First Oil

Vol. 233 No. 6

“And the Lord said, I have surely seen the affliction of my people, which are in Egypt, and have heard their cry by reason of their taskmasters; for I know their sorrows; And I am come down to deliver them out of the hand of the Egyptians, and to bring them up out of that land unto a good land, unto a land flowing with milk and honey.”

—Exodus 3.7 and 3.8

What a difference 5,000 years make! Egypt is no longer ruled by a slave-driving pharaoh. Even the military dictator, who ruled Egypt for 30 years, was overthrown last year during the Arab Spring.

The good Lord had promised Moses to deliver the Israelites to a land flowing with milk and honey. Relieved to be away from their Egyptian taskmasters, the Israelites probably did not mind the lack of abundant natural resources. But Golda Meir, the first prime minister of modern Israel, lodged a complaint, “Let me tell you something that we Israelis have against Moses. He took us 40 years through the desert in order to bring us to the one spot in the Middle East that has no oil!”

With the recent gas discoveries in the offshore Levant basin, modern-day Israel should be pleased with its good fortune. Within the last three years, Israel has enjoyed three major gas discoveries: Mari-B (1 Tcf), Tamar (8.3 Tcf) and Leviathan (17 Tcf). At a presentation on May 3 at the 2012 Offshore Technology Conference, Uzi Landau, Israel’s Minister of National Infrastructure, estimated the value of the country’s hydrocarbon treasure at $717 billion, based on an oil price of $77/bbl. With these billions, Israel could literally flood the desert landscape with millions of gallons of milk and honey.

I noticed a great sense of gratitude in Mr. Landau’s handshake with Noble Energy Chairman and CEO Chuck Davidson after the minister’s presentation at Rice University’s Energy Institute. Noble Energy is the leading independent oil and gas company responsible for these tremendous discoveries. Noble has also announced a 5-8-Tcf gas discovery in Block 12, offshore Cyprus.

Another country grateful for the divine bounty of oil and gas is Brazil. The deep Cretaceous salts, which trap oil in rocks off Brazil’s coast, are “strong evidence,” in the words of President Dilma Rousseff, “that God is Brazilian.”

On the other hand, communist Cuba may be suffering divine retribution. Repsol’s drilling rig failed last month to turn up commercial quantities of hydrocarbons at the first attempt in its deepwater block. If, however, future wildcat drilling becomes successful, we’ll attribute it to the fact that the nation is still populated with devout Catholics.

In France, the nation, or at least its political leadership, is disdainful of its potential bounty of shale oil and gas in the Paris basin. Last year, the government placed a moratorium on shale fracturing. Divine intervention may be needed to make the enigmatic French realize that fracturing is safe and the billions of Euros that the country will gain through leasing permits and taxes may help save the Euro, itself, from collapsing, and will enable its citizens a cornucopia of milk and honey, or if they so choose, the finest California wines.

The energy landscape has changed dramatically within the last decade. North America has seen the emergence of bountiful shale plays. According to the U.S. Energy Information Agency, the leading countries with significant technically recoverable shale resources are China (1,275 Tcf), the U.S. (862 Tcf), Argentina (774 Tcf) and Mexico (681 Tcf). Offshore, we have an up-and-coming deepwater play in East Africa. One expert at the Mayer Brown Energy Conference in Houston suggested that Mozambique could become the third largest LNG exporting country in the world after Qatar and Australia.

What’s next? We could have oil and gas flowing from the Arctic. Hydrate mining is possible in Alaska and offshore Japan and India. God only knows what lies in the future.