Avner Oil - Annual Report 2011 - Delek Energy Systems

PeriodDalit leaseSummary of the operations performedin the period / summary of the plannedwork planActual totalcost/estimated totalbudget foroperations on thelevel of the oil asset(USD thousands) 612011 - - -2012 onwards A work plan has yet to be set for thisperiod.The Partnership'seffective share ofthe cost/budget(USD thousands)(B)Development plan for the Tamar projectOn August 10, 2010, the Minister of Energy granted the partners in the Tamar projectapproval to develop the Tamar gas field as a dual pipeline for the delivery of natural gas fromthe field to a platform that will be constructed north of and nearby the Yam Tethys platformand from there, through the existing pipeline to the Yam Tethys receiving terminal in Ashdod,which will be expanded to receive the gas.On August 18, 2010, the Commissioner informed Noble that he was approving its applicationfor the development of the Tamar reservoir in accordance with the above outline. ThePetroleum Commissioner also asked Noble for a reservoir development plan, including thearrangements between the partners in the Tamar lease and the holders of rights in theAshkelon lease regarding use of the pipeline and receiving terminals as well as the onshorehandling facilities, including storage arrangements.In December 2010, a development plan for the Tamar field was submitted to theCommissioner. The development plan, which was updated several times in 2011, is for theTamar and Dalit reservoirs, however, the partners decided, in the first stage, to advance thedevelopment of the Tamar field ("the development plan").The development plan includes mainly five wells, each with a planned production capacity of200-250 MMcf/d. The gas will flow from the Tamar field through two 16" pipelines to the newhandling platform which will be constructed opposite the coastline at Ashkelon, adjacent tothe existing platform for the Mari-B reservoir. The Tamar platform will connect to the existing30" pipeline that delivers natural gas to the Yam Tethys onshore receiving terminal inAshdod, which will be rehauled to allow preliminary processing capacity of up to 1 billioncubic feet of gas per day. The development plan could include penetration and storage ofnatural gas from the Tamar reservoir in the Mari B reservoir and expansion of gas supplycapacity, if required and according to the needs of the country.The development plan is carried out in three stages: In the first stage, four developmentwells were drilled (Tamar 6, Tamar 5, Tamar 4 and Tamar 3) to an initial depth of 2,500 m(including water depth). In the second stage, these wells were drilled to a final depth of 5,200m, and in the final stage, these wells and the Tamar 2 well (which was drilled in 2009 as anappraisal drilling) are completed for production. At the date of the report, the first and seconddevelopment stages have been completed. The running in of the project systems is expectedto start in the fourth quarter of 2012, with the objective of starting commercial supply of gasin the first half of 2013. After completing the development plan, the maximum possibleproduction rate from the project is planned at 1 BCF a day.The development plan for the Tamar project, approved by the lease partners, is USD 3.06billion, including:(1) Planning works(2) Drilling and completion of five production wells(3) Development of the submarine systems in the oil field(4) Equipment and pipes for the subsea production system(5) Contractor services for construction of the subsea systems(6) Pipes to connect the gas field to the platform:16" pipesA-51