While sizable, it remains unclear if it can be economically or technically produced
Afek Oil and Gas, an Israeli subsidiary of U.S. Genie Energy (ticker: GNE) has found substantial amounts of oil and gas in the Golan Heights. According to the company’s press release, the resource is present at multiple strata and in some of the explored portions of the license are is up to 350 meters (1,148 feet) thick.
“We are talking about a strata which is 350 meters thick and what is important is the thickness and the porosity. On average in the world strata are 20-30 meters thick, so this is ten times as large, so we are talking about significant quantities,” said Afek Oil and Gas Chief Geologist Dr. Yuval Bartov. While the exact amount of oil in place remains to be determined, it will likely be able to supply Israel’s 270,000 barrels per day of demand.
Genie does not yet have sufficient evidence to determine whether this or any part of the resource can be technically or economically produced. Because of that, the resource does not constitute proved, probable or possible reserves.
“We remain optimistic given the results to date,” said Howard Jonas, Chairman and Chief Executive Officer of Genie Energy. “In term of quantity, our log results indicate that this could be a significant find if analogous conditions are present over a significant portion of the license area. We are now working diligently to determine the production costs and total quantity of the resource.”
Genie’s position in the Golan Heights represents challenges that exceed determining whether or not the resource in place can be produced economically. Drilling in the area has be vehemently opposed by environmental groups who are concerned about damaging the area’s ecosystem.
A license to drill was initially issued in April 2013, but a series of appeals to the Israeli courts by organizations like the Society for Protection of Nature in Israel and Greenpeace, put all development in the area on hold until a December 2014 ruling gave the go-ahead to drill.
Adding to the complexity of developing the area, Israel’s sovereignty over the Golan Heights is still contested following the area’s capture from Syria during the Six Day War in 1967. The international community considers the Golan Heights as occupied territory, making development more difficult politically.
Regardless which side the international community falls on in regards to Israel’s claim to the Golan Heights, ISIS continues to wage a violent campaign across the border in Syria, making security a concern for any future development. Most recent rocket strikes in the area have been declared stray fire by the Israel Defense Force, reports Fox News, but regional experts point out that the potential costs and challenges of protecting future oil fields so close to a war zone, as well as the large target it would provide for enemy fire, could give second thought to companies looking to drill in the area.