I have worked in the Oil and Gas Exploration and Production business for almost 50 years. This has
included running large gas processing operations (both offshore and onshore) on behalf of Shell
International, and designing onshore and offshore gas-field developments on behalf of Shell, Mossgas, and
BG, as an independent industry consultant.
I visited Israel between June 20 and July 4, 2010 at the invitation of a group of Carmel Coast residents who
requested my opinion on the Tamar gas field development plan. I have inspected the proposed processing
plant sites at Dor (South and North), Ein Ayala, Caesarea, and Hadera. I have also reviewed the following
documents (some in translation from the original Hebrew):
1.
2.
3.
4.
5.
6.
Israel Natural Gas Development plans presentation, February 2010.
Development Alternatives for the Offshore Tamar and
Dalit Gas Fields, PDC report, 17/02/2010
PDC letter, 01/03/2010
Presentation to the TAMA 37 Executive Committee on offshore processing, 2306/2010
Financial assessment of Tamar & Dalit land bases alternatives for gas connection to land
infrastructure, TAMA 37, May, 2010
Based on the above, my main observations are as follows:
I.
Offshore gas processing, on a shelf-platform, appears to be the most appropriate choice for the
Tamar development. Offshore (shelf platform) processing is an industry standard,, is reliable,
requires very little onshore infrastructure (< 10 Dunams) and can typically be implemented within
3 – 4 years. (see later regarding construction and barge availabilities).
II. The planning authorities (Shiry to verify term) should conduct a thorough independent evaluation
of the offshore option and not rely on studies provided by the operator. There is an inherent
conflict of interest in asking the operator to evaluate offshore options. Operators have very strong
financial incentives for opposing offshore. Offshore processing has significantly higher operating
expense (OPEX) over time, and presents far more logistical "headaches" for the operator.
III. Critical estimates presented by the IGA and Noble Energy about the offshore processing option do
not fit with my industry experience. In particular, assumptions regarding the development
timetable, reliability, and the amount of onshore infrastructure required appear questionable
considering that this project is of such a critical nature, in which fast tracking constructions
options should not be ruled out. I recommend that these assumptions should be examined very
carefully.
IV. The IGA presentation implies that there is no backup plan in place for the Tamar gas supply. If
this is true, it is a critical planning flaw regardless of whether processing is performed onshore or
offshore. The Tamar supply could be interrupted by a failure on an onshore plant, or an offshore
plant, or in the subsea extraction and pipeline system. Becoming reliant on Tamar without a
backup supply plan would represent a completely unacceptable level of risk for Israel.
V. Major gas infrastructure decisions should be based on proper risk, safety, and reliability analyses,
rather than on generalized assumptions. The level of documentation that I have been shown
regarding the Carmel Coast options would generally not be considered adequate for significant
decisions in the gas industry. Specifically, A Quantitative Risk Analysis (QRA) is required, prior
to site selection.
VI. The first Tamar processing plant should be part of a comprehensive gas development "master
plan" for Tamar and for future gas discoveries. Such a plan should proactively address the full
infrastructure that will be required over the foreseeable future, as well as appropriate risk
management at the national level.
VII. Israel should identify options to reduce time pressure, and to provide sufficient time for proper
analysis, planning, and decision-making. IGA and Noble argue that the onshore planning and
approval process should be arbitrarily shortened in order to avoid critical shortfalls in the 2013 –
2015 gas supply. I believe that being rushed to major infrastructure decisions is unwise and likely
unnecessary. There are often a number of alternative options to solving supply crises, and these
should be methodically identified and independently evaluated. For example, the option of
interim processing of Tamar Gas at Mary B should be thoroughly examined.
Below is a more detailed discussion of each of these observations. I will be happy to elaborate and discuss
these observations further upon request.
I.
Offshore gas processing appears to be the most appropriate choice for the
Tamar development.
All operators favor onshore facilities over offshore. Onshore facilities are much lower cost to operate than
offshore and they require simpler on-going logistics. As an operator, I myself generally favor onshore
rather than offshore facilities.
However, having seen the proposed locations and the unusual land constraints of Israel, I believe that
offshore processing (specifically, full processing on a shelf platform) is the most suitable approach for
Tamar.
This opinion is based on my experience developing and running gas and oil operations in many countries,
and on having visited the proposed Carmel Coast sites. I believe that it would be an unfortunate and
unnecessary mistake for Israel to turn the Carmel Coast into a hydrocarbons processing industrial zone.
My main reasons for this opinion are as follows:
1) Serious Disadvantages of Onshore Processing at the Carmel Coast:

By world standards, the Carmel Coast area is highly populated. The proposed sites are all within
close proximity of significant populations, highways, passenger train lines, and important
infrastructure. Each site will inevitably cause pollution, safety, and disturbance problems.

I understand that the Carmel Coast is an important recreational area for Israel and a national
heritage site. Indeed, several of the sites are in agricultural or forest areas. Hydrocarbon
processing plants would fundamentally change the character and recreational utility of the region.

In general, the first plant in a gas development is followed by others as fields are developed and
new discoveries made. One should assume that any onshore site that is selected will become a
major hydrocarbon/petrochemical processing industrial zone over time. This will result in
undesirable ribbon development throughout the camel coastal area.

The residents of the area appear to strongly oppose establishment of a hydrocarbon processing
industry on the Carmel Coast. In the case of the Corrib gas processing plant (referred to in the
PDC report) all progress has halted due to residence resistance and refusal to permit pipeline
construction.

The Tamar gas is at extremely high pressure. Reducing the pressure to levels appropriate to
onshore facilities is not consistent with PDC's recommendation to reduce the pressure on a shelf
platform.

There is a straightforward and very standard alternative available: offshore processing on a shelf
platform.
2) Appropriateness of offshore processing for Israel:
Shelf platform processing plants have been widely used around the world for many years, and are
completely standard in the industry. They are the norm in exactly the type of land-constraint situations
seen on the Carmel Coast.
According to the PDC information, the Tamar gas is of high quality and therefore the processing
requirements are undemanding and would be straightforward to implement on a shelf-platform. Based on
my experience,

Full processing on a well designed shelf platform would generally not require any significant
onshore facility. The onshore component would typically be a 2 - 3 acre (~10 Dunam) facility that
would not cause any meaningful onshore disturbance.

A shelf platform gas processing plant of the type required for Tamar can be developed relatively
quickly (my initial inquiries suggest approximately 3 years excluding regulatory approvals)

A shelf platform plant provides extremely high operating reliability if it is properly designed and
managed. The industry generally expects both onshore and offshore processing plants to operate
at virtually equivalent levels of reliability.
These reliability, timetable and onshore requirement assumptions are discussed in more detail in Section
III. below.
II.
The regulator should conduct a thorough independent evaluation of the
offshore option and not rely on studies provided by the operator.
In general, the operators can be expected to vigorously oppose offshore options. The reason for this is
simple: onshore plants have far higher profitability than their offshore equivalents.
Materials provided by IGA and PDC correctly state that onshore and offshore processing plants have
similar development costs (CAPEX). However, they do not mention that offshore plants have far higher
operating costs (OPEX).
OPEX for an offshore plant is higher because supplies, workers, and contractors have to travel by
helicopter or boat instead of by road. Platform storage is limited meaning that logistics becomes much
more complicated for the operator. Equipment is more densely situated meaning that maintenance routines
are more costly. And specialized heavy equipment such as barge-cranes must be kept available instead of
being able to contract standard onshore equipment when needed.
This very substantial difference in OPEX means that offshore plants are significantly less profitable on an
ongoing basis than their onshore equivalents. As a result, the operator has extremely strong financial
incentive to avoid moving offshore.
I therefore believe that there is an inherent conflict of interest in asking the operator to evaluate offshore
feasibility. I would always advise the regulator to conduct an independent and detailed study of the
offshore option in a case such as this, and not to rely on data provided by the operator.
III.
Critical estimates presented by the IGA and Noble Energy about the offshore
processing option do not fit with my industry experience.
The IGA and Noble Energy materials present three critical assumptions that I believe most industry
personnel would find surprising: These three assumptions appear to be critical to the IGA position, and
therefore I recommend that each should be carefully checked:
1.
Assumption #1, long offshore development timetable: Noble and IGA present an estimated 60+
month timetable for development of an offshore facility. This estimate is composed of 17 – 20
months for regulatory approval plus 40 – 48 months for design and construction.
Based on my experience with similar facilities, and on my inquiries about current availabilities, 40
– 48 month development timetable is significantly longer than required. I would assume that the
type of facility required for Tamar could be developed well within 36 months (excluding
regulatory approvals) .
Regarding a 17 – 20 month regulatory process, I would comment that it is surprising to see that
this is presented as sequential rather than parallel. In this industry design and engineering work
for an offshore platform usually begins long before final location approval (as Noble has in fact
done on the onshore plant). The specific location of the platform does not influence the design or
build, and therefore development can begin as soon as the high-level go ahead has been given.
I would also note that timetables of offshore processing plants are very variable. This is because
availability of many of the critical inputs change continuously (yard capacity, steel availability,
heavy lifting crane and barge availability, processing equipment availability, etc.) .
What this means is that when a project has a particularly critical timetable, the operator can move
it ahead of competing projects by allocating a larger budget. This allows the use of major design
houses and constructors to secure a full package, and allows the project to “jump the queue” in
securing critical elements and services.
Therefore, in order to determine the timeframe of a Tamar shelf-platform at this specific point in
time, I would recommend contacting relevant suppliers and conducting a short independent study
to determine the minimum timetable with different budget scenarios.
As an example, I was involved in the development of the Poinsettia gas processing platform in
Trinidad (pictured below). This platform took 3 years FEED to EPIC in a very tight development
market. (Note, this platform is smaller than would be required for Tamar but size does not
significantly affect the development timetable).
2.
Assumption #2, low offshore reliability: Noble and IGA report that offshore processing plants
have serious reliability issues. They do not specify which type of plant they are referring to, but
this assumption is certainly incorrect for shelf platform processing plants. Shelf platform and
onshore plants have similar reliability as long as they are well designed and operated. There are
specific unduplicated systems that can reduce reliability in offshore plants (for example FSO).
But these systems should be designed out (for example, a condensate pipeline direct to a refinery)
or extra redundancies built in.
IGA and Noble documents cite a statistic of 18 down days per year for an offshore platform. They
should be asked to provide a source for this statistic as it is extremely surprising. 18 down days
per year would not be accepted in any operation that I am familiar with. I have been unable to
ascertain the reliability performance of Mary-B but I would be surprised if unscheduled
downtimes where as high as 18 days per year, if any.
In my personal experience for example, I managed the Shell Sarawak, Central Luconia shelf
platform processing plant (pictured below) for 5 years without a single unplanned down day
during that period amongst 3 separate facilities of which only one is pictured below..
3.
Assumption #3, that an offshore plant still requires a large onshore facility: IGA/Noble state
that even if an offshore plant is built, it will still require a large (80 Dunam) onshore facility. This
should not be presented as a fact, it is entirely dependent on design decisions amd is contrary the
PDC design chart that clearly shows that full processing offshore requires only a tie-in to the INGL
pipeline.
If full processing is performed on the platform (as I recommend), then only a very small facility
(approximately 10 Dunam) would be required onshore. This facility would be for metering,
distribution into the ING system, and pig capture.___________________________.
Issues such as condensate storage need to be addressed during the design phase. For example,
condensate can be stored at the platform in FSO's, or piped directly to a refinery. Neither of these
common approaches require any shore space.
I would note also that in the IGA/Noble discussion of why 80 Dunam is required, they include space
that does not need to be at the onshore facility, for example, warehouse space. A gas processing
operation requires large warehouses. But there is no reason to build these warehouses at the onshore
terminus if there are land use or environmental considerations. As with any other industrial
operation, the warehouses would be located in any convenient existing industrial zone.
(if we are able to find a google earth of an appropriate tie-in for the presentation, we can also
insert it here).
IV.
IGA documents imply that there is no backup supply plan for the Tamar gas
supply.
The translated IGA presentation that was shown to me states that 50% of Israel's electrical supply will be
based on Tamar gas. It further states that any disruption of Tamar gas would cause "catastrophic harm" to
the electricity supply. This implies that there is no backup supply plan for that 50%.
According to the Noble and PDC materials, the current plan for Tamar development is a single subsea
system feeding a single processing plant. This means that Tamar is a critical single point-of-failure that
threatens 50% of Israel’s electricity supply. In other words, a failure anywhere in the Tamar subsea
extraction or processing chain will have catastrophic consequences for Israel.
This should be of extreme concern. Gas extraction and production systems are complex. Regardless of
whether the Tamar processing plant is onshore or offshore, it cannot guarantee 100% reliability. Similarly,
the Tamar wells and subsea systems cannot guarantee 100% reliability and subsequent intervention in
water depth of 1700 meters is difficult. Therefore, according to the IGA presentation, a catastrophic failure
of Israel’s electricity supply at some point is very possible.
In my experience, a major energy plan always has a backup supply plan for its critical elements. It seems
to me absolutely unreasonable to allow a single-point-of-failure to threaten 50% of Israel’s electrical
supply. This has nothing to do with the question of onshore versus offshore processing. Regardless of
where the processing takes place, there is always a risk of failure and there needs to be a backup supply
plan.
In fact, as shown in the IGA presentation other advanced countries never allow such critical dependencies:
IGA shows that the UK, Australia, and US all have multiple redundant energy sources and that no single
point of failure can significantly affect their energy economies.
Based on the information that I have seen, I strongly advise that a backup supply plan be implemented to
cover the shortfall in the event of a failure in the Tamar system. This could be based on a parallel
connected subsea and processing system in Tamar, or other sources. But in my opinion this issue must be
urgently addressed.
V.
Important decisions in the gas industry should be based on proper risk and
reliability analyses.
In general, important decisions in the gas industry are best based on proper risk and reliability analyses,
rather than on general statements and undocumented assumptions.
Generally, I would advise that the following standard analyses must be prepared for each of the onshore
and offshore options before any meaningful decisions can be made:
1.
Quantitative Risk Analysis (QRA): In a QRA, specialized domain experts from the design
team sit down together with independent experts as well as observers from the relevant
regulatory bodies and the full detailed system architecture is reviewed on a component by
component basis. All failure mechanisms are assigned a probability and a number of
scenarios are quantitatively analyzed.
I have not been shown such documentation for the currently proposed onshore solutions, or
the offshore option. Until such a document is examined, the risks and safety distances
specified cannot be relied upon. The QRA must also include the pressure reduction station at
the beach.
Although I have limited understanding of the unique Israeli security situation, I would assume
that the QRA should include “security” scenarios which are different from QRAs performed
for “standard” scenarios, and that security specialists would form a part of the QRA team who
will define specific security scenarios as part of the QRA procedure.
2.
a)
In order to prepare the QRA team appropriatelythe following additional neeed to be
forthcoming from the design team:
Design Basis and results of FEED and feasibility studies for options to be analyzed
b) Detailed system design documents for options to be analyzed
c)
Reliability, Availability, and Maintainability (RAM) analyses
d) Risk scenario analysis including security scenarios.
3.
VI.
?
The first Tamar processing plant should be part of a comprehensive gas
development "master plan".
I have not been shown any comprehensive development plan for Tamar and future gas discoveries. If such
a plan exists, it should be available for public review. If a master plan does not exist, it should be created
as an urgent priority. A master plan should cover points such as the following:
VI.

Future gas processing infrastructure: It would appear, according to Noble data, a total of 24 TCF
of gas may be extracted from the Tamar and Leviathan fields. And of course additional
discoveries are to be hoped for. Such volumes will require major processing infrastructure in
addition to that being proposed for this first stage. Siting of such major facilities should not be
conducted on an ad-hoc basis, and should not be left to the initiative of the operators. An overall
plan should be available that maps out a processing infrastructure strategy that best serves Israel's
overall interests.

Future LNG export: Also according to Noble materials, Israel will export natural gas in the form
of LNG within a few years. LNG processing plants are very large and will almost certainly raise
significant land-use issues. They will also of course raise major security and safety concerns. In
addition, LNG requires specialized port facilities and safe transportation routes from plant to port.
All of these issues need to be addressed well in advance.

Supply backup: As outlined earlier in this document, a master-plan must include full backup
supply for any critical supply elements. In the case of Tamar, this should include backup for both
the subsea extraction and topside processing elements.

Pipeline looping: In reviewing the Israel Gas Development plans as laid out in the February 2010,
presentation, I see that there is a plan for implementing a pipeline loop by adding an inland north
south pipeline. This is standard infrastructure practice and should take precedence over the
requirement of ensuring geographically separated landing points from offshore in terms of
infrastructure robustness and reliability.
Israel should identify options to reduce time pressure, and to provide
appropriate time for proper analysis, planning, and decision-making.
IGA and Noble present data that shows a critical supply shortfall in the 2014 – 2015 (?) gas
supply. They therefore argue that the planning and approval process for the Tamar processing
facility must be rushed and that there is no time to implement solutions (such as offshore) that
might otherwise be advantageous for Israel.
In my experience, being rushed to major infrastructure decisions is unwise. There are often a
number of alternative options to solving supply crises, and these should be methodically identified
and independently evaluated before artificially rushing to decisions that may have many harmful
consequences for Israel. For example, an interim option for partially processing Tamar Gas at
Mary B via single 16” pipeline shortfall. On the surface, this appears to be a promising option and
worthy of evaluation. It would provide the following three critical benefits:
1. In the near term, provide sufficient supply to cover the shortfalls predicted by IGA.
2. In the longer term, provide the basis for a backup processing site for Tamar gas so as to
remove the single-point-of-failure risk
3. Ensure that there is time for proper planning processes that will prioritize Israel’s interests in
the development of the emerging gas infrastructure.
This is only an example of lateral thinking in the absence of detailed information on the Mary B
and Ashdod facilities.
Summary
As noted above, my overall recommendations at this stage are to
1) Independently study the option of an offshore full processing shelf platform for the Tamar
development. My “going in” assumption is that this will prove to be the most appropriate option
for Israel.
2) Examine the Tamar-to-Mary B option and any other options for reasonably covering any nearterm supply shortages without inappropriately rushing major infrastructure decisions. Understand
and resolve the EMG reliability issues.
3) Urgently create an overall gas infrastructure development master plan that will address both the
required future processing infrastructure, future exports, liquefaction i.e. LNG/Fischer-Tropsh
process and backup supply planning.
4) Conduct the above using standard industry tools and documentation (QRA, etc.) and while being
cautious of relying on operator-generated studies on topics which may pose a conflict of interest
for the operator.
5) Increase level of citizen transparency and participation in all aspects of the planning process in
order to establish public confidence in the process and the solutions presented