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Zion Oil
& Gas Newsletter
August
20, 2010
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Dear
Shareholder and/or Friend of Zion
The past
two weeks have seen both our office and the Ma'anit-Joseph #3 wellsite 'humming' with activity. The
drilling rig has been moved from the Ma'anit-Rehoboth #2 wellsite to the
Ma'anit-Joseph #3 wellsite and has been erected. Almost everything is now in
place for drilling to begin, as you can see in the pictures below.
Our
schedule has had to be slightly revised (by approximately seven days) and now
indicates a spud date of Thursday, August 26, 2010. The revision was mostly
caused by a delay in importing some of the required equipment and consumables.
Our logistics department planned carefully, but ship charter schedules are
beyond the control of our staff, so a few days have been lost.
On a
positive note, the extra time has allowed us to ensure that everything will be
completely ready when drilling does begin.
Here are
some photographs from the Ma'anit-Joseph #3 wellsite; they were all taken on
Wednesday, August 18, 2010.
The
front gate to the M-J #3 wellsite.
The
2,000 horsepower drilling rig has been erected.
Zion's President and
Chief Operating Officer, Bill Ottaviani, with AME's staff
engineer, Ibrahim Unsal.
Installing
the equipment
A
10,000 psi Blow Out Preventer from 'WellCat' (Weatherford).
L.
to R. - Zion's Field Foreman, Danny Weisman, AME's staff engineer, Ibrahim Unsal
and Zion's President and Chief Operating Officer, Bill Ottaviani.
Consultant,
Mike Ellis, from The Mudlogging Company, Houston, USA.
Training the site
geologists who will 'sit' the well during drilling.
You may
be particularly interested in the photograph above of the (red) Blowout
Preventer (BOP). The BOP is a large, specialized set of seals used to control
the well in the unlikely event of unexpected flow (from a formation “kick”) at
the surface. A formation kick can lead to a potentially catastrophic event known
as a blowout. The BOP (as a fail-safe device) is critical to the safety of the
crew, the drilling rig and the environment. The BOP shown above is rated for a
maximum pressure of 10,000 pounds per square inch.
The
recent BP disaster may have been prevented, if, in part, the correct well
control equipment was both in place and working. There are industry guidelines
that, had they been followed, could have minimized the severity of the effects
of the problem that occurred at BP's site in the Gulf of Mexico.
The
consequences of the events at BP's well are relevant to all of us and include:
(i) an increase in Control of Well insurance premiums, and (ii) a heightened
sense of care and attention when dealing with drilling safety issues. We can do
little about (i) other than pay the premium, but (ii) is something we take very seriously
indeed.
So, our
operations department is now in high gear, as we all look forward to daily
drilling operations next week.
Here is
the latest, more detailed, news on Operations:
Ma'anit-Joseph #3 Well (M-J
#3)
Mobilization
of the drilling rig from the Ma’anit-Rehoboth #2 wellsite was completed this
past week and the drilling mast has been raised. Work crews are
making final adjustments to the rig and installing ancillary equipment in
preparation for the upcoming spud date.
Construction
of the acoustic wall surrounding portions of our drill site is now
completed. Installation of mobile buildings, utility hook-ups, and
related infrastructure will also be completed in the next few days.
The
mudlogging unit is operational and our wellsite staff have begun their hands-on
training in using this sophisticated piece of electronic
equipment. “Mudlogging” is an important diagnostic process used by
our geologists and engineers during the course of drilling a
well. Our geologists use mudlogging to determine the type of rock
being penetrated by the drill bit and to give an early indication of oil and gas
presence in the rock. The mudlogging unit itself uses sensors
throughout the drilling system to measure various parameters (for example, rate
of drilling penetration and weight on the drill bit) that are crucial to our
engineers in drilling the well effectively, efficiently, and
safely.
Equipment
continues to arrive daily at the wellsite coming from Asia, Europe, and other
points around the world. Orchestrating such a large movement of goods
and materials into Israel is a sizable task that requires careful planning and
execution. Still, unavoidable delays can occur and we have
experienced a few recent delays that has caused us to shift our planned spud
date by a few days. Our current estimate for spudding the well is
August 26, 2010.
Ma'anit-Rehoboth #2 Well
(M-R #2) and
Elijah #3 Well
and
Issachar-Zebulun Permit
Area
No change
from previous updates. We await the results of the seismic processing and
integration.
Recent Oil & Gas News in
Israel
Following
the two recent natural gas discoveries offshore Israel,
estimated to hold 24 trillion cubic feet of gas (reported to be twice the 2009
gas reserves of Britain) Lebanon has been discussing the possibility of
approving its own laws regarding offshore oil and gas exploration. As per
Norway-based Petroleum Geo-Services, the world's third largest surveyor of oil
and gas fields, this may prove to be 'an exciting new province for oil
and gas'.
Of
course, the Norwegian experts are saying nothing new, as in April 2010, the
United States Geological Survey already assessed that there may be 1.7 billion
barrels of recoverable oil and 122 trillion cubic feet of recoverable gas in the
Levant Basin. (Zion’s exploration rights fall within the area of the Levant
Basin.)
In other
recent news, you may be interested to learn that, this past week, an Israeli oil
company announced an onshore oil and gas
discovery, in Israel. They estimate that there are 1.5 billion barrels of oil in
their exploration area - approximately 30 miles south of the location where our
Ma’anit-Joseph #3 well is to be drilled. However, there appears to be
uncertainty regarding the commercial viability of the discovery as well as the
claimed quantity of the discovery.
"In your good pleasure, make Zion
prosper..."
Psalm
51:18
Thank you
for your support of Zion, and
Shalom
from Israel
Richard
Rinberg
CEO of
Zion Oil & Gas, Inc.
www.zionoil.com
FORWARD LOOKING STATEMENTS: Statements
in this communication that are not historical fact, including statements
regarding Zion's planned operations, spud dates, geophysical and geological data
and interpretation, anticipated attributes of geological strata being drilled,
the procurement of needed drilling permits, drilling efforts and locations, the
presence or recoverability of hydrocarbons, the sufficiency of cash reserves,
ability to raise additional capital, timing and potential results thereof and
plans contingent thereon are forward-looking statements as defined in the "Safe
Harbor" provisions of the Private Securities Litigation Reform Act of 1995.
These forward looking statements are based on assumptions that are subject to
significant known and unknown risks, uncertainties and other unpredictable
factors, many of which are described in Zion's periodic reports filed with the
SEC and are beyond Zion's control. These risks could cause Zion's actual
performance to differ materially from the results predicted by these
forward-looking statements. Zion can give no assurance that the expectations
reflected in these statements will prove to be correct and assumes no
responsibility to update these statements.
Contact
Information
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More
information about Zion is available at www.zionoil.com or by contacting Michael
Williams at Zion Oil & Gas, Inc., 6510 Abrams Rd., Suite 300, Dallas, TX
75231; telephone 1-214-221-4610; email: dallas@zionoil.com
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