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Canada eyes GTL debut, Alberta plant Sasol buys into Talisman BC Farrell Creek shale gas assets; eventual plant would be larger than Sasol facilities in Qatar, Nigeria Gary Park For Petroleum News
Canada has moved a large step closer to entering the gas-to-liquids age, fueled by South African money.
Sasol, the South African-based energy and chemical powerhouse, will pay C$1.05 billion for 50 percent of Talisman Energy’s shale gas assets at Farrell Creek in British Columbia, laying the foundation for a possible GTL facility.
A Sasol spokesman said a potential site for the plant has yet to be identified, but some locations within Alberta will be part of a feasibility study that could be completed over the next year.
Neil Shelly, executive director of the Alberta Industrial Heartland, said a site near Edmonton would be a logical choice, offering his association’s support to Sasol.
“Given the fact that they are investing close to a billion dollars so far in securing a feedstock, they appear to be very serious about this,” he said.
Shelly said the Heartland region, being both close to major natural gas transmission lines and established as the refining hub for Western Canada, has the infrastructure in place to distribute diesel products that would be the main output from a GTL plant.
He added that naphtha could also be produced, offering a diluent to aid the flow through pipelines of bitumen from the Alberta oil sands.
Paul Smith, Talisman’s executive vice president of North American operations, said the plant would essentially be a natural gas refinery, which is “potentially a hugely value-accretive option” to merely delivering the gas into the North American pipeline network, or marketing the gas as liquefied natural gas.
A Talisman spokeswoman said her company views GTL as a possible answer to surplus gas supplies in North America and to creating a cleaner environment.
Sasol senior group executive Lean Strauss said a GTL plant in Western Canada could be larger than his company’s GTL plants in Qatar, which has design capacity of 34,000 barrels per day, and Nigeria.
Deal to close by mid-2011 Sasol and Royal Dutch Shell are the only two companies in the world with the ability to convert natural gas into liquid transportation fuels using the Fischer-Tropsch process, a Second World War technology that was further enhanced to circumvent sanctions imposed on South Africa during its apartheid era.
The joint venture is a key element of Talisman’s strategy to develop an estimated 44 trillion cubic feet equivalent of net contingent resources in British Columbia’s Montney formation, while Sasol said the deal is a chance to “grow its own shale expertise.”
Under the deal, which is expected to close by mid-2011, Sasol will pay C$262.5 million in cash and carry 75 percent, or C$787.5 million, of Talisman’s future capital commitments to Farrell Creek, which is part of the Montney play, where the Canadian-based company expects to face eventual capital spending costs of C$35 billion-C$40 billion.
Talisman was counting on exiting 2010 with Farrell Creek production of 40 million-60 million cubic feet per day from 15 or 25 wells planned for completion. It also has a recently expanded processing plant in the area that can handle 120 million cubic feet per day.
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