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Providing coverage of Alaska and northern Canada's oil and gas industry
May 2009

Vol. 14, No. 22 Week of May 31, 2009

Talisman spreads shale gas gospel

Gary Park

For Petroleum News

Its pockets bulging with the proceeds from asset sales of C$2.5 billion in the past year, sitting on C$3 billion in liquidity that it expects to grow “significantly” this quarter and unencumbered by oil sands commitments, Canadian independent Talisman Energy now estimates it is sitting on 132 trillion cubic feet of gas in its North American shale gas lands.

While not all of those in-place resources can be developed, Talisman Chief Executive Officer John Manzoni believes more than 30 tcf is recoverable from its Montney (British Columbia), Outer Foothills (Alberta) and Marcellus (Pennsylvania) plays. Its Quebec properties are still in the early evaluation stage.

He told an investor conference in New York on May 20 that the latest estimates are “more tightly defined” than last year.

“Our unconventional base is improving all the time,” he said. “We’ve not stopped adding to our lands and our pilot activity continues into this year. In some areas, we’re moving to development.”

Having spent the last 20 months reshaping its asset portfolio to concentrate on longer-term opportunities, Manzoni said Talisman is confident it can currently make gas from its shale properties profitable at US$4 per thousand cubic feet and is “working to bring down the break-even price of these plays.”

Haynesville could be next

The next step in Talisman’s advance could be to enter the Haynesville shale play in Texas, where BMO Nesbitt Burns analyst Jim Byrne believes a number of companies may be willing to unload some assets or negotiate joint ventures.

He expects to see “quite a bit of acreage come on to the market as guys get stretched on credit lines.”

Byrne said the recession and low gas prices have seen land values in Haynesville plummet to about US$4,000 an acre from peaks of about US$30,000, making some gas cheaper to buy than find.

BMO figures that Haynesville has 69 tcf of recoverable gas that should be profitable at US$5.14 per thousand cubic feet.

The emergence of shale gas and its possible role as a “green fuel” was promoted May 23 by EnCana Chief Executive Officer Randy Eresman before leaders from the Group of Eight in Rome.

That follows a meeting in April of industry leaders, including Eresman, with U.S. Energy Secretary Steven Chu, a champion of renewable energy, when the industry made its case that there are major opportunities to use shale gas to reduce greenhouse gas emissions by replacing coal to generate electricity and as a new source of fuel in vehicles.






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