Sasol, Talisman mull enlarged GTL plan as they pen second shale-gas deal
By: Terence Creamer
8th March 2011
miningweekly.com
JOHANNESBURG (miningweekly.com) – Energy and chemicals group Sasol announced on Tuesday that it had signed a second R7,4-billion agreement with Talisman Energy, of Canada, to acquire a 50% interest in the Cypress A shale-gas asset, located in the Montney Basin of British Columbia. It also indicated that the two companies might pursue a bigger gas-to-liquids (GTL) development plan than had initially been envisaged, based on the enlarged joint asset base.
Earlier in March, the JSE-listed group concluded a R7,55-billion deal to purchase half of Talisman Energy’s Farrell Creek shale-gas asset, which is also located in the Montney Basin - the deal was initially announced in December.
The Cypress A announcement also came only a day after CEO Pat Davies signalled Sasol's continued appetite for further upstream gas acquisitions, including unconventional gas prospects, such as shale gas.
As with the Farrell Creek acquisition, Talisman Energy would retain the remaining 50% interest and continue to operate the Cypress A gas asset. Assets included in the transaction cover over 57 000 acres of land and represent an estimated contingent resource of 11,2-trillion cubic feet.
Sasol, which aims to apply its proprietary GTL technology to exploit what could be a sustained and growing gap between the price of gas and that of other transport fuel products, indicated that it could seek to scale up its GTL aspirations in western Canada.
Following the Farrell Creek purchase, the joint-venture (JV) partners confirmed that they would study a 48 000 bbl/d GTL facility based on the gas reserves at Farrell Creek. However, Sasol group communication manager Jacqui O’Sullivan told Mining Weekly Online that, while the base case of 48 000 bbl/d remained, the partners would also assess the option of a 96 000 bbl/d plant.
“The acquisition of the Cypress A asset, together with the Farrell Creek acquisition, will allow us to scale up such a GTL facility,” Sasol said in a statement.
Talisman Energy President and CEO John Manzoni added the transaction would allow the companies to “unlock additional value in the world-class Montney shale play and potentially accelerate development of the resources in the area.”
Manzoni said that the Cypress A assets were similar to those at Farrell Creek and that the JV would build an “integrated long-term development plan for the area”.
Besides the GTL proposal, gas could also be sold through the existing and planned pipeline infrastructure in North America.
The transaction remained conditional upon the exchange control approvals required by the South African Reserve Bank and other regulatory approvals required. But Sasol said that it expected the transaction to close within the third quarter of the 2011 calendar year. |
