Talisman flags desire for major expansion in PNG

TALISMAN Energy has signalled to the PNG Petroleum seminar yesterday that it intends to become a significant player in Papua New Guinea and has played down the use of floating liquefied natural gas to monetise its gas.
Talisman flags desire for major expansion in PNG Talisman flags desire for major expansion in PNG Talisman flags desire for major expansion in PNG Talisman flags desire for major expansion in PNG Talisman flags desire for major expansion in PNG

This posture represents a big change of heart from just over a year ago when the Canada-headquartered company with a market capitalisation of $US19 billion sought to make an exit from PNG, according to Bob Bonnar, Talisman's new exploration and sub-surface manager in Port Moresby.

Bonnar told the two-day conference organised by the PNG Chamber of Mines & Petroleum that Talisman last year had decided to sell its offshore Pandora gas-condensate field because the 600 billion cubic feet of gas it contained was "too small to monetise".

However, offers for the field were so small, in the cents per million cubic feet range, that Talisman decided the "aggregation strategy" it had successfully employed in other countries would be the way to go.

Talisman, which has operations in North America, Peru, Colombia, Kurdistan, Malaysia and Vietnam, considers it has "multiple monetisation options" for its PNG operations, which includes the offshore Flinders block close to Pandora and the recently acquired Rift Oil and Horizon assets.

"It's time to giddy-up here," he told conference participants, adding that the earlier flagged floating LNG concept has been "losing flavour as we get more assets".

Talisman is leaning towards building a conventional LNG plant to become the third player after ExxonMobil and InterOil.

"We could join ExxonMobil or InterOil with an additional LNG train or put in our own LNG plant," he said.

However, Talisman is also looking at the alternative of building a gas to liquids facility especially in view of ongoing concern at the rising importance of unconventional gas resources in North America and the likelihood of a similar trend in Australia, Russia and elsewhere.

Bonnar said a gas-to-liquids plant would take the company out of the increasingly competitive gas market and into liquids, noting that the move to non-conventional gas had been "a game changer" in the United States where gas prices have dropped by 50%.

Following the takeover of Rift Oil and the purchase of a 50% stake in Horizon's interests in PRL 4 and 5, he said, "the aggregation process is still continuing".

He said Talisman's total resources at Pandora and the Foreland possibly amounts to around 2 trillion cubic feet with drillable targets likely to increase the resource potential to 4-5tcf in 4-5 years, when LNG could be considered.

"There are 20 locations that need to be drilled in the next three years in the Foreland area," he noted, adding that Talisman was in discussion with various parties, including service companies, to spread the risk for a large program that could keep at least two rigs active in the area.

One of these would be a heavy rig capable of drilling to 3500m and the other a light rig to drill to depths of 2300-2500m.

Bonnar said that once infrastructure was better developed in the Western Province area, small pools of 10-50 billion cubic feet could be developed and the overall resource potential in the area could rise from 4-5tcf to 10-15tcf.

Bonnar said Talisman had adopted this kind of aggregation strategy many times.

"It will be good for Western Province; it won't compete with the other two projects, and create value for all stakeholders," he said. "This fits in well with Talisman's expertise globally."

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