Talisman dropped out of GTL plant because of ‘marginal’ economics

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(Calgary Herald; Aug. 1) - Talisman Energy said Aug. 1 it dropped out of a plan to build a multibillion-dollar natural gas-to-liquids fuel plant in Western Canada because of its "marginal" economics. President and CEO John Manzoni said on a conference call to discuss second-quarter results that his firm is positioning itself to monetize its large northeastern British Columbia Montney shale gas assets, likely through supplying a gas liquefaction and export facility. "[It] is now more likely to be LNG than GTL," he said.

A month ago, when Talisman announced that it would not join South African partner Sasol Canada in building a two-phase GTL plant worth an estimated $8 billion, Manzoni said in a statement the company had "better ways to allocate capital." On the call, however, he said the results of a joint feasibility study were discouraging.

"For us, we believe the economics look marginal and the capital costs and risks associated with the actual building of the plant are too great for Talisman to step into today," Manzoni said. Sasol has indicated it will continue on its own, deciding later this year whether to sanction detailed engineering on the project. The feasibility study looked at building a 48,000-barrels-per-day plant, likely in Alberta, that would consume about 500 million cubic feet per day of natural gas.

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