South African synthetic fuels and chemicals company Sasol has signed a second agreement with Canada-based Talisman Energy to acquire a 50% stake in their Cypress A shale gas asset located in the Montney basin of British Columbia for C$1.05 billion (US$1.08 billion).
Consistent with the recent Farrell Creek shale gas acquisition, announced in December 2010, this second acquisition will see Talisman Energy retain the remaining 50% interest and continue to operate the Cypress A gas asset.
Assets included in the transaction cover more than 57,000 acres of land and represent an estimated contingent resource of 11.2 trillion cubic feet (TCF).
The Cypress A asset offers thick productive shale formations and is located in close proximity to the recently acquired Farrell Creek asset. This will allow for optimization and synergies, Sasol said. The existing and planned pipeline infrastructure in North America also allows for gas to either be sold into the regional gas market, or to a potential integrated Gas-to-Liquids (GTL) facility in Canada.
As disclosed in December 2010, in the Farrell Creek announcement, Sasol and Talisman have agreed to conduct a feasibility study on the economic viability of a facility in western Canada to convert natural gas to liquid fuels using Sasol’s GTL technology. The acquisition of the Cypress A asset, together with the Farrell Creek acquisition, will allow them to scale up such a GTL facility.