Talisman Energy: What's Next?
Time passes. And sometimes, plans change.
Nearly two years ago, Talisman Energy’s Country Manager in Poland declared Poland the pre-eminent place for shale gas. Along with its partner, San Leon Energy, Talisman steadily released drilling results that were fairly encouraging.
But recently, media reports inicated Talisman was pulling out of Poland.
Keeping those developments in mind, Natural Gas Europe spoke with Talisman's Tomasz Gryzewski, who told us about the company's plans and offered his perspectives on shale gas in Europe ahead of his appearance at the European Shale Gas Summit in Vienna, Austria on 29-31 January 2013.
The media reported a couple of months ago that Talisman had lost $731 million. How has this figured in to the company's change in plans and what's next?
I can only say that following the new CEO arrival – Hal Kvisle took over after John Manzoni, and now the entire exploration and production portfolio and strategy is being reviewed. The core assets remain in North America (Canada and USA), Asia and North Sea. It is believed the new, updated strategy for TLM worldwide will be publicly announced sometime in Q1 2013.
What does this tell us about exploring for unconventional gas, if anything?
It does not really say anything about unconventional exploration. We have to wait till the official communiqué is disclosed in January – February. One may expect that the exploration operations will be revised and re-assessed aiming for cost minimization and cash flow growth.
Could you tell us about a particular unconventional gas success for Talisman in another geography?
TLM has been exploring and now is producing unconventional gas in North America – where the whole "unconventional rush” started. Talisman’s successes are very well known in Montney basin (Alberta in Canada) and in Texas and Pennsylvania, USA.
TLM is following the three core rules for gas and oil exploration and production : 1) We look for best rocks (gas bearing, fraccable and deliverable of gas or oil), 2) We take every effort to produce gas at predictable costs, with the best available technology, safely for humans and the environment, and 3) We aim for the best gas markets where favorable terms are offered, a stable fiscal regime is implemented and a favorable geographic position provides income maximization and cost reduction.
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The media have reported that Talisman is allegedly selling its concessions in Poland. What can you tell us about the company's strategy there?
During 2011 – 2012 Talisman Energy and its partner San Leon had drilled three vertical wells, one at each concession. Our strategy in Poland from 2010 was to explore, recognize and evaluate shale gas production potential on three concessions that we farm-in with San Leon in northern Poland – in Pomerania – Gdansk West, Warmia and Mazury – Braniewo S, and Kujawsko Pomorskie- Szczawno.
Extracted core samples are being evaluated and some gas contained rocks have been identified. Still more drilled wells are needed to economically asses the gas plays, and some data share is needed with other companies operating at nearby concessions to draw the geological map of the potential unconventional gas play to be economically produced. It is believed that there is a lot of potential in Pomerania region, where currently Polish PGNiG state owned company and USA originated BNK are conducting their vertical and horizontal wells including the fraccing processes.
Talisman Energy has scheduled another vertical and horizontal well as well as fraccing operation for second half of 2013 in its Gdansk W concession. Location for that is still to be determined.
How would you evaluate the results of what has been done so far? Have they been disappointing? And, if so, why?
I can only say that so far results prove that the Baltic Basin (geological formation under the Baltic Sea and Pomerania region in northern Poland) geology is different and more complicated than the USA’s Marcellus in Pennsylvania or Montney in Canada. Gas containing rocks are much deeper in Poland – some 3,500 meters below the surface, while in the US at a depth of 1500 metres(!).
The gas itself also seems to be more mature here – in Poland - than it is in North America. Such initial results are forcing geologists and engineers to learn more about the geology and techniques to be utilized for commercial production, including fraccing, equipment delivery and surface impact, as the Pomerania is a highly populated area when compared to Canada or the US.
What have we found out about Poland's shales in the last 2-3 years?
Really not a great deal yet. Only 30 wells have been drilled and only five fracked. It is definitely too few to make even an initial assessment. However, as said before, PGNiG’s operations in northern Pomerania may give gas flows in high volumes, which will encourage other companies to intensify their explorations in Pomerania in 2013.
It is said that another 50 wells must be drilled and fully fracked to give a better depiction of the subsurface reservoirs across north- east southern Poland.
What needs to happen in Poland to secure Talisman's position there?
Talisman’s position in Poland is strong, however Poland is only one of the numerous exploratory basins in the world and the internal competition for exploration budgets is strong, as within any other large exploration and production companies. Some bureaucratic barriers, new regulatory regimes and costs of exploration may influence Talisman’s plans and strategy in the future.
Where does shale gas in Poland go from here? What needs to happen to boost the industry?
Positive information from PGNiG drills in Pomerania may be a good reason to re-boost exploration, and a positive climate from the government- industry talks and debate over the new hydrocarbon bill draft.
Does Talisman have any plans to explore for unconventional gas in any other locations in Europe in the near future?
Not now. TLM’s strategy is being revised and more information on that will be available in late January – early February 2013.
What does the UK government's decision to allow for shale gas exploration there mean for the industry in Europe?
It is a very positive signal indeed. While France's energy sector is dependant on nuclear plants and Germany's on imported gas and lignite, the UK with its gas import from Norway and own shale gas plays seems to understand and implement the policy for clean – gas energy source (domestic) as a solid base for energy generation in coming years, considering that renewable energy sources can not guarantee continuous supply on the demand level that the country requires.
Wealso believe that France will abandon their moratorium on fraccing as under such a regime any wells – water, thermal water, gas, oil - can not be produced as fracking technology has been widely utilized in drilling for other energy sources – not only gas.
What's next for developing unconventional gas in Europe? How do you see the industry moving forward?
The energy sector scene – especially the gas scene – will be changing very fast , and ahead of us is a period of some 3-5 years of implementing and learning the so-called deregulation and liberalization on the EU markets.
Shale gas has yet to be explored and its volumes to be assessed – before one could say what its role is going to be.
It does not look like it is going to play a significant role (unless really large volumes are discovered) but rather complementary – on local /national markets. UK and Poland may be the countries of importance in its production in the future, but rather for their domestic needs than for export. Every EU member country should undertake any effort to provide that their national gas markets be connected within the EU distribution – consumption gas pipeline systems, as the gas demand and supply will be managed at the high pan-European level of hubs and trading points.