Sasol buys 50% stake in second Canadian gas field

Photo: Financial Mail

The acquisition further entrenches the company in the North American shale gas market

SISEKO NJOBENI

Published: 2011/03/09 06:29:59 AM

PETROCHEMICALS group Sasol yesterday announced that it had bought a R7,4bn interest in Canadian oil and gas group Talisman Energy for its gas asset in British Columbia.




The acquisition, similar to one Sasol sealed with Talisman Energy for R7,1bn for another of its assets in December, further entrenches the company in the North American shale gas market.




Sasol acquired a 50% stake in both gas fields, located near each other.






"This will allow for optimisation and synergies. The existing and planned pipeline infrastructure in North America also allows for gas to be sold either into the regional gas market, or to a potential integrated gas-to-liquids facility in Canada," the company said in a statement yesterday.








Sasol CE Pat Davies said this week that the company and Talisman were conducting a feasibility study on the economic viability of a gas-to-liquids plant in western Canada.


Mr Davies said his company’s gas-to- liquid technology was among the factors that led Talisman to choose Sasol over its other suitors.




The acquisition comes as opposition grows in SA to the methods used to extract shale gas.


Local landowners and farmers have raised concern about plans to explore for shale gas in the Karoo through a process called fracking, which entails pumping a high-pressure mixture of water, sand and chemicals to break apart a shale rock and bring the gas


Continued on page 2 PetroSA gas extraction: to the surface. Sasol, however, believes there is immense economic value in the pursuit of gas assets because of the wide gap between gas and oil prices on international markets.


The company’s chief financial officer, Christine Ramon, said this week that gas prices were likely to remain depressed.


This boded well for the group, which used gas as feedstock for its gas-to-liquid plants.


Sasol’s synfuels products, on the other hand, were linked to the international oil price. The price has been on a steady increase recently, mainly because of political upheavals in the oil-rich regions of North Africa and the Middle East.




Output from a gas-to-liquids plant in Canada would boost Sasol’s synfuels production.




The company said yesterday its new asset in Canada covered more than 23000ha of land and represented an estimated contingent resource of 11,2-trillion cubic feet of gas. It is bigger than the asset purchased in December which covered 20 895ha of land, with an estimated resource of 9,6-trillion cubic feet.




"This transaction allows Talisman and Sasol to unlock additional value in the world-class Montney shale play and potentially accelerate development of the resources in the area," Talisman president and CEO John A Manzoni said yesterday.


"With our partner (Sasol), we will now build an integrated long- term development plan for the area," he said.




Sasol said it expected the transaction, which is subject to exchange control approvals by the Reserve Bank, to close within the third quarter of this year.


njobenis@bdfm.co.za