Calgary-based Talisman Energy Inc. has identified more than 132 Tcf of original gas in place (OGIP) on its North American unconventional land holdings, more than 30 Tcf of it recoverable, company officials said at an investor conference in New York Wednesday. Those figures exclude 770,000 acres that Talisman holds in Quebec, which are still early in the evaluation phase.

Last May Talisman laid out a strategy that included expanding its North American unconventional gas operations and selling up to C$2 billion worth of assets (see Daily GPI, May 21, 2008). Over the last year Talisman accumulated an additional 320,000 net acres of unconventional leasehold, most of it in shale areas. The company said it now holds 2.7 million acres on some of the most economic unconventional plays in North America.

Based on the 30 Tcf announcement and a recent earnings report -- 1Q2009 production was up 7% compared with 1Q2008, including a 1% increase in North American gas production (see Daily GPI, April 30) -- that strategy appears to be paying off.

The play areas with the largest increases in OGIP compared to a year ago are the Marcellus Shale in Pennsylvania and New York, and the Montney formations of Alberta and British Columbia. Trillions of cubic feet of gas -- some estimate as much as 500 Tcf -- lie thousands of feet underground in the Marcellus, which stretches from West Virginia to New York. Talisman has completed four of 36 wells it plans to drill this year in the Marcellus, where it holds 800,000 net acres. Recent 30-day initial production (IP) rates have been in the 2.3-4.5 MMcf/d range, with expected ultimate recovery (EUR) in the range of 3-4 Bcf per well.

Talisman has drilled 11 of 35 planned wells in the Montney area, where it holds 590,000 acres. Average 30-day IP results indicate that EUR may exceed 3 Bcf, with some recent wells at 4 Bcf, the company said.

Talisman has set an internal goal to drive its break-even gas price to below US$4/Mcf and said it is confident that both the Montney and Marcellus will meet that target.

Talisman drilled a total of 169 unconventional wells in 2008 and has plans to drill 100-120 additional wells in 2009.

Last year the company said it would add up to C$500 million more to its C$2 billion North American capital spending budget to accelerate exploration and development activities in unconventional natural gas plays (see Daily GPI, July 30, 2008). In January Talisman said it would spend approximately C$3.6 billion on exploration and development in 2009, down from C$4.38 billion last year (see Daily GPI, Jan. 14). At the same time, Talisman said it expected production to remain at levels similar to those of 2008. Talisman expects to spend 33% of its capital program in North America, with the rest being spent on North Sea development (27%), Southeast Asia growth projects (19%), international exploration (18%) and the rest of the world (3%).

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