Talisman Energy made a major natural gas find in northeastern British Columbia. A successful Paleozoic gas well in its core Monkman area tested at a restricted rate of 40 MMcf/d with maximum open flow potential of more than 75 MMcf/d. The company said the well, 20% of which is owned by Seneca Energy Canada Inc., should begin production at 40 MMcf/d by January.

The well was drilled on a previously untested structure, Talisman said. Based on flow rates and pressure data current indications are that it could have upwards of 200 Bcf of original gas in place. Talisman also recently purchased deep gas mineral rights on 3,800 hectares of offsetting Crown Land for $7.9 million.

“This is a significant and exciting new discovery,” said Talisman CEO Jim Buckee. “Over time, the deep play at Monkman could be as prolific as the Triassic play where 2 Tcf has been produced to date.” Buckee said the deep play illustrates the company’s shift toward pursuing more high impact exploration prospects.

The well is currently being tied in to existing Talisman infrastructure. Incremental production will depend on reservoir performance and available processing capacity, the company said.

The deep gas mineral rights Talisman acquired in last month’s provincial land sale are located along the same trendline to the north and west of the 60-E discovery. Talisman has been the leader in evaluating the deep gas play at Monkman and has built a strategic deep rights land position of 134,000 gross hectares (446 gas spacing units) with an average working interest of about 57%. To date, three out of the six deep exploration wells drilled by Talisman at Monkman have been successful.

The company plans to drill four Paleozoic wells at Monkman in 2005. This will include a follow-up well on the Brazion structure and two wells on untested structures at Bullmoose and Boulder. Talisman has identified 30 potential drilling locations and is looking for targets of 35 Bcf per well or greater, although the estimated size of the b-60-E discovery enhances the upside potential of this high impact exploration play.

Talisman’s natural gas sales from the Palaeozoic are forecast to increase from 2 MMcf/d today to more than 50 MMcf/d by 2007. Production has a low acid gas content and the 60-E well is eligible for a deep gas royalty holiday. The deep play is in close proximity to Talisman operated infrastructure that connects to the Pine River gas processing plant.

Prices received by Talisman at Pine River have averaged over $6/Mcf this year and operating costs for deep gas are expected to be in the range of $0.75/Mcf. Well depths average between 13,100-16,400 feet with drilling costs ranging between $12-15 million.

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