Calgary-based Talisman Energy is abandoning a project it had considered with Sasol Canada to develop Canada’s first gas-to-liquids (GTL) facility to create transportation fuels from natural gas.

After participating in Sasol Canada’s feasibility study for the facility, Talisman Energy said Thursday it would not participate in the next phase.

“After careful consideration, we have concluded that there are better ways to allocate capital in support of our strategy,” said Talisman CEO John A. Manzoni. “Talisman’s immediate focus is to accelerate investment in near-term liquids opportunities, with the goal of increasing liquids and oil-linked gas production to 300,000 b/d by 2015.”

Talisman was granted the option to participate in the study as part of the ongoing partnership between the companies that includes two 50% working interests in two natural gas assets and associated infrastructure in Talisman’s Montney Shale resources in northeast British Columbia (see Shale Daily, Dec. 21, 2010).

A GTL facility in western Canada could provide a strategic alternative to traditional North American pipeline or liquefied natural gas marketing. “The outlook for GTL could be very positive if North American natural gas prices continue to decouple from oil prices. The GTL process produces premium, clean liquids fuels,” the companies said when plans to study such a facility were announced.

Talisman’s decision to exit the GTL project will not impact the upstream partnership, the company said.

Sasol Canada is a division of Sasol of Johannesburg, South Africa. The company produces liquid fuels and chemicals from coal and natural gas. Sasol Canada owns a 50% working interest in two natural gas fields in British Columbia and is pursuing the opportunity to build the country’s first GTL facility to convert natural gas into high-quality transportation fuels. GTL technology can provide diesel, jet fuel and petrochemical feedstocks.

Talisman’s three main operating areas are North America, the North Sea and Southeast Asia. The company also has a portfolio of international exploration opportunities.