Project Planning And Development

EN25

Talisman employed local marine mammal observers during barging operations between Prudhoe Bay and Cape Simpson in 2005.

HOW WILL TALISMAN'S ALASKAN AFFILIATE, FEX, MITIGATE THE POTENTIAL ENVIRONMENTAL IMPACTS OF ITS EXPLORATION PROGRAM?
FEX believes that open, honest communication is the first step to mitigating environmental impacts. Extensive public consultation in support of Alaskan drilling operations took place well in advance of drilling activity in the area. Supplies for the initial exploration project were stored at West Dock, Prudhoe Bay, and moved to Cape Simpson during the open-water barging seasons. The Alaska Eskimo Whaling Commission and FEX jointly developed conflict avoidance and communications procedures in advance of barging operations required to move equipment into the area. Marine mammal observers were also employed on all vessels for the duration of barging operations. Summer field studies, including archeological surveys, lake studies and fish and wildlife surveys, were completed in support of an Environmental Impact Assessment for the onshore drilling operations and helped optimize onshore routing, site selection and other environmental planning decisions. Detailed emergency and oil spill response plans have also been prepared. Winter access will be conducted using aircraft and vehicles approved for travel on tundra and ice roads. Planned routes and airstrip locations will avoid native allotments. Drilling rig, support equipment and facilities will be returned to Cape Simpson between winter drilling seasons.

Wherever we operate, we endeavour to understand local environmental sensitivities and plan our activities accordingly. This demands careful attention to environmental issues and impacts in order to minimize the Company's environmental footprint. Seismic, construction and drilling projects worldwide are supported by environmental planning to identify environmental risks and implement strategies to reduce potential impacts. This may involve baseline environmental studies, formal or informal environmental impact assessments and attendant protection plans, depending on the local environmental setting and sensitivities.

Operating in Environmentally Sensitive Areas

Talisman carefully plans all construction projects and seeks ways to reduce environmental impact. Talisman minimizes the size of areas to be cleared or otherwise disturbed, salvages topsoil for eventual use in site reclamation and properly controls run-off and erosion. Efforts are made to avoid sensitive environmental features through routing and schedule adjustments and the use of directional drilling techniques. In some cases, wells can be drilled from common pads to minimize the environmental footprint in a given area and most pipeline stream crossings are drilled or bored. To assist in our monitoring efforts, environmental inspectors are hired to guide work in sensitive areas.

Environmental Impact Assessments

Talisman completed or progressed formal environmental impact assessments in support of drilling operations in Alaska and Qatar, pipeline construction projects in Western Canada, the Beatrice Wind Farm Demonstrator project in the UK, planned development of the South Varg field in Norway, and the Bunga Pakma and Bunga Orkid fields in Malaysia. In addition, screening-level environmental assessments were completed in support of a variety of North Sea offshore operational activities.

Slope Instability in Colombia

Despite careful planning and implementation efforts, environmental restoration work is occasionally required. For instance, to address problems which arose during initial access road construction, Talisman (Colombia) invested $2 million in slope reconstruction and stabilization work in the Acevedo Block in Colombia and has committed to a two-year monitoring program, which will verify the success of the reconstruction work. Talisman (Colombia) also provided $163,000 in funding for environmental education, capacity building and infrastructure development in conjunction with the monitoring program in the block.

As a result of this feedback, the Company will use existing pipeline and road corridors for about 70% of the project. The Company will also narrow the width of the "right of way", avoid steep slopes and sensitive habitat areas where possible, employ directional drilling at sensitive watercourses and extreme terrain, and has specifically designed a revegetation strategy to address caribou concerns. The Company will also install emergency shutdown valves and communication towers along the pipeline and has developed an emergency response plan to ensure the highest levels of safety. Two full-time environmental inspectors are working on the project, supplying direct environmental support to construction supervisors and project managers on a daily basis.

Access and Wildlife Management in Western Canada

Effective management of access and wildlife concerns remains a key component of project planning for ongoing deep gas exploration and development activity in the Rocky Mountain Foothills of Western Canada. Consequently, Talisman provided $110,000 in continued environmental research funding relating to coldwater fisheries, caribou, grizzly bears and the propagation of native plants for use in site reclamation. Talisman also supported the Alberta Ecotrust Foundation, which provides financial support for grassroots environmental projects by communities and NGOs in Alberta.

Environmental Research Supports Wind Farm Plans

Though Talisman (UK)'s Beatrice oilfield sits about 24 kilometres outside the boundary of the Moray Firth Special Area of Conservation in the North Sea, Talisman (UK) has initiated a number of surveys and reviews within the biologically rich area adjacent to the Beatrice operations in advance of the proposed installation of two demonstrator deepwater wind turbines near the platform. While primary research focused on the North Sea's only known resident population of between 120 to 170 bottlenose dolphins, the Company also initiated research into the effects deepwater turbines may have on migratory patterns of bird populations, radar and air traffic control facilities and possible visual impacts.

Caribou Protection Planning in Alberta

Talisman developed Caribou Protection Plans in support of exploration and development activities in defined Caribou Management Areas (CMA) in Alberta. The Company continues to work with local forestry companies on co-ordinated access planning in the Little Smoky and A La Peche CMAs.

Lynx Pipeline Construction in Northwestern Alberta

In late 2005, Talisman began construction of the Lynx Pipeline in northwestern Alberta. The pipeline is planned as an industry solution for transportation of gas for several operators in the area. The western-most portion of the pipeline travels through the Copton Kakwa area, an environmentally sensitive area that includes a caribou range. Prior to construction, Talisman initiated extensive consultation with local area operators, governmental authorities, local communities and environmental specialists to plan for mitigation of potential impacts of the pipeline on the caribou herd.

Turtle Patrols and Fire Protection in Trinidad
Talisman (Trinidad) supported the Nariva Environmental Trust in 2005 and its ongoing efforts to protect the Ramsar2-designated Nariva Swamp. Working with local volunteers from the nearby villages of Plum Mitan, Biche, Cascadoo and Kernaham, the Nariva Environmental Trust conducts annual fire patrols during the critical dry months of March and April. Talisman (Trinidad) also supported the Trust's green leatherback turtle patrols on the adjacent east coast of Nariva.
  The turtles are listed as an endangered species and they are most susceptible to poaching when the females come to shore to lay their eggs. Turtle patrols have helped curb poaching in the area and have helped the wildlife section of the Trinidad and Tobago Forestry Division record the number of nests and young in the area. In recognition of this important work, Talisman included the green leatherback turtle on the cover of this report.
2 The area was nominated as a "Wetland of International Importance" in 1993 under the Ramsar Convention of Wetlands (Ramsar, Iran, 1971).

Talisman Operations Support CAPP "Energy in Action" Week

From September 26 to October 6, 2005, Talisman participated in "Energy in Action" Week activities in Edson and Grande Prairie, Alberta and Fort St. John, BC as part of a CAPP Stewardship Initiative that celebrates the upstream petroleum industry's dedication to environment, health, safety and social performance through community-related activities. "Energy in Action" activities included an education presentation at schools in the area and tree planting for students and volunteers. Talisman covered costs associated with the presentation, trees, buses, ceremony, banners, plaques and lunch for the participants. CAPP encourages corporate support and commitment to responsible resource development and continuous improvement. As a Platinum Level member of the CAPP Stewardship Initiative, Talisman has participated in CAPP's annual Benchmarking Reporting since 1999, providing detail on health, safety, environmental and socioeconomic performance indicators, including greenhouse gas emissions, flaring, venting, spills, releases and fresh water use among others. For more information, visit www.capp.ca.

Eastern Block Trinidad Onshore Drilling Program

Upon receipt of a Certificate of Environmental Clearance from the local Environmental Management Authority in early 2005, comprehensive project planning was undertaken to properly manage and mitigate potential environmental impacts and ensure compliance with all environmental regulatory requirements prior to Talisman (Trinidad)'s first onshore drilling operation in Eastern Block Trinidad. Waste management, effluent and storm-water management, selection of low toxicity synthetic oil-based drilling fluids, drilling waste disposal, spill prevention and spill response preparedness were all considered. A local environmental specialist was also trained and fully integrated into daily operations on a full-time basis in order to provide direct environmental support and ensure that all Talisman (Trinidad) and local regulatory requirements are consistently met. Talisman (Trinidad)'s operations are continuously evolving to reflect experiences gained in the field and apply improvements at every opportunity.

Supporting Fulmar Studies at the University of Aberdeen

Throughout 2005, Talisman (UK) supported the University of Aberdeen's ongoing studies of a colony of fulmars on the island of Eynhallow in Orkney. The university has been undertaking the study since the 1950s. The research is focused on the breeding success of fulmars and other environmental factors. In recent years, the studies have been co-ordinated from the Lighthouse Field Station. The university will explore the relationship between fulmar feeding ecology, reproduction and population dynamics in 2006.

Other Research in the UK

Talisman (UK) supported additional environmental research projects in 2005, including funding to the Scottish Native Woods, Scottish Wildlife Trust, Highland Foundation for Wildlife and Sustainable Development Research Centre for Environmental and Sustainable Research. Investigating Artificial Reefs in Malaysia Talisman (Malaysia) supports multi-year research by the Institute of Oceanography (Kolej Universiti Sains dan Teknologi Malaysia) to investigate the status of artificial reefs. The research program evaluates diversity and abundance of reef-associated fish communities. Data will be used to guide construction and future deployment of new artificial reefs by the Malaysian government and the local Fishery Development Board. Project Planning Offshore Vietnam In Vietnam, environmental controls, including emergency response and oil spill contingency arrangements, site environmental surveys and waste management plans were completed in advance of recent seismic operations and exploration drilling offshore Vietnam.

Spill Management

Talisman records and internally reports spills and near misses through various incident tracking systems across our global operations. All spills are reviewed and any trends relating to cause are identified and addressed.

Assessing Spill Containment in North America

In Alberta, Talisman continued its work on multi-year assessment of spill containment measures and controls at more than 1,100 wellsites, facilities and pipelines within 100 metres of permanent water bodies. The Company also revised its spill response and reporting guidelines for its North American production operations in 2005.

International Spill Response

Oil spill response plans were developed in support of planned drilling operations in Alaska, Qatar, the North Sea and Malaysia. Comprehensive independent reviews of oil spill response capability were conducted at the Flotta and Nigg marine terminals in the UK by Oil Spill Response Limited, a recognized world leader in this discipline specialty. An informal review of PIMMAG, the Malaysian oil industry's oil spill response co-operative, was completed in 2005. Based on the findings of the informal review, a more formal audit of PIMMAG's operational capabilities will be commissioned in 2006.