Stakeholder Relations

3.10-3.12, 3.14-3.16, SO1

Talisman's Alaskan affiliate, FEX, held extensive public consultation regarding planned onshore exploration activity.

WHAT STAKEHOLDER ACTIVITY DID TALISMAN'S ALASKAN AFFILIATE, FEX, UNDERTAKE IN 2005 IN SUPPORT OF ITS EXPLORATION PROGRAM IN ALASKA?

In 2005, FEX held extensive public consultation in the Alaskan communities of Barrow, Nuiqsut, Atqasuk and Wainwright regarding planned onshore winter exploration drilling activities in the Northwest National Petroleum Reserve-Alaska in 2006 and 2007. Key stakeholder groups consulted included the North Slope Borough, the Alaska Eskimo Whaling Commission, town and tribal councils, village offices, local corporations and state and federal authorities. FEX plans to drill between two and eight wells from temporary ice pads over two winter seasons. During the consultations, FEX sought community input regarding such project-specific items as overland winter route determination and subsistence conflict avoidance, barging and staging equipment prior to drilling, marine mammal monitoring, travel on tundra, emergency response planning and training for employees and contractors. Thanks to nearly a year of extensive consultation, and with the full consent and co-operation of the local Inupiat community, FEX successfully began its drilling program in early 2006.

Community Consultation in Canada

In 2005, Talisman consulted with or notified about 11,000 people across Canada in support of 1,358 projects, including wellsite acquisitions, minor tie-ins and major pipeline work. Talisman hosted or actively participated in 29 open houses and Aboriginal career fairs across North America, including open houses in New York State, Ontario, Turner Valley, Edson and Grande Cache, and appreciation breakfasts or barbecues in Silver Valley, Chetwynd, Carlyle, Sexsmith, Hythe and Chauvin. These activities help Talisman meet face-to-face with our stakeholders and provide opportunities for communities to learn more about our operations.

Talisman implemented a community consultation tracking system to improve interaction with landowners, Aboriginal communities, NGOs and regulators. Talisman also continues to be involved with approximately 10 multi-stakeholder groups throughout Western Canada, which bring industry, the public and regulators together to create an opportunity for dialogue and to build understanding of Talisman's interests and activities. These groups include, among others, the Edson Creative Solutions Synergy Group, the Saddle Hills Awareness Committee, the Josephine Environmental Protection Group, the Battle Lake Synergy Group and the Tay River Advisory Committee.

As an example of proactive community engagement, Talisman joined the Rocky Mountain House, Tay River Advisory Committee in 2005. The committee, made up of industry, regulatory and local stakeholders, participated with Talisman in its decision-making process around the best location for its proposed well. Community members provided input to Talisman while on a field trip to look at a number of considered locations for the well. Talisman will continue to consider the local communities, interests as it develops the land.

I believe that since you are coming into the North Slope of Alaska, you folks have a long way to learn our environment. I truly believe that you need to talk with the community more than the North Slope borough. Get more input from hunters and campers. Larry Aiken, Barrow, Alaska Resident

Fortuna, New York State Energy Industry Grows

Fortuna expanded its operations through leasing activity, land acquisitions and successful drilling in 2005, reinforcing its position as the largest natural gas producer in the state. However, as a relatively new company experiencing rapid growth, Fortuna faced a number of continuing challenges in early 2005, including an evolving regulatory and legislative environment, policy issues and local community and leaseholder relations concerns.

The majority of these challenges were addressed during the year through a concerted effort by Fortuna to improve awareness of its operations, enhance training for Fortuna employees and increase direct communication with leaseholders. Representative of these efforts were four open houses held in the south-central New York and northern Pennsylvanian towns of Big Flats, Hornby, Van Etten and Mansfield. More than 1,000 people attended the open houses which were held in trade show format with employees from various operational areas providing specific information about all facets of Fortuna's activities in the resident's county.

These efforts were further bolstered by a New York Department of Environmental Conservation decision allowing the release of a large amount of escrowed royalties to many leaseholders and the passage of new state legislation in August, which clarified the rights and responsibilities of landowners and natural gas producers. Fortuna continues to cooperate with the New York State Attorney General in their ongoing investigation of numerous large producers in the natural gas industry.

Talisman (Trinidad) Receives Two Certificates of Environmental Clearance

As a result of the extensive consultation with various community, industry, government and not-for-profit stakeholders, Talisman (Trinidad) received two Certificates of Environmental Clearance (CEC)s from Trinidad's Environmental Management Authority (EMA) in 2005 in support of its interests in the onshore Eastern Block in the Rio Claro and Mayaro regions. Talisman (Trinidad) also established a full-time contract position to manage the local stakeholder engagement process.

Despite best efforts, Talisman (Trinidad) continued to face stakeholder concerns including blockades and protests, with residents in Union and Navet Villages and surrounding areas regarding local employment opportunities, including blockades and protests. As Talisman (Trinidad)'s drilling program is significantly less labour intensive than its seismic program, less local employment can be offered. Nonetheless, Talisman (Trinidad) continues to encourage sub-contractors to seek out local service providers to maximize local employment opportunities, where feasible, during the drilling process. Talisman (Trinidad) also provided input on the EMA's proposed plan to designate parts of the Eastern Block as an Environmentally Sensitive Area. See page 28 for more.

Community Consultation Supports Proposed North Sea Wind Farm

In April 2005, Talisman (UK) produced a full Scoping Report for the proposed Beatrice Wind Farm Demonstrator Project, inviting interested stakeholders to download the report from a dedicated website and to provide feedback. The Company also consulted with the Department of Trade and Industry, Scottish Executive, Joint Nature Conservation Committee, Scottish Natural Heritage, Royal Society for the Protection of Birds and Fisheries representatives.

In May, Talisman (UK) co-sponsored a stakeholder engagement workshop organized through the Moray Firth Partnership, a voluntary coalition of over 620 organizations and individuals. In July and August, Talisman (UK) held 14 open houses in communities along the shores of the Moray Firth, from Wick to Fraserburgh, attracting approximately 200 people. This public consultation into the potential environmental, socio-economic and visual impacts of the project provided valuable input into the formal Environmental Impact Assessment (EIA) which Talisman (UK) submitted in order to secure developmental consent. In 2006, Talisman will also submit EIAs for two oil developments in the UK for the Duart and Fiddich developments. In addition, EIAs with public consultation that meet regulatory requirements of both Norway and UK will be submitted for the trans-boundary developments of South Varg and Blane.

During the course of the past month, it has been my pleasure to work with [Talisman employee] Helmut Gutsche and his team. As you may be aware, a number of residents in the Turner Valley/Black Diamond area, including myself, have expressed concerns related to the former Turner Valley Gas Plant. Through conversations with Mr. Gutsche&ldots; my concerns were addressed in a professional and expedient manner. Linda Abrams, Black Diamond Resident