Oilpatch spending to ramp up in Canada’s ‘hottest new play,’ led by Chevron
Geoffrey Morgan
Chevron Corp. is ramping up spending in the Duvernay shale basin, Canada’s “hottest new play,” after spending three years exploring its potential.
“The Duvernay is one of the most prospective liquids-rich shale plays in North America,” Chevron Canada Ltd. president Jeff Gustavson said in a release Monday night, announcing the company’s move from exploration to commercial development in play.
Wells in the Duvernay formation, which stretches across east-central and northern Canada, turn up large volumes of natural gas but also high-value liquids like condensate, which is used in the oilsands and at times fetches the same price as light oil in the province.
BMO Capital Markets analyst Joe Levesque noted in a recent report that oil and gas companies have spent $250 million on Duvernay land so far this year out of a total $412 million spent on land across Canada, “defining it as the hottest new play.”
Chevron, along with joint-venture partner Kuwait Petroleum Corp., has an interest in 330,000 acres in the play and has been drilling exploratory wells there for the last three years.
The San Ramon, Calif.-based producer is currently the third largest producer in the Duvernay after Shell Canada Ltd. and Encana Corp. but is about to accelerate its drilling program in the formation, sparking hundreds of millions of dollars of new spending to commercially develop a section of the formation.
“They did their pilot and were very pleased with the results,” Wood Mackenzie analyst Nathan Nemeth said of Chevron. He said the company produces about 21,000 barrels of oil equivalent per day in the formation and its drilling program could boost its production there to 65,000 boepd.
“We’re taking a staged, scalable approach to developing our Duvernay acreage and this is the first step,” Chevron spokesperson Leif Sollid said. He declined to provide details on how much the company would spend.
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