Chevron is planning a significant drilling program in the Duvernay shale formation, marking a vote of confidence in Canada’s energy industry in a year when it joined other majors in selling assets there.
The initial development in the East Kaybob section of the formation will encompass about 55,000 acres, the California-based company said this week.
The drilling program may boost morale in the Canadian energy industry, which has seen energy majors divest billions of dollars of assets in Alberta’s oil sands.
The decision is a rare bright spot for Canada's oil industry, which was hard hit by the global crude price downturn. International energy firms, including Royal Dutch Shell, Marathon Oil and ConocoPhillips, sold off nearly $23 billion in assets this year alone. Chevron itself sold its gas stations and refinery in British Columbia in a $1.1 billion deal.
Chevron’s operations in the Duvernay, a liquids-rich formation in west-central Alberta, will use long-term infrastructure agreements with Pembina Pipeline and Keyera Corp.
Canada's energy industry is still dominated by the vast oil sands sector in northern Alberta, but investment is climbing in the Duvernay and Montney shale basins, which offer faster returns and lower capital requirements than the oil sands.