Fox Creek Alberta is booming these days, and in more ways than one.
While the town is home to Canada's biggest shale boom - drawing the likes of Chevron Corp., Royal Dutch Shell Plc, Encana Corp., Murphy Oil Corp. and XTO Energy Inc - there is also a 'literal' boom.
Alberta's Duvernay shale play prize is condensate, an ultra-light oil that’s perfect for diluting the heavy tar-sands crude for which Alberta is known.
More locally produced diluent would be a plus for Canadian companies that now depend on the U.S, and Fox Creek is a town that is feeling the economic benefits.
Domestic companies use around 600,000 barrels of condensate a day, and production of the hydrocarbon in Alberta is surging. Output reached 64,000 barrels a day last year, the highest in provincial production records dating back to 2010. In the Duvernay, oil and gas output is poised to more than triple in the next two years to the equivalent of 300,000 barrels of oil a day, according to Stephen Kallir, upstream research analyst at Wood Mackenzie in Calgary.
Mayor Hailes figures it to be a mixed blessing. While there is no doubt the town has - and will continue to benefit economically, many residents have concerns over strains on infrastructure.
“They are talking about thousands of new wells up there, not just Chevron, but all of them,” Mayor Jim Hailes said during an interview in his office. “The play is that big.”
Alternatively, drilling has been so intense near Fox Creek that its been linked to a series of earthquakes. One tremor measured 4.6 in magnitude, one of the two biggest human-induced seismic event in Canada’s history. Given that there are plans to drill wells right under the town, residents are concerned.
However, Chevrom company spokesperson Leif Sollid said “Chevron takes the concerns of residents seriously...This area is assessed as a lower risk region within the Duvernay for induced seismicity, and any related events would be feeble to slight in nature.”
Ultimately, the Duvernay promises too much wealth to ignore. First explored in 2011, the formation holds the equivalent of 25 years of Alberta’s natural gas production and 17 years light oil and condensate output, according to Canada’s National Energy Board.