featurechevron canada limited moving into development in the duvernay
Chevron Canada Limited has announced it is moving into development on a portion of its lease holdings in the Kaybob Duvernay area of west-central Alberta. The decision follows a successful three-year appraisal program by Chevron.
The decision to move into initial development in the Duvernay is a major accomplishment for Chevron Canada Ltd. It reflects more than eight years of significant effort by many people across the Canada business unit toward a common goal of developing legacy assets in Canada and positioning Chevron Canada Ltd. as a major unconventional resource operator.
General Manager, Asset Development
Jim Navratil, Kaybob Duvernay asset manager, said significant strides have been made over the past three years to reduce costs and cycle times and increase resource recoveries. Close collaboration with other Chevron business units that have shale and tight assets, in particular the Mid-Continent and Appalachian Mountain business units, have accelerated Chevron Canada Ltd.’s learning trajectory.
“We are benefiting directly from the experience of our colleagues in other shale and tight plays and are applying their best practices as we continue our efforts to drive down drilling, completion and facilities costs and implement a factory model approach to our business in the Duvernay,” said Navratil.
It is anticipated this initial development program will comprise approximately 55,000 acres of Chevron Canada Ltd.’s operated position in the Duvernay resource. Development drilling is scheduled to begin in the second half of 2018.
how we got here
Chevron Canada Ltd. has a net 70 percent operating interest in approximately 330,000 acres in the Duvernay formation. KUFPEC Canada Inc., a wholly owned subsidiary of Kuwait Foreign Petroleum Exploration Company, holds a net 30 percent nonoperating interest.
acres initial development
“The Duvernay formation is one of the most prospective liquids-rich shale plays in North America. Chevron Canada Ltd. looks forward to realizing the value of this resource from our industry-leading position while delivering economic benefits to local communities, Alberta and Canada,” said Jeff Gustavson, president, Chevron Canada Ltd.
Chevron Canada Ltd. commenced an exploration program in the Duvernay in 2011, subsequently drilling 16 horizontal wells and completing 13 wells using multi-stage hydraulic fracturing. In the second half of 2014, the company commenced a pad drilling program for appraisal and land retention purposes. More than 50 wells have now been tied into production facilities.
In the Duvernay, Chevron Canada Ltd. is targeting natural gas that is rich with liquids, including condensate. Condensate is often blended with molasses-like oil sands bitumen to reduce its viscosity so that it can flow in pipelines.
A chronic shortage of condensate (also known as diluent) in Western Canada to support growing oil sands volumes has forced producers to import condensate from the United States. This gives Alberta-produced diluent a competitive cost advantage due to lower transportation costs, and a premium price relative to Canadian light sweet crude oil.
Chevron Canada Ltd.’s rich history in the Kaybob area stretches back more than 50 years. In 1957, The California Standard Company (the forerunner to Chevron Canada Ltd.) participated in a discovery in the Kaybob north area near the town of Fox Creek. The company later expanded its landholdings to the nearby Kaybob south area, leading to the discovery of a 50-km-long field that at the time was the largest wet-gas reservoir in Canada.
Chevron Canada Ltd. subsequently built the Kaybob South Gas Plant, and when it went on line in 1972 it had the distinction of being the largest sour gas plant in the world. Sour gas processing technologies and capabilities developed in Alberta were later deployed by Chevron elsewhere in the world, including Kazakhstan.
In 2004, Chevron Canada Ltd. divested its interests in the Kaybob region as part of a strategic sale of the company’s mature Western Canadian conventional oil and natural gas assets, as the business unit focused its attention on other Canadian large resource opportunities with significant growth potential.
In 2009, with a strategic vision to position Chevron Canada Ltd. in emerging shale and tight resource plays of scale, the company returned to the Fox Creek area, making the first of several large land acquisitions that now comprise the company’s Kaybob Duvernay Program.
For more information on the Kaybob Duvernay Program, please visit Chevron Canada Ltd.
About Chevron Canada Ltd
Since 1938, Chevron Canada Limited has been exploring for, developing, producing and marketing crude oil, natural gas and natural gas liquids. Headquartered in Calgary, Alberta, Chevron Canada Ltd. has interests in oil sands projects and shale acreage in Alberta; exploration, development and production projects offshore Newfoundland and Labrador; a proposed liquefied natural gas (LNG) project and shale acreage in British Columbia; and exploration and discovered resource interests in the Beaufort Sea region of the Northwest Territories.
Published: December 2017