“Early results of our Duvernay play are encouraging,” said Chevron Corporation (
NYSE:CVX,
Stock Forum) Vice Chairman George Kirkland in a statement today, after the company successfully concluded their initial exploration phase of one of North America’s hottest oil regions.
“Chevron Canada Limited successfully concluded the initial twelve well exploration drilling program in the liquids-rich portion of the Duvernay shale play,” said a
company news release Friday.
“Five wells have been completed and are tied into production facilities, and an additional four wells are waiting on completion and tie-in. The company’s acreage is well positioned in the condensate-rich and volatile-oil portion of the play. Liquids yield for the completed wells range from 30 to 70 percent with initial production rates up to 7.5 million cubic feet of natural gas per day and 1,300 barrels of condensate per day.”
Chevron holds 325,000 net acres in the Kaybob area of the Duvernay area, having acquired Alta Energy Luxembourg in what was the company’s first big foray into the left half of Canada after selling most of its west coast assets a decade ago – right before the oilsands boom.
The industry has been watching the Duvernay play intently which, according to the Energy Resources Conservation Board, holds an estimated 443 trillion cubic feet of gas, 11.3 billion barrels of natural gas liquids and 61.7 billion barrels of oil.
Companies such as PetroChina (
NYSE:PTR,
Stock Forum) and Encana (
TSX:T.ECA,
Stock Forum) are developing their assets in the area quickly. Athabasca Oil (
TSX:T.ATH,
Stock Forum) has a sizable land holding, Shell and Canadian Natural Resources are neck deep in the play, Exxon just bought out Celtic Exploration’s (
TSX:T.CLT,
Stock Forum) 100,000 acres, while junior player Zodiac Exploration (
TSX:V.ZEX,
Stock Forum) recently announced the acquisition of Muskwa’s 54,000 acre holding in Duvernay and Nordegg through a merger arrangement, to go along with its package of Californian Monterey Shale holdings.
“There was no acquisition that came close to the leverage we get with Muskwa,’’ said Bob Cross, a Canadian financier and significant shareholder in both Muskwa and Zodiac, on a
conference call earlier this month, outlining the urgency to get a foothold in the region.
Chevron’s success backs that up.
“Well performance and condensate yields exceeded our expectation and strengthen our plans going forward, said Jeff Shellebarger, president of Chevron North America Exploration and Production Company. “Near term plans include transitioning to a two-rig drilling program to optimize well and completion design, and full field spacing requirements.”
The company plans to increase its workforce in Calgary 800 people going forward, from 500 today and 200 in 2010.
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FULL DISCLOSURE: The auhor of this article holds a small stake in Zodiac Exploration, which is a Stockhouse Publishing client.