Chevron Canada Okays Duvernay Development

Following a three-year appraisal program, Chevron Canada Limited has decided to develop a portion of its leaseholdings in the Kaybob Duvernay area of west-central Alberta, the company reported Monday.

“The Duvernay formation is one of the most prospective liquids-rich shale plays in North American,” Chevron Canada President Jeff Gustavson said in a company announcement. “Chevron Canada looks forward to realizing the value of this resource from our industry-leading position while delivering economic benefits to local communities, Alberta and Canada.”

Chevron stated that it has a net 70 percent operated interest in approximately 330,000 acres in the Duvernay formation near Fox Creek, which is located roughly 260 kilometers northwest of Edmonton. According to the company, the initial development program will likely comprise approximately 55,000 acres of its company-operated position in the Duvernay resource area called East Kaybob. In addition, the company said the program will use long-term infrastructure development and service agreements with Pembina Pipeline Corp. and Keyera Corp. Chevron expects service to be available during the second half of 2018.

In a separate announcement, Pembina said that its 20-year service agreement with Chevron calls for the development and construction of:

• Raw product separation and water removal infrastructure
• A condensate stabilization facility with approximately 30,000 barrels per day (bpd) of raw inlet condensate handling capacity
• A 100 million cubic feet per day gas processing facility with approximately 5,000 bpd of propane-plus liquids capacity
• A 10-inch condensate pipeline lateral connecting to Pembina’s Peace Pipeline system.

According to Pembina, the new “Duvernay II” infrastructure – located near its existing Duvernay I complex – will cost roughly $290 million and should begin service in mid- to late-2019. Moreover, Pembina stated the service agreement with Chevron includes natural gas liquids (NGL) and condensate transportation on the Peace Pipeline system and NGL fractionation at its Redwater Fractionation complex.