Chevron Corp. will continue to expand its unconventional natural gas operations in the United States but it first will focus on the Marcellus Shale, Vice Chairman George Kirkland said Friday.

Kirkland, who helms the company’s upstream and gas business, told financial analysts during a conference call that the company already is gaining a better understanding of what’s needed — and what’s not — in the shale play. Getting to the gas isn’t just about fracturing (fracking), he said.

“On shale spending, we don’t believe you have to spend as much to frack [hydraulically fracture] if you know where to develop. The only way to prove it is by doing it. We also want to be able to apply technology to other places in the world and we see that as particularly important as we move into Eastern Europe because we don’t see the infrastructure capability by service providers [there] to be nearly as strong as in the United States.”

Given that every unconventional formation is different, an analyst asked whether Chevron had achieved a “sufficient learning curve” yet from its domestic onshore developments.

“We want to technically be a whole lot smarter” and “apply that around the world,” Kirkland said. “We think that is the case with the Marcellus. Quality took us there and its proximity to market. We have opportunity on the scale, relatively early entry. All of that took us there at this point in time.”

Chevron wants to take what it learns in the Marcellus and its other unconventional plays and apply it to emerging plays in Europe, said Kirkland. “We want to get to scale in Europe initially where if [technology] works, it will have a scale to make a really nice business. The entry cost in Europe is much different than bets are in the United States.”

But there’s still much to accomplish in the Pennsylvania shale play and elsewhere, he said. Chevron climbed onto the shale bandwagon last year when it purchased Atlas Energy Inc. for an estimated $4.3 billion (see Shale Daily, Nov. 10, 2010). The purchase gave Chevron close to 486,000 net acres in the Marcellus, 623,000 acres in the Utica, close to 370,000 total shale acres in Michigan, around 120,000 acres in the Chattanooga Shale and another 123,000 acres in the New Albany Shale.

The Marcellus development is the priority, said Kirkland, noting that the company added another 228,000 net acres to its portfolio in a deal earlier this year with related entities Chief Oil & Gas LLC and Tug Hill Inc. (see Shale Daily, May 5).

“We’re trying to put together a nice size portfolio in the Marcellus and we’re very close to putting it together,” said the upstream chief. “There will be additions, small additions that make sense synergistically. We’ll do that but we think we’ve pretty much put our Marcellus position together. The goal is to lay out all that we’ve done and give everyone a good update next March” at the company’s annual analyst meeting. “By then the pieces will all be in place and integration will be well in hand with both Atlas and the Chief piece.”

Chevron also is analyzing “light” shale oil, he said. “We like it, but I tell you, we’ve been pricing the acreage and to be frank, we’ve found it just to be too high and that impacts the economic viability of buying it. We’ve done lots of technical work looking for opportunities around the world that are similar; we’re always trying to take the knowledge that we’ve gained in one location…but we don’t just want to add barrels or Mcfs. We want those barrels to deliver strong earnings, strong returns and if it’s inorganic and it’s producing, we find it very difficult in most cases to ante up the money.”

The oil major, which is based in San Ramon, CA, holds a sizeable amount of unconventional acreage in California, including in the prospective Monterey Shale. But early testing indicates that the shale doesn’t stack up economically against other projects worldwide, said Kirkland. That could change in the future as more testing is done.

“The strategy continues to be to look for early entry, early opportunities. There’s a major value if we can create it by getting it early and from a geotechnical side, reservoir, project side to create value and then, of course, to operate it well.” In other words, “no major acquisitions” are on the horizon, Kirkland told analysts.