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First Duvernay Results Encouraging, Says Chevron Executive

Chevron Corp.'s vice chairman on Friday said there are "encouraging" results from initial exploration activity at the Kaybob prospect in the Duvernay Shale in west-central Alberta.

Subsidiary Chevron Canada Ltd. drilled 12 wells in the initial phase of exploration activity and has completed and tied five wells to sales. Four wells are in the process of being completed. Liquids yields for the five completed wells are 30-70%, with initial production rates of up to. 7.5 MMcf/d of natural gas and 1,300 b/d of condensate.

"Early results of our Duvernay exploration program are encouraging," said Vice Chairman George Kirkland. "This discovery creates a foundation for future growth in Canada."

Jeff Shellebarger, president of Chevron North America Exploration and Production Co., said the initial well performance and condensate yields "exceeded our expectation and strengthen our plans going forward." The near-term plans are to transition to a "two-rig drilling program to optimize well and completion design, and full-field spacing requirements."

Chevron now has about 325,000 net acres in the Kaybob area. Last summer Chevron's Canada unit acquired 67,900 net acres in the Duvernay from Alta Energy Luxembourg S.a.r.l. (see Shale Daily, Aug. 6).

Operators have had a line of sight on the Duvernay for years but few have been able or have wanted to make a frontal attack in the unconventional formation. A year ago, Wood Mackenzie analysts said the emerging play had the potential to become one of the most attractive liquids plays in North America (see Shale Daily, Oct. 25, 2012). At the time they pointed to the stronger possibility for more development after ExxonMobil Corp. paid more than $3 billion to buy Celtic Exploration Ltd., which gave it leverage in the play (see Shale Daily, Oct. 18, 2012).

Many North American-based producers and overseas operators own leaseholds in the Duvernay, and Calgary's Encana Corp. has long been one of the big operators.

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