Chevron Corp. is planning a significant drilling program in the Duvernay shale formation, marking a vote of confidence in Canada’s energy industry in a year when it joined other majors in selling assets there, Bloomberg reported.
The initial development in the East Kaybob section of the formation will encompass about 55,000 acres (22,000 hectares), the San Ramon, California-based company said Monday. Chevron has a net 70 percent operating interest in about 330,000 acres in the Duvernay.
The drilling program may boost morale in the Canadian energy industry, which has seen energy majors including Royal Dutch Shell Plc, Marathon Oil Corp. and ConocoPhillips divest billions of dollars of assets in Alberta’s oil sands. Chevron itself sold its gas stations and refinery in British Columbia in a $1.1 billion deal earlier this year.
Chevron’s operations in the Duvernay, a liquids-rich formation in west-central Alberta, will use long-term infrastructure agreements with Pembina Pipeline Corp. and Keyera Corp. Calgary-based Pembina expects a capital cost of C$290 million ($228 million) for its portion of the project, with an in-service date of mid- to late-2019.
The decision follows a three-year appraisal program, according to the company statement.
Chevron shares rose 1.8 percent to $117.04 Monday in New York. The stock is little changed this year.
