Chevron Corporation (NYSE:CVX) has revealed its interest in Canada with investments in the Kitimat LNG project, as well as interest in Duvernay shale gas plays in Alberta. Chevron Corp had cut back its operations significantly in Canada about ten years ago. After having lost out on the oil sands boom in Western Canada, Chevron is ready to recommit to Canada.
Recommitment of Chevron to its Canadian business suggests a new theme
“The plans are fueling a hiring spree to increase its workforce in Calgary in the next couple of years to 800 people, from about 500 today and 200 in 2010,” says the Financial Post. “After years of purchases by Asian energy companies in Western Canada, the recommitment of Chevron Corporation (NYSE:CVX) to its Canadian business suggests a new theme – oil majors are taking a second look at Canada, buoyed by Canada’s unconventional resource potential, its emerging LNG business and in response to federal and provincial governments’ aggressive campaigns to promote resource development and cultivate new markets. Both Chevron and Exxon Mobil Corporation (NYSE:XOM) made big acquisitions in Western Canada this year, elbowing out Asian companies as the big spenders.”
Chevron entered the Kitimat LNG project in February 2013
Chevron entered the Kitimat LNG project in February 2013 with the acquisition of a 50 percent share. Chevron Canada and Apache Canada now each own 50 percent of the Kitimat LNG plant. Chevron is responsible for the marketing element of LNG, plant operations and pipeline assets. This entry has given the company 50 percent of the proposed Pacific Trail Pipeline, and 50 percent in approximately 644,000 acres in B.C.’s Horn River and Liard Basins.
The Kitimat project requires a two train 10 million metric ton per year LNG facility. Chevron Corporation (NYSE:CVX) is yet to decide whether to proceed with the construction on the expensive LNG facility by 2014. However, Chevron is exhibiting commitment to this project by opening an office in Vancouver to handle its customer relations and expanding the team in Houston working on the project design.
Kitimat LNG will be connected to Spectra Energy’s Westcoast Pipeline system and will be connected to the North American pipeline grid. Furthermore, this terminal, placed on the Pacific Northwest coast of Canada, represents the shortest shipping route to Pacific Basin LNG markets compared to other international energy markets. ‘This provides an opportunity for Asian utility companies to diversify their portfolio through exposure to one of the largest natural gas supplies in the world,’ says Kitimat LNG website.
It gives Kitimat a huge market to play with. “Kitimat LNG will draw natural gas from the Horn River and Liard basins and involve a liquefaction facility with two trains able to export two billion cubic feet a day. As production increases, exports could be expanded. The anchor plays are so large there is no requirement for further acquisitions,” Mr. Jeffrey Lehrmann, President of Chevron’s Canadian unit, said recently.
Chevron Canada increased its landholdings in Alberta
In early August 2013, Chevron Corporation (NYSE:CVX) Canada increased its landholdings in Alberta’s Duvernay formation. Agreement was reached to acquire all stakes in Duvernay shale formation in west-central Alberta from Alta Energy Luxembourg. The acquired interests cover 67,900 net acres.
“Chevron Canada in the second half of 2011 commenced a multi-well exploration program for unconventional resources in the Duvernay formation. Initial production was achieved in 2012 on these 100-percent-owned and operated leases,” informs Chevron Canada.
Chevron Corporation (NYSE:CVX) Canada has been involved in exploring, developing, producing and marketing crude oil, natural gas and natural gas liquids in Canada since 1938. The company focuses its exploration and production activities in Atlantic Canada, Northern Canada, the Athabasca oil sands and unconventional resource plays in Western Canada.