Pembina, Chevron agree to team up

CALGARY Pembina Pipeline Corp. has reached an agreement with Chevron Canada Ltd. to build natural gas pipelines and processing facilities for a potential production operation northwest of Edmonton.

The Calgary-based pipeline company said its 20-year deal with Chevron involves the construction and operation of potential gas and liquids infrastructure in the Duvernay resource play near Fox Creek.

Pembina said it could ultimately spend billions of dollars on the project, which has not yet been sanctioned by Chevron or received regulatory approvals.

“The agreement is transformational for Pembina’s gas services business, securing a long-term platform for growth supported by one of the largest lease holders in the Duvernay resource play,” Jaret Sprott, a Pembina vice-president, said in a release.

Chevron has been conducting an appraisal of its Duvernay holdings in the Fox Creek area since the middle of 2014, using two drilling rigs to evaluate well production rates and reservoir performance.

The company holds a 70-percent interest in 330,000 acres in the Alberta shale gas play, having sold 30 per cent to the Canadian subsidiary of Kuwait Foreign Petroleum Exploration Co.

“We’ve been very encouraged by the results to date from our Duvernay appraisal program,” Leif Sollid, a Chevron spokesman, said in an interview. “Chevron Canada has not taken a decision on development at this time.”

The deal with Pembina requires the pipeline company to build and run gas gathering pipelines and processing facilities, liquids facilities and other infrastructure, should Chevron sanction a project and secure regulatory approvals.

Sollid said Chevron remains focused on its appraisal program, but he could not provide a timeline for decision-making on a potential production facility.