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The estimated output of Alberta’s Duvernay shale puts it in league with the Eagle Ford shale in Texas, which has drawn billions in investment.

Alberta's most promising shale prospect could yield billions of barrels of crude, a new study says, a finding that points to a substantial resource beyond the province's downtrodden oil sands industry.

The assessment by the National Energy Board and Alberta's Geological Survey ranks the Duvernay shale, which covers 130,000 square kilometres of the province's western flank, as a smaller northern cousin to the Eagle Ford shale in Texas, one of several that has helped transform the United States into a major global crude exporter.

But it shows that Alberta has huge potential outside of the bounty of extra-thick crude surrounding Fort McMurray, where environmental opposition, high costs and slow returns on capital have prompted a mass exodus by the world's biggest energy companies.

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Alberta has lagged other jurisdictions in developing its shale resources, but companies are beginning to move from testing to development stages, study author Mike Johnson said. In the Duvernay, they stand to benefit from a network of existing pipeline and processing infrastructure.

"It's not like they're going into new areas," said Mr. Johnson, technical leader for hydrocarbon reservoirs and energy supply with the federal regulator. "This is really smack dab in the middle of where a lot of production is occurring."

In the past year, small explorers such as Raging River Exploration Ltd. and privately held Vesta Energy Corp. have built up sizeable land positions in the eastern portion of the Duvernay, an oil-rich pocket that has drawn hefty premiums in provincial auctions of drilling rights.

The smaller players have joined Royal Dutch Shell PLC, Encana Corp. and other major producers that began amassing holdings in the Duvernay's more developed western side, known for liquids-rich natural gas, as far back as 2011.

While previous studies have identified a massive resource, this is the first attempt to forecast what might actually be produced if the region was fully developed using existing technology.

Although exact results will vary considerably depending on economics and other factors, the study authors say the Duvernay has potential to produce 3.4 billion barrels of crude oil, 76.6 trillion cubic feet of natural gas, plus another 6.3 billion barrels of natural gas liquids.

The potential production is equivalent to 17 years' worth of current output of light crude and condensate in the province, and nearly 25 years of Canada's annual natural-gas consumption, according to federal and provincial data.

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The numbers put Alberta's deposits in league with the Eagle Ford shale in Texas, which has drawn billions in investment even as crude prices sputtered to $50 (U.S.) a barrel from more than $100 in mid-2014.

U.S. government data put technically recoverable resources in the Texas play at 15 billion barrels of oil, 52.2 trillion cubic feet of gas, and another 6.4 billion barrels of natural gas liquids.

In Alberta, executives have begun touting opportunities in Canadian shale in a bid to lure investment back to the country following a $30-billion (Canadian) sell-off by major international companies from the oil sands.

Encana, Tourmaline Oil Corp. and others recently launched a lobbying campaign, seeking streamlined regulations and breaks on carbon pricing. Meanwhile, investment in some corners is picking up.

Earlier this year, Vesta raised $295-million in private equity to develop holdings. Last month, Raging River said it expanded its Duvernay land base. It plans to drill a test well later this year and six wells in 2018.

PraireSky Royalty Ltd. also has been actively promoting leasing opportunities in the region, analysts say. Upcoming provincial land auctions, on Sept. 27 and Oct. 11, could further validate interest in the oil-rich portion of the play, TD Securities Ltd. analyst Juan Jarrah said in a recent note.

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