Royal Dutch Shell Plc said Thursday it will reduce capital expenditures in 2017 for the third straight year, while also outlining plans to boost production at one of its light oil assets in southern Alberta.

During a quarterly conference call with analysts, the Netherlands-based company laid out plans to invest in its liquids-rich Fox Creek, Alta., assets as part of a broader US$2-to- $3-billion strategy targeting its highest-return shale plays.

The company operates two separate plays inside its Deep Basin assets in west central Alberta, “and Fox Creek is the one where we will invest and develop,” outgoing Shell CFO Simon Henry told analysts.

Henry pointed to Fox Creek as one of its top-three shale assets within its global portfolio, in terms of near-term growth, along with the Permian basin in Texas and Louisiana and Argentina’s Vaca Muerta shale.

Over half of the up to US$3 billion-spending program will be invested in its Permian assets, Henry said. The company expects combined production at Fox Creek and the Permian to grow by 140,000 barrels of oil equivalent in 2017.

The company is targeting the shale plays amid an industry-wide pivot toward operations with faster returns on investment, particularly shale, after oil prices plummeted in late-2014.

Shell is currently undergoing a sharp turn away from oil following its roughly US$50-billion acquisition of BG Group Plc. As part of the investment it plans to divest of as much of US$30 billion from its oil assets globally.

Shell’s management did not mention its Canadian oilsands assets during the nearly two-hour call, as energy companies with global operations cool to developments with longer time horizons and high up-front costs.

The company now views the oilsands as “a cash engine, not a growth engine,” according to Tara Lemay, a spokesperson with Shell Canada, the Calgary-based subsidiary of Royal Dutch Shell.

According to investor presentations, it plans to maintain oilsands investment at somewhere below $1 billion per annum, most of which will got toward maintenance, operations and de-bottlenecking efforts.

Shell Canada owns a 60 per cent stake in the Albian Sands project producing a combined 255,000 bpd. It also operates an upgrader and a carbon capture and storage facility north of Edmonton.

The company owns 225,000 net acres of land in its Fox Creek asset, according to its website. It produced 8,000 barrels of oil equivalent of liquids and 38 million cubic feet equivalent of gas in 2015, according to its website. The company outlines the asset as one of its main growth engines in the near term.

However Henry also noted during the conference call that, despite its potential, the Fox Creek assets pale in comparison to the Permian in terms of scope.

“[Fox Creek] may have the quality of the Permian, it doesn’t have the scale of the Permian for us,” he said.

The company did not specify how much capital would be allocated toward the Fox Creek play.

Shell entered the liquids-rich region with its 2008 purchase of Duvernay Oil for $5.9 billion, a deal that included a substantial position in the Montney formation in northern Alberta and British Columbia.

When oil prices were at their peak before the global financial crisis, Alberta’s Duvernay play was seen as a potential area of growth in western Canada’s energy sector. However the play has fallen well short of expectations following periods of low commodity prices, as drilling and completions costs in the region remain among the highest in Canada. 

In October 2016 Shell sold a portion of its Montney assets to Tourmaline Oil Corp. for $1.4 billion. In late 2015 it took a $2-billion writedown after shelving its Carmon Creek oilsands development. 

Shell posted earnings of $3.5 billion in 2016, an eight per cent drop from the year prior.

It plans to spend US$25 billion in 2017, which is on the low end of its capital spending plans of between US$25 billion and $30billion per year from 2017 to 2020. The company spent US$27 billion in 2016 and US$47 billion in 2014.

jsnyder@postmedia.com

Twitter: @Jesse_Snyder