Early days for Grieve EOR

Based on the June well production figures reported to the Wyoming Oil and Gas Conservation Commission (WOGCC) by Denbury, the producing wells had yet to register any enhanced oil recovery from the injected CO2.  The high water cuts of the producing wells for June are testimony to that fact:

	Column 1	Column 2	Column 3	Column 4	Column 5
0	​	Production
1	Well​	Oil (barrels), Water (barrels)		Water Cut %​
2	​	April​	May​	June​	June​
3	#10​			54​	​
4	#10​	5,025​	14,322​	19,183​	99.72%​
5	#9​	​	​	90​	​
6	#9​	37,686​	106,740​	143,870​	99.94%​
7	#22​			36​	​
8	#22​	25,124​	71,160​	95,913​	99.96%​
9	#20​	​	​	18​	​
10	#20​	1,885​	5,337​	7,194​	99.75%​
11	#11​			54​	​
12	#11​		21,348​	28,774​	99.81%​
13	#5​	​	​	18​	​
14	#5​	687​	2,066​	0​	0.00%​
15	#16​	​			​
16	#16​	7,537​			​

​

The June water cuts are what could be expected if the field was brought back on line without the benefit of a CO2 miscible flood OR if Denbury elected to bring on down dip wells somewhat remote from the bulk of the CO2 injected in wells high on the structure.  Denbury’s decision to bring on down dip wells (highest production well #10 is approximately 95 m below the lowest CO2 injection well and the lowest production well #5 is approximately a further 45 m below #10) is reflected in the delay to a positive response to the CO2 flood being seen in those wells.

The fact that no produced gas was reported to the WOGCC for June is the other sure indicator that production for that month was not enhanced by CO2 injection.

The exception to the high water cut figures for June is Grieve #5.  It is the lowest well reported to have produced oil.  The fact that it was producing 100% water in May and produced 100% oil in June suggests that Denbury’s reporting to WOGCC needs to be reviewed (together with the fact that each of the June oil producers produced a volume which is a multiple of 18!)

The good news is that July’s oil production must have been at least three times that of June’s 270 barrels to be able to inject 1,000 barrels into the export pipeline on August 1.

The other encouraging news is the recent announcement  that CO2 is being recycled which means the miscible phase containing CO2 has been produced (since June) in at least one well.

Rather than wait for WOGCC to release the July production figures late this month for Grieve Brad could put a call into Denbury now and request the Grieve production information for July and release it via an ASX announcement.   If Denbury was forthcoming on the July production details perhaps they could also provide:

• A forecast from their reservoir simulations when they expect Grieve to see an EOR result from Denbury’s well production schedule together with details of that production plan.
• An explanation why the several up-dip historical oil producing wells (higher on structure than Grieve #10) and closer to the injected CO2 have not been produced (or if they are now being produced, to what effect). Because of the significant dip (370 m) in the Grieve structure, it is a “text book” candidate for a CO2 gravity stable flood enabling up-dip production wells being brought on line first to take advantage of the CO2-oil miscible phase front progressing down the reservoir.  Denbury’s approach of producing down dip wells should not lose reserves but does appear to have delayed their production and Elk’s ability to provide an encouraging report about Grieve to its shareholders and the ASX.
• Details of what happened to 120,000 barrels of produced water that does not appear to have been re-injected into the Muddy formation to support oil production at Grieve.

Providing the above information to JV partners should not be an issue for a joint venture operator at the start-up of a new JV operation.  This is  particularly the case for a JV party who bailed its cash poor partner out a difficult situation rather than fight them in court over a breach of contract. It would be comforting to know that Denbury was willing to assist Elk with this information as Elk was willing to assist the JV by ensuring that Grieve was not locked up in legal battle over ownership or not force Denbury into an uncomfortable financing arrangement to complete its contractual obligations on the Grieve EOR project.