New enhanced oil recovery planned for Natrona County Attendees of the 5th Annual Wyoming CO2 Conference, sponsored by the University of Wyoming?s Enhanced Oil Recovery Institute learned about new and ongoing projects in Natrona County and Wyoming. The conference, held at the Casper Events Center last week, was well attended. . ..Natrona County is becoming something of a poster child for the use of carbon dioxide (CO2) in enhanced oil recovery (EOR) techniques that are bringing old well fields in Wyoming back to life.
At the 5th Annual Wyoming CO2 Conference, sponsored by the University of Wyoming?s Enhanced Oil Recovery Institute held in Casper last week, one of the feature presentations was the imminent development of the old Grieve Field in western Natrona County by Elk Petroleum.
?It?s going to be a great project in Natrona County,? said Ralph Schulte of Elk Petroleum, explaining it will generate upwards of 50 jobs to bring the field back into service, and five to 10 full-time positions once in general operation.
The Grieve Field lies about 50 miles west of Casper, and during its heyday in the 1960s and '70s was producing about 10,000 barrels of oil per day from some 35 wells. That production has slipped to maybe 12 barrels a day from one well, but Elk is projecting the use of CO2 injection will restore the field to its former production, if not more.
?We?re targeting recoveries at the high end of the resource base of 12-24 million gross barrels of oil,? said Bob Cook, managing director for Elk Petroleum Limited, in an interview with the World Oil News Center.
Elk has been one of the few companies to acquire a contract for CO2 from Exxon-Mobil?s Shute Creek Natural Gas Plant in Lincoln County near LaBarge. Anadarko?s CO2 pipeline to its enhanced oil recovery project at the old Salt Creek Field passes only about three miles from the Grieve Field, and Elk will be tapping off that for its project. Elk has also formed a joint venture with CO2 experts Denbury Resources out of Plano, Texas, to develop the field. The oil will be carried on the old West Casper Pipeline connected to the Grieve Field, which Elk now owns. The company hopes to have a CO2 pipeline spur in place and the EOR operation up and running by next year.
In addition to the enhanced oil recovery project, Elk also wants to explore the Niobrara Shale Formation, which is some 60 feet thick in the Grieve Field area, according to its website.
The company has some 3,700 acres under lease, and with the fields well-developed geological records, Elk is considering putting in some multi-fractured horizontal wells in the promising formation.
The Grieve Field project isn?t the only undertaking by Denbury in Wyoming. The company is set to begin building the 220-mile Green Core Pipeline that will cross Natrona County as it makes its way to Montana from the Lost Cabin Gas Plant on the Fremont-Natrona County border.
Denbury was also one of the key presenters at the CO2 Conference, and company officials outlined their basic strategy in tapping the growing CO2 enhanced oil recovery market. Denbury is already a dominant player in the southeastern and central United States, and they?re beginning to expand into the Rocky Mountain west.
Tracy Evans of Denbury told the audience that CO2 is selling for around $10 a ton, or about 50 cents per million cubic feet (mcf). He said it takes about 12 mcf of CO2 to recover a barrel of oil, and with CO2 pipeline and infrastructure costs, ? ... $35 a barrel is break-even cost for us.?
Evans said his main concern, however, isn?t pipeline permits or locating oil fields to redevelop, but finding adequate supplies of CO2.
?My biggest worry, the one that keeps me up at night, is where we can get a billion cubic feet per day of CO2,? Evans commented.
Evans said there are potential CO2 recovery projects across the globe, noting Denbury has even been approached by three or four Middle Eastern countries. The main issue, however, comes back to adequate sources of CO2. He noted that while power plants generate large quantities of CO2 and are potential sources, the price of capturing it is high.
?Ratepayers will have to accept the cost,? Evans said. ?I think it?s a long way off.?
Meanwhile, another CO2 generating project in the pipeline in Wyoming is a large coal-to-liquids plant to be located near Medicine Bow. DKRW Advanced Fuels out of Houston, Texas, has been working on the $1.8 billion dollar venture, and acquired rights for an estimated 200 million tons of coal on 13,000 acres about 13 miles south of the Medicine Bow.
The project, going under the name of Medicine Bow Fuel and Power, will generate 11.7 billion tons of CO2 over its lifetime, in the processes of converting coal into gasoline or diesel fuel.
?We?re about three quarters through the front end engineering design of the plant,? said DKRW official Bob Kelly at the Conference, as he compared the plant to a chemical processing facility (the Wyoming Supreme Court recently ruled in the company?s favor in an air quality challenge by the Sierra Club).
The plant is projected to convert some 6,500 tons of coal a day into 13,000 gallons of 87-octane gasoline, while having a lower ?carbon footprint? than a standard refinery. ?If a carbon tax is implemented,? Kelly said, ?that potentially gives us a price advantage.?
The company has attracted Denbury?s attention with their CO2 generation, for possible enhanced oil recovery in the Powder River Basin. There is already a pipeline corridor across the site.
?It?s a landmark project, and it uses our own natural energy resources,? Kelly said.
ELK Price at posting:
18.5¢ Sentiment: Buy Disclosure: Held
