GRIEVE ENHANCED OIL RECOVERY PROJECT RECEIVES APPROVAL TO PROCEED HIGHLIGHTS • The Bureau of Land Management (BLM) has provided its Decision of Record (DR) approving the environmental assessment (EA) of the Grieve EOR project • BLM approval allows construction of the 12-24 MMbbls oil project to proceed • First carbon dioxide (CO2) injection expected November 2012 • Operatorship of Grieve to transfer to Denbury effective 1st August 2012 Elk Petroleum Limited (ASX Code: ELK) is pleased to announce that a critical milestone in the development of the Grieve enhanced oil recovery (EOR) project has been achieved, with the USA Federal Government’s approval of the environmental assessment (EA) for the project allowing development to proceed. On Friday 27 July 2012 in Wyoming, USA, the Bureau of Land Management (BLM) completed its review of the EA for the Grieve project and approved it by issuing a Decision of Record (DR) and a Finding of No Significant Impact (FONSI) statement. Elk’s Managing Director, Bob Cook said, “We are pleased to receive regulatory approval from the BLM to proceed with the construction of the EOR project at Grieve. With construction works to start straight away, and successful EOR producer Denbury as Operator from 1 August, our next goal is to achieve first CO2 injection in November 2012. This will not only benefit Elk and Denbury but the community at large with the sequestering of the CO2” “The approval of the EA was the critical regulatory step in the Government’s sanctioning of the project. We have already completed all the necessary well workovers in preparation for CO2 injection and with the EA approved, Denbury now is able to mobilise construction crews for the installation of the new 8” diameter, and relatively short, 3 mile long CO2 supply pipeline to the Grieve field. We look forward to seeing considerable progress now being made on the Grieve EOR project, which is targeting 12 – 24 MMbbls of oil from the implementation of the CO2 injection,” Mr. Cook said. The EA is an extensive process which examines all aspects of the project (e.g. production, processing and transportation) and considers the project’s potential impact on local wildlife and fishing, and archeology over the life of the project. The process involves studies and impact assessments over four seasons as well as providing opportunity for public input; as such, the process is thorough and time consuming. Construction at the Grieve EOR project will involve: ? an immediate start on the 3 mile CO2 supply pipeline to the project ? tie-in of the new pipeline to Anadarko’s CO2 transmission pipeline ? installation of CO2 distribution and production gathering throughout the Grieve field ? demolition of existing but superfluous processing and storage facilities ? site works for the new processing and storage facilities The new CO2 supply pipeline will be connected to Anadarko’s existing 16” CO2 transmission pipeline in time for completion of the new 8” pipeline in October. Denbury will also mobilise a second construction crew to lay new CO2 distribution piping and new production gathering piping, to and from the respective wells in the Grieve field. This work is also expected to be completed in October. Injection of CO2 at Grieve is expected to commence in early November, as soon as the new piping and CO2 metering facilities have been installed and commissioned. Elk’s expectations for the project’s progress through 2012 are in line with latest schedule (refer to Elk’s 24 April 2012 ASX release and Denbury’s Enhanced Oil Recovery Institute’s CO2 Conference presentation 12 July 2012 – 13 July ASX release). The pipe for the 3 mile long 8” diameter CO2 pipeline is available in Casper, Wyoming (see following photograph) and ready for delivery to site for installation. 8” diameter pipe for new Grieve CO2 pipeline in storage in Casper, WY BACKGROUND ON DENBURY RESOURCE INC. (Denbury) Denbury Resources Inc. (NYSE: DNR) is a growing independent oil and gas company. The Company is the largest oil and natural gas producer in both Mississippi and Montana, owns the largest reserves of carbon dioxide (CO2) used for tertiary oil recovery east of the Mississippi River, and holds significant operating acreage in the Rocky Mountain and Gulf Coast regions. It currently produces in excess of 30,000 BOEPD of oil from CO2 EOR projects. For further information, contact: Elk Investor Relations on +61 2 8256 3262 or [email protected]
ELK Price at posting:
15.0¢ Sentiment: Buy Disclosure: Held
