Oxy invests in new large CO2 source for Permian basin EOR

By OGJ editors
HOUSTON, July 3 -- Occidental Petroleum Corp. with its agreement with SandRidge Energy plans to increase substantially the amount of carbon dioxide available in the Permian basin for use in enhanced oil recovery projects.

The CO2 will come from Oxy's planned gas processing plant to be built in Pecos County, Tex.

Oxy expects the additional CO2 will allow its projects in the area to increase production by at least 50,000 bo/d in the next 5 years.

Oxy Chairman and Chief Executive Officer Ray R. Irani said the project will provide at least 3.5 tcf of CO2 for Oxy's long-term use in EOR projects and develop about 500 million bbl of oil reserves from currently owned assets at an attractive cost.

Oxy will own and operate the new facilities and will invest about $1.1 billion in their development.

The planned gas processing plant has an expected 450 MMcfd of CO2 takeaway capacity, and Oxy expects to receive another 50 MMcfd of CO2 from existing SandRidge gas processing plants. The project also includes construction of a 160-mile pipeline from the plant, through McCamey, Tex., to the industry's CO2 hub in Denver City, Tex.

The plant will process SandRidge's locally produced, high CO2-content natural gas.

Oxy says it is the largest producer in the Permian basin with about a 16% net share of total regional production. It produces about 200,000 boe/d and at yearend 2007, its Permian basin properties contained proved reserves of about 1.2 billion boe.

Subject to approvals, Oxy expects the new gas plant and pipeline in 2011 to start operations and commence CO2 deliveries to its existing CO2 EOR operations.

In addition, Oxy says it will continue to contract for and seek more CO2 sources to develop further its existing Permian asset base.

In 2007, the Permian basin received about 1.371 bcfd of CO2 for use in EOR projects (OGJ, Apr. 21, 2008, p. 45).

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