By OGJ editors
HOUSTON, July 29 -- Encore Acquisition Co. said it will purchase carbon dioxide for its Bell Creek tertiary oil recovery project in southeastern Montana from the Lost Cabin gas plant in Fremont County, Wyo.
Under the terms of the agreement, Encore will purchase all volumes available from the plant, initially estimated at 50 MMcfd. Initial term of the contract is 15 years.
The company plans to build compression facilities adjacent to the plant and construct a 206-mile pipeline to transport compressed CO2 to Bell Creek where it will upgrade its current waterflood into a miscible CO2 flood.
Bell Creek contained an estimated 350 million bbl of original oil in place with about 221 million bbl remaining, according to the company.
The reservoir at Bell Creek is at 4,500 ft, which allows for CO2 miscibility, Encore noted. In addition, the company expects a rapid production response because of the reservoir's 900 md permeability and average 24% porosity. Encore expects to begin seeing a production response within 6 months to 1 year after first injection.
Encore estimates that the CO2 project will recover an incremental 30.1 million bbl of oil, and at the current strip price generate more than $800 million of net cash flow for the company during the project's 20-25 year life.
Utilizing 100% of the available CO2, Encore expects the production response will exceed 6,500 bo/d by 2015 and to stay relatively flat for 10 years before beginning to decline in about 2025. It expects a peak response of about 7,000 bo/d in this case.
Utilizing 70% of the available CO2, its estimate is that the production response will exceed 5,000 bo/d by 2015 and to stay relatively flat for 12 years before beginning to decline in about 2027. Peak response will be about 5,500 bo/d, it said.
Under the 70% scenario, the company said that the remaining 30% would be earmarked for possible acquisitions in the Powder River basin.
Encore plans to immediately begin upgrading the Bell Creek field infrastructure to handle higher water injection and production volumes, facilitate injection and production of CO2, and to reinject produced water and CO2 streams.
During the first 10 years of the project, the company plans to reactivate 275 wells and drill up to an additional 75 wells to install a five-spot CO2 injection pattern across the field on 40 acre spacing.
Its estimated cost for the project is about $425 million during the its life, with about $345 million being spent the first 20-24 months and the remainder being invested in years 5-10 as the project is phased in.
Encore plans to develop the project in seven phases depending on such variable as injection response, timing and magnitude of CO2 recycle, current maturity of well reactivation, reservoir repressurization needs, and surface facility requirements.
It said the project has an estimated $14/bbl finding and development cost.