Denbury expanding Mississippi carbon dioxide operation

By OGJ editors

HOUSTON, July 3 -- Denbury Resources Inc., Dallas, bolstered its Southwest Mississippi carbon dioxide enhanced oil recovery operations with acquisition of Gulf Coast fields from bankruptcy proceedings of COHO Energy Inc., Dallas.

Denbury submitted a winning bid of $50.3 million for interests in eight fields in Mississippi and two fields in Texas and will operate all but two fields. The acquisition included net proved reserves of 14.4 million bbl of oil and 4,000-4,500 b/d of production, retroactive to June 1, 2002.

The Mississippi properties are Brookhaven, Laurel, Martinville, Soso, Summerland, Bentonia, Cranfield, and Glazier fields.

Acquisition of Brookhaven is part of a strategy to expand its CO₂ operations in Lower Tuscaloosa fields. Brookhaven is a candidate for CO₂ injection.

Denbury owns around 800 bcf of developed CO₂ reserves at Jackson Dome near Jackson, Miss., and the 183-mile, 20-in. Choctaw pipeline to southwestern Mississippi and Louisiana. It injects CO₂ into Little Creek, Lazy Creek, and Mallalieu fields in Mississippi, with combined reserves of 19.7 MMBOE.

Jackson Dome produces about 100 MMcfd of CO₂. Facilities are in place to process 200 MMcfd. Industrial customers take about half the gas.

Denbury injects 200 MMcfd of CO₂, including recycled volumes, into 25 injection wells in Little Creek field, Lincoln and Pike counties, which has 56 producing oil wells. Little Creek production was 4,200 b/d at yearend 2001, compared with 1,500 b/d in 1999 when the company purchased the field.

It is estimated that CO₂ injection will result in the production of about 21 million bbl of incremental oil at Little Creek, Denbury said.

Within 30 miles of the pipeline are fields with potential reserves of 80-100 million bbl of oil, assuming that a further 17% can be recovered as demonstrated at Little Creek.

If the pipeline were extended east towards Denbury's Heidelberg field, Jasper County, or south into southern Louisiana, another 300 million bbl to 1 billion bbl is within reach, the company reckons.