Occidental to Develop Major New Permian Basin CO2 Enhanced Oil Recovery Project

01 July 2008

Occidental Petroleum Corporation and SandRidge Energy will develop a $1.1 billion West Texas hydrocarbon gas processing plant and related pipeline infrastructure that will provide carbon dioxide (CO2) for use in Oxy’s enhanced oil recovery (EOR) projects. The new CO2 resources are expected to expand Oxy’s Permian production by a minimum of 50,000 barrels of oil per day within the next five years. Oxy says that it is the largest user of CO2 injection for EOR in the world. Approximately 60 percent of Oxy’s current Permian Basin oil production is from fields that actively employ the application of CO2 flood technology. Oxy currently operates approximately 8,700 wells in 28 CO2 EOR projects in the Permian, including 3,700 CO2 injection wells that support 5,000 projection wells and injects approximately 1.4 billion cubic feet of CO2 day or about 500 billion cubic feet per year.  Click to enlarge. As show in the diagram at right, with CO2 flood technology: 1. CO2 is injected into the reservoir via injection wells. 2. The CO2 reduces the viscosity of the trapped oil so it flows more easily. 3. Water is injected in alternating cycles with CO2 to sweep the oil to the producing wells 4. Production wells pump the oil, along with CO2, produced water and any associated natural gas to the surface. 5. The CO2 and associated natural gas are separated at the production satellite facility and transported offsite for additional processing. Natural gas liquids are extracted and sold and the CO2 is recycled for reinjection 6. The oil and produced water are separated at the central tank battery. The oil is piped to holding tanks where it is metered and sold. 7. The produced water is transported to the central water injection station and is pressurized for reinjection. This project will allow us to exploit at least 3.5 trillion cubic feet of CO2 for our long-term use in enhanced oil recovery projects throughout the Permian Basin and will allow us to develop approximately 500 million barrels of reserves from currently owned assets at an attractive cost. —Dr. Ray R. Irani, Occidental Petroleum Corporation Chairman and CEO The net cost of the CO2 from the new gas processing plant is attractive. However, Oxy will continue to contract for and seek additional CO2 sources to further develop its existing Permian asset base. Total costs for the oil production from the new field development, including capital and operating costs, transportation, CO2 gas, etc., given the proximity to the Permian basin, are expected to be several dollars below current levels. Oxy will own and operate the new facilities and will invest approximately$1.1 billion in their development. The gas processing plant, located in Pecos County, Texas, is expected to have a CO2 takeaway capacity of at least 450 million cubic feet per day. Oxy additionally will get another 50 million cubic feet per day from existing SandRidge gas processing plants. A new 160-mile long pipeline will be constructed from the plant, through McCamey, Texas, to the industry CO2 hub in Denver City, Texas.

SandRidge’s locally produced, high CO2 content natural gas will be processed at the new Oxy plant with Oxy oil and gas production wells receiving the CO2 stream that is separated from the natural gas.

Oxy is the largest producer in the Permian Basin with approximately 16% net share of total regional production. Oxy’s net production in the Permian Basin is currently about 200,000 BOE per day. At the end of 2007, Oxy’s Permian Basin properties had 1.2 billion BOE in proved reserves.

Subject to approvals, the new gas plant and pipeline are expected to commence operations in 2011 with immediate application to expand Oxy’s existing CO2 EOR operations.

High gas prices and GHG fears financing big oil domestic drilling. Poetic justice!

Most heavy oil recovery requires heat. If they used concentrated solar thermal heating it would be more economical and much more environmentally friendly.

First, I hope they are using waste product CO2, not making it special for the purpose. (The blurb fails to say)

Second, this is a temporary use of CO2, not permanent storage for it. This CO2 will all return to the surface and become part of our atmosphere, or be dissolved in the ground water and cause leaching of other minerals.

Third, if this is sold as a "carbon offset" then it destroys the integrity of the program. (The blurb fails to say)

Our way off oil is not to be getting more of it using technology, but to install more renewable generators and not need any more oil.

"I hope they are using waste product CO2, not making it special for the purpose"

Ok, first, CO2 is a naturally occurring gas, not something you "make". If you want to produce the gas, it is usually done by separation of the naturally occurring gases in the atmosphere. The injection process is actually a separation of the natural gases that come out of the ground with the oil and natural gas , that is then re-injected.

"Second, this is a temporary use of CO2, not permanent storage for it."

Again, this gas was in the ground already, brought to the surface, separated, re-injected. Although it may be moved in a pipeline from one location to another, it is being injected below 5000 ft in most cases. Leaching back to the surface over a mile is not a common problem.
Btw, CO2 is used as a purifying agent for drinking water.

"Our way off oil is not to be getting more of it using technology, but to install more renewable generators and not need any more oil."

In the mean time, a little thing called "market forces" will cause people to continue to try to produce from existing sources. We all know that there are renewable sources of energy and there are a lot of really smart people working on better solutions to our energy demands. Ride a bike.

-Irl

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