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.
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As show in the diagram at right, with CO2 flood technology:
CO2 is injected into the reservoir via injection wells.
The CO2 reduces the viscosity of the trapped oil so it flows more easily.
Water is injected in alternating cycles with CO2 to sweep the oil to the producing wells
Production wells pump the oil, along with CO2, produced water and any associated natural gas to the surface.
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
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.
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.