While much attention has been focused on the massive oil production in North Dakota as a result of the technology of horizontal drilling, the technology of carbon dioxide (CO2) Enhanced Oil Recovery (EOR) promises to bring Montana into its own.
Greg Dover, Vice President of Operations excellence for Denbury Resources, told a crowd of several hundred people at the Montana Energy 2012 conference in Billings that there's going to be significant increases in the production of oil in Montana as the result of a completely different kind of technology than what is being used in North Dakota.
One of the most intriguing aspects of CO2 EOR is that it allows the resurrection of wells once considered depleted. Denbury Resources, a national leader in CO2 EOR, plans to invest some $3 billion over the next few years to squeeze additional oil from two well-known Montana fields.
In its heyday in the late 60s, Belle Creek in southeastern Montana produced some 48 million barrels of oil, Denbury expects to invest $400 million and pull another 30 million barrels from 475 existing wells.
In addition to Belle Creek, further north is the Cedar Creek Anticline, which Dover called a "monster field." The company plans to invest $2.5 billion to recover some 200 million barrels of oil. Cedar Creek Anticline is four miles wide and 100 miles long, "and saturated with oil," said Dover. At its peak, the field will produce 40,000 barrels of oil a day.
But, to get all that oil, Denbury needs a lot of carbon dioxide, which the company plans to bring from a natural gas process facility at Lost Cabin in Wyoming. A 232-mile pipeline is already under construction which is expected to be able to deliver carbon dioxide in time to begin oil production at Belle Creek in 2013. Production will take place in eight phases through 2019.
This phase of oil extraction can last up to six years – and then as production levels begin to decline, it will continue for perhaps another six years. Development could extend beyond that, adding another 30-40 years to the life of the fields. The area could be producing oil for another 100 years, said Dover.
The process of CO2 EOR is to inject the carbon dioxide into the well, under pressure. The CO2 acts as a solvent enabling the oil to flow more easily. After it has been brought to the surface, the CO2 is separated from the oil and then re-injected. No worry about encouraging the capture of CO2 – "It is valuable to us. We don't want to lose any of it," said Dover, who explained how they use a closed-loop system to reuse as much of the CO2 as possible.
Denbury Resources has also invested in another property at Riley Ridge in Wyoming as another potential source of carbon dioxide.
Because of CO2 EOR, nationally, there is a potential market for 380 trillion tons of CO2.
It has been estimated that in employing the technology there is 7.5 billion of oil to be recovered nationwide. "And, the industry is just scratching the surface," said Devon. In Montana, Wyoming and North Dakota, alone, there is 3.2 billion barrels of recoverable oil, said Dover.
US CO2 oil production first started in west Texas in the 1980s – production using the process has steadily increased. Denbury today is producing 280,000 barrels of oil in its fields in New Mexico, Texas and Colorado, using the process.
"It's a key prize for us," said Devon.
Denbury is a leading oil company in the US and the largest producer of oil in Montana and Mississippi. The company employs 65 people near Baker.
In 2011 the company paid $53 million in state severance tax and royalties to the State of Montana.