Denbury Resources Inc.

 

Page Updated 09/20/2007

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THE GREEN PIPELINE PROJECT

 

 



Denbury Onshore, LLC plans to install a 24” pipeline from Donaldsonville, Louisiana to the Hastings Field, south of Houston, Texas. The 314 mile pipeline is designed to transport both natural and man-made (anthropogenic) carbon dioxide (CO2). The CO2, a greenhouse gas, will be injected into oil reservoirs to recover additional crude oil.

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Denbury Resources Inc. (NYSE: DNR) is a growing independent oil and gas company. The Company is the largest oil and natural gas operator in Mississippi, owns the largest reserves of CO2 used for tertiary oil recovery east of the Mississippi River, and holds key operating acreage in South Louisiana, Alabama, and Texas Barnett Shale. The Company increases the value of acquired properties in its core areas through a combination of exploitation drilling and proven engineering extraction practices.

Our headquarters is located in Plano, Texas. At December 31, 2006, we had 596 employees, 390 of whom were employed in field operations or at the field offices.
 

Purpose of the Green Pipeline


The United States has limited methods to transport CO2. Denbury plans to install the pipeline and transport CO2 from both natural sources and man-made sources to petroleum reservoirs. Denbury has currently entered into agreements to purchase man-made (anthropogenic) CO2 production from three proposed “coal to liquid” plants which can convert petroleum coke or coal into a variety of products including ammonia, methanol, synthetic diesel fuel, or electrical power generation. One such plant, the Faustina Plant proposed to be built near Donaldsonville, Louisiana, is scheduled to be completed in 2010 and will convert petroleum coke into ammonia. As a byproduct of the plant’s process, large quantities of CO2 will be produced, estimated to be around 200 million cubic feet per day. Denbury plans to use this CO2 to recover oil that may otherwise not be economically productive. In addition, our use of this CO2 will eliminate the release of this greenhouse gas into the earth’s atmosphere. To date, none of these “coal to liquid” plants have started construction, so we are not certain whether they will be built, although it was recently announced by the Faustina Plant owners that they plan to commence construction in late 2007 or early 2008. Denbury is in various stages of discussions with several other entities that are considering building other coal or petroleum coke gasification plants that want Denbury to sequester their CO2.

 

Facts About Proposed Pipeline

  • Size: 24” diameter pipeline
     

  • Length: Approximately 314 miles
     

  • Volume: Designed to transport up to 800 million standard cubic feet per day of carbon dioxide (CO2)
     

  • Design and Operations: The pipeline will be designed and operated under the rules and regulation of the Department of Transportation (DOT)
     

  • Regulatory: Compliant with local, state and federal regulations. Pre-pipeline construction involves approvals for wetland delineation, habitat evaluations and culture resource studies along with other environmental and safety statutes.
     

  • Construction: Will occur after permitting and approvals are received from over 11 governmental agencies including federal, state, parish/county, city and levee boards ; currently anticipated in late 2008.

CO2 Injection to Enhance Oil Recovery


CO2 is one of the most efficient enhanced recovery mechanisms for crude oil. The CO2 acts somewhat like a solvent for the oil, removing it from the oil bearing formation as the CO2 passes through the rock. CO2 enhanced recovery projects require large volumes of CO2, which has only been discovered to date in just a few limited geological basins. The limited number of existing CO2 pipeline systems which are necessary to transport the CO2 make enhanced recovery projects even less common. The proposed Green Pipeline will be one of the first pipelines designed to transport man-made CO2 so that it can be injected or sequestered into the ground, keeping it out of the earth’s atmosphere and utilizing it to recover oil that would not otherwise be produced.

 

Facts About Carbon Dioxide (CO2):

  • Carbon Dioxide gas is colorless
     

  • At low concentrations the gas is odorless
     

  • At higher concentrations it has a sharp, acidic odor
     

  • Acts as an asphyxiant and is an irritant
     

  • CO2 is also used to manufacture dry ice, carbonated soft drinks and beers
     

  • Acts as an inert gas during chemical processing

Pipeline Safety

 

According to the U.S. Department of Transportation, pipelines are the safest, most reliable, and least costly way to transport energy products. Denbury Onshore is committed to maintaining the highest standards of safety. We design, install, test, operate, and maintain our pipelines to meet or exceed regulatory standards. Our employees are thoroughly trained to maintain and operate the systems safely, and we are proud of our safety record. We use a variety of methods to ensure safe operations of our pipeline systems.

  • Monitoring - Operating conditions on our pipelines are monitored 24 hours a day by a control center. The computer system has the capability to operate automated valves to shutdown and/or isolate sections of the pipeline systems, if necessary.
     

  • Pressure Testing - All of our pipelines are strength tested to establish maximum operating pressure (including a safety factor) prior to being placed into service.
     

  • Visual Inspection - Denbury’s pipeline right‐of‐ways are inspected on a regular basis for signs of damage and encroachment. Encroachments prevent us from gaining access to all our facilities at all times for regular maintenance or during emergencies. Marker signs are placed along the right-of-way to alert the public of the existence of the pipelines.
     

  • Public Awareness Program - The program is designed to help the public, contractors and others identify the location of pipelines before excavating to prevent third‐party damages. We are also members of one‐call centers in the states where we operate pipelines.
     

  • Cathodic Protection - An induced electrical current is applied to our pipelines in addition to a protective coating to help prevent external corrosion.
     

  • Emergency Procedures - All pipeline operations personnel are trained periodically for emergency preparedness and are required to follow company’s procedures during emergency situations.

Additional pipeline safety information can be obtained through the following:

 

If you have any questions or need more information regarding The Green Pipeline Project, please contact Laurie Burkes at laurie.burkes@denbury.com.

 

 

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