Denbury sanctions Cedar Creek Anticline carbon dioxide development
Denbury Resources Inc., Plano, Tex., has sanctioned a carbon dioxide enhanced oil recovery project at Cedar Creek Anticline, which extends across Montana, North Dakota, and South Dakota. Denbury has interest in about 175,000 acres.
The EOR project targets initial tertiary production by late 2021 or early 2022, Denbury said. The Cedar Creek Anticline stretches 126 miles northwest to southeast and ranges 2-6 miles wide.
The structure contains several oil fields. Commercial quantities of oil were discovered in the early 1950s. Denbury estimates OOIP for its portion of the anticline at up to 5 billion bbl.
The anticline produces from numerous reservoirs with the primary reservoir being the Red River formation. Reservoir characteristics of Cedar Creek Anticline are similar to oil fields flooded with CO2 in the Permian basin of West Texas and Weyburn field in the Canadian Williston basin.
“We expect this project could ultimately produce more than 400 million bbl of oil through CO2 enhanced oil recovery, much greater than Denbury’s entire current proved reserves base and is attractive at $50 oil,” said Chris Kendall, Denbury’s president and chief executive officer.
Phases planned
Phase 1 targets 30 million bbl in the Red River formation at East Lookout Butte and Cedar Hills South fields. It includes a 110-mile, $150-million extension of the Greencore CO2 pipeline from Bell Creek field. An additional $100 million in investment is anticipated before production starts.
Another $400 million in spending is expected during a 15-year period with investment peaking in 2019 at $125-150 million, mainly for the pipeline. After that, investment is estimated to be less than $50 million/year, Denbury said.
Incremental production is expected to reach 7,500-12,500 b/d within 3 years after production starts. The Phase 1 payout is expected within 2 years. Denbury will use available cash flow to finance field development and the pipeline although executives said they will evaluate external funding for the pipeline.
Denbury expects Phase 2 to begin in 2022, targeting 100 million bbl in the Interlake, Stony Mountain, and Red River formations at Cabin Creek field. The company estimates $500-600 million in development costs over multiple decades, anticipated to be fully funded from Phases 1 and 2 cash flow.
Additional phases targeting more than 300 million bbl in the Interlake, Stony Mountain, and Red River formations could be developed based on CO2 availability and other factors, Denbury said.
Years ago, Denbury acquired producing property interests in the Cedar Creek Anticline of Montana and North Dakota from a wholly owned subsidiary of ConocoPhillips for $1.05 billion cash (OGJ Online, Jan. 15, 2013).
Contact Paula Dittrick at [email protected].
Paula Dittrick | Senior Staff Writer
Paula Dittrick has covered oil and gas from Houston for more than 20 years. Starting in May 2007, she developed a health, safety, and environment beat for Oil & Gas Journal. Dittrick is familiar with the industry’s financial aspects. She also monitors issues associated with carbon sequestration and renewable energy.
Dittrick joined OGJ in February 2001. Previously, she worked for Dow Jones and United Press International. She began writing about oil and gas as UPI’s West Texas bureau chief during the 1980s. She earned a Bachelor’s of Science degree in journalism from the University of Nebraska in 1974.