Denbury Inc. will develop dedicated CO2 storage sites, expand its carbon capture, utilization, and storage (CCUS) pipeline infrastructure, and develop tertiary and non-tertiary oil-focused projects in 2023.
The company has budgeted total 2023 capex $490-530 million. Of that, $350-370 million is for EOR activity and $140-160 million is for CCUS activity.
CCUS activity will focus on expanding CO2 transportation and dedicated storage by adding strategically located sequestration sites to its portfolio, expanding existing sequestration sites with nearby leasing, and drilling several stratigraphic test wells. In addition, Denbury expects to acquire additional rights of way and long-lead items for CO2 pipeline connections to sequestration sites and industrial customers, the company said in a release Feb. 23.
At Cedar Creek Anticline (CCA) in the Rocky Mountains, carbon capture activities will include construction of the initial four CO2 recycle facilities, conversion of existing production wells to handle CO2 arrival and associated oil response, as well as continuing installation of the Phase 1 infield flowline network. In addition, to support Phase 2 CCA development, Denbury intends to commission a CO2 injection pilot in Pennel field targeting the Interlake formation, including construction of a CO2 recycle facility at Pennel.
Also in the region, Denbury intends to drill an additional Mission Canyon horizontal in the Cabin Creek area of Cedar Creek Anticline, expand CO2 injection at Grieve, develop a new EOR phase in Salt Creek field, and increase CO2 injection into the Beaver Creek E/F development.
In the Gulf Coast region, the company will expand existing EOR recovery projects, such as targeting new horizons at Eucutta and Phase 2 of the Rodessa development at Soso in Mississippi, an infill drilling program at Delhi in Louisiana, and conventional horizontal drilling programs in Conroe and Webster, Tex.
Denbury currently injects over 4 million tonnes/year of captured industrial-sourced CO2, with an objective to fully offset its Scope 1, 2, and 3 CO2 emissions by 2030, primarily through increasing the amount of captured industrial-sourced CO2 used in its operations, it said.
Oil and natural gas sales volumes for 2023 are expected to average 46,000-49,000 boe/d, 97% of which is expected to be oil. Midpoint of the 2023 production range is up about 1.5% from 2022, primarily due to the anticipated production start from the CCA EOR development in second-half 2023.
Fourth-quarter 2022
Denbury’s fourth-quarter 2022 total revenues and other income totaled $381 million, down from third-quarter 2022 levels primarily as a result of lower oil prices, the company said in a separate release.
Sales volumes for the quarter averaged 46,641 boe/d, down modestly from third-quarter 2022 primarily due to severe winter storm impacts, the company said. Fourth quarter volumes were impacted on average about 1,150 boe/d due to production downtime associated with late December 2022 winter storms and about 500 boe/d related to temporary curtailment of production in certain areas of the CCA EOR flood where CO2 arrival has occurred in advance of the completion of CO2 recycle facilities, it continued.
Fourth-quarter 2022 capital expenditures, excluding capitalized interest, totaled $153 million, with 79% related to oil and gas development and 21% related to CCUS business activities.
