Interactive 2009 Annual Report (PDF 7.56 MB) - Denbury Resources ...

Denbury Resources Inc. 2009 Annual Report 191CO 2Sources& CaptureAnthropogenic SourcesWhile naturally produced CO 2 drives our operations today, we are alsopursuing anthropogenic sources of CO 2 to use in future tertiary operations. Inaddition to helping us recover additional oil, this will provide an economical wayto sequester large volumes of anthropogenic CO 2 . According to the Departmentof Energy, CO 2 EOR has the potential to produce 39 to 48 billion barrels ofAmerican oil that are not otherwise recoverable today while storing billions oftons of CO 2 .Many industrial activities produce large volumes of CO 2 , particularly fossilfuel power plants, chemical plants and refineries. In these plants, carbon in theform of coal, oil or natural gas is combusted, which releases CO 2 as a by-productof combustion. These facilities release significant volumes of CO 2 . It has beenproposed by those concerned about atmospheric CO 2 levels that these emissionsbe reduced by some means. At this time, the only method of beneficially usingCO 2 that does not ultimately re-release the CO 2 into the atmosphere would beto capture this CO 2 and utilize it in CO 2 EOR operations. Our CO 2 EOR operationsprovide a proven method to sequester these CO 2 volumes in oil reservoirs whileincreasing domestic supplies of oil at the same time.We have entered into eight contracts with owners of potential sources ofCO 2 in the Gulf Coast and Midwest regions and have signed Letters of Intent orMemoranda of Understanding (“MOU”) with numerous other project owners.These contracts are possible because of our ability to utilize Jackson Dome CO 2volumes to buffer the inherent imbalances between industrial supplies and thedemands of our oil fields and because of our willingness and ability to enterinto long-term take-or-pay contracts with the plant owner. These contracts arealso possible because of our significant inventory of oil fields that are eithercurrently being flooded or that we expect to flood, our extensive CO 2 pipelineinfrastructure and our expertise and confidence in the CO 2 EOR process.Generally, the current signed contracts and MOUs are for proposed plants whichwould employ gasification, none of which are currently under construction.Gasification is a process by which carbon in the form of lignite, coal,petroleum coke, biomass or mixtures of solid carbon is combined with pureoxygen, producing primarily syngas, which can then be used as a fuel source