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

Denbury Resources Inc. 2009 Annual Report 253 CO 2Enhanced Oil Recovery & StorageCO 2 Enhanced Oil RecoveryOur strategy of CO 2 capture and transportation isto provide sufficient volumes to pursue the Company’sultimate goal of increasing oil production and reserves indepleted reservoirs through CO 2 enhanced oil recovery(CO 2 EOR). In most U.S. oilfields, about 33% of the originaloil in place is recoverable through primary and secondarymethods, increasing to 50% to 60% with CO 2 EOR.It is estimated that the Gulf Coast region (Alabama,Mississippi, Louisiana and Southeast Texas) originallycontained approximately 44.4 billion barrels of oil in place.Assuming that sufficient supplies of CO 2 are captured anddelivered to the oil fields in the region, it is estimated thatup to 7.5 billion barrels of oil could be recovered throughCO 2 EOR projects. Denbury’s ownership of the only naturalCO 2 source in the area and our CO 2 pipeline systeminfrastructure provides us with a significant competitiveadvantage. We are able to acquire depleted fields in ourareas of operation with significant CO 2 EOR potential,and ultimately produce the oil that would not otherwisebe recoverable.Denbury’sownership ofthe only naturalCO 2source inthe Gulf Coastregion and our CO 2pipeline systeminfrastructureprovides us witha significantcompetitiveadvantage.Denbury has planned the development of our oil fieldsover a series of nine phases, each phase representing agroup of nearby fields. In some cases, the fields are largeenough to be a phase by themselves (e.g., Tinsley Field,Delhi Field and Conroe Field). Typically, we acquire thesefields two to five years ahead of our planned CO 2 flood,with our latest acquisition being Conroe Field (Phase 9)purchased in December 2009.In the fourth quarter of 2009, Denbury produced anaverage of 26,307 Bbls/d from 13 fields in Phases 1, 2, 3and 4. Our longest active CO 2 EOR projects are locatedin Phase 1 (Southwest Mississippi), where we currently