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

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30 Denbury Resources Inc. 2009 Annual Report4 CO 2Strategic BenefitsBenefits of Denbury’s StrategyDenbury’s current CO 2 EOR projects inject approximately 0.52 to 0.64 metrictons of CO 2 for every barrel of oil recovered compared to the 0.42 metric tons ofCO 2 released when the oil is consumed. Assuming that we use anthropogenicCO 2 , our CO 2 EOR projects ultimately store between 24% and 52% more CO 2 thanthe recovered oil will release when the oil is utilized in a combustion process.Today, we are using CO 2 from our natural source at Jackson Dome but plan to useanthropogenic CO 2 in the future. Not all of the oil that we produce is consumedin such a way that creates CO 2 — a significant percentage is used to producevaluable products like plastics that are used to produce products vital to themodern economy. In any event, oil produced from CO 2 EOR using anthropogenicCO 2 certainly has a lower carbon footprint than imported oil, which most likelysequesters no CO 2 volumes.CO 2 EOR can recover billions of barrels of oil from existing U.S. oil fields.This additional domestic production can be recovered with little if any additionalenvironmental impacts and many times can be developed more rapidly than manyremote exploration prospects. In addition, the CO 2 that is released from the oilcan be offset by the CO 2 injected in the CO 2 EOR process, versus no CO 2 offset forimported oil.The benefits of producing a barrel of oil domestically are very significant tothe local and federal economy. In Mississippi, we expect that approximately50% of the state’s total 2010 production of oil will come from CO 2 EOR. Bothour capital expenditures and operating expenditures are spent in the localcommunities where we work and invest, and we contribute to the local and stateeconomies through the various taxes that we pay. Contrast this to the economiccost of imported oil, which provides none of the previously described benefits.Denbury’s current and proposed CO 2 pipeline network will enable commercialscalecarbon capture and storage (CCS) during enhanced oil recovery andpotentially in post-production utilization of underlying saline formations. CO 2pipeline networks provide the infrastructure needed for development of carbonsolutions for environmentally sensitive industrial developments, including innovativegasification projects that can produce transportation fuels, power, substitute
Denbury Resources Inc. 2009 Annual Report 31Mississippi Annual Oil Production (1)MMBOEnatural gas, fertilizer and chemicals from plentiful U.S.natural resources.Older, depleted U.S. oil fields that we acquire oftensuffer from mechanical or environmental conditionsthat we remedy as part of our CO 2 EOR operations.Denbury’s program to rejuvenate these fields andincrease oil production from marginal oil fields beginsby initiating a comprehensive environmental assessmentand remediation program that addresses environmentalissues, equips the field with updated technology, andresults in a more environmentally benign operationthat is cleaner and “greener” than what existed before.Reactivating and increasing oil production in marginaloil fields results in increased revenue to the mineralowners, additional severance, ad valorem and sales taxrevenues to state and local governments and job growththat benefits local economies.Denbury’s CO 2 EOR efforts in Mississippi are primarilyresponsible for Mississippi being one of few states withincreasing oil production. CO 2 EOR has increased as a totalpercentage of Mississippi’s oil production from less than5% to over 50% today.Denbury enjoys being a part of the communities inwhich we work. Our employees are encouraged to givegenerously to charitable organizations and educationalinstitutions of their choice with Denbury supporting theirefforts through a matching gifts program.200517.2 MMBOE200617.8 MMBOE200720.4 MMBOE200822.3 MMBOE200923.4 MMBOE4.26.07.04.75.77.46.85.68.08.85.97.612.64.95.9Denbury CO 2 EORDenbury Non-CO 2 EOROther Mississippi(1)Source: Mississippi Oil & Gas Board forstate total annual oil production amounts
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Denbury Resources Inc.5100 Tennyson
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