Occidental develops Texas assets
Posted: 30 June 2008
Occidental Petroleum reported an agreement with SandRidge
Energy to develop a West Texas hydrocarbon gas processing
plant and related pipeline infrastructure.
The deal will provide carbon
dioxide (CO2) for use in Oxy's enhanced oil recovery (EOR) projects.
The new CO2 resources are expected to expand Oxy's Permian production
by a minimum of 50,000 barrels of oil per day within the next five
years.
"This project will allow us to exploit at least 3.5 trillion cubic feet
of CO2 for our long-term use in enhanced oil recovery projects
throughout the Permian Basin and will allow us to develop approximately
500 million barrels of reserves from currently owned assets at an
attractive cost," said Dr. Ray R. Irani, Occidental Petroleum
Corporation Chairman and Chief Executive Officer.
The net cost of the CO2 from the new gas processing plant is
attractive. However, Oxy will continue to contract for and seek
additional CO2 sources to further develop its existing Permian asset
base.
Total costs for the oil production from the new field
development, including capital and operating costs, transportation, CO2
gas, etc., given the proximity to the Permian basin, are expected to be
several dollars below current levels.
Oxy will own and operate the new facilities and invest
about $1.1 billion in their development.
The gas processing
plant, located in Pecos County, Texas, is expected to have a CO2
takeaway capacity of at least 450 million cubic feet per day. Oxy
additionally will get another 50 million cubic feet per day from
existing SandRidge gas processing plants.
A new 160-mile long pipeline
will be constructed from the plant, through McCamey, Texas, to the
industry CO2 hub in Denver City, Texas.
SandRidge's locally produced, high CO2 content natural gas will be
processed at the new Oxy plant with Oxy oil and gas production wells
receiving the CO2 stream that is separated from the natural gas.
Oxy is the largest producer in the Permian Basin with approximately
16-percent net share of total regional production. Oxy's net production
in the Permian Basin is currently about 200,000 BOE per day. At the end
of 2007, Oxy's Permian Basin properties had 1.2 billion BOE in proved
reserves.
Subject to approvals, the new gas plant and pipeline are expected to
commence operations in 2011 with immediate application to expand Oxy's
existing CO2 EOR operations.
Posted by Richard Price, Editor, EnergyME.com
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