Download - CO2 Pipeline

NYSE: DNR

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SECARB – Plant Barry to Citronelle Knowledge Sharing Conference - Mobile - May 17, 2012

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Our Company

Denbury Resources Inc. (NYSE: DNR):

!! A growing independent oil and gas company

!! Approximately 1309 employees (578 in Plano,731 in the field)

!! The largest oil and natural gas operator in Mississippi and Montana

!! Owns the largest reserves of CO2 used for tertiary oil recovery east of the Mississippi River

!! Holds significant operating acreage in the Rockies, Mid-Continent and Gulf Coast

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Areas of Operations: 2 Target Areas

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Green Pipeline

Jackson Dome Free State

Pipeline

Delta Pipeline

NEJD Pipeline

Sonat MS Pipeline

ND

SD Lost

Cabin

ID

MT

WY

TX LA

MS

IL

IN

KY

Greencore Pipeline

Rockies

CO2 Pipelines Under Development

CO2 Source Owned or Contracted

Existing CO2 Pipelines

Rocky Mountain Fields With EOR Potential

Existing Anthropogenic CO2 Sources

Proposed Coal to Gas or Liquids

Gulf Coast

Gulf Coast Pipelines Source: Jackson Dome NEJD Line •!Brookhaven •!Mallalieu •!Little Creek •!McComb •!Smithdale •!Cranfield •!Lockhart Crossing Free State Line •!Martinville •!Soso •!Eucutta •!Heidelberg Delta Line •!Tinsley •!Delhi Green Line •!Oyster Bayou •!Hastings •!Seabreeze •!Conroe (TBC) •!Thompson (TBC)

Rockies Pipelines Source: Riley Ridge Greencore Line •!Bell Creek (C) (EOY) •!Cedar Creek Anticline (TBC) Anadarko Line •!Grieve (TBC)

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Denbury Study Partnerships

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!! East Region !! Cranfield – Adams & Franklin Counties, MS

!! Large Scale CO2 Injection MVA – BEG / SECARB !! Citronelle – Mobile County, AL

!! CO2 Injection Pilot – UAB / UA / AA&M / UNCC !! Sequestering CO2 in a Saline Reservoir – EPRI / SSEB / SECARB

!! West Region !! West Hastings – Brazoria County, TX

!! Anthropogenic CO2 Injection for EOR MVA – BEG / GCCC !! Delhi – Richland Parish, LA

!! Geophysical Mapping – CSM !! North Region

!! Bell Creek – Powder River County, MT !! MVA Program – PCOR / EERC / UND

!! MVA (Monitoring, Verification, Accounting)

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Citronelle Field – Basic Facts

!! Citronelle Field located in & around the City of Citronelle !! Approx. 1 hour north of Mobile, AL

!! Field is comprised of 3 active units: Main, East & Southeast

!! There are 423 wells in the 3 Denbury operated units !! 168 active producers !! 62 active injectors !! 7 SWD wells !! 93 TA/TP wells !! 88 plugged !! 5 SECARB

!! Denbury took over operations on Feb. 1, 2006 from Merit Energy

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SECARB Phase III Anthropogenic Test - Schedule

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The CO2 capture unit at Alabama Power’s (Southern Co.) Plant Barry became operational in 3Q 2011.

A newly built 12 mile CO2 pipeline from Plant Barry to the Citronelle Dome completed in 4Q 2011.

A characterization well was drilled in 1Q 2011 to confirmed geology.

Injection wells were drilled in 4Q 2011.

100 to 300 thousand metric tons of CO2 will be injected into a saline formation over 2 to 3 years beginning in 2Q 2012.

3 years of post-injection monitoring.

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•! Approx. 12 mi (19 km) to the SE Citronelle Unit in Citronelle Oil Field

•! Right-of-Way •! 1" mi (2 km) inside Plant Barry property •! > 8 mi (13 km) along existing power corridor •! 2 mi (3 km) undisturbed forested land •! Permanent cleared width 20 ft (6 m) •! Temporary construction width 40 ft (12 m)

•! Right-of-Way habitat •! 9 mi (14.5 km) of forested and commerical

timber land •! 3 mi (5 km) of emergent, shrub and forested

wetlands •! Endangered Gopher Tortoise habitat

•! 110 burrows in or adjacent to construction area

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CO2 Pipeline Right-of-Way

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•! Applicable regulatory standard: US Depart of Transportation, 49 CFR Part 195 —Transportation of Hazardous Liquids by Pipeline

•! Welding - API 1104 & B31.3 (plant section)

•! 4-inch (10 cm) pipe diameter •! X42/52 carbon steel pipe •! MOP – 2,220 psig (flange limitation) •! Normal operating pressure: 1,500 psig

(10.3 MPa) maximum •! Buried average of 5 ft (1.5 m) with

surface re-vegetation and erosion control

Handling pipe for horizontal directional drill

CO2 Pipeline and Measurement Design

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•! Directional drilled 18 sections of the pipeline under roads, utilities, railroad tracks, tortoise colonies, and wetlands. (30 to 60 ft deep)

•! Trenched remaining sections •! Corrosion protection •! Fusion Bond Epoxy coated pipe •! “Jeep” pipe for coating damage; manually

coat joint welds and scratches •! Impressed current cathodic protection •! AC mitigation for overhead powerlines

using copper wire •! ACVG survey after construction to check

again for coating damage •! Caliper tool run to check for dents caused

by rock or equipment

Workers dressing welded pipe joints

CO2 Pipeline Design and Construction

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•! Denbury pipeline purity requirement is: •! > 97% dry CO2 at 115ºF (46ºC) •! < 0.5% inerts (incl. N2 & argon) •! < 30 lb water per 1MMSCF •! < 20 ppm H2S

•! Impurities affect and sometimes amplify pipe fracture toughness requirements •! Hydrogen & N2 problematic

•! Toughness requirements for this project met by standard X42 pipe. Other projects require added wall thickness, modified pipe chemistry and/or crack arrestor installation.

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Custody meter station and building

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CO2 Pipeline and Measurement Commissioning

•! Pipeline was commissioned March 8, 2012 •! At custody meter station there is the capability of

taking samples of CO2 stream. •! Samples will be taken periodically for permits

and GHG reporting. •! Sample obtained for Class V injection permit

showed 99.6% pure CO2. •! Major impurities were

•! Nitrogen (2700 ppm) •! Line was filled with N2 to pressure test line

then swept with CO2 prior to commissioning •! Oxygen + Argon (880 ppm).

•! Lab impurity?

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•! CO2 Specific Design Requirements •! Valve seals – Accepted: Nylon,

peroxide cured Buna N (HBNR-90/95), ethylene propylene rubber (EPDM)

•! Valve packing – Teflon •! Low temperature materials for

valves used for blowdown service only.

•! Mainline valve station similar to natural gas with blowdowns for maintenance.

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Mainline valve station & CP test station

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•! CO2 measured with senior orifice meter and gas chromatograph

•! Custody measurement meets AGA Report #3, Parts 1 & 2

•! Accuracy and mechanical issues with turbine, Coriolis, & ultrasonic meters •! Turbine – CO2 is dry – damages

moving parts. CO2 viscocity range can be problematic

•! Coriolis – Accuracy not as good as orifice

•! Ultrasonic – CO2 absorbs and distorts signal

•! Communication using SCADA and satellite.

•! Check meter installed for pipeline leak detection and verification of injected volumes

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Check meter station and building at Denbury Citronelle Field

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•! CO2 Booster Pump •! Designed & fabricated by Wood Group

(GE) •! 130 stages (impellers) •! 44 # ft long •! 4” suction – 3” discharge •! 300 HP electric motor – 3570 rpm w/

variable speed drive •! Pneumatic shut downs (2), pneumatic

control valves (2), manual shut down valves (2), vibration shut down switch (1), manual blowdown valves (2), discharge check valve (1)

•! Inlet pressure 1300 psi – outlet pressure 3200 psi

•! Variable speed drive with recycle valve for near 100% turndown

•! Max rate approx. 14 MMCFD CO2

•! Satellite link for communication •! 2 pressure transmitters & 2

temperature transmitters •! Stand alone air compressor system to

operate valves & controls

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Horizontal Injection Pump @ D-9-7 #2 Wellsite