government puts pressure on co2 venters

By DUSTIN BLEIZEFFER
Star-Tribune energy reporter
Monday, April 14, 2008 9:03 AM MDT

With the world price of oil trading at more than $110 per barrel, producers in Wyoming are eager to revive old fields by injecting carbon dioxide into oil reservoirs.

In response, state officials are seeking assurances from those who regularly vent CO2 into the atmosphere that they are actively trying to market the greenhouse gas to oil producers.

The Wyoming Oil and Gas Conservation Commission last week put off making a decision about whether to continue to approve CO2 venting from ExxonMobil's Shute Creek natural gas processing plant in southwest Wyoming. The commission will revisit the issue next month.

Commissioners indicated that ExxonMobil did not provide enough information to determine whether the company is trying hard enough to sell all of its commercial-quality CO2 stream.

"It's an annual review. We have to give approval for them to continue venting gas. So if they're venting, it's a determination that it (the CO2) has no economic value," said Don Likwartz, commission supervisor.

The Oil and Gas Conservation Commission is required under state law to prevent the state's natural resources from being wasted. The commission discussed CO2 venting with representatives of ExxonMobil and ConocoPhillips during regular monthly hearings last week.

ExxonMobil has provided CO2 for enhanced oil recovery at the Rangeley oil field in Colorado for more than a decade. CO2 from Shute Creek also flows to Anadarko's Salt Creek and Monel fields, Merit Energy's Soldier Field, and other aging oil fields in Wyoming.

In all, ExxonMobil sold an average 207 million cubic feet per day of CO2 in 2007 for enhanced oil recovery, and vented an average 20 million cubic feet per day that was available for sale, but for various reasons was vented instead.

The plant vented an additional 181 million cubic feet of CO2 per day on average during 2007. In question is how much of that gas could be commercially marketed.

ExxonMobil representatives said they plan to expand compression at the plant to make an additional 97 million cubic feet per day available for sale. But commissioners wanted more information about whether pipeline capacity exists to make more CO2 available.

After years of providing CO2 to Merit Energy's Soldier Field, ExxonMobil representatives said the company did not renew a contract and it will stop delivering CO2 to the field this summer. Instead, it signed a new contract with Rancher Oil, but will not begin CO2 deliveries until 2010.

ExxonMobil representatives did say the company has had discussions about supplying CO2 to Merit Energy on a short-term or "interruptible" basis.

Asked whether ExxonMobil could fully supply both Merit Energy and Rancher Energy, Shute Creek sales expansion manager Tom Wilson said, "There is not the capacity to do that."

ConocoPhillips received an abbreviated six-month approval to continue venting CO2 at its Lost Cabin natural gas processing facility -- half the customary annual review period. ConocoPhillips indicated that it had received interest from several oil producers about whether to buy CO2 from Lost Cabin, so the commission wanted to review the matter in six months.

Much of ConocoPhillips' testimony was in closed session of the commission. The company's Lost Cabin natural gas processing plant produced 53 million cubic feet of CO2 per day in 2007, on average. It vented an average 44 million cubic feet per day.

Likwartz said that same amount may be available or use in enhanced oil recovery. Commissioners must determine if a market actually exists for that amount.