"Exxon Mobil has been ordered by the state to curb carbon...

"Exxon Mobil has been ordered by the state to curb carbon dioxide emissions at its Shute Creek natural gas processing facility near LaBarge and redirect the greenhouse gas into pipelines for enhanced oil recovery.

The Wyoming Oil and Gas Conservation Commission, which is charged with making sure the state's resources are not wasted, passed a resolution on Tuesday requiring Exxon Mobil to submit progress reports to the commission detailing its progress in marketing much of the CO2 it vents.

The reporting is a condition of the company's permit to vent CO2, which is produced in association with sour natural gas in southwest Wyoming.

Exxon Mobil sold an average 207 million cubic feet of CO2 per day in 2007 for enhanced oil recovery, but it vented another 181 million cubic feet per day.

According to information provided to the commission by Exxon during several hearings, the company indicated that it could sell all but 70 million cubic feet per day of the CO2, which is about 318 million cubic feet per day. The result of the commission's order is likely to force Exxon to get several customer contracts in place for "interruptible" CO2 delivery.

Although Exxon has several customer contracts for CO2 delivery to enhanced oil recovery projects in Wyoming and Colorado, those customers cannot always take the full volume of CO2 they have access to under their contracts. The commission wants Exxon to add "interruptible" supply contracts so that no CO2 is vented that could otherwise help the oil industry.

"They recognize what we have no argument with: That is, there are hedging opportunities in the CO2 market," said Exxon Mobil spokeswoman Sara K. Tays. "The goal is to safely market everything you can."

In addition, the commission ordered Exxon to submit a detailed report justifying why the remaining 70 million cubic feet per day of CO2 cannot be marketed. Exxon officials have argued that it's too expensive to capture and isolate the entire CO2 inlet stream at Shute Creek. There are costs associated with isolating the CO2 from other gases, as well as pressurizing the CO2 for market deliverability.

"Everything is more complex than it looks," Tays told the Star-Tribune.

With the price of oil riding well above $125 per barrel, the state is eager to help out oil producers who desperately want to secure flows of CO2. The gas can be injected into aging oil fields to sweep out volumes that were unrecoverable through primary or conventional production methods.

Tays noted that Exxon has committed to investing $70 million to expand production at the Shute Creek gas plant, which includes making an additional 100 million cubic feet per day of CO2 available for the local enhanced oil recovery market.

In addition, Exxon recently announced it would spend more than $100 million to build a "controlled freeze zone" plant at its LaBarge properties. The purpose of the plant is to test technology to make capturing and storing CO2 more affordable.

Research could begin in 2009."