international press

Reborn Grieve oil field in Wyoming gets pipeline deals

By JEREMY FUGLEBERG Star-Tribune energy reporter trib.com

A field that first produced oil when Dwight D. Eisenhower was president is a step closer to producing even more black gold.

Elk Petroleum, which owns the Grieve oil field 35 miles west of Casper, says it has agreed to buy a Unocal oil pipeline out of the field and has made a deal with Denbury Resources for a pipeline to transport carbon dioxide to the field.

The carbon dioxide will be used in a process known as enhanced oil recovery. In the process, carbon dioxide is pumped underground, forcing otherwise hard-to-get oil to the surface.

Elk Petroleum, an Australian firm operating through its wholly owned U.S. subsidiary Elk Petroleum Inc., previously cut a deal for a supply of carbon dioxide from ExxonMobil?s Shutte Creek natural gas plant.

The gas will flow through a pipeline owned by Anadarko, and the new $1.2 million, 3-mile Denbury Resources pipeline will branch from the Anadarko line to the Grieve field.

?This unique joint venture package provides Elk with the funding to unlock the considerable untapped potential at Grieve,? said Bob Cook, Elk Petroleum?s managing director.

As part of the Denbury deal, Denbury will operate the field and get a 65 percent interest in the field.

Denbury will pay

$28.5 million for the first phase of the project, and may cover the next

$34.5 million spent in the field or pay for that total from Elk?s oil revenue.

The carbon dioxide injections are scheduled to start in 2012 with oil production beginning in 2014.

Elk says the joint venture will target 12 to 24 million barrels from the Muddy Formation in the oil field at a rate of 4,000 to 6,000 barrels a day.

Elk?s deal with Unocal buys the oil company an 8-inch pipeline that runs 32 miles downhill between the field and Casper and some related assets such as storage tanks. Cook, of Elk Petroleum, declined to disclose the price of that deal.

The Grieve field, which Elk purchased in 2005, first went into operation in 1954 and has produced 30 million barrels of oil and 60 billion cubic feet of natural gas.

Denbury Resources Inc. of Plano, Texas, is moving forward with plans to build a 232-mile carbon dioxide pipeline ? dubbed the Greencore Pipeline ? from the ConocoPhillips Lost Creek natural gas plant to oil fields the company operates in Montana.

The company, which uses enhanced oil recovery at fields in Alabama, Louisiana and Texas, has expressed an interest in Wyoming oil fields as part of its plans to build the pipeline and expand its use of the process in the state.

The firm?s agreement with Elk appears to be the first of its kind for the company in Wyoming.

Enhanced oil recovery has proven to be a boon for oil producers in fields thought to be depleted.

The process has revived production in the Salt Creek oil field near Casper, which was first drilled in the early 1900s.