By JEREMY FUGLEBERG Star-Tribune energy reporter trib.com |...

By JEREMY FUGLEBERG Star-Tribune energy reporter trib.com | Posted: Sunday, February 6, 2011 1:00 am |

Elk Petroleum cuts key deal for revived Grieve oil field

Elk Petroleum has cut a deal with ExxonMobil for a supply of carbon dioxide that will allow Elk to resurrect the Grieve oil field in Natrona County and produce more than 20 million barrels of oil over the next several decades.

The Australia-based company will pump the carbon dioxide into the old oil field. That will force out oil that is otherwise impractical to get, a technique known as enhanced oil recovery.

?This supply agreement is expected to lead to a significant upgrade of our oil reserve base and, importantly, underpins our future production outlook and the project?s commerciality,? said Bob Cook, Elk Petroleum?s managing director.

ExxonMobil will begin providing the carbon dioxide in 2012, assuming Elk builds the necessary infrastructure and obtains needed permits and financing.

Exxon will supply the carbon dioxide from its Shute Creek plant in Lincoln County and is contracted to supply 150 billion cubic feet of carbon dioxide over 10 years.

Elk estimates the initial development will cost

$65 million and the construction at the field will employ 25 to 50 people.

The carbon dioxide will be piped into seven injection wells in the Muddy Reservoir field in 2012. The oil field should start production in 2013 and is expected to generate 5,000 to 10,000 barrels a day.

The oil field, 28 miles southwest of Casper in Natrona Country, produced 35 million barrels over its lifetime.

Cook says there?s ?every reason? to expect the field can produce the same total over the 20-25 years of its new life.

Elk Petroleum obtained the Grieve oil field in 2005.