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Elk Petroleum, Denbury Resources Closer To CO2 Injection At Grieve

Enhanced oil recovery player Elk Petroleum (ASX: ELK) is drawing closer to the start of carbon dioxide injection at its Grieve oil field project in Wyoming with most of the required work close to completion.

Operator Denbury Resources (NYSE:DNR) has completed work that will allow CO2 to be drawn from Anadarko Petroleum's (NYSE: APC) 16 inch pipeline about three miles from the Grieve field as well as installing all manifold injection piping from its 8 inch CO2 pipeline to the manifold.

The building to house the manifold will be constructed in the coming weeks along with final installation works and tie-ins of in-field flowlines to the CO2 and water injection wells and from a number of the production wells.

Most of the three mile long 8 inch CO2 pipeline has also being completed along with cables for power and communications.

However, the November target for injection of CO2 maybe pushed back by up to six weeks because of the need to meet late changes to the design specifications for the ExxonMobil CO2 meter station.

Denbury is endeavouring to minimise the possible slippage in their construction schedule to accommodate the specification changes.

Construction of the meter station is underway and will be completed along with the pipeline and cables.

Elk added that it expects the first of two water injection wells aimed at accelerating the oil recovery process is expected to spud in December 2012.

This will be followed by construction of the CO2 recycling and oil processing facilities at Grieve in 2013 with completion in late 2013 when CO2 is expected to be present in the produced reservoir fluids.

The Grieve Project is fully funded and expected to produce up to 1,000 barrels of oil per day net within three years, and possibly up to 5,000 barrels of oil per day by five years.

Independent petroleum consultants Ryder Scott had early this month reclassified the oil reserves of 18.6 million barrels at the field to the Proved and Probable (2P) category from the Proved, Probable and Possible (3P) category.

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