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Elk Petroleum On The Last Stretch Towards CO2 Injection At Grieve Oil Field

Enhanced oil recovery player Elk Petroleum (ASX: ELK) is poised to start carbon dioxide injection at its Grieve oil field with first phase of construction now nearing completion.

Managing director Bob Cook credited operator Denbury Resources (NYSE: DNR), a US$5.9 billion market cap specialising in EOR, for the rapid progress on the project.

"The wealth of experience that Denbury brings, in implementing successful CO2 floods in numerous mature oil fields in the US, has proven invaluable to the project.

"Denbury's ability to expedite the construction activities at Grieve was of vital importance once the project's environmental assessment was approved by the BLM in late July. The professional and technical skills contributed by Denbury will result in Grieve being a showcase EOR oil production facility in Wyoming."

Cook added the speed and attention to detail at which construction activity has occurred at Grieve has been very encouraging and that Elk looked forward to the first of the new Grieve wells being drilled in December.

Grieve progress

Denbury is currently completing installation of a new CO2 pipeline as well as crude production gathering and CO2 distribution facilities at Grieve.

Initially, this will allow the Grieve Muddy reservoir to be re-pressured to the minimum pressure at which the Grieve crude is miscible (soluble) in CO2 and hence mobile. This will enable the crude to be produced to the surface via the existing Grieve wells.

The majority of the CO2 branch pipeline to the Grieve field has been installed. The exceptions are the meter station and several sections of the pipeline to be buried in the Grieve field.

Elk added that while construction of the meter station located at the tie-in point to the Anadarko CO2 pipeline was delayed earlier as a result of a design change, it is not expected to have a material impact on the start of oil production as it can be corrected by a modest increase in CO2 and/or water injection rates to repressure the Muddy reservoir.

The CO2 pipeline has been connected to the crude production/CO2 injection manifold at Grieve and the building to contain the manifold is currently under construction.

CO2 is to be directed to the appropriate injection wells from the manifold via new flowlines that are about to be completed and tied into the existing distribution lines from the manifold.

The installation of many miles of new production and CO2 injection flowlines from the north and south ends of the field are completed except for the tie-in to the manifold and in some cases, for the finish of backfilling operations.

The flowlines have been coated internally and externally to avoid corrosion and also to be suitable for either crude production or CO2 injection service, as may be required throughout the new life of the revitalized Grieve field.

Preparations are also underway at the site for the first of two new deep Grieve wells to source water from the Madison formation.

Denbury has installed the flowline for this well back to the production/injection manifold to allow water produced from the Madison formation to be injected into wells low on the Muddy structure.

The addition of water to the Muddy reservoir concurrently with the injection of CO2 into wells high on the Muddy structure is expected to expedite the re-pressuring of the reservoir and hence, expedite first oil production from Grieve field as a result of the CO2 flood.

The drilling of the first new Grieve well is expected to commence in December 2012.

This well will also provide an opportunity for Elk to gather more technical information about the Niobrara shale formation at Grieve.

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