Denbury Enters Into Two Industrial CO2 Purchase Contracts
DALLAS, TX, March 16, 2011 – Denbury Resources Inc. (NYSE: DNR) ("Denbury") today announced that a wholly-owned subsidiary has entered into two contracts to purchase carbon dioxide ("CO2") from future anthropogenic sources in the Gulf Coast and Rocky Mountain regions. Denbury will purchase 100 percent of the CO2 captured from the DKRW Advanced Fuels LLC’s ("DKRW"), Medicine Bow Fuel and Power LLC ("MBFP") project in Medicine Bow, Wyoming and Denbury will also purchase 70 percent of the CO2 captured from Mississippi Power Company’s Kemper County Integrated Gasification Combined Cycle ("IGCC") project in Mississippi.
MBFP, an industrial gasification and liquefaction facility, will capture CO2 produced from its Medicine Bow, Wyoming coal-to-transport fuels project (estimated to be up to 200 MMcf/d) and clean, compress, and deliver the CO2 to Denbury for carbon dioxide enhanced oil recovery ("CO2 EOR") in Denbury’s oil fields in the Rocky Mountain region and ultimately for sequestration in its CO2 EOR reservoirs. First deliveries of CO2 are expected in late 2014 or early 2015, pending construction of the plant, which has not yet commenced.
Mississippi Power, a wholly owned subsidiary of Southern Company (NYSE: SO), has initiated construction of a 582 MW IGCC power plant, located in Kemper County, Mississippi. Mississippi Power will capture, clean, compress and deliver an estimated 115 MMcf/d of CO2 to Denbury’s Heidelberg Field. First deliveries of CO2 are expected in 2014.
Both CO2 capture projects have been granted various forms of support through United States Department of Energy programs for the production of clean energy from coal and/or carbon capture and sequestration programs. Capturing CO2 from industrial and power projects such as these are expected to supply meaningful volumes of CO2 for CO2 EOR projects throughout the United States. CO2 EOR utilizes the CO2 to produce additional quantities of domestic oil and ultimately sequesters the CO2 when the CO2 EOR project is completed. Denbury’s cost of CO2 from these two plants is priced competitively with the Company’s other potential anthropogenic CO2 supplies.
"The supply of CO2 from DKRW’s Medicine Bow facility is expected to provide a significant portion of our anticipated CO2 requirements in the Rocky Mountain region and the Mississippi Power volumes should add to our CO2 supplies in the Gulf Coast region, enabling us to produce a significant amount of oil from depleted oil fields that would otherwise not be recoverable," said Denbury’s CEO, Phil Rykhoek. "Increasing the recovery of oil from the nation’s existing oil fields while sequestering a greenhouse gas is a win-win opportunity for the country." Denbury Resources Inc. is a growing independent oil and natural gas company. The Company is the largest oil and natural gas producer in both Mississippi and Montana, owns the largest reserves of CO2 used for tertiary oil recovery east of the Mississippi River, and holds significant operating acreage in the Rocky Mountain and Gulf Coast regions. The Company's goal is to increase the value of acquired properties through a combination of exploitation, drilling and proven engineering extraction practices, with its most significant emphasis relating to tertiary recovery operations.
This press release contains forward-looking statements that involve a number of risks and uncertainties, including projected completion times of construction of facilities by third parties, anticipated volumes of CO2 to be produced from such facilities, and assumptions regarding their successful financing and construction. Such forward-looking information is based upon current plans, expectations, estimates and financial and operating assumptions that management believes are reasonable based on currently available information, but which are subject to a wide range of business risks and uncertainties, and there is no assurance that these goals and projections can or will be met. As a consequence, actual events may differ materially from expectations, estimates or assumptions expressed in or implied by any forward-looking statements made by or on behalf of the Company.
For further information contact:
Phil Rykhoek, CEO, 972-673-2000
Mark Allen, Sr. VP and CFO, 972-673-2000