Occidental to Develop Major New Texas Enhanced Oil Recovery Assets, Increasing U.S. Production
Occidental Petroleum Corporation announced an agreement with SandRidge Energy to develop a West Texas hydrocarbon gas processing plant and related pipeline infrastructure that will provide carbon dioxide (CO2) for use in Oxy’s enhanced oil recovery (EOR) projects. The new CO2 resources are expected to expand Oxy’s Permian production by a minimum of 50,000 barrels of oil per day within the next five years.
“This project will allow us to exploit at least 3.5 trillion cubic feet of CO2 for our long-term use in enhanced oil recovery projects throughout the Permian Basin and will allow us to develop approximately 500 million barrels of reserves from currently owned assets at an attractive cost,” said Dr. Ray R. Irani, Occidental Petroleum Corporation Chairman and Chief Executive Officer.
The net cost of the CO2 from the new gas processing plant is attractive. However, Oxy will continue to contract for and seek additional CO2 sources to further develop its existing Permian asset base. Total costs for the oil production from the new field development, including capital and operating costs, transportation, CO2 gas, etc., given the proximity to the Permian basin, are expected to be several dollars below current levels.
Oxy will own and operate the new facilities and will invest approximately $1.1 billion in their development. The gas processing plant, located in Pecos County, Texas, is expected to have a CO2 takeaway capacity of at least 450 million cubic feet per day. Oxy additionally will get another 50 million cubic feet per day from existing SandRidge gas processing plants. A new 160-mile long pipeline will be constructed from the plant, through McCamey, Texas, to the industry CO2 hub in Denver City, Texas.
SandRidge’s locally produced, high CO2 content natural gas will be processed at the new Oxy plant with Oxy oil and gas production wells receiving the CO2 stream that is separated from the natural gas.
Oxy is the largest producer in the Permian Basin with approximately 16-percent net share of total regional production. Oxy’s net production in the Permian Basin is currently about 200,000 BOE per day. At the end of 2007, Oxy’s Permian Basin properties had 1.2 billion BOE in proved reserves.
Subject to approvals, the new gas plant and pipeline are expected to commence operations in 2011 with immediate application to expand Oxy’s existing CO2 EOR operations.
About Oxy
Occidental Petroleum Corporation is an international oil and gas exploration and production company with operations in North America, Middle East/North Africa and Latin America regions. Oxy is the fourth largest U.S. oil and gas company, based on equity market capitalization. Oxy’s wholly owned subsidiary, OxyChem, manufactures and markets chlor-alkali products and vinyls. Oxy is committed to safeguarding the environment, protecting the safety and health of employees and neighboring communities and upholding high standards of social responsibility in all of the company’s worldwide operations.
FOR ADDITIONAL INFORMATION ON OXY EOR AND OXY IN THE PERMIAN, PLEASE GO TO: http://www.oxy.com/co2.
Contact:
Occidental Petroleum Corporation Media: Richard S. Kline 310-443-6249 richard_kline@oxy.com Investors: Chris Stavros 212-603-8184
chris_stavros@oxy.com
Source: Occidental Petroleum Corp.
