The company’s portion of CCA covers nearly 175,000 acres. It is estimated to have up to five billion barrels of original oil in place.
Being developed in phases, the EOR project aims to recover oil more than 400 million barrels, with initial tertiary production scheduled by late 2021 or early 2022.
Denbury plans to invest approximately $250m in first tertiary production, including CO2 pipeline.
Denbury president and CEO Chris Kendall said: “The decision to sanction this significant project marks a major milestone for the Company and highlights our confidence in the significant long-term oil production and cash flow potential of this key asset.
“Over the last few years, the Denbury team has worked diligently to prepare this project for execution, capitalizing on our vast EOR experience, and I am proud of all the efforts that made the sanctioning of this project possible.
“We expect this project could ultimately produce more than 400 million barrels of oil through CO2 enhanced oil recovery, much greater than Denbury’s entire current proved reserves base and is attractive at $50 oil.”
The firm expects the project’s first two phases to generate $3bn of cumulative net free cash flow at $60 oil.
Under the first phase, the project targets to recover 30 million barrels of estimated recoverable oil in the Red River formation at East Lookout Butte and Cedar Hills South fields.
Denbury said that the project will reach incremental production between 7,500 and 12,500 barrels of oil per day within three years of first production.
Scheduled to commence in 2022, the phase 2 of the project will target approximately 100 million barrels of recoverable oil in the Interlake, Stony Mountain and Red River formations at Cabin Creek field.
Based on CO2 availability and other factors, additional phases of the project will target over 300 million barrels of estimated recoverable oil in the Interlake, Stony Mountain and Red River formations in Denbury’s other CCA fields.
