CO2 Pipeline - SECARB, Plant Barry to Citronelle

7/31/2019 CO2 Pipeline - SECARB, Plant Barry to Citronelle

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NYSE: DNR

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SECARB Plant Barry to CitronelleResearch Experience in Carbon Sequestration June 8, 2012


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Our Company

Denbury Resources Inc. (NYSE: DNR):

A growing independent oil and gas companyApproximately 1309 employees (578 in Plano,731 in the field) The largest oil and natural gas operator in Mississippi and Montana Owns the largest reserves of CO2 used for tertiary oil recovery east of the

Mississippi River

Holds significant operating acreage in the Rockies, Mid-Continent and GulfCoast


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Areas of Operations: 2 Target Areas

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GreenPipeline

JacksonDome

Free StatePipeline

Delta Pipeline

NEJDPipeline

Sonat MSPipeline

ND

SDLost

Cabin

ID

MT

WY

TXLA

MS

IL

IN

KY

Greencore

Pipeline

Rockies

CO2 Pipelines Under Development

CO2 Source Owned or Contracted

Existing CO2 Pipelines

Rocky Mountain Fields With EORPotential

Existing Anthropogenic CO2 Sources

Proposed Coal to Gas or Liquids

Gulf Coast

Gulf Coast Pipelines

Source: Jackson Dome

NEJD LineBrookhavenMallalieuLittle CreekMcCombSmithdaleCranfieldLockhart CrossingFree State LineMartinvilleSosoEucuttaHeidelbergDelta LineTinsleyDelhiGreen LineOyster BayouHastingsSeabreezeConroe (TBC)Thompson (TBC)

Rockies Pipelines

Source: Riley Ridge

Greencore LineBell Creek (C) (EOY)Cedar Creek Anticline (TBC)Anadarko Line

Grieve (TBC)


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Denbury Study Partnerships

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East Region Cranfield Adams & Franklin Counties, MS

Large Scale CO2 Injection MVA BEG / SECARB Citronelle Mobile County, AL

CO2 Injection Pilot UAB / UA / AA&M / UNCC Sequestering CO2 in a Saline Reservoir EPRI / SSEB / SECARB

West Region

West Hastings Brazoria County, TX Anthropogenic CO2 Injection for EOR MVA BEG / GCCC

Delhi Richland Parish, LA Geophysical Mapping CSM

North Region Bell Creek Powder River County, MT

MVA Program PCOR / EERC / UND

MVA (Monitoring, Verification, Accounting)


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Citronelle Field Basic Facts

Citronelle Field located in & aroundthe City of Citronelle Approx. 1 hour north of Mobile, AL

Field is comprised of 3 active units:Main, East & Southeast

There are 423 wells in the 3Denbury operated units

168 active producers 62 active injectors 7 SWD wells 93 TA/TP wells 88 plugged 5 SECARB

Denbury took over operations onFeb. 1, 2006 from Merit Energy

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Citronelle Geological Field Summary

Field discovered 1955 Discovery Well: Zach Brooks Drilling #1 Donovan (Unit Well A-25-5) Producing formations:

Upper Donovan Sands (Rodessa) Lower Donovan Sands (Sligo)

Current Well Spacing: 40 acres

Original GOR = 244 cft/bbl in Rodessa and 104 cft/bbl in Sligo

Oil Gravity (43-45 degrees API) Water flood June 1961 to present Cumulative Production approximately 165 MMBO

(Estimated Primary cum production approximately 52 MMBO)

Estimated OOIP between 300-500 MMBO

Structure is a salt-cored, un-faulted, ovate anticline with NW-SE trending axis. Regional structural dip is generally to the south.

Reservoir seal for Rodessa is Ferry Lake Anhydrite Reservoir seal for Sligo is Pine Island Shale

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Citronelle Geological Field Summary

Productive Area approximately 33 square miles 53 productive sandstones have been identified. 481 wells on the structure Currently 168 active producers and 62 active water injectors Daily production averages approximately 1,580 BOPD (gross)

with approximately 9,700 BWPD and water injection

approximately the same as water produced. (Apr 2012 avg thru 4/9)

Depositional Model Tidal Channel / Tidal Flat / Estuarine Environment Brackish water; semi-arid climate; pedogenic features Abundant bioturbation (even within channel deposits) Modern-day analogy = Indus Delta

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SECARB Phase III Anthropogenic Test - Schedule

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The CO2 capture unit at Alabama Powers(Southern Co.) Plant Barry became operationalin 3Q 2011.

A newly built 12 mile CO2 pipeline from PlantBarry to the Citronelle Dome completed in 4Q2011.

A characterization well was drilled in 1Q 2011to confirmed geology.

Injection wells were drilled in 4Q 2011.

100 to 300 thousand metric tons of CO2 will be

injected into a saline formation over 2 to 3years beginning in 2Q 2012.

3 years of post-injection monitoring.

Project Schedule and Milestones


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Approx. 12 mi (19 km) to the SE Citronelle Unitin Citronelle Oil Field

Right-of-Way 1 mi (2 km) inside Plant Barry property > 8 mi (13 km) along existing power corridor 2 mi (3 km) undisturbed forested land

Permanent cleared width 20 ft (6 m) Temporary construction width 40 ft (12 m) Right-of-Way habitat

9 mi (14.5 km) of forested and commericaltimber land

3 mi (5 km) of emergent, shrub and forestedwetlands

Endangered Gopher Tortoise habitat 110 burrows in or adjacent to constructionarea

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CO2 Pipeline Right-of-Way


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Applicable regulatory standard: USDepart of Transportation, 49 CFR Part

195 Transportation of HazardousLiquids by Pipeline

Welding - API 1104 & B31.3 (plantsection)

4-inch (10 cm) pipe diameter X42/52 carbon steel pipe MOP 2,220 psig (flange limitation) Normal operating pressure: 1,500 psig

(10.3 MPa) maximum

Buried average of 5 ft (1.5 m) withsurface re-vegetation and erosion control

Handling pipe for horizontal directional drill

CO2 Pipeline and Measurement Design


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Directional drilled 18 sections of the pipelineunder roads, utilities, railroad tracks, tortoise

colonies, and wetlands. (30 to 60 ft deep)

Trenched remaining sections Corrosion protection

Fusion Bond Epoxy coated pipe Jeep pipe for coating damage; manuallycoat joint welds and scratches Impressed current cathodic protection AC mitigation for overhead powerlines

using copper wire

ACVG survey after construction to checkagain for coating damage

Caliper tool run to check for dents causedby rock or equipment

Workers dressing welded pipe joints

CO2 Pipeline Design and Construction


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Denbury pipeline purity requirementis:

> 97% dry CO2 at 115F (46C) < 0.5% inerts (incl. N2 & argon) < 30 lb water per 1MMSCF < 20 ppm H

2S

Impurities affect and sometimesamplify pipe fracture toughness

requirements

Hydrogen & Nitrogenproblematic

Toughness requirements for thisproject met by standard X42 pipe.

Other projects require added wallthickness, modified pipe chemistry

and/or crack arrestor installation.

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Custody meter station and building


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CO2 Pipeline and Measurement Commissioning

Pipeline was commissioned March 8, 2012 At custody meter station there is the capability of

taking samples of CO2 stream.

Samples will be taken periodically for permitsand GHG reporting.

Sample obtained for Class V injection permitshowed 99.6% pure CO2. Major impurities were

Nitrogen (2700 ppm) Line was filled with N2 to pressure test line

then swept with CO2 prior to commissioning

Oxygen + Argon (880 ppm). Lab impurity?


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CO2 Specific Design Requirements Valve seals Accepted: Nylon,

peroxide cured Buna N

(HBNR-90/95), ethylenepropylene rubber (EPDM)

Valve packing Teflon Low temperature materials for

valves used for blowdownservice only.

Mainline valve station similar tonatural gas with blowdowns formaintenance.

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Mainline valve station & CP test station


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CO2 measured with senior orificemeter and gas chromatograph

Custody measurement meets AGAReport #3, Parts 1 & 2

Accuracy and mechanical issues withturbine, Coriolis, & ultrasonic meters

Turbine CO2 is dry damagesmoving parts. CO2 viscocity rangecan be problematic

Coriolis Accuracy not as good asorifice

Ultrasonic CO2 absorbs and distortssignal

Communication using SCADA andsatellite.

Check meter installed for pipeline leakdetection and verification of injected

volumes

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Check meter station and building atDenbury Citronelle Field


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CO2 Booster Pump Designed & fabricated by Wood Group

(GE)

130 stages (impellers) 44 ft long 4 suction 3 discharge 300 HP electric motor 3570 rpm w/

variable speed drive

Pneumatic shut downs (2), pneumaticcontrol valves (2), manual shut down

valves (2), vibration shut down switch

(1), manual blowdown valves (2),

discharge check valve (1)

Inlet pressure 1300 psi outletpressure 3200 psi

Variable speed drive with recycle valvefor near 100% turndown

Max rate approx. 14 MMCFD CO2 Satellite link for communication

2 pressure transmitters & 2temperature transmitters

Stand alone air compressor system tooperate valves & controls

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Horizontal Injection Pump @ D-9-7 #2 Wellsite

Documents

CO2 Pipeline - SECARB, Plant Barry to Citronelle