REMEDIATION EFFORTS CONTINUE AT DENBURY-OPERATED EOR SITE

Karen Frantz
GHG Monitor
11/08/13

Remediation efforts at Delhi Field—an enhanced oil recovery project in northern Louisiana that was discovered to be releasing a mix of CO2, saltwater and other well fluids in June—is nearing completion, Phil Rykhoek, president and chief executive officer of Denbury said this week. “We have resumed CO2 injections into the area surrounding the relatively small part of the field directly impacted by the release,” Rykhoek said on a call to investors reporting Denbury’s third quarter earnings. “I can assure you that the lessons we’ve learned are being applied across the organization.”

Denbury halted CO2 injections into the southwestern portion of the field after the release of well fluids was discovered and took action to stop the release and contain and recover well fluids in the area. Craig McPherson, Denbury’s senior vice president and chief operating officer, said progress on remediation efforts has allowed the company to resume injections into other parts of the field, “leaving only a small portion of Delhi into which we are not injecting CO2.” He added that Denbury is undertaking additional diagnostic work in the affected area.

Rykhoek said that despite a “modest” decline in production, mostly due to the remediation efforts at Delhi, Denbury reported sequential improvements in its quarterly financial results mostly as a result of higher oil prices. “We expect a modest increase in Delhi’s production in Q4,” McPherrson said. “Based on the actual remediation costs incurred to date, we’ve increased our current estimate for those costs by $28 million to a total of $98 million.” Denbury expects that insurance will cover some of the costs and damages of the release but has not yet reached an agreement with its provider.