Oklahoma City-based SandRidge Energy Inc. and Occidental Petroleum Corp. plan to build and operate a West Texas carbon dioxide (CO2) extraction plant and pipeline that is expected to boost Occidental’s Permian Basin oil production by at least 50,000 b/d and Sandridge’s production of high-CO2 natural gas to 350 MMcf/d (260 MMcf/d net), the companies said.

Occidental will put up the $1.1 billion in development costs, own and operate the facilities and claim 100% of the CO2. The Century Plant in Pecos County, TX, combined with existing SandRidge CO2 processing plants, would allow treatment of approximately 1 Bcf/d of high-CO2 gas by year-end 2011. The CO2 takeaway capacity is expected to be at least 450 MMcf/d.

SandRidge would drill, produce, and deliver high-CO2 gas to the Century Plant and retain 100% of the methane gas at the tailgate under a 30-year agreement. The Oklahoma company expects the facility also will enable it to develop 1.7 Tcf of additional methane reserves from high-CO2 gas. The company currently has the capability of producing 70 MMcf (50 MMcf net) per day of methane from high-CO2 gas.

Occidental also plans to build pipelines from McCamey, TX, to Denver City, TX, to deliver the CO2 to its enhanced oil production facilities.

“This agreement underscores the vast resource of natural gas that SandRidge controls in the West Texas Overthrust (WTO),” said SandRidge CEO Tom L. Ward.”We believe that there are multiple Tcfs of high-CO2 gas to produce in coming decades in the WTO.”

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