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March 29, 2011 – Comments (0)

Chaparral Energy Agrees to a CO2 Purchase and Sale Agreement With CVR Energy for Capture of CO2 for Enhanced Oil Recovery

Mar 29, 2011 07:00:04 (ET)

OKLAHOMA CITY, Mar 29, 2011 (GlobeNewswire via COMTEX) -- Chaparral Energy's CO2 subsidiary (Chaparral) announced today the execution of a long-term carbon dioxide (CO2) purchase and sale agreement with a subsidiary of CVR Energy (CVI, Trade ) for capture of CO2 from CVR's Coffeyville, KS nitrogen fertilizer plant. The agreement provides for the purchase of CO2 for Chaparral's initiation of enhanced oil recovery operations in its North Burbank Unit in northeastern Oklahoma.

Carbon dioxide enhanced oil recovery (CO2 EOR) is a tried-and-true method of producing otherwise stranded oil from mature fields. Chaparral is a leader of CO2 EOR in the Mid-Continent Region, and only uses CO2 from anthropogenic (man-made) sources which has the added benefit of reducing greenhouse gas emissions.

CVR Energy's subsidiary Coffeyville Resources Nitrogen Fertilizers, LLC owns and operates a nitrogen fertilizer facility in Coffeyville, KS. As a byproduct of manufacturing ammonia and urea ammonium nitrate (UAN) fertilizers, the plant currently produces about 850,000 tons per year (40 MMscf/d) of CO2. In this new project, almost all of the fertilizer plant's CO2 will be captured by Chaparral, who will construct a CO2 compression facility at the plant site and install approximately 70 miles of pipeline to deliver the CO2 to its North Burbank Unit in Osage County. Injection is expected to commence no later than July, 2013.

"We are excited about the opportunities this CO2 source presents for us," stated Mark Fischer, Chaparral's chairman, president and chief executive officer. "Using anthropogenic CO2 to produce domestic oil is a win-win scenario for everyone whereby CO2 is captured to reduce the impact on the atmosphere and at the same time generates incremental oil production that helps offset foreign oil imports. Utilizing CVR Energy's CO2 to grow our EOR business in the northeastern part of the state has been our desire for some time now. We are very pleased to complete the transaction."

During the past 10 years, Chaparral has initiated four CO2 floods in the Oklahoma and Texas panhandle areas and also continues to operate a mature CO2 project in southern Oklahoma where CO2 was first injected in 1982. Chaparral currently captures a total of approximately 42 million cubic feet per day of anthropogenic CO2, which otherwise would be vented to the atmosphere, and injects this CO2 into its fields. This contract will almost double Chaparral's CO2 capture volumes

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