Denbury Resources Inc. Compression in CO2 Enhanced Recovery

NYSE: DNR

Denbury Resources Inc.Compression in CO2 Enhanced RecoveryFebruary 10, 2011

Denbury Resources Inc. 2

Denbury Overview CO2 Compression History Engineering Issues Typical Denbury Packages Summary


Cautionary Note on Forward-Looking StatementsCertain statements in this presentation may constitute "forward-looking statements" within the meaning of Federal securities laws. The

events and circumstances referred to in forward-looking statements are subject to numerous risks and uncertainties that are detailed in Denbury's filings with the Securities and Exchange Commission, including its most recent reports on Forms 10-K and 8-K. Investors and securities holders are urged to consider closely the disclosure in our Annual Report on Form 10-K, available free of charge on our internet site (www.denbury.com). You can also obtain this form from the SEC on the SEC’s internet site (www.sec.gov) or by calling 1-800-SEC-0330. These risks and uncertainties are incorporated by this reference as though fully set forth herein and these events and circumstances may be influenced by factors that could cause actual outcomes and results to be materially different from those projected.

All written and oral forward-looking statements attributable to Denbury or persons acting on its behalf are expressly qualified in their entirety by such factors.

For further information contact:DENBURY RESOURCES INC.Phil Rykhoek, Chief Executive Officer, 972-673-2000Mark Allen, Sr. VP and Chief Financial Officer, 972-673-2000Laurie Burkes, Investor Relations Manager, 972-673-2166

Denbury Resources Inc.4 4

Green Pipeline

Jackson Dome Free State

Pipeline

Delta PipelineSonat MS Pipeline

ND

SDLost

Cabin

ID

MT

WY

TX LA

MS

IL

IN

KY

CO2 Pipelines Under Development

CO2 Source Owned or Contracted

Existing CO2 Pipelines

Rocky Mountain Fields With EOR Potential

Existing Anthropogenic CO2 Sources

GreencorePipeline

Note: 3P total reserves as of 9/30/10, based on a variety of recovery factors.

Proposed Coal to Gas or Liquids

Rockies227 Million Barrels

Gulf Coast 508 Million Barrels

Total Denbury 3P Inventory 735 Million Barrels

Denbury Resources Inc.

Top 5 Oil producer (1)

Leading CO2 EOR Company- Active in the Gulf Coast and Rocky Mountains

Largest producer in Mississippi and Montana 13 Producing EOR Floods. 2 in Construction 1.3 Billion BBLS of Reserves (2). 92 % Oil (2). Approximately 11.6 TCF of CO2 3P Reserves 835 Miles of CO2 Pipelines Approximately $10 B Enterprise Value Total production 3Q10 (2)- 63,194 BOE/D

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(1) Source: IHS Energy, Pro forma 2009 Production including Denbury, Encore and ENP. Excludes GOM and Alaska. Excludes NGLs.(2) Pro forma for sold or soon-to-be sold properties. Excluding ENP Reserves.

Denbury Resources Inc.6 6

Green Pipeline

Jackson Dome Free State

Pipeline

Delta PipelineSonat MS Pipeline

ND

SDLost

Cabin

ID

MT

WY

TX LA

MS

IL

IN

KY

GreencorePipeline

Source: DOE 2005 and 2006 reports.

Rockies

Gulf Coast

Estimated 1.3 to 3.2Billion Barrels

Recoverable

Estimated 3.4 to 7.5Billion Barrels

Recoverable


Denbury started CO2 EOR with the acquisition of the Little Creek Field in SWMS in 1999.

Continued with the acquisition of the W. Mallalieu and Olive Fields and NEJD Pipeline and Jackson Dome in 2000.

Originally developed by Shell Oil in the 1980’s The acquisitions included 9 compressors

including 3- CB KM2, 4 - DR RDS and 2-DR HHE VG2 acquired by Shell.

Facility expansion started with W. Mallalieu in 2002.

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From 2002 to 2004 Denbury acquired 9 compressors through a typical bid process.

As a small company there was mixed response from vendors and several no bids.

In 2004, the Denbury growth plans suggested that 150 additional compressors would be needed over 10 years at 15-20 units per year.

Multiple options for a new business plan were evaluated. Goals:◦ Predictable pricing◦ Predictable delivery◦ Repeatable standards

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In 2005 an alliance was formed with American Warrior, Dresser Rand and Converteam EM to supply compression. Formally on June 30, 2006.

To date the East Region has purchased 50 compressors under the alliance and the West and North Regions have purchased 26 compressors for a total of 76 compressors.

In line with the original plan Benefits of the alliance.◦ Reduced cost – Bid and engineering cycles◦ Early definition of schedule◦ Competitive pricing. Base loading◦ Commonality of parts and Standardization.◦ Common support crews◦ Continuous product improvement. Optimization. ◦ Lessons learned process.◦ Proactive improvements.◦ Improved business process based on long term trust.

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Dresser Rand HHE VG2 2

Dresser Rand RDS

Dresser Rand 7HOS4

Dresser Rand 6HOS4

Dresser Rand 5HOS2

Dresser Rand 6HOS2

Dresser Rand 7HOS2

Dresser Rand 7 HOSS6

Ariel JGC4

Ariel JGH2

Cooper Bessmer KM2


Dresser Rand

Ariel

Cooper Bessmer


CO2 Properties◦ CO2 is miscible in oil Good for EOR Bad for elastomers. Preferred - Peroxide cured buna,

urethane and teflon - 90 durometer Bad for compressor lubrication. Preferred -Mineral Oil

(Conoco RNO460) or Synthetic Oil (Summit NGL-888) Reduced compressor speed to maintain lubrication

◦ CO2 is a small molecule Good for EOR Will find a leak where other materials can’t

◦ CO2 and Water = Carbonic Acid Material selection is important if free water is present.

◦ CO2 has the density of oil at higher pressure Impact on rod load.

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Reservoirs are highly permeable sandstone.◦ Very little pressure drop from the injector to the producer ◦ Flowing tubing pressures are higher than other EOR regions

Denbury prefers straight CO2 injection.◦ Contributes to high flowing tubing pressure.

H2S isn’t produced with the oil. Suctions pressures range from 700-900 psi. Discharge pressures range from 2000 to 3150 psi. Second stage is in the supercritical region.◦ Compressor or pump?

Corrosion impact mitigated by under-saturation.

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45 -50 lbs./ cu. ft at discharge after cooling to 130 degrees

Can be pumped above critical pressure and temperature


Dresser Rand RDS2

1400 psi suction

2900 psi Discharge

5.5 in. stroke

3.81 in. bore

27 MMSCF/D

1000 HP


Wood GroupESP70 Stage TJ9000 Pump

27 MMSCF/D

600 HP

1400 psi suction

2900 psi discharge


Under-saturation used in lieu of dehydration for carbonic acid corrosion control


15 in stroke

327 rpm

2 stage

10.5 in 1st

stage

6.5 in 2nd

stage

40 MMSCF/D

2400 HP

800 psi suction

3150 psi discharge


7” Stroke

514 RPM

2 Stage

40 MMSCF/DCapacity

9” 1st Stage

5.75” 2nd

Stage

2400 HP

800 psi suction

3150 psi discharge


7” Stroke

4650 HP

600 rpm

400 psi suction

2200 psi discharge

6 throw

50 MMCF/D Capacity

At 700 psi suction capacity increases to 96 MMCF/D at Heidelberg and Tinsley

11.5” 1st stage

7.5” 2nd stage


CO2 requires slower speed operation◦ Longer stroke with speeds from 514 – 600 rpm on a typical high speed machine. HOS or HOSS◦ Better for lubrication◦ Requires larger cylinders and valves. Better for CO2 service due to density. ◦ Results in higher rod load. Needs to be managed. ◦ At 900 rpm, the piston rings travel 82,125 miles per year. At 514 rpm the same piston travels

59,694 miles per year. Preventative maintenance procedures need to be followed.

◦ Minor inspections at 5000 hrs- 10,000 hr. Cylinder and valves◦ Major inspection at 15,000 to 20,000 hrs. Overall◦ Beta analysis.◦ Oil analysis and history.

Good alignment will save future cost CO2 can carry more contaminates due to higher density.

◦ Vane pack design◦ Filtration or centrifugal separation

Vibration is more of a concern due the higher density of CO2◦ Heavier skids and foundations◦ More off skid clamping.◦ Need to measure vibration after installation

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Denbury Resources Inc. Compression in CO2 Enhanced Recovery

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