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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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CO2 Pipeline and Measurement Design
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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CO2 Pipeline and Measurement Design
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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CO2 Pipeline and Measurement Design
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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CO2 Pipeline and Measurement Design
Horizontal Injection Pump @ D-9-7 #2 Wellsite
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