Denbury Resources Nears Construction Phase on a New CO2 Pipeline in Mississippi

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Denbury Resources Incorporated (NYSE:DNR )(Plano, Texas) is approaching the construction phase for a new 84-mile carbon dioxide (CO2) pipeline. The proposed pipeline will originate near the company's CO2 source fields, near Jackson, Mississippi, and will terminate at Denbury's planned tertiary oil recovery operations in its East Mississippi operating area. The pipeline will initially terminate at Denbury's Eucutta EOR field and will then be extended through new pipeline lateral construction to other facilities such as Denbury's Heidelberg Field. Ultimately the CO2 pipeline will serve six of Denbury's oil fields. Denbury's supply of CO2 has been shored up, as well, by adding 300 billion cubic feet of reserves in the Jackson area in 2004, with a total reserves increase of one trillion cubic feet added in 2004.

Denbury Resources has already issued bid packages for the pipeline construction and hopes to select a contractor some time in late June or early July of 2005. All things considered, Denbury expects to begin construction on the pipeline as early as August 2005, with a completion and in-service date targeted for November of the same year.

Capital expenditure estimates for the pipeline range from $40 million to $50 million and represent a sizeable portion of Denbury's $305 million 2005 capital budget. The 2005 capital budget represents a spending increase of approximately 31% of Denbury's $209.4 million 2004 capital budget, and there is talk of further increasing the 2005 capital budget by another $30 million to $50 million.

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