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Released October 29, 2014 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Surging crude-oil production in the Permian Basin has convinced Kinder Morgan Energy Partners LP (NYSE:KMP) (Houston, Texas) to invest about $1.7 billion to build new carbon dioxide (CO2) projects that will capture, process and transport that gas to the Permian Basin, where it will be injected in enhanced oil recovery (EOR) projects.
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In an announcement earlier this year, Kinder Morgan said it will invest about $700 million to drill CO2 wells in St. Johns, in eastern Arizona, where it also will build field gathering, treatment and compression facilities. In that same announcement, Kinder Morgan said it would spend an additional $310 million to build the Lobos Pipeline, a 214-mile, 16-inch diameter, grassroot pipeline to bring CO2 from eastern Arizona to Torrance County, New Mexico, where it will connect with the existing Cortez Pipeline, operated by Kinder Morgan.
The Lobos project will take between six and eight months to construct, and will employ about 1,200 people during construction. When completed, the pipeline will be able to transport up to 300 million cubic feet of CO2 per day. Assuming all approvals are granted, the new Lobos Pipeline should be operating by late 2016.
Kinder Morgan projected the development of the St. Johns Field and the construction of the Lobos Pipeline will help increase domestic oil supply by up to 50,000 barrels per day, decreasing the need to import oil from other countries.
"This project will help address the market's growing demand for CO2 and enable Permian Basin producers to increase oil production by using the product in EOR projects," said James Wuerth, president of KMP's CO2 group, in a statement. "EOR is measurably increasing the nation's recoverable oil supply and will continue to do so in the future."
In a separate announcement earlier this year, the company outlined plans to invest an additional $671 million to expand its CO2 infrastructure in southwestern Colorado and New Mexico. Kinder Morgan plans to expand its CO2 production operations in the Cow Canyon area of the McElmo Dome source field in Montezuma County, Colorado, and expand the approximately 500-mile Cortez Pipeline that transports CO2 from southwestern Colorado to eastern New Mexico and West Texas for use in EOR projects.
"These projects are designed to help address the market's growing demand for CO2 and enable companies, including Kinder Morgan, to increase incremental oil production by using CO2 in EOR projects," Wuerth said. "Kinder Morgan is a leading CO2 supplier and transporter, and we look forward to growing our CO2 network."
Crude-oil production in the Permian Basin has risen sharply in recent years, mainly through the use of horizontal drilling and hydraulic fracturing. However, EOR projects also are active in that area, as the basin is more than 50 years old. Production is expected to hit about 1.8 million barrels of oil per day (BBL/d) in November, a 42,000-BBL/d increase over October production levels. The Permian's current production is about double what it was in 2010, according to the Energy Information Administration's most recent Drilling Productivity Report for that basin.
Click on the image at right to see the steady rise of crude oil production in the Permian Basin
Kinder Morgan's $671 million capital investment will include approximately $344 million to increase its Colorado production of CO2 by 200 million cubic feet per day (MMCF/d). The plan includes an ongoing 3-D seismic acquisition; 16 new wells; activation of a production well and a produced water disposal well; water separation facilities; a central compressor station; and associated gathering and produced water disposal pipelines. Pending regulatory approvals, the company anticipates that 100 MMCF/d of new CO2 production in Cow Canyon, Colorado, will be brought online by next 2015. The remaining 100 MMCF/d of new CO2 production is scheduled to be in service by the end of 2015.
The company also plans to invest about $327 million to increase the capacity of its existing Cortez Pipeline in New Mexico to about 2 billion cubic feet per day (BCF/d) from its current capacity of about 1.35 billion cubic feet per day. Kinder Morgan plans to build a 64-mile loop in New Mexico and three new pumping stations--one each in New Mexico, Colorado and Texas. It also plans to modify five existing pumping stations--three in New Mexico, one in Colorado and one in Texas.
This $327 million expansion plan will accommodate the increased CO2 supply from the McElmo Dome field in Colorado, the St. Johns source field in eastern Arizona, and other sources in southwestern Colorado. Pending regulatory approvals, the northern portion of the Cortez Pipeline expansion is expected to be completed by July 2015 to handle the additional volumes from Cow Canyon, Colorado. The southern portion of the expansion project, which will handle new CO2 production from the St. Johns field, is scheduled to be complete by mid-2016.
"EOR makes a lot of sense, particularly when oil prices are as volatile as they have been lately," remarked Jesus Davis, vice president of research for Industrial Info's Oil & Gas Production, Pipelines and Terminals industries. "EOR may offer some producers a cost-effective alternative to fraccing, or refraccing, wells in the Permian Basin."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
View Project Report - 300159514 300159517 300147539 300162629 300147715 300159360 300159362 300159370 300159510 300154521 300180097
In an announcement earlier this year, Kinder Morgan said it will invest about $700 million to drill CO2 wells in St. Johns, in eastern Arizona, where it also will build field gathering, treatment and compression facilities. In that same announcement, Kinder Morgan said it would spend an additional $310 million to build the Lobos Pipeline, a 214-mile, 16-inch diameter, grassroot pipeline to bring CO2 from eastern Arizona to Torrance County, New Mexico, where it will connect with the existing Cortez Pipeline, operated by Kinder Morgan.
The Lobos project will take between six and eight months to construct, and will employ about 1,200 people during construction. When completed, the pipeline will be able to transport up to 300 million cubic feet of CO2 per day. Assuming all approvals are granted, the new Lobos Pipeline should be operating by late 2016.
Kinder Morgan projected the development of the St. Johns Field and the construction of the Lobos Pipeline will help increase domestic oil supply by up to 50,000 barrels per day, decreasing the need to import oil from other countries.
"This project will help address the market's growing demand for CO2 and enable Permian Basin producers to increase oil production by using the product in EOR projects," said James Wuerth, president of KMP's CO2 group, in a statement. "EOR is measurably increasing the nation's recoverable oil supply and will continue to do so in the future."
In a separate announcement earlier this year, the company outlined plans to invest an additional $671 million to expand its CO2 infrastructure in southwestern Colorado and New Mexico. Kinder Morgan plans to expand its CO2 production operations in the Cow Canyon area of the McElmo Dome source field in Montezuma County, Colorado, and expand the approximately 500-mile Cortez Pipeline that transports CO2 from southwestern Colorado to eastern New Mexico and West Texas for use in EOR projects.
"These projects are designed to help address the market's growing demand for CO2 and enable companies, including Kinder Morgan, to increase incremental oil production by using CO2 in EOR projects," Wuerth said. "Kinder Morgan is a leading CO2 supplier and transporter, and we look forward to growing our CO2 network."
Crude-oil production in the Permian Basin has risen sharply in recent years, mainly through the use of horizontal drilling and hydraulic fracturing. However, EOR projects also are active in that area, as the basin is more than 50 years old. Production is expected to hit about 1.8 million barrels of oil per day (BBL/d) in November, a 42,000-BBL/d increase over October production levels. The Permian's current production is about double what it was in 2010, according to the Energy Information Administration's most recent Drilling Productivity Report for that basin.
Click on the image at right to see the steady rise of crude oil production in the Permian BasinKinder Morgan's $671 million capital investment will include approximately $344 million to increase its Colorado production of CO2 by 200 million cubic feet per day (MMCF/d). The plan includes an ongoing 3-D seismic acquisition; 16 new wells; activation of a production well and a produced water disposal well; water separation facilities; a central compressor station; and associated gathering and produced water disposal pipelines. Pending regulatory approvals, the company anticipates that 100 MMCF/d of new CO2 production in Cow Canyon, Colorado, will be brought online by next 2015. The remaining 100 MMCF/d of new CO2 production is scheduled to be in service by the end of 2015.
The company also plans to invest about $327 million to increase the capacity of its existing Cortez Pipeline in New Mexico to about 2 billion cubic feet per day (BCF/d) from its current capacity of about 1.35 billion cubic feet per day. Kinder Morgan plans to build a 64-mile loop in New Mexico and three new pumping stations--one each in New Mexico, Colorado and Texas. It also plans to modify five existing pumping stations--three in New Mexico, one in Colorado and one in Texas.
This $327 million expansion plan will accommodate the increased CO2 supply from the McElmo Dome field in Colorado, the St. Johns source field in eastern Arizona, and other sources in southwestern Colorado. Pending regulatory approvals, the northern portion of the Cortez Pipeline expansion is expected to be completed by July 2015 to handle the additional volumes from Cow Canyon, Colorado. The southern portion of the expansion project, which will handle new CO2 production from the St. Johns field, is scheduled to be complete by mid-2016.
"EOR makes a lot of sense, particularly when oil prices are as volatile as they have been lately," remarked Jesus Davis, vice president of research for Industrial Info's Oil & Gas Production, Pipelines and Terminals industries. "EOR may offer some producers a cost-effective alternative to fraccing, or refraccing, wells in the Permian Basin."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
