CO2-EOR a technical success in the Charles formation
Magellan Petroleum (ticker: MPET) announced last week that the company’s CO2 enhanced oil recovery (CO2-EOR) pilot project is a “technical success,” according to MPET President and CEO J. Thomas Wilson. The pilot was concluded and proves that it is a technically viable tertiary recovery method in the Charles formation at Poplar Dome, in Montana.
According to the company’s investor presentation, Poplar has produced about 52 MMBOE since the 1950’s with no production from a water flood. The company expects that it will recover an additional 50 MMBOE using its CO2-EOR technique.
CO2 injection into the pilot’s single injector well began in August 2014. In October, the pilot’s four producer wells were opened for production. Since then, oil production has increased in three of the four producer wells in response to CO2 injection, with the fourth well expected to follow suit in the future. The current run-rate of production from the three producing wells together is 50 to 75 BOPD and is expected to increase gradually through the summer.
“Demonstrating that CO2-EOR works in practice at Poplar is a major milestone that substantially de-risks the technical feasibility aspects of this project,” said Wilson. “Our next objective is to demonstrate that this technique is economic at our field … Although oil prices also affect the economics of the project and the current oil price environment remains depressed, we believe that the potential long-term value of CO2-EOR development at Poplar is encouraging.”
CO2 from Farnham Dome
Magellan is also exploring its options for generating its own CO2 by acquiring the Farnham Dome in Utah, which the company could use to produce CO2 and ship to projects that would benefit from its CO2-EOR.
The company announced along with the technical success of its Poplar project that it also negotiated an extension of its option to acquire the Farnham Dome. The company now has until the end of May to negotiate with potential off-takers before determining whether or not to exercise the option.
The company also has the option to purchase CO2 from the Farnham Dome at a fixed price if it decides not to acquire the asset outright, according to the company’s presentation.
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