American Oil and Gas Reporter - July 2023 - 74

SpecialReport: The CCS Journey
According to Wood, the enduring support
for the 45Q tax credit is fantastic
news for companies that excel at evaluating
subsurface geology and moving fluids.
" Carbon capture and storage is a great
opportunity for Denbury to use the capabilities
it has built over the past couple
decades and positively impact the environment, "
Wood says. " The market opportunity
is huge. "
The U.S. Environmental Protection
Agency's Greenhouse Gas Reporting Program
indicates that the United States produces
2.47 billion tons of carbon emissions
a year from existing stationary sources.
240 million of those tons are within 30
miles of the approximately 900-mile CO2
pipeline network Denbury has built along
the Gulf Coast, which is complemented
by an approximate 400-mile system in
the Rocky Mountains. The nearby emission
sources range from natural gas processing
facilities and power plants to ammonia,
biofuel and hydrogen producers,
Wood describes.
The potential market is likely to grow
with time, Wood predicts. He offers ammonia
as a case in point. " We expect ammonia
demand to continue increasing because
it's used to make fertilizer and
many places, including Asia, are looking
at adopting ammonia as a fuel for transportation
and even power generation. As
demand grows and facilities expand production,
they will want to store more
CO2 to generate low-carbon ammonia, "
he relates.
Today, Wood reports, Denbury already
has long-term contracts to transport and
sequester 22 million tons a year of CO2.
" By the end of the decade, we see ourselves
transporting and/or storing between
50 million and 70 million tons a year, "
he says. " In most cases, we charge between
$15 and $25 a ton for moving and storing
the CO2. "
EOR's Role
Wood points out that installing or
retrofitting equipment to capture CO2 requires
substantial capital. " To feel comfortable
with that investment, emitters
need to be confident they will have a
place to put the CO2, " he says. " Right
now, the Gulf Coast region does not have
any Class VI injection wells, the type for
sequestering CO2. "
That is where EOR comes into play,
Wood assures. " What Denbury has that is
especially unique is 400 million tons of
potential future EOR storage available
that we can use to help customers justify
investing in capture facilities. We can
guarantee them the ability to move into
our EOR fields and store CO2 there, which
would allow them to get the utilization
credit. That credit is not as high as the
one for storage, but since we can charge
a lower fee for EOR, it is often enough to
get emitters past their economic hurdles. "
Using anthropogenic CO2 for EOR
has a welcome side effect, Wood adds.
" From 20 years of experience with CO2
EOR, we can calculate how much oil
we get by putting CO2 in the ground.
There is enough CO2 stored for every
incremental barrel to offset the Scope I,
Scope II and Scope III emissions that
barrel creates, " he reports. " In other
words, the oil that gets pushed out of
the way to allow the CO2 to be stored
has a net negative carbon impact. "
During the first quarter of 2023, 28%
of Denbury's production qualified as carbon
negative. Once the Cedar Creek Anticline
CO2 flood begins producing later this year,
Wood says that percentage will grow
meaningfully. He mentions that the project,
which is in Montana and North Dakota, is
the company's largest EOR development
to date, with total recoverable reserves estimated
at 400 million barrels.
Although EOR projects have strong
economics and environmental benefits,
Wood says most emitters will move to
carbon storage once Class VI wells become
available to take advantage of the
more lucrative tax credits. " We need
them to do that, " he says. " We only
have limited EOR storage available as
this industry commences. For comparison,
we already have acquired more than 2
billion tons of dedicated storage capacity
in the Gulf Coast. "
The Gulf Coast's Appeal
In addition to ample emissions sources,
the Gulf Coast offers carbon sequestration
sites that Wood describes as world-class.
" It has some of the best geology in the
world, " he affirms. " There is a lot of
storage per square foot. It's also possible
to inject at extremely low differential
pressures, which means we can store
massive amounts of CO2 quickly. "
Add the capacity and speed together,
Using carbon dioxide captured from industrial facilities for enhanced oil recovery enables
Denbury to produce incremental barrels that are carbon-negative. The company indicates
that EOR projects help industrial sites justify investing in carbon capture equipment
before dedicated storage sites come on line.
74 THE AMERICAN OIL & GAS REPORTER
and " it takes fewer wells to accommodate
more emissions, " Wood reports. He says
the Rocky Mountain region also has excellent
geology. However, because fewer
facilities that produce pure, easily captured
carbon are located there, the market will

American Oil and Gas Reporter - July 2023

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