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BUSY PLACE - Workers have been busy installing CO2 equipment for the past few months at SACROC and now more work is planned by Kinder Morgan. The company has announced a $185 million project to increase oil production in the unit. (SDN Staff Photo)

A $185 million spending plan to double the oil production in Snyder’s SACROC unit within two years was announced Wednesday by Kinder Morgan Energy Partners (KMP).

Kinder Morgan CO2 Company plans to build a new $40 million pipeline from Denver City to Snyder and the company also plans to spend $145 million in additional CO2 infrastructure at the SACROC unit. Of this amount, the company said approximately $120 million is KMP’s share.

Company officials project that the capital investment will make the field a viable source of oil production for years to come.

Kinder Morgan is forecasting that the project, and others associated with it, could increase recovery from the field by approximately 200 million barrels over the next 20 years.

At today’s posted price of a barrel of oil, that translates into $4,650,000,000.

“We’ve worked a number of years to stabilize SACROC and make it more efficient,” said Pete Hagist, the unit’s manager. “That is what this is all about.”

“We are delighted with the continuing internal growth of our CO2 business and the phenomenal early success of our SACROC CO2 project,” said Richard D. Kinder, chairman and chief executive officer of KMP. “These new expansion projects are expected to generate exceptional returns for our unit holders.”

According to Tim Bradley, president of Kinder Morgan CO2 Company, CO2 injection at the SACROC Unit continues to produce oil at levels that exceed the company’s original expectations.

“Oil production has increased by approximately 50 percent since we acquired our interest in SACROC and assumed operations in June of 2000, and it’s evident that more CO2 infrastructure is needed if SACROC is to achieve maximum potential production levels,” Bradley explained.

“Building additional infrastructure will increase CO2 deliveries to the project from 125 million cubic feet (MMcf) per day to well over 200 MMcf/day when the expansion comes online in late 2003. Eventually, we expect CO2 deliveries to SACROC to increase to approximately 325 MMcf/day.”

With the expansion, oil production is expected to grow from approximately 12,000 barrels per day currently to more than 20,000 barrels per day by late 2003, with substantial continued growth thereafter.

“With this growth, we’ll need more people,” said Hagist. “We’ll add as we go and we feel we will be adding a number of people to our operations as the project responds over the next three years,” said Hagist.

Presently, there are 55 working in operations for the company in Snyder, and seven in Midland.

Hagist said the project also would give a boost to local oil field contractors. “It will definitely increase local business as we can’t do a thing without our local people.”

Hagist said the project would include new drilling, and the most visible projects would be additional compressors just south of the existing facilities on FM 1611.

The $40 million Centerline Pipeline will originate near Denver City and transport CO2 to this area. The pipeline will consist of 120 miles of 16-inch pipe. Construction will start in January and the work will be completed in August. The new pipeline will primarily supply SACROC, but will also be available for existing and prospective third-party CO2 projects in the Horseshoe Atoll area of the Permian Basin. Existing projects include the Reinecke, Sharon Ridge and Cogdell units.

Kinder Morgan supplies CO2 to OxyPermian who announced last month that the first stage of their CO2 project at the Cogdell Field is a success, and that plans are in the works for a new $23 million project.

SACROC, which consists of some 50,000 acres, began CO2 injection in the early 1970s upon completion of the Canyon Reef Carriers Pipeline. The unit has produced more than 1.2 billion barrels of oil since its discovery in 1948 and still has significant additional oil reserves recoverable by CO2 injection operations.

Kinder Morgan CO2 has a greater than 80 percent ownership stake in the SACROC Unit, which is one of the oldest and largest oil fields in the U.S. utilizing CO2 injection technology.