T. Chatfield - Denbury's CO2 EOR Activities

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Tommy ChatfieldRECS Plant Barry

June 21, 2013


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Click to edit Master title style

Denbury Resources Inc. (NYSE: DNR):

A growing independent oil and gas company Approximately 1386 employees (622 in Plano,764 in the

field) (6/30/2012)

The largest oil and natural gas operator in Mississippi andMontana

Owns the largest reserves of CO2 used for tertiary oilrecovery east of the Mississippi River

Holds significant operating acreage in the Rockies, Mid-Continent and Gulf Coast

http://www.denbury.com/

Our Company

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Rocky Mountain Region

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East Region Cranfield Adams & Franklin Counties, MS

Large Scale CO2 Injection MVA BEG / SECARB Citronelle Mobile County, AL

CO2 Injection Pilot UAB / UA / AA&M / UNCC

Sequestering CO2 in a Saline Reservoir EPRI / SSEB / SECARB West Region

West Hastings Brazoria County, TX Anthropogenic CO2 Injection for EOR MVA BEG / GCCC

Delhi Richland Parish, LA Geophysical Mapping CSM

North Region Bell Creek Powder River County, MT

MVA Program PCOR / EERC / UND

MVA (Monitoring, Verification, Accounting)

Denbury Study Partnerships

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Jackson Dome currently supplies all of theCO2 for the East Region

12 Fields are currently injecting CO2 forenhanced oil recovery (EOR)

Citronelle Field Last major field to be flooded in the East

Region 40 miles from end of Free State Line in

Eucutta

Significant amount of well, facility, flow line& injection line work needs to be done

Phase 6 is Citronelle Field in southwestAlabama, another field acquired in 2006,

which will require an extension to theFree State CO2 Pipeline or anotherpipeline depending on the ultimate CO2source for this field, the timing of which isuncertain at this time

East Region Area of Operations

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Click to edit Master title styleCitronelle Field Basic Facts

Citronelle Field located in & aroundthe City of Citronelle

Approx. 1 hour north of Mobile, AL Field is comprised of 3 active units:

Main, East & Southeast

There are 423 wells in the 3Denbury operated units

168 active producers 65 active injectors 8 SWD wells 88 TA/TP wells 88 plugged 5 SECARB

Denbury took over operations onFeb. 1, 2006 from Merit Energy

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Click to edit Master title styleCitronelle Geological Field Summary

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Field discovered 1955 Discovery Well: Zach Brooks Drilling #1 Donovan (Unit Well A-25-5) Producing formations:

Upper Donovan Sands (Rodessa) Lower Donovan Sands (Sligo)

Current Well Spacing: 40 acres Original GOR = 244 cft/bbl in Rodessa and 104 cft/bbl in Sligo Oil Gravity (43-45 degrees API) Water flood June 1961 to present Cumulative Production approximately 165 MMBO

(Estimated Primary cum production approximately 52 MMBO) Estimated OOIP between 300-500 MMBO Structure is a salt-cored, un-faulted, ovate anticline with nw-se trending axis.

Regional structural dip is generally to the south. Reservoir seal for Rodessa is Ferry Lake Anhydrite Reservoir seal for Sligo is Pine Island Shale

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Productive Area approximately 33 square miles 53 productive sandstones have been identified. 481 wells on the structure Currently 168 active producers and 65 active water injectors Daily production averages approximately 1,600 BOPD (gross)

with approximately 9,200 BWPD and water injectionapproximately 13,000 BWIPD

Depositional Model Tidal Channel / Tidal Flat / Estuarine Environment Brackish water; semi-arid climate; pedogenic features Abundant bioturbation (even within channel deposits) Modern-day analogy = Indus Delta

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Click to edit Master title styleSECARB Phase III Anthropogenic Test - Schedule

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The CO2 capture unit at Alabama Powers (SouthernCo.) Plant Barry became operational in 3Q 2011.

A newly built 12 mile CO2 pipeline from Plant Barryto the Citronelle Dome completed in 4Q 2011.

A characterization well was drilled in 1Q 2011 toconfirmed geology. Injection wells were drilled in 4Q2011.

1st injection on Aug 20, 2012. Thru Feb 2013, haveinjected over 55,800 metric tons.

100 to 300 thousand metric tons of CO2 will beinjected into a saline formation over 2 to 3 yearsbeginning in 3Q 2012.

3 years of post-injection monitoring.

Project Schedule andMilestones


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Approx. 12 mi (19 km) to the SE Citronelle Unitin Citronelle Oil Field

Right-of-Way 1 mi (2 km) inside Plant Barry property > 8 mi (13 km) along existing power corridor 2 mi (3 km) undisturbed forested land Permanent cleared width 20 ft (6 m) Temporary construction width 40 ft (12 m)

Right-of-Way habitat 9 mi (14.5 km) of forested and commerical

timber land

3 mi (5 km) of emergent, shrub and forestedwetlands

Endangered Gopher Tortoise habitat 110 burrows in or adjacentto construction area

Directional drilled 18 sections of the pipelineunder roads, utilities, railroad tracks, tortoisecolonies, and wetlands. (30 to 60 ft deep).

Trenched remaining sections.

CO2 Pipeline Right-of-Way

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4-inch (10 cm) pipe diameter X42/52 carbon steel pipe MOP 2,220 psig (flange limitation) Normal operating pressure: 1,500 psig (10.3 MPa) maximum Buried average of 5 ft (1.5 m) with surface re-vegetation and erosion control

CO2 Pipeline and Measurement Design

Handling pipe for horizontal directional drill


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Corrosion protection

Fusion Bond Epoxy coated pipe Jeep pipe for coating damage;

manually coat joint welds and

scratches Impressed current cathodic

protection

AC mitigation for overheadpowerlines using copper wire

ACVG survey after construction tocheck again for coating damage

Caliper tool run to check for dentscaused by rock or equipment

CO2 Pipeline Design and Construction

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Workers dressing welded pipe joints


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Denbury pipeline purity requirement is: > 97% dry CO2at 115F (46C) < 0.5% inerts (incl. N2 & argon) < 30 lb water per 1MMSCF < 20 ppm H2S

A Danielmodel 500 gas chromatographis located at the pipeline metering andcustody transfer station & continuouslysamples the gas leaving Plant Barry.Used for trace contaminant monitoring,pipeline integrity, or product quality /process control.


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Custody meter station and building

2012-13 Injection Stream Monitoring Results

(Percent by Volume).

Sep Oct Nov Dec Jan

CO2 99.979% 99.984% 99.984% 99.981% 99.977%

N2 0.011% 0.002% 0.002% 0.003% 0.020%

O2 0.010% 0.014% 0.014% 0.016% 0.003%

Field-mount GasChromatograph


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Pipeline was commissioned March 8,2012 At custody meter station there is the

capability of taking samples of CO2stream.

Samples will be taken periodically forpermits and GHG reporting.

Sample obtained for Class V injectionpermit showed 99.6% pure CO2.

Major impurities were Nitrogen (2700 ppm)

Line was filled with N2 topressure test line then sweptwith CO2 prior tocommissioning

Oxygen + Argon (880 ppm). Lab impurity?

CO2 Pipeline and Measurement Commissioning

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CO2 Specific Design Requirements Valve seals Accepted: Nylon,

peroxide cured Buna N(HBNR-90/95), ethylene propylenerubber (EPDM)

Valve packing Teflon Low temperature materials forvalves used for blowdown serviceonly.

Mainline valve station similar tonatural gas with blowdowns for

maintenance.


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Mainline valve station & CP test station


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Click to edit Master title styleCO2 Pipeline and Measurement Design

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Mainline valve station & CP test stationCheck meter station & building at Denbury Citronelle Field

Check meter station to horizontal pump Discharge side of horizontal pump


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Horizontal CO2 Booster Pump @ D-9-7 #2 Wellsite Designed & fabricated by Wood Group (GE) 130 stages (impellers) / 44 ft long / 4 suction 3 discharge 300 HP electric motor 3570 rpm w/ variable speed drive Pneumatic shut downs (2), pneumatic control valves (2), manual shut down valves (2), vibration shut down

switch (1), manual blow down valves (2), discharge check valve (1)

Inlet pressure 1300 psi outlet pressure 3200 psi Variable speed drive with recycle valve for near 100% turndown Max rate approx. 14 MMCFD CO

2 Satellite link for communication

2 pressure transmitters & 2 temperature transmitters Stand alone air compressor system to operate valves & controls


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Click to edit Master title styleDeep Monitoring Activities

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D-9-9#2

Backup Injection Well

Spud date: 12/28/2011

D-9-7#2

Primary Injection Well

Spud date: 12/2/2011

D-9-8#2

Characterization Well

Spud date: 12/31/2010

Plume Extent

(Model)

D-4-13 & D-4-14

In Zone Monitoring Wells

TA wells put into service

The 5 Wells

Dedicated to theProject

New wells - drilling order: D-9-8 #2 characterization well D-9-7 #2 primary injection well D-9-9 #2 auxiliary injection

well

All 3 wells drilled to 11,800 ft. The distance from the D-9-7 #2

injector to the D-9-8 #2observation well is only 825 ft.

2 SE Unit wells were convertedfrom TA to be in & above zonemonitoring wells:

D-4-13 perforated in theTuscaloosa (above zonemonitoring)

D-4-14 perforated in thePaluxy (in zonemonitoring)


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Click to edit Master title styleDrilling Time Curves

All 3 wells drilled to same specificationsexcept for coring program

Closed loop mud system used on 2 of 3wells

Typical mud weight 9.2 to 9.5 Typical Ph 9.5 to 10.0 Projected drilling days on AFE

D-9-8 #2 = 41 days (30 days) D-9-7 #2 = 33 days (22 days) D-9-9 #2 = 33 days (25 days)

Cores taken in Upper Paluxy for all 3 wells D-9-8 #2 had additional cores in lower

Paluxy & upper & lower Donovan

Deviation 1o or less on all wells Cost to drill & complete (less MBM)

ranged from $2,200,000 to $2,400,000

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Wells Drilled for the

Project


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Click to edit Master title styleWellbore Schematic

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Thecasingprogramforall3wellswasidenEcal Surfacecasing:

Drilledwith131/2bitto2500L Set10casing&circulatedcementtosurface(D-9-7#2)

eadslurry=805sacks35/65Pozw/yieldof1.81L3/sack Tailslurry=320sacksType1cementw/ yield of 1.21 ft3/

sack

ProducEoncasing: Drilled with 9 7/8 bit to 11,800 ft Set 7 casing with DV tool @ 6000 ft & circulated cement

to surface(D-9-7 #2)

Spacer of Mud Clean II followed with a preflush ofSealbond

Lead slurry = 715 sacks 35/65 Poz w/ yield of 1.62 ft3/sack

Tail slurry = 805 sacks Class H cement w/ yield of1.43 ft3/sack

OpenDVtool,pumpfreshwaterspacerfollowedwithSealbondpreflush

Pumped 1515 sacks 35/65 Poz w/ yield of 1.62 ft3/sack


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Click to edit Master title styleCO2 Research Activity

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We have been opportunistic about addingexperimental aspects to the test.

Tools run in the D-9-8 #2 observation well Modular Borehole Monitoring (Carbon

Capture Project)

Sensor platform for acquiring multiplemeasurements using one deploymentcompletion

Water Sampling Methodologies Deploy different methods (e.g., u-tube,

gas-lift, pumping and wireline sampling) toevaluate impact on groundwater qualityresults

Reservoir Dynamics and FormationSaturation

in-zone tracer tests and fluid sampling toassess changes in inter-well formationsaturation, sweep efficiency changes in thegeochemistry of formation fluids

Installed geophones for periodic monitoringof CO2 plume

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Click to edit Master title styleD-9-8 #2 MBM (Modular Borehole Monitoring) Deployment

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XFlat Pack

Weight = 1.089 #/ftTotal weight to packer

depth of 9400 ft =10,240 #s


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Click to edit Master title styleGLCC Unit Venting of D-9-8#2

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Blow Down Schematic sent to ADEM

Documents

T. Chatfield - Denbury's CO2 EOR Activities