With oil prices plunging again amidst news of Iran crude hitting the markets, and Saudi oil production remaining steady, U.S. oil companies are looking towards technology to bring production costs down.
When oil prices dip below $60 per barrel fracking isn’t economical for most companies causing rig counts to plummet in the U.S. along with production. This is where enhanced oil recovery technologies (EOR) are stepping to the forefront. One of these is CO2 EOR. Although it isn’t new, the technology can be applied to old oil fields to extend their production life by 25 years. EOR spending is projected to hit nearly $5 billion in 2015.
CO2 EOR is a proven technology that not only gives companies a way to recover stranded oil resources, which is estimated to be over 60% in older oil fields, but it also can be used to permanently store CO2 underground. CO2 EOR could be used for thousands of aging oil wells right now. CO2 EOR technology currently accounts for about 14% of total U.S. production.
For the green crowd, using CO2 this way should be palatable. Right now the move is on to start capturing some of the billions of tons of CO2 emitted from power plants to use for the EOR process. The main problem is many of the oil fields that are good candidates for the CO2 EOR process are not close to CO2 pipeline transports or naturally occurring CO2. Companies on the cutting edge of EOR recovery, CO2 capturing and gas transport should be on the energy investor’s radar.
One CO2 EOR stock to watch is Denbury Resources Inc. (NYSE: DNR). Like many oil stocks, DNR was hit hard with falling oil prices. Denbury Resources is currently at a 52-week low of $4.23 per share. This is well below the 52-week high of $18.07 in July of 2014.
For those who would like to dig deeper into CO2 EOR stocks this article lists over a dozen companies in the market.