LOS ANGELES, June 30, 2008 (PRIME NEWSWIRE) -- Occidental Petroleum Corporation (NYSE:OXY) today announced an agreement with SandRidge Energy (NYSE:SD) to develop a West Texas hydrocarbon gas processing plant and related pipeline infrastructure that will provide carbon dioxide (CO2) for use in Oxy's enhanced oil recovery (EOR) projects. The new CO2 resources are expected to expand Oxy's Permian production by a minimum of 50,000 barrels of oil per day within the next five years.
"This project will allow us to exploit at least 3.5 trillion cubic feet of CO2 for our long-term use in enhanced oil recovery projects throughout the Permian Basin and will allow us to develop approximately 500 million barrels of reserves from currently owned assets at an attractive cost," said Dr. Ray R. Irani, Occidental Petroleum Corporation Chairman and Chief Executive Officer.
The net cost of the CO2 from the new gas processing plant is attractive. However, Oxy will continue to contract for and seek additional CO2 sources to further develop its existing Permian asset base. Total costs for the oil production from the new field development, including capital and operating costs, transportation, CO2 gas, etc., given the proximity to the Permian basin, are expected to be several dollars below current levels.
Oxy will own and operate the new facilities and will invest approximately $1.1 billion in their development. The gas processing plant, located in Pecos County, Texas, is expected to have a CO2 takeaway capacity of at least 450 million cubic feet per day. Oxy additionally will get another 50 million cubic feet per day from existing SandRidge gas processing plants. A new 160-mile long pipeline will be constructed from the plant, through McCamey, Texas, to the industry CO2 hub in Denver City, Texas.
SandRidge's locally produced, high CO2 content natural gas will be processed at the new Oxy plant with Oxy oil and gas production wells receiving the CO2 stream that is separated from the natural gas.
Oxy is the largest producer in the Permian Basin with approximately 16-percent net share of total regional production. Oxy's net production in the Permian Basin is currently about 200,000 BOE per day. At the end of 2007, Oxy's Permian Basin properties had 1.2 billion BOE in proved reserves.
Subject to approvals, the new gas plant and pipeline are expected to commence operations in 2011 with immediate application to expand Oxy's existing CO2 EOR operations.
About Oxy
Occidental Petroleum Corporation is an international oil and gas exploration and production company with operations in North America, Middle East/North Africa and Latin America regions. Oxy is the fourth largest U.S. oil and gas company, based on equity market capitalization. Oxy's wholly owned subsidiary, OxyChem, manufactures and markets chlor-alkali products and vinyls. Oxy is committed to safeguarding the environment, protecting the safety and health of employees and neighboring communities and upholding high standards of social responsibility in all of the company's worldwide operations.
FOR ADDITIONAL INFORMATION ON OXY EOR AND OXY IN THE PERMIAN, PLEASE GO TO: http://www.oxy.com/co2.
Forward-Looking Statements
Statements in this release that contain words such as "will," "expect" or "estimate," or otherwise relate to the future, are forward-looking and involve risks and uncertainties that could significantly affect expected results. Factors that could cause results to differ materially include, but are not limited to: exploration risks such as drilling of unsuccessful wells, global commodity pricing fluctuations and supply/demand considerations for oil, gas and chemicals; higher than expected costs; political risks; changes in tax rates; unrealized acquisition benefits or higher than expected integration costs; and not successfully completing (or any material delay in) any expansion, capital expenditure, acquisition or disposition. The United States Securities and Exchange Commission (SEC) permits oil and natural gas companies, in their filings with the SEC, to disclose only proved reserves demonstrated by actual production or conclusive formation tests to be economically producible under existing economic and operating conditions. We use certain terms in this release, such as recoverable reserves, that the SEC's guidelines strictly prohibit us from using in filings with the SEC. You should not place undue reliance on these forward-looking statements which speak only as of the date of this release. Unless legally required, Occidental does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise. U.S. investors are urged to consider carefully the disclosure in our Form 10-K, available through 1-888-699-7383 or at www.oxy.com. You also can obtain a copy from the SEC by calling 1-800-SEC-0330.