SECARB - Plant Barry to Citronelle - Knowledge Sharing Conference - Mobile - May 17, 2012

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SECARB - Plant Barry to Citronelle - Knowledge Sharing Conference - Mobile - May 17, 2012
SECARB – Plant Barry to Citronelle
Knowledge Sharing Conference - Mobile - May 17, 2012

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                                                       NYSE: DNR
SECARB - Plant Barry to Citronelle - Knowledge Sharing Conference - Mobile - May 17, 2012
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Our Company                                                                      x

Denbury Resources Inc. (NYSE: DNR):

!! A growing independent oil and gas company

!! Approximately 1309 employees (578 in Plano,731 in the field)

!! The largest oil and natural gas operator in Mississippi and Montana

!! Owns the largest reserves of CO2 used for tertiary oil recovery east of the
  Mississippi River

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

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SECARB - Plant Barry to Citronelle - Knowledge Sharing Conference - Mobile - May 17, 2012
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Areas of Operations: 2 Target Areas                                                                                                                  x

        Rockies
                                         MT                          ND

                                               Greencore
                                 ID             Pipeline            SD
                                             Lost
                                            Cabin
 Rockies Pipelines
 Source: Riley Ridge
 Greencore Line                                      WY
 •!Bell Creek (C) (EOY)                                                                          IL
 •!Cedar Creek Anticline (TBC)                                                                                     IN
 Anadarko Line
 •!Grieve (TBC)
                                                                                                                               Gulf Coast Pipelines
                                                                                                                               Source: Jackson Dome
                                                                                                                          KY
                                                                                                                               NEJD Line
                                                                                                                               •!Brookhaven
                                                                                                                               •!Mallalieu
                                                                                                                               •!Little Creek
                                                                                                                               •!McComb
                                                                                                                               •!Smithdale
                                                                                                                               •!Cranfield
                                                                                                       MS                      •!Lockhart Crossing
                                                                                     Delta Pipeline                            Free State Line
                                                       Gulf Coast                Sonat MS
                                                                                                      Jackson
                                                                                                       Dome
                                                                                                                 Free State
                                                                                                                               •!Martinville
                                                                                                                               •!Soso
       Existing CO2 Pipelines                                                     Pipeline                        Pipeline     •!Eucutta
       CO2 Pipelines Under Development                                                 LA              NEJD                    •!Heidelberg
                                                                     TX                               Pipeline                 Delta Line
                                                                           Green
       Rocky Mountain Fields With EOR Potential                           Pipeline                                             •!Tinsley
                                                                                                                               •!Delhi
       Existing Anthropogenic CO2 Sources                                                                                      Green Line
                                                                                                                               •!Oyster Bayou
       Proposed Coal to Gas or Liquids                                                                                         •!Hastings
                                                                                                                               •!Seabreeze
       CO2 Source Owned or Contracted                                                                                          •!Conroe (TBC)
                                                                                                                               •!Thompson (TBC)

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SECARB - Plant Barry to Citronelle - Knowledge Sharing Conference - Mobile - May 17, 2012
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Denbury Study Partnerships                                                  x

!! 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)

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SECARB - Plant Barry to Citronelle - Knowledge Sharing Conference - Mobile - May 17, 2012
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Citronelle Field – Basic Facts                                            x

                                 !! Citronelle Field located in & around
                                    the 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 3
                                    Denbury operated units
                                      !! 168 active producers
                                      !! 62 active injectors
                                      !! 7 SWD wells
                                      !! 93 TA/TP wells
                                      !! 88 plugged
                                      !! 5 SECARB
                                 !! Denbury took over operations on
                                    Feb. 1, 2006 from Merit Energy

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SECARB - Plant Barry to Citronelle - Knowledge Sharing Conference - Mobile - May 17, 2012
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SECARB Phase III Anthropogenic Test - Schedule                           x

                        The CO2 capture unit at Alabama Power’s
                        (Southern Co.) Plant Barry became operational
                        in 3Q 2011.

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

                        A characterization well was drilled in 1Q 2011
                        to confirmed geology.

                        Injection wells were drilled in 4Q 2011.

                        100 to 300 thousand metric tons of CO2 will be
                        injected into a saline formation over 2 to 3
                        years beginning in 2Q 2012.

                        3 years of post-injection monitoring.

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SECARB - Plant Barry to Citronelle - Knowledge Sharing Conference - Mobile - May 17, 2012
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  CO2 Pipeline Right-of-Way                             x

•! Approx. 12 mi (19 km) to the SE Citronelle Unit
   in 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 forested
      wetlands
   •! Endangered Gopher Tortoise habitat
        •! 110 burrows in or adjacent to construction
           area

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SECARB - Plant Barry to Citronelle - Knowledge Sharing Conference - Mobile - May 17, 2012
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 CO2 Pipeline and Measurement Design                                                              x

•! Applicable regulatory standard: US
     Depart of Transportation, 49 CFR Part
     195 —Transportation of Hazardous
     Liquids by Pipeline
•!   Welding - API 1104 & B31.3 (plant
     section)
•!   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

                                                 Handling pipe for horizontal directional drill
SECARB - Plant Barry to Citronelle - Knowledge Sharing Conference - Mobile - May 17, 2012
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 CO2 Pipeline Design and Construction                                                        x

•! Directional drilled 18 sections of the pipeline
   under roads, utilities, railroad tracks, tortoise
   colonies, and wetlands. (30 to 60 ft deep)
•! Trenched remaining sections
•! Corrosion protection
   •! Fusion Bond Epoxy coated pipe
   •! “Jeep” pipe for coating damage; manually
      coat joint welds and scratches
   •! Impressed current cathodic protection
                                                       Workers dressing welded pipe joints
   •! AC mitigation for overhead powerlines
      using copper wire
   •! ACVG survey after construction to check
      again for coating damage
   •! Caliper tool run to check for dents caused
      by rock or equipment

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SECARB - Plant Barry to Citronelle - Knowledge Sharing Conference - Mobile - May 17, 2012
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CO2 Pipeline and Measurement Design                                           x

•! Denbury pipeline purity requirement
   is:
   •! > 97% dry CO2 at 115ºF (46ºC)
   •! < 0.5% inerts (incl. N2 & argon)
   •! < 30 lb water per 1MMSCF
   •! < 20 ppm H2S
•! Impurities affect and sometimes
   amplify pipe fracture toughness
   requirements
      •! Hydrogen & N2 problematic
•! Toughness requirements for this
   project met by standard X42 pipe.
   Other projects require added wall
   thickness, modified pipe chemistry
   and/or crack arrestor installation.
                                         Custody meter station and building

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CO2 Pipeline and Measurement Commissioning                     x

•! Pipeline was commissioned March 8, 2012
•! At custody meter station there is the capability of
   taking samples of CO2 stream.
•! Samples will be taken periodically for permits
   and GHG reporting.
•! Sample obtained for Class V injection permit
   showed 99.6% pure CO2.
•! Major impurities were
     •! Nitrogen (2700 ppm)
          •!   Line was filled with N2 to pressure test line
               then swept with CO2 prior to commissioning
     •! Oxygen + Argon (880 ppm).
          •!   Lab impurity?

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CO2 Pipeline and Measurement Design                                                 x

•! CO2 Specific Design Requirements
   •! Valve seals – Accepted: Nylon,
     peroxide cured Buna N
     (HBNR-90/95), ethylene
     propylene rubber (EPDM)
  •! Valve packing – Teflon
  •! Low temperature materials for
     valves used for blowdown
     service only.
  •! Mainline valve station similar to
     natural gas with blowdowns for
     maintenance.

                                         Mainline valve station & CP test station

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 CO2 Pipeline and Measurement Design                                                  x

•! CO2 measured with senior orifice
     meter and gas chromatograph
•!   Custody measurement meets AGA
     Report #3, Parts 1 & 2
•!   Accuracy and mechanical issues with
     turbine, Coriolis, & ultrasonic meters
     •! Turbine – CO2 is dry – damages
        moving parts. CO2 viscocity range
        can be problematic
     •! Coriolis – Accuracy not as good as
        orifice
     •! Ultrasonic – CO2 absorbs and distorts
        signal                                  Check meter station and building at
•!   Communication using SCADA and                  Denbury Citronelle Field
     satellite.
•!   Check meter installed for pipeline leak
     detection and verification of injected
     volumes

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  CO2 Pipeline and Measurement Design                                                             x

•! CO2 Booster Pump
   •! 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 blowdown 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 CO2
                                                  Horizontal Injection Pump @ D-9-7 #2 Wellsite
   •!   Satellite link for communication
           •! 2 pressure transmitters & 2
               temperature transmitters
   •!   Stand alone air compressor system to
        operate valves & controls

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