February 28, 2005

$95M project increases oil recovery, reduces CO2

Apache Canada plans to invest $95 million over the next five years to recover additional oil from its Midale Unit oilfield in southeast Saskatchewan by injecting and trapping carbon dioxide (CO2) deep inside the earth. Almost half of the funds will be invested this year in new construction, including 26 kilometres of pipeline to tie into the existing 325-kilometre pipeline that delivers CO2 to the EnCana operation in Weyburn.

Industry and Resources Minister Eric Cline said the project will extend the life of the Midale operation by over two decades with minimal environmental impact. Apache Canada Ltd. estimates it will extend the Midale Unit's lifespan by about 25 years, during which time up to 8.75 million tonnes of CO2 will be sequestered underground rather than being released into the atmosphere.

This is Saskatchewan's second full-scale CO2 enhanced oil recovery project. The provincial government encouraged Apache's investment by offering special enhanced oil recovery royalty and production tax provisions. Apache expects to recover an additional 45 to 46 million barrels of oil from the Midale Unit, increasing its production by approximately 50%.

The CO2 will be purchased from a coal gasification plant which has been piping CO2 from Beulah, North Dakota to Weyburn since 2000. Up to 1,350 tonnes of purchased CO2 will be injected deep into the ground on a daily basis over the next 20 years, making it the second largest CO2 flood operation in Canada. During that period, up to 8.75 million tonnes of CO2 will be permanently sequestered in the deep underground oil reservoir.

More information is available from Bill Jackson, Apache Canada's joint venture manager, in Calgary, 403/261-1321.

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