Occidental Petroleum Corp. (NYSE: OXY) has officially completed the first phase of its $500 million carbon dioxide flooding project in Hobbs.
Announced in 2013, the project involves flooding the oil field in South Hobbs with carbon dioxide in order to increase oil production substantially. According to company representatives, when the company — also known as Oxy Permian — began CO2 flooding in Hobbs more than a decade ago, oil production doubled as a result.
Two years ago, Hobbs’ oil operations involved primary and water recovery alone — methods of recovering oil through drilling new wells first and then injecting water to recover more oil after primary recovery wanes. Oil recovery through CO2 flooding is considered a third stage oil recovery method; Oxy Permian’s South Hobbs project replaces water-only recovery with CO2 flooding.
Grant Taylor, president and CEO of the Hobbs Chamber of Commerce, said that Oxy’s investment in the South Hobbs field has a “decades-long outlook” and could extend the life of the oil field there by as much as 30 years.
“Oxy’s South Hobbs project is a great example of the billions in capital expenditures we’ve seen over the last decade in the Permian Basin. Aside from exploration and production, we’ve also seen major investments in infrastructure like pipeline and rail,” he said.
Oil prices have largely remained at $50 or less per barrel over the last year. While many in the industry are struggling, the project will likely increase oil production and bring more jobs to the area. Taylor said that those in Hobbs “remain optimistic about the long-term outlook for oil and natural gas production.”
One of the largest carbon dioxide injectors in the Permian Basin, Occidental Petroleum is a leader in what’s known as enhanced oil recovery (EOR) technology and operated more than two dozen carbon dioxide flooding projects in 2014 alone. The company plans to invest a total of $740 million in Hobbs over the coming years via flooding projects and expansions.
New Mexico is one of the top states for onshore oil production and is the fourth-largest net energy supplier in the country.
By: Sal Christ (Albuquerque Business First)
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