Chaparral Energy Inc. made history in May.
Chaparral produced 1 million barrels of oil equivalent that month, a first for the Oklahoma City-based oil and natural gas company founded in 1988.
“I think the company’s doing well,” CEO Mark Fischer said.
Fischer said he is proud of Chaparral’s performance, which has come after it reinvented itself as a Mid-Continent operator.
Chaparral recently sold its assets in Texas, Louisiana, Arkansas and New Mexico so it could focus on operations closer to home.
Fischer said Chaparral sold about 22 million barrels of oil equivalent in reserves, but he expects the company to make that back by the end of the year thanks to its continued success in Oklahoma.
Chaparral is on pace to boost its oil production by about 8 percent this year, despite its asset sales, he said.
Fischer said Chaparral had been close to 1 million barrels in a month recently, but never actually got there.
Fischer said about 21 percent of Chaparral’s May production came from its operations in northern Oklahoma’s Mississippian play.
Another large chunk came from Chaparral’s enhanced oil recovery projects, led by the historic North Burbank field in Osage County. Fischer described it as a “world-class project” that is the largest single oil unit in the state.
He said Chaparral has invested about $250 million in the project, which relies on injecting large amounts of carbon dioxide to free oil that was not produced by traditional means. The company began seeing significant response from its gas injections into the unit in March.
“Right now we’re up about 800 to 900 barrels of oil per day, over the base of about 1,250 to 1,300 barrels a day,” Fischer said. “By the end of the year, that 1,250 barrels a day should be somewhere in the neighborhood of 2,400 to 2,500.
“It’ll continue to rise until that 1,250 barrels a day is turned into 14,000 barrels a day through that program.”
He said an additional supply of carbon dioxide could boost production from North Burbank to 25,000 barrels a day.
“I can’t really give you details right now, but we’re looking at an opportunity to gain an additional 100 million cubic feet (of carbon dioxide) a day that would give us that boost that I just mentioned,” Fisher said. Chaparral currently has about 80 million cubic feet of carbon dioxide a day available for its operations under long-term contracts.
Fischer said CO2, which is typically moved via pipelines, is difficult to get.
Chaparral hopes to add about 100 million cubic feet for its North Burbank project, plus an additional 50 million cubic feet for its other enhanced oil recovery operations in the Oklahoma and Texas panhandles.
“We’ll find it,” he said. “It’s just a matter of time.”
A green company
Fischer said he considers Chaparral to be a green company since its CO2 comes from man-made sources, which otherwise would vent the gas into the atmosphere. He said most of Chaparral’s CO2 comes from fertilizer plants, which emit almost pure carbon dioxide.
Ethanol plants release emissions that are about 95 percent CO2, but Fischer said the true prize could be coal-fired power plants. Their emissions, which are subject to increasing regulation by the U.S. Environmental Protection Agency, are about 12 percent carbon dioxide, but the total volume is much bigger, he said.
Fischer said CO2 from coal plants could be a valuable tool in boosting oil production if those emissions could be harnessed economically.
“It would be great for us if that opportunity existed because one of those plants is within 20 miles of Burbank,” Fischer said.
He said enhanced oil recovery will became an important part of the U.S. production mix in the the future, when the yield from the nation’s booming shale plays begins to tail off.
Going public in 2015
Fischer said Chaparral’s enhanced oil recovery operations should be a powerful draw when the company goes public, likely in the second half of next year. The company also has about 6,400 drilling locations in its Oklahoma holdings.
“We have no shortage of opportunity,” he said.