A typical oil well produces on average just 35% of the original oil in place. If the industry could squeeze only 1% more out of current wells, it would add 6% to global oil reserves. For perspective, that would equate to 80 billion barrels of oil, which would satisfy American oil demand for more than a decade.
What I’d like to do today is to tell you a bit more about one of the companies in that report. The company is Denbury Resources Inc. (NYSE:DNR), and its primary focus is on an enhanced oil recovery, or EOR, method to unlock more oil out of America’s aging oil fields. While Denbury Resources Inc. (NYSE:DNR) isn’t the top EOR producer — Occidental Petroleum Corporation (NYSE:OXY) is No. 1 — the company is the first pure play on the process, which has provided it with significant competitive advantages. What that means is that its growth potential is simply staggering.
There are literally billions of barrels of oil trapped underneath the United States just waiting to be unlocked. In fact, it’s estimated that there are 89 billion barrels of oil trapped in onshore reservoirs, which is substantially more than our total proven reserves of 29 billion barrels of oil. If we could boost our recovery to 60%, then the U.S. would be ranked fifth globally in terms of oil reserves.
Denbury Resources Inc. (NYSE:DNR) is leading the way to enhancing our recovery. The company is focused on a tertiary recovery process that has it injecting carbon dioxide into an oil field. This can lead Denbury Resources Inc. (NYSE:DNR) to recover an additional 17% of the original oil in place, which would go a long way toward boosting U.S. oil reserves. The company is currently employing the process on the wells it owns to unlock more than a billion barrels of oil; however, the potential to extend its process just within its two core target areas alone could yield up to 10 billion barrels of recoverable oil. That’s a lot of oil, and when combined with the 3 billion barrels of oil that Occidental Petroleum Corporation (NYSE:OXY) believes it can pump out of the Permian Basin, it’s a big future driver of American oil production.