Fossil Energy Projects

Projects – Salt Creek West – Natrona County, Wyoming

SALT CREEK WEST FIELD POTENTIAL
The University of Wyoming Institute for Energy Research (“IER”) is playing a key role in a pioneering scientific venture (the “Teapot Dome Project”) to inject and store carbon dioxide (“CO2”) gas in underground oil reservoirs, a process that will improve oil production in Wyoming. The Company believes that the Teapot Dome Project can grow to be one of the three largest sequestration tests in the world. Conceived with a potential surface area spanning 50-square-miles, its test area encompasses the contiguous Salt Creek oil field of Anadarko Petroleum Corp. (“Anadarko”). Anadarko's (the operating company) plans for enhanced oil recovery (“EOR”) will make the Teapot Dome investigation possible and potentially bleed into contiguous fields. The carbon sequestration potential from the project is projected to be at least 2.6 million tons of CO2 annually (almost 700,000 tons of carbon) with a concurrent rise in related oil production of about 30,000 barrels a day, well above the current production level of 19,000 barrels a day.

FE is informed that Anadarko plans to inject about 7,200 tons of CO2 gas a day into the declining, century-old Salt Creek field, which is projected to boost production from about 5,300 barrels (bbls) a day to 30,000 bbls. Anadarko is also building a 125-mile pipeline extension to move by-product gas from its origin to the Shute Creek natural-gas processing plant in western Wyoming. A short spur will deliver CO2 for injection at Teapot Dome.

FE believes that the Salt Creek West field is a stratigraphic trap that may be supplied by continuous migration or flow of oil and gas beyond the trap in Salt Creek field into Salt Creek West. The analysis of the Teapot Dome 3D survey acquired by the U.S. Department of Energy (“DOE”) as a grant-funded operation to study the EOR and sequestration potential of the large oilfields indicates there are a large number of east west cross-faults that have allowed for the continuous migration of hydrocarbons into the traps to the west. Due to the subtle nature of the trapping mechanisms for the Salt Creek West field, existing wells and production levels need to be carefully evaluated before assigning an upside potential to the remaining reserves for the Fishtooth and Second Wall Creek formations in these fields. Independent petroleum geologists have provided strong evidence for a significant potential upside that exists in this field. These remaining reserves can be exploited through in-fill drilling in the Fishtooth and Wall Creek Shares, and through new mostly undeveloped drilling in the proven Niobrara formation.

A geological report prepared by Dr. Robert Fox estimates that the Salt Creek West Field has the potential to produce an additional 1.7MMBL of oil from the Fishtooth and Wall Creek units. Based on the work of another petroleum geologist, the Niobrara Shale Formation may contain 7.7MMBBL of oil in the acreage held by the Company. The reserves will be added to the stated proven and probable reserves of the Company as wells are completed, but cannot be added to the proven reserve statement before drilling occurs due to the guidelines established by the SEC and the Society of Petroleum Engineers (“SPE”) for fractured shale reservoirs.