Highlands Natural Resources Plc (LON:HNR) said it has made an application to acquire leases in Arizona that are prospective for commercial volumes of carbon dioxide (CO2).
The AIM-listed oil & gas producer said the leases, covering 46,000 acres in Apache County, Arizona, sit adjacent to land which was identified as a target for future CO2 production by Kinder Morgan, one of the leading suppliers of CO2 to the Permian Basin.
READ: Highlands Natural Resources reports “significant” flow rates from Kansas nitrogen project
Highlands added that Kinder had decided not to pursue the building of a planned pipeline from the site due to a decline in the WTI oil price in 2015, to which CO2 prices in the Permian Basin are linked, and that the recent increase in oil prices signalled the right time for it to acquire the leases.
The company said the grant of the leases is subject to ratification by the state government and that it expected this within the next two weeks.
Robert Price, chairman and chief executive of Highlands, said: “This is an exciting project in an area identified by one of the region's leading producers as being prospective for CO2 and we look forward to evaluating it further. In the meantime we remain focused on increasing our cash flow through completion of the six additional wells currently being developed at our East Denver project, and on commercialising DT Ultravert through the acquisition of assets which have the potential to lower the cost for end users."
READ: CO2 shortages could leave Britain facing a World Cup beer drought this summer
Highlands move into CO2 production could be good news for the UK's pubs, as Britain looks set for a potential beer drought over the summer as supplies of the gas run at their lowest levels in decades.