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US DOE approved the proposed modified plan to flood a 10+-acre pattern. MV Energy has received informal notification that GE Capital will approve sale of the portion of the Colliver lease involved in the pilot. Murfin Drilling Company is seeking local small independent partners for the pilot and has received commitment from White Eagle Energy and John O. Farmer Oil Company to date. A Contract was signed between the Kansas Department of Commerce & Housing and Murfin formalizing the KSDOC&H contribution of $88,000 to the pilot project. This money will be used for well rework and testing. The results of this small flood will be used to evaluate the viability of performing a larger-scale demonstration and will be used by the partners to decide their role in a larger-scale demonstration. The 10+-acre pattern requires the least up-front expense to all parties to obtain the data required to accurately assess the viability and economics of CO2 flooding in the L-KC and of a larger-scale demonstration. Proposed modifications to the project plan were reviewed in the previous quarterly technical progress report.

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Progress is reported for the period from January 1, 2003 to March 31, 2003. A water supply well was permitted, drilled, and completed in the shallow, freshwater , Dakota Sandstone. The pumphouse has been put in place and the long-term injection equipment is being setup. Although the short-term injectivity test was cut short by power failure following an ice storm, results indicate the well exhibits sufficient injectivity to proceed with the long-term injectivity test, which will start in the beginning of the second quarter. The CO2 Project #10 and #12 wells were reworked and the Lansing-Kansas City (LKC) "C" interval in both wells isolated. The CO2 Project #16 well was drilled deeper, cored in the LKC "C" and "G" zones, and cased to the "C" zone and will be perforated and stimulated in the beginning of second quarter. Initial wireline log analysis and examination of the core indicate that the porosity of the "C" zone in this location may be lower than in other parts of the pattern by 3-5 porosity units. Log analysis indicates water saturations are near 60% consistent with predicted residual oil saturation to waterflood modeling. Lower porosities may indicate lower permeability may also be present. Core analysis is being conducted and results will be available in the first week of the second quarter. A draft letter agreement has been presented to FLOCO2 Company for supply of CO2 storage and injection pump equipment. Presentations of the project status were made at the 15 th Oil Recovery Conference in Wichita on March 12-13.

. Technical design and budget for a larger (60-acre, 24.3 ha) CO 2 demonstration project are being reviewed by the US DOE for approval. While this review process is being conducted, work is proceeding on well testing to obtain reservoir properties and on the VIP reservoir simulation model to improve model prediction and better understand the controls that certain parameters exert on predicted performance. In addition, evaluation of the economics of commercial application in the surrounding area was performed. In a meeting on January 14, 2002 the possibility of staging the demonstration, starting with a 10-acre sub-pattern flood was raised and the decision made to investigate this plan in detail.The influence of carbon dioxide on oil properties and the influence of binary interaction parameters (BIP) used in the VIP simulator were investigated. VIP calculated swelling factors are in good agreement with published values up to 65% mole-fraction CO2. Swelling factor and saturated liquid density are relatively independent of the BIP over the range of BIPs used (0.08-0.15) up to 65% mole-fraction CO2.Assuming a CO2 EOR recovery rate projected as being most likely by current modeling, commercial scale CO2 flooding at $20/BO is possible in the leases in Hall-Gurney field. Relatively small floods (240-320 acres, 4-6 patterns) are economically viable at $20/BO in areas of very high primary and secondary productivity (>14 MBO/net acre recovery). Leases with moderately high primary and secondary productivity (> 10 MBO/net acre recovery) can be economic when combined with high productivity leases to form larger floods (>640 acres, 9 or more patterns).