The offtake agreements also contain standard clauses that include recourse – including penalties – each party has in case of violation of one or more clauses. The Lake Charles-Deal is an important deal for Denbury, which has significantly expanded its oil recovery activities in the Gulf in recent years, Monitorghg reported earlier. In early fall, Denbury announced a major trade agreement with a subsidiary of Exxon Mobil, including a south-east Texas oil field ripe for EOR, located a few miles from its green pipeline. The company already has carbon loss contracts for CO2 produced at Mississippi Power`s kemper County integrated gasping plant and the PORT Arthur CSC project in Texas, and is in talks with other CO2 capture projects currently under development. Taketake agreements are often used in the development of natural resources, where the cost of capital for resource extraction is high and the company wants a guarantee that part of its product will be sold. The acquisition contract will provide a guaranteed market for aldel`s production at this time of great uncertainty. This is an important vote of confidence for the company, which wants to boost its production this year. Aldel has launched a 10-year plan to become one of Europe`s leading producers of low-cost, energy-efficient aluminium. Aldel`s annual production is currently about 80,000 tonnes, but is expected to increase significantly over the next 12 months. This story was amended on November 5, 2012 to clarify the details of a possible joint venture agreement between Denbury Resources and Indiana Gasification. In addition to providing a guaranteed market and a source of supply for its product, an acquisition agreement allows the manufacturer/seller to guarantee a minimum result for its investment. Because taketake agreements often help secure funds for the creation or extension of a facility, the seller can negotiate a price that guarantees a minimum level of return on associated products and thus reduces the risk associated with the investment.
This is the first in a series of CO2 use agreements with TCEP and we are pleased to have negotiated this historic first agreement with a company that has a long and successful history of increased oil recovery in the Perm. LCCE also announced this week that BP Products North America Inc. will purchase the bulk of the one million tonnes of methanol produced each year at the Lake Charles Port gasification plant. The company explained that it had also signed an acquisition agreement with Air Products and Chemicals, Inc. to purchase all of the locally produced hydrogen and argon. LCCE stated that the conclusion of the three acquisition agreements would “improve” Leucadia`s ability to secure third-party funding for the project. Leucadia will lead the construction of the project, while Turner Industries Group, LLC, will lead the construction and provide design, engineering and procurement services to KBR, LCCE said. Under the new agreement, Whiting will purchase 80 million cubic feet (80,000 mcf/d) of CO2 per day from TCEP for the first five years of TCEP operation, representing approximately 60% of TCEP`s total CO2 volume – with a gradual decrease in quantities and an option to extend purchases thereafter.