Efforts to improve oil recovery will receive a boost after Kinder Morgan announced it will pump $1 billion into projects to expand its CO2 network in the U.S.

Plans include drilling more than 150 CO2 production wells—about 40 wells during the 2014 to 2015 period—with first production expected in mid-2016, if the company secures needed environmental and regulatory approvals. Kinder Morgan is set to begin drilling the wells, covering about 777 sq km (300 sq miles) in the Permian Basin’s St. Johns Field in Arizona and New Mexico, in May 2014.

About $700 million will be shelled out to drill the wells as well as build field gathering, treatment and compression facilities at the field, the company said. An additional $300 million or so will be spent on a new 343-km (213-mile), 16-in. diameter pipeline—called Lobos—capable of carrying up to 8.5 MMcm/d (300 MMcf/d) of CO2 from the source field to the Cortez pipeline in Torrance County, N.M.

“This project will help address the market’s growing demand for CO2 and enable Permian Basin producers to increase oil production by using the product in EOR projects,” James Wuerth, president of KMP’s CO2 group, said in a prepared statement. “EOR is measurably increasing the nation’s recoverable oil supply and will continue to do so in the future.”

The news comes as operators move beyond easy oil, working to tap harder to get oil and improve recovery rates amid the shale boom that has swept across the nation.

Injection of gases, such as CO2, natural gas or nitrogen, expands in the reservoir, causing oil to move to the wellbore. The technique, which has been successfully used since the 1970s in the Permian Basin, accounts for about 60% of the nation’s EOR production, according to the U.S. Department of Energy’s Office of Fossil Energy.

Gas injection along with other techniques, such as thermal recovery and chemical injection, could result in the production of 30% to 60% of the reservoir’s original oil in place, the agency reported. In 2010 there were about 114 active commercial CO2 injection projects in the U.S. Combined, the projects injected more than 60 MMcm (2 Bcf) of CO2 and produced more than 280,000 bbl/d.

“St. Johns’ recoverable reserves are currently pegged at 1.3 trillion cubic feet of CO2. We plan to produce 300 MMcf/d out of the St. Johns source field beginning in 2016,” the company said. Original gas in place at the field is more than an estimated 68 Bcm (2.4 Tcf). “The CO2 will be used by Kinder Morgan and other Permian Basin producers in enhanced oil recovery in West Texas and eastern New Mexico.”

Currently, Kinder Morgan operates two CO2 source fields in southwest Colorado, the company said, adding it has produced more than 1.4 Bcf/d of CO2 into Permian EOR oil fields in eastern New Mexico and West Texas. Its work in the CO2 EOR field spans more than 30 years, having completed more than 120 CO2 source wells.

Kinder Morgan believes CO2 production from the St. Johns Field could add millions of barrels of oil to the nation’s oil supply.

The company’s other source fields include Bravo Dome in New Mexico, where more than 350 wells produce more than 11 MMcm/d (400 MMcf/d) from the Tubb Sandstone; the McElmo Dome in Colorado, where the company and partner ExxonMobil produce up to 1.4 MMcm/d (50 MMcf/d) from the Leadville formation with 61 wells; and Colorado’s Doe Canyon Deep, which holds more than 42 Bcm (1.5 Tcf) of CO2, according to the company’s website.

Contact the author, Velda Addison, at vaddison@hartenergy.com.