Carbon dioxide pouring from smokestacks hardly has a reputation as a valuable commodity. But one company has launched a series of projects to see if it can use the refuse of the industrial economy to breathe new life into tired oil fields.

How well Denbury Resources Inc.'s projects go will be closely watched not just by environmentalists but other oil producers. For decades, companies have pumped naturally-occurring carbon dioxide from geological basins into existing oil wells. The gas acts like a solvent for the oil, removing it from rock formations.

Workers in Louisiana lay part of a pipeline network last year to carry carbon dioxide to Denbury's oil fields, where it will be used to boost output.
.Denbury is a regional oil and natural-gas producer based in Plano, Texas, whose primary source of carbon dioxide is a basin near Jackson, Miss. It is hoping to add to that finite supply by using carbon dioxide recovered from industrial plants. Next month, it is slated to acquire Encore Acquisition Co., an oil company in the Rocky Mountain region that is considering using similar industrial sources of carbon dioxide to recover oil.

By mid-2011, Denbury plans to treat and ship its first batch of industrial emissions from a Dow Chemical Co. factory in Plaquemine, La., to its oil fields in Texas via a pipeline network it is building. Although the U.S. government recently announced funding for a host of other "industrial carbon capture" projects, the Dow project is unique because itappears to be economically viable without government aid.

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