Watching Chaparral Energy Inc. develop its CO2 tertiary-recovery business in Oklahoma and Texas, Aubrey K. McClendon, an astute observer of industry trends, knew he wanted to buy the company. After all, Oklahoma doesn't have a good source of CO2, notes the chairman, president and chief executive of Oklahoma City's Chesapeake Energy Corp. Despite the lack of Sooner CO2 sources, privately held, Oklahoma City-based Chaparral had gained control of outlets from a couple of fertilizer plants in the state and used their CO2 to reinvigorate a couple of oil fields. It was looking for more such opportunities. At the same time, Midwestern U.S. production of ethanol has been growing, and the No. 1 byproduct of ethanol manufacturing just happens to be CO2. "It's a virtuous cycle with value creation that could really separate Chaparral from other up-and-coming companies," McClendon says. "Everybody needs a hook. For Chesapeake it has been horizontal drilling and unconventional resources; for Chaparral, it will be tertiary recovery in oil fields using CO2." For more on this, see the January issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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