Elliott Roosevelt Jr., a grandson of U.S. President Franklin Delano Roosevelt, grins and leans toward visitors in his Dallas office to describe his biggest discovery in 53 years as an oilman.

After nursing a single 10-barrel-a-day well in a desolate stretch of west Texas for two decades, Roosevelt, 76, is embracing a technique he says can liberate a third of the 1.8 billion barrels of petroleum stuck a mile below

He plans to inject carbon dioxide into limestone, potentially freeing oil valued at about $58 billion in early April – more than the gross domestic product of Bulgaria – and reaping this bounty from a 38-square-mile (98-square-kilometer) area drillers abandoned long ago.

Roosevelt’s method, known as carbon dioxide-enhanced oil recovery, or CO2 EOR, may speed up America’s resurgence as a fossil-fuel superpower – and do so under a president elected as a green-energy champion.

With an oil rush endowing North Dakota with the nation’s lowest unemployment and shale gas drilling rigs sprouting from Colorado to Pennsylvania, the U.S. is shedding the energy inferiority complex that has humbled it since lines snaked around gasoline stations 40 years ago.

‘Independence Day’
“Independence day is coming,” says Ed Morse, global head of commodities research at Citigroup Inc. in New York.

Morse says the U.S. could stop being a net importer of crude oil and petroleum products and become a net exporter in about five years, meaning that it would sell abroad more crude oil and products than it would buy. That would trim the $540 billion trade deficit and encourage a foreign policy that promotes democracy instead of protecting oil supplies, he says.

Daniel Yergin, vice chairman of Englewood, Colorado-based research company IHS Inc. and author of “The Quest: Energy, Security and the Remaking of the Modern World,” says North American production along with stagnating demand will reduce U.S. dependence on the Organization of Petroleum Exporting Countries.

“The U.S. is now in a position of being envied because of our energy vitality,” Yergin says.

The U.S. is swimming in newfound oil. Crude output surged 14.3 percent to an average of 6.47 million barrels a day in 2012 from a year earlier, according to the U.S. Energy Information Administration. This included about 300,000 barrels a day from CO2 EOR. Last year’s leap of 812,000 barrels a day was the biggest since 1859, when Edwin Drake drilled the first commercial well, in Titusville, Pennsylvania.

Oil Bonanza
In the four years since President Barack Obama defeated John McCain and his drill-baby-drill backers and succeeded oilman George W. Bush in the White House, oil production has soared 29.4 percent.

Meantime, the Earth is hotter now than during three- quarters of the 11,300 years since the most recent ice age, according to researchers at Harvard and Oregon State universities. By 2020, U.S. oil output may surpass that of Saudi Arabia, the world’s top producer, the Paris-based International Energy Agency says.

Drillers say they can hasten America’s petroleum revival with CO2 EOR, a technique first used in the 1970s to refresh flagging wells.

In the mid-1990s, Hess Corp. (HES) and Occidental Petroleum Corp. (OXY) began using carbon dioxide in so-called residual oil zones, areas previously rejected because the petroleum was mixed with too much water.

Residual Oil
Since then, mapping and other technologies for steering CO2 toward productive reservoirs have improved, says Steve Melzer, who has run CO2 EOR conferences in Midland, Texas, for 18 years. The enhancements helped convince Roosevelt, who aims to be the first person to drill residual oil in a virgin field where there’s no network of existing wells.

Roosevelt’s claim that roughly 1.8 billion barrels are trapped below his parcel is accurate, says Melzer, whose consulting firm studied and verified it. Ryder Scott Co., a Houston firm that oil companies hire to independently evaluate petroleum reserves data they file with the U.S. Securities and Exchange Commission, estimates Roosevelt has a 90 percent probability of recovering 437 million barrels or more, spokesman Mike Wysatta says.

Texas Rozapolis
Melzer has no doubts about the oil. He calls west Texas residual oil zones, or ROZ in drilling lingo, the rozapolis because of their enormous potential. Montana, North Dakota and Wyoming are also rich in residual oil, says Vello Kuuskraa, who helped develop wells near Fort Worth, Texas, in 1997 that showed the viability of hydraulic fracturing, or fracking, and unleashed U.S. fossil-fuel fever.

Unlike fracking, in which drillers blast water, sand and chemicals into wells to shatter shale and release oil and gas, CO2-enhanced drilling induces a chemical reaction that makes oil less sticky and helps it flow from microscopic pores in the rock. CO2 costs about $35 per metric ton in west Texas, and drillers recycle it as many times as possible to dislodge more oil.

Such drilling has the potential to unlock 100 billion barrels of recoverable U.S. reserves, says Kuuskraa, president of Advanced Resources International Inc. in Arlington, Virginia. U.S. reserves total 222.6 billion barrels this year, the EIA says.

Big Projections
About one-third of Kuuskraa’s projected increase, or 33 billion barrels, would come from residual zones, augmenting the bounty that fracking is recovering from shale rock.

“Shale oil could produce 3 million barrels a day for the U.S.,” Kuuskraa says. “With CO2 EOR, we’ve got the potential to do 3 or 4 million barrels a day for a long time.” That much CO2 EOR crude would have increased last year’s output by 50 percent.

Kuuskraa’s big projections come with a large caveat: securing enough CO2 to free the oil.

Expanded CO2 EOR requires new sources of carbon dioxide, which scientists say hastens global warming. In 2009, the U.S. Environmental Protection Agency classified CO2 as a pollutant that threatens public health.

Kuuskraa estimates the U.S. may need 33 billion metric tons of the gas for CO2 EOR, while only 3 billion tons are available from such naturally occurring sources as extinct volcanoes. The rest would come from man-made sources such as power plants that create and capture CO2. Only a handful of these exist.

Environmental Benefit
John Thompson, director of the Fossil Transition Project for the Boston-based Clean Air Task Force, says creating demand for carbon dioxide is an environmental benefit of drilling residual oil. He says residual zones are large enough to absorb half the CO2 from America’s power plants over 30 years, and he advocates tax incentives for oil companies to expand CO2 EOR and help develop other pollution-busting technologies.

“I hope Elliott Roosevelt makes a lot of money,” Thompson says. “I hope other people replicate his model and take much more CO2 out of the atmosphere than would otherwise happen.”

The seeming illogic of using a heat-trapping greenhouse gas to enable the pumping of pollution-spewing hydrocarbons isn’t lost on Kyle Ash, senior lobbyist for Washington-based environmental advocate Greenpeace USA. He says enhanced oil recovery doesn’t move the U.S. away from fossil fuels and doesn’t permanently bury carbon.

“We can achieve faster and cheaper CO2 reductions with improved efficiency and solar generation,” he says.

Roosevelt Name
If Roosevelt can get enough CO2, he’s certain he can wring oil from his piece of the Permian Basin, a 250-mile-by-300-mile (400-kilometer-by-480-kilometer) area underlying parts of Texas and New Mexico and a cradle of conventional U.S. drilling.

Joseph Googins, Roosevelt’s maternal grandfather, started buying mineral rights there after moving to Fort Worth to build stockyards in 1902. He bequeathed the rights to his daughter Ruth, who married Elliott Roosevelt, Franklin’s son, in 1933. They divorced 11 years later. She passed the rights to her son Elliott Jr., who remembers visiting the White House as a boy but says he doesn’t focus much on being a Roosevelt.

“It’s just the name I was born with,” he says.

Roosevelt is so sure he’s on to something that he has spent $10 million on additional mineral rights. Sitting near a framed collection of FDR campaign buttons, both pro and con, he declines to give the location, saying he fears others may buy competing claims.

‘Plus, Plus’
“The Permian has produced 32 billion barrels to date,” he says. “Residual oil zones mean the Permian has the potential to produce that much again in the future – plus, plus, plus,” says Roosevelt, whose gray hair, streaked with white and parted on the left, is reminiscent of his famous grandfather’s.

“We don’t view this as a high-risk project.”
Roosevelt, a Republican, says he disagrees with some friends in the party about climate change: He says it’s real. Yet he no longer subscribes to another hydrocarbon premise – peak oil, or the idea that global output is poised to permanently decline. The remaining oil, however, won’t be cheap.

“It’s not coming out of the ground at $20 a barrel,” he says. “All our models are run at $90.”

West Texas Intermediate crude sold for $97.07 on April 1.

Roosevelt uses a $90-a-barrel selling price for his financial calculations. When he reaches full production, he says, he can generate a 15 percent internal rate of return if crude sells for $50 a barrel – greater if it sells for more.

Fracking Competition
Philip Verleger, once an energy adviser to former President Jimmy Carter, says cost could be a big deterrent to CO2 EOR. The risk for WTI crude to plunge back to its 2008 low of $32.40 a barrel means most drillers lack the patience to nurture the technology.

“Companies aren’t going to spend a lot of money on CO2 EOR with all this oil they can get by fracking,” says Verleger, founder of consulting firm PK Verleger LLC in Carbondale, Colorado.

Three hundred fifty miles southwest of Roosevelt’s Dallas office, Legado Resources LLC has used carbon dioxide since 2008 to recharge existing wells and tap the residual oil below them.

On a cold, cloudless day in November, the company is one of three working the Goldsmith field, where cactuses are scattered among pumps, pipelines and drilling rigs. Operations superintendent Bobby Lord snaps his head around to what sounds like a rifle shot as compressed air bursts from another company’s pump. With the Permian booming, it’s hard to find good help, Lord says.

“If you’re serious about supporting your family, maybe it’s time to move here,” he says.

Goldsmith Field
Legado’s portion of the Goldsmith field has produced 74 million barrels since 1934, says Dane Cantwell, senior vice president for development. The company has 70 wells for injecting CO2 and 93 for extracting it along with water and oil.

Operators send the mix to a processing station that pumps oil to a pipeline, recycles CO2 back to the reservoir and injects water deep underground to protect upper-level aquifers. Almost all the CO2 remains underground or in the pipelines and processing stations, Cantwell says.

In June, Occidental told California regulators that 0.3 percent of the CO2 used at its enhanced-recovery field near Denver City, Texas, escaped during a 25-year period; the rest stayed trapped.

As many as 100 million additional barrels of oil may be recoverable from Legado’s portion of Goldsmith, Cantwell says. Permian oil producers, who now buy about 83,000 tons of CO2 each day, could use twice as much to develop all of their available reserves, he says.

Dodging Guerillas
Roosevelt is also on the hunt for CO2. He began studying the well that led to his biggest discovery, in 2007, when WTI crude neared $100 a barrel. He planned a second conventional well to double output but reconsidered when chief engineer Jimmy Hawkins suggested carbon dioxide. After studying Melzer’s CO2 research, Hawkins realized Roosevelt’s well sat atop a residual oil zone. Roosevelt was skeptical until outside consultants came back with bigger projections than Hawkins had forecast.

Roosevelt has been seeking such aha moments since 1960, when, as a so-called landman, he roamed ahead of rigs and negotiated mineral rights. In 1973, while he was an executive vice president at Shenandoah Oil Corp., his workers dodged anti- government guerillas to build a 140-mile pipeline in Guatemala. He went on to drill for oil and gas throughout the U.S. and Canada and to start a natural gas storage company.

After searching for half a century, he says, he’s poised to launch what he says could be the world’s biggest CO2 EOR project, with 17,500 acres (7,080 hectares) for drilling and 100,000 acres for permanent CO2 storage.

Natural CO2
Roosevelt’s quest for carbon dioxide has led him to Houston-based Kinder Morgan Energy Partners LP (KMP), the biggest U.S. pipeline company and the fifth-largest Texas oil producer. Kinder Morgan may supply the gas, operate his project or take an equity stake, Roosevelt says.

Tim Bradley, chief executive officer of Kinder Morgan’s CO2 unit, says his company was slow to see the potential of residual oil zones. Now that it has, Kinder Morgan is seeking joint ventures to expand into them.

The company replenished its sold-out supply by buying CO2 trapped under a granite rock dome near St. Johns, Arizona, in 2011. Kinder Morgan may build a pipeline from St. Johns to the Permian, says Bradley, who retired at the end of March.

Coal Plant
Roosevelt says he has a contract to buy CO2 starting in 2017 from a power plant that Seattle-based Summit Power Group LLC has proposed near Odessa, Texas.

Eric Redman, Summit’s CEO, says he plans to break ground for the 400-megawatt plant in June or July. It would heat coal in a gasifier to form a chemical mix called syngas and then strip CO2 before burning the syngas in a turbine. The plant would be built near a crossroads called Penwell, where a few dozen ranchers live in the vicinity of rusted trailers and oil tanks from prior Permian booms.

If all goes well, Summit would build two or three more gasifiers to make power and products such as ammonia and plastics. Roosevelt has an option to buy the CO2 from any additional gasifiers Summit constructs.

Roosevelt is also in touch with Southern Co. (SO) and other utilities that capture CO2 after burning coal or natural gas.

North of Mobile, Alabama, Southern and Mitsubishi Heavy Industries Ltd. (7011) are running the world’s biggest test for trapping carbon dioxide from power plant smokestacks. The plant can capture 500 tons a day that go to Plano, Texas-based Denbury Resources Inc. (DNR) for underground storage and potential oil recovery.

Starting Small
To get started, Roosevelt is seeking small quantities of CO2 for two years of test drilling beginning in 2014 – and expects full production about two years later. He’s seeking financing to invest $300 million in six years. He says cash flow would fund subsequent investments, bringing the total cost to $2 billion. He expects a 50-fold return on equity for Roosevelt Resources LLC, which employs sons Elliott III, 50, and David, 43.

Roosevelt isn’t stopping there. He’s considering a sixfold expansion of his 38-square-mile area and is scouting further in west Texas, declining to say where.

“The key is getting CO2,” he says.

While Roosevelt assembles the pieces he says will dislodge hundreds of millions of barrels of residual oil, the U.S. is rising as a fossil-fuel powerhouse – angering Obama backers who want action on clean energy.

Angry Environmentalists
On March 1, the State Department said the proposed Keystone XL pipeline for hauling Alberta, Canada’s tar sands oil wouldn’t hurt the environment, even though the crude releases 17 percent more greenhouse gas than typical U.S. oil. If the pipeline stalls, producers have other options to reach the market, so the environmental impact won’t change, the department says.

In other disappointments for environmentalists, Obama’s cap-and-trade plan to limit CO2 died in the Senate in 2010. The EIA expects energy-related CO2 emissions to drop 9 percent from 2005 levels by 2020. Four years ago, Obama pledged a 17 percent decline in greenhouse gases by then.

“President Obama needs to match his soaring oratory with climate action,” Michael Brune, executive director of the San Francisco-based Sierra Club said after the Keystone announcement.

‘Wake-up Call’
As the U.S. fracks, drills and pumps its way toward fossil- fuel independence, the planet’s rate of temperature increase is accelerating, according to the March 7 Harvard and Oregon State study.

“This is another wake-up call,” says Frances Beinecke, president of the New York-based Natural Resources Defense Council. “We must cut carbon pollution.”

Obama has made some headway toward his environmental goals. He mandated better fuel-efficiency, requiring a corporate average of 54.5 miles per gallon for cars and light trucks by 2025, up from 30.2 miles in 2011. Even if the U.S. becomes a net exporter of oil, that may not affect gasoline pump prices because those costs are driven by global markets.

He also proposed limiting new power plants to 1,000 pounds of CO2 emissions per megawatt-hour. He may expand this rule to existing plants, including coal-fired facilities that emit 2,249 pounds per megawatt-hour on average – potentially providing sources of CO2 for oil recovery.

Roosevelt says he’s happy to pursue the type of drilling that creates a market-based demand for CO2 to clean up coal and gas plants. At his core, though, he’s a Texas oilman with a fossil-fuel bonanza in his sights.

“We’re not doing this to solve climate change,” Roosevelt says of his carbon dioxide-enhanced drilling plans. “We’re in business to liberate and sell oil.”