Let's talk about the plant shutdown
A lot of the K-fuel produced at Ft. Union was shipped to potential customers for test burns. Some of that test burn material was literally given away, and some of it sold for very little money. That was just a necessary marketing tactic, given the huge amount of money the utilities were spending preparing the test burns. (engineering staff overtime, additional independent instrumentation, etc.) Keep in mind that the most important objective of Ft. Union was to prove that numerous types of feedstocks could be used with the K-fuel process , and that the new Lurgi vessel concept worked. The Ft. Union plant accomplished all that. It can be switched back on at any time, but as I made clear earlier, the price of natural gas is currently a major problem.
To originally get the plant up an running fast Evergreen had no choice but to first install a natural gas boiler, given the lengthly permitting time required to obtain a coal burning permit. The major goal of Ft. Union was to test the new Lurgi vessel concept, and by all accounts that was a great success. (Go back and look at the old press releases in early 2006 if you don't believe me; investor's primary interest at that time was in making sure the new Lurgi concept worked, and that the quality of the K-fuel produced was independently verified by power producers.) The plant problems they have since experienced have to do with the ancillary plant systems, not the core Lurgi vessels or the independent test burn results.
It is true that there have been some serious efforts to convert the plant to coal, given the higher costs of natural gas. However, as we all know, the big new plant deals didn't come as quickly as expected. The natural result is that there has been less money to spend on plant improvements, such as a coal boiler with electrical co-generation capabilities. That could however change when the first plant deal is signed.
It's my understanding that the plant financing isn't a major problem, confirmed by more than one financial institution bidding on the opportunity. (Sumitomo has already stated their interest in public.) From what I can see these Evergreen business development guys are still holding out for the best possible deal, and have discovered an interesting new way to add additional value to the entire proposition.. Clearly they have been waiting for that first plant deal for a LONG time, and don't seem to be interested in settling for anything less than a highly profitable endeavor. New plants will be set up as independent subsidiaries.
When the Arch deal was shelved a couple years ago, there was a charge taken against the expired warrants, but it was a non-cash charge. It has something to do with IRS/SEC reporting requirements. (I'm not a bean counter, so you'll have to ask somebody else to explain it to you.) Most importantly, the Arch Coal Creek deal has just been shelved, not killed altogether. I believe the coal burning air permit for that specific deal is still moving forward, though I haven't checked on it lately. (The lawyers keep playing games with it, trying to keep it alive while at the same time trying to stall it, until they're actually ready to start pouring cement. There is some kind of law in Wyoming that says you must start building your plant within a given period after the necessary permits are issued, or you lose your right to build.) Again though, those offtake agreements sweeten the pot, but the US utilities have been dragging their feet until new emissions legislation is enacted. That's why I believe Evergreen's first deal will be for an overseas plant, probably in Indonesia. With the price of coal these days, I also believe the new Indonesian plant will use otherwise unmarketable local lignite feedstock, given the ever widening crack spread.. |
