Alter NRG Plans C$4.5 Billion Coal-To-Liquids Project (Update2)
bloomberg.com
By Ian McKinnon
July 22 (Bloomberg) -- Alter NRG Corp. plans to build Canada's first plant to convert coal into transportation fuels for $4.5 billion ($4.46 billion).
The plant, located about 150 miles (241 kilometers) northwest of Edmonton, may produce as much as 40,000 barrels a day of fuels including diesel, according to a disclosure document on the Calgary-based company's Web site. The project will likely be developed in stages, with the first phase producing about 20,000 barrels a day.
The technology has been around for decades and the project is based on oil selling for $80 a barrel, Alter NRG Chief Executive Officer Mark Montemurro said. ``We think it's a very robust project,'' he said today in telephone interview.
Record oil prices exceeding $140 a barrel are encouraging companies worldwide to consider projects that convert coal or natural gas into transportation fuels. Royal Dutch Shell Plc's multibillion dollar gas-to-liquids refinery in Qatar will start in 2010, the country's energy minister has said.
Alter NRG owns four leases near the town of Fox Creek that contain an estimated 468 million metric tons of proven and probable coal reserves. A processing unit will convert the coal into diesel and naphtha, according to the disclosure document.
The company is looking for partners, particularly those with refining and marketing expertise, and is unlikely to own a majority stake in the project, said Montemurro, 47.
The former executive at Deer Creek Energy Ltd., a Canadian oil-sands producer sold in 2005 for C$1.67 billion to France's Total SA, declined to identify possible partners.
Target Dates
The project's environment and engineering studies will be conducted in 2008 and 2009, and a regulatory application will likely be filed late next year, Alter NRG said. If approval is obtained in 18 months, mining operations may start in 2013 and the refinery-like plant may begin processing fuels in early 2014.
About 85 to 90 percent of the plant's carbon dioxide, a gas linked to global warming, will be captured and stored, Montemurro said. The company may sell some carbon dioxide to oil producers for injection underground to boost pressure and production at aging fields in the area, he said.
The company was formed in 2006 and sold an initial offering of shares last year at C$2.25, Montemurro said.
Alter NRG rose 29 cents, or 6.6 percent, to C$4.68 in Toronto Stock Exchange trading. The stock has climbed 44 percent this year.
To contact the reporter on this story: Ian McKinnon in Calgary at imckinnon1@bloomberg.net.
Last Updated: July 22, 2008 16:23 EDT
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