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Gold/Mining/Energy : Esprit Exploration Ltd. -- Ignore unavailable to you. Want to Upgrade?

To: no1coalking who wrote (1446)	10/30/2007 3:05:29 PM
From: no1coalking	Read Replies (1) \| Respond to of 2774

K-FUEL: Pennsylvania Utility to Test Burn K-fuel Here is the latest info from Evergreen: blog.evgenergy.com Collins clearly indicated that a Pennsylvania utility is getting ready to test burn K-fuel. That's interesting, because Pennsylvania is about 1500 miles away from Evergreen's coal refinery in Wyoming. This utility must really need K-fuel, or else they would not consider paying Warren Buffett's railroad those expensive rail fees for future shipments. Another observation is that the new utility customer is in Pennsylvania, and there is a lot of coal already in Pennsylvania. Importing clean coal like this gives you an idea how much the environmental regulations have tightened up in that area of the country. It's probably a small to medium sized utility, that does not have the ability or desire to install an expensive scrubber on their power plant. These are the types of high-margin customers that have been paying more than $50/ton for K-fuel - real juicy margin for Evergreen! This doesn't look like a K-Direct prospect, but rather another PRB opportunity. A K-Direct deal would have required the Pennsylvania utility to first ship their local coal to Gillette, process it at Ft. Union, and then return it to the Pennsylvania power plant for a test burn. This latest job sounds more like an opportunity in which Evergreen will source the K-fuel out of Gillette, given that Buckeye is going to combine the K-fuel with their Ohio coal before the whole mixed batch is shipped to Pennsylvania. That's a clear indication that Evergreen expects to have sufficient capacity somewhere in the PRB to supply this new utility customer. It could also mean that Buckeye gets an Ohio coal supply contract out of the deal. (Either way, good for the bottom line; Evergreen owns Buckeye.) I'm really curious to know where that new capacity will come from to supply the new Pennsylvania utility. Evergreen is already supplying two small utilities out of the Ft. Union plant, along with some industrial customers. It was my understanding that ALL of that Ft. Union capacity had been pre-sold to customers a long time ago. Evergreen and Buckeye certainly seem to be selling as much K-fuel as they can produce, and customers are even knocking on Buckeye's door to get more. Evergreen and the prospective Pennsylvanian utility must be convinced of some kind of new future supply coming from Wyoming soon, or else they wouldn't have entered into this latest test burn agreement. I wonder what's going on? Could it be that Arch is dusting off the plans for that 8 megaton refinery at their Coal Creek mine? Or Evergreen is going to expand their Ft. Union plant? Or somebody else is going to build a K-fuel refinery in the Powder River Basin? On the outside, one can only guess, but Evergreen sure had something big in mind when they recently signed that billion dollar contract with Bechtel to build some new plants. Collins is telling us that his people have been working around the clock to implement plant improvements, and that effort is paying off. I like to hear Collins talking about "reliable, consistent performance". That new enhanced performance probably has something to do with those new logic controllers that Bechtel helped them install over the past year. With a complete set of sensors around the plant, and a computerized remote control system, optimizing the plant's performance is mostly a problem of writing the best operational control algorithms, finding some time to test them, and going through the debug process. (That's why they call it a "ramp-up", as opposed to instantly reaching full production by turning on some imaginary switch. These control algorithms take time to properly develop.) Collins also states in his latest blog that they have been shipping K-fuel to more commercial customers, as well as for some new test burns. That could also help explain why they haven't reached full capacity yet, especially since Processor "A" is still undergoing some renovation. (I expect to get a progress report during the November 6th conference call.) Creating a test burn shipment is rather challenging if it involves using non-locally sourced feedstock. The whole system has to be shut down and cleaned out to avoid contamination, a rather time consuming process. That significantly lowers throughput, but hey, if it hooks a new customer, then it was worth the effort. Throughput will surely improve when they get that second processor on line, when one processor can be devoted to producing test burn material, letting the other process PRB feedstock more efficiently in an uninterrupted environment. One thing for sure, it's nice to see those trains leaving the Ft. Union plant with K-fuel! That's something the shorts said could never be done, so listen to them at your own risk of missing out on this great opportunity. Look at this picture of the latest train shipment, these Evergreen guys even work at night: blog.evgenergy.com report abuse