HOUSTON and WASHINGTON, Jan. 12 /PRNewswire/ -- Medicine Bow Fuel & Power LLC, a subsidiary of DKRW Advanced Fuels LLC, announced today that it has entered into a long-term contract to sell 100% of the ultra-low-sulfur diesel fuel from its planned coal-to-liquids (CTL) facility in Medicine Bow, Wyoming, to Sinclair Oil Corporation, which will market the fuel in the Rocky Mountain region.
The planned Medicine Bow project, which includes a coal mine and adjacent CTL facility, will use an indirect liquefaction process to convert coal resources into refined products that meet critical energy needs while reducing the environmental concerns associated with coal combustion.
The CTL facility will utilize General Electric Company's coal gasification technology to produce synthetic gas. The synthetic gas will be cleaned through other technology so that substantially all of the sulfur and carbon dioxide (CO2) is removed. This process significantly reduces greenhouse gas emissions and other environmental impacts associated with the traditional use of coal as a boiler fuel. The syngas will then be liquefied using Fischer- Tropsch technology licensed from Rentech, Inc. (AMEX:RTK). A further refining process will produce the ultra-low-sulfur diesel product that is expected to exceed current environmental emission standards in the region.
"We believe this agreement for the long-term supply of a Fischer-Tropsch, ultra-low-sulfur diesel product is the first of its kind," said Jon Doyle, DKRW Advanced Fuels' chief operating officer. "This contract is another important milestone in Advanced Fuels' strategy to complete the financing and construction of our flagship project."
"We are pleased to enter into this agreement, which will provide additional high-quality ultra-low-sulfur diesel to our customers," said M. C. "Bud" Blackmore, Sinclair Oil Corporation Senior Vice President. "This agreement, along with our refinery expansion projects, strategically positions Sinclair as the leader in refined products along the Rocky Mountains."
Construction of the CTL facility is scheduled to start in late 2007, with an expected in-service date in the fourth quarter of 2010. In addition to liquid fuels, primarily diesel and naphtha, a number of byproducts of the liquefaction process, including carbon dioxide and chemicals, are expected to be sold for use in the region. Carbon dioxide from the coal can be dried, liquefied and shipped via pipeline, and plans are to sell it to the enhanced oil recovery market in Wyoming with an initial target in the Powder River Basin.
"We are pleased to reach another important milestone in the development of the Medicine Bow project," said Bob Kelly, DKRW Advanced Fuels' chairman. "We have already secured options on coal reserves and licenses to key technology. With more than a million barrels per day of refined diesel products imported into the U.S., record prices at the pumps, new air-quality regulations and diesel becoming the fastest-growing transport fuel in the world over the next 20 years, environmental and market forces favor new investment in U.S. diesel production," he continued. "We believe that we will be well positioned to meet the rising demand."
DKRW Advanced Fuels is a development-stage hydrocarbon conversion company. We are focused on the commercial development, construction, ownership and operation of facilities designed to convert lower-value hydrocarbons into products that traditionally have been produced from crude oil. By utilizing proven coal gasification and Fischer-Tropsch liquefaction technologies, we plan to convert more abundant resources, primarily solid hydrocarbons such as coal and pet coke, into competitively priced products, including ultra-clean diesel fuel. Our initial project is a planned coal-to-liquids facility at the mouth of the Saddleback Hills Mine in Carbon County, Wyoming, near the town of Medicine Bow. We also are pursuing projects in other parts of the U.S. and exploring international opportunities. DKRW Advanced Fuels is a subsidiary of DKRW Energy LLC. Other shareholders are Arch Coal (NYSE:ACI), the second- largest coal producer in the U.S., and Och-Ziff Capital Management, a New York-based private equity firm.
Sinclair Oil Corporation is a fully integrated energy business owning and operating exploration, production, refining, pipeline, trucking, and terminal and marketing assets. Nearly 3,000 service stations in more than 20 states brand under the Sinclair name.
We make statements in this news release that are forward-looking statements. All statements, other than statements of historical facts, included in this news release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward looking statements. These statements are not guarantees of our future performance and are subject to risks, uncertainties and other important factors that could cause our actual performance or achievements to be materially different from those we project. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Medicine Bow Fuel & Power LLC Fact Sheet Project: Medicine Bow Fuel & Power LLC (MBFP) is developing a greenfield, mine-mouth coal-to-liquids (CTL) facility near Medicine Bow, Wyoming. Current and planned assets include: * CTL Facility: To be developed, owned and operated by MBFP * Coal Reserves: Current option to purchase approximately 180 million tons of bituminous coal from Arch Coal * Coal Mine: Initially continuous mining operations * Technology Licenses: Site license with General Electric (GE) to use their proprietary coal gasification technology and Rentech, Inc. for Fischer-Tropsch technology used to liquefy the gas. * Contracts for products from the facility: (See Below) * Surface land rights on property * Permits to construct and operate the coal mine and CTL facility Ownership: MBFP is owned 100% by DKRW Advanced Fuels LLC. Arch Coal owns 25% of DKRW Advanced Fuels LLC with the remainder owned by DKRW Energy LLC. Products: The CTL facility will produce the following (volumes are approximate): * 13,000 barrels per day of refined liquids primarily ultra-low-sulfur diesel and naphtha, which will be sold into the market. Sinclair Oil Corporation has a long-term contract to purchase all of the diesel. * Steam, tailgas and power produced from the CTL process will provide the necessary energy for internal CTL facility use with some surplus power sold to the utility grid. * Carbon dioxide will be extracted, dried, liquefied and shipped via pipeline to the enhanced oil recovery market in Wyoming with an initial target in the Powder River Basin. * Other byproducts for sale in the market are elemental sulfur, chemicals, and ash, which will be put to productive use in the region. Schedule: Construction is currently scheduled to start in the fourth quarter of 2007 with a 2010 in-service date. The following are major steps to completion: * CTL Permitting: Q3 2006 - Q4 2007 * Air (started modeling protocol) * Water (started water well drilling on site) * Siting (will commence in early 2007) * Engineering & Design: Q4 2006 - Q4 2007 * CTL Construction: Q4 2007 - Q4 2010 * In-Service Date: End of 2010 * Operations: 30 + years Construction: MBFP will contract with SNC-Lavalin, an experienced and credit-worthy construction contractor, to construct, commission and test the CTL facility. Operations: Arch Coal will operate and maintain the coal mine. MBFP or a subcontractor will operate and maintain the CTL facility. Benefits: To the community: * Job Creation: Approximately 300 full-time operating personnel; 1,500 construction workers (600 on average) * Property Taxes: Increased * Coal Severance Taxes: Increased as more coal is extracted * Oil Royalties: Increased due to the sale of CO2 to EOR sites * Support Services: Increased due to increased jobs in region * Environmental: Lower emissions than conventional coal power plants. Reduced emissions and greenhouse gases with the use of ultra-low-sulfur diesel (< 1ppm sulfur) as a transportation fuel To the United States: * Domestic production of petroleum * Reduced energy imports * Lessened dependence on Middle East * Use of abundant US coal reserves; including stranded reserves * Environmentally responsible * Increased US refined product production (ultra-low- sulfur diesel) * CO2 sequestered
Source: DKRW Advanced Fuels LLC
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