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Evergreen Energy idles Wyoming coal refinery

By David Milstead, Rocky Mountain News (Contact)

Published March 21, 2008 at 12:05 a.m.

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Denver-based Evergreen Energy is idling its Fort Union coal refinery near Gillette, Wyo., putting 56 employees out of work.

The company said it will take a $109 million noncash charge to write down the value of the plant. Evergreen Energy said the closure, coupled with "anticipated cash flows from increased production" at another subsidiary, and its current cash levels "are sufficient to support our ongoing operations."

The company's stock is down 90 percent from two years ago as enthusiasm over its clean-coal technology has waned.

Evergreen Energy, formerly known as KFx, has been trying to commercially develop a technology called K-Fuel that reduces moisture and mercury from Western coal - found in the Powder River Basin of Wyoming - and makes it comparable in fuel efficiency to more expensive coal from the eastern U.S.

The Gillette plant was the company's first to make use of the K-Fuel process. In its most recent financial report, filed Nov. 9, the company said it "continue(d) to face technical and operational issues with improving capacity utilization" at the plant, but management believed it had made "significant improvements to address these issues."

Evergreen Energy said the decision to idle the plant was driven by a desire to use improved technology from partner Bechtel for new facilities elsewhere.

CEO Kevin Collins, in a letter to shareholders Thursday, said, "There are better options for a return on our capital at other locations."

Jacobsen said the action is not a total closure of the plant because the company will still have three dozen people working there on maintenance, at the lab and for other purposes.

"We have not entirely ruled out the potential of firing it back up if needed on a short-term basis for testing or other purposes," he said.

Finance Editor David Milstead can be reached at milstead@RockyMountainNews.com or 303-954-2648.