Arch Coal, the US’s second-largest coal producer, has acquired a 25% equity interest in DKRW Advanced Fuels, LLC. In exchange, Arch has agreed to extend its existing option agreement with DKRW Advanced Fuels, to work with DKRW Advanced Fuels to secure coal reserves for two additional coal-to-liquids (CTL) projects outside of the Carbon Basin, and to invest $25 million in the company.
DKRW Advanced Fuels is a subsidiary of Houston-based DKRW Energy LLC and the principal developer of the Medicine Bow Fuel and Power coal-to-liquids project in the Carbon Basin of southern Wyoming. The Medicine Bow CTL plant will initially produce about 11,000 bbl/day of transport diesel and other fuels.
The Medicine Bow project is being planned as a mine-mouth coal-to-liquids facility that will use coal from Arch’s Carbon Basin reserves in southern Wyoming as a feedstock. DKRW has already selected GE’s coal gasification technology and Rentech’s Fischer-Tropsch (FT) technology for the Medicine Bow CTL plant, and has entered a construction agreement with SNC-Lavalin. (Earlier post.)
In addition, DKRW Advanced Fuels has signed a letter of intent with a regional oil and gas producer that plans to use carbon dioxide generated by the facility for enhanced oil recovery.
We believe that our strategic partnership with DKRW Advanced Fuels positions Arch to play a significant role in the emerging coal-to-liquids industry.—Steven F. Leer, Arch Coal Chairman and CEO
As part of the transaction, Arch and DKRW Advanced Fuels completed an extension of the existing option agreement on approximately 180 million tons of Carbon Basin coal reserves relating to the Medicine Bow coal-to-liquids project, and entered into a new agreement whereby Arch and DKRW Advanced Fuels will explore potential reserves and project opportunities of similar size to Medicine Bow in two other coal basins.