DKRW Advanced Fuels' proposed $2 billion coal gasification plant near Medicine Bow lost $62 million during the last seven years, financial filings with federal regulators show, prompting the Houston firm’s financial partner to write off its remaining investment in the venture late last year.

Arch Coal, Inc. invested $25 million in the planned plant in 2006 in return for a 24 percent stake in the company. The St. Louis-based firm planned to provide coal to the facility, which would then be turned into liquid petroleum products.

But the project struggled through permitting and funding delays, losing money every year since 2007. 

The losses started at $400,000 in 2006, according to a review of Arch's financial filings with the U.S. Securities and Exchange Commission by Taxpayers for Common Sense, a Washington, D.C.-based watchdog group. 

They grew to almost $6.7 million the next year and never dropped below $6.3 million, Taxpayers reported. The biggest loss came in 2012 when the venture lost $17.5 million. 

Arch loaned DKRW a total of $44 million between 2006 and 2013, none of which has been paid back, while watching its equity in the company fall to $13.7 million. 

Late last year the coal company signaled it had all but given up on the project after Sinopec Engineering Group, a Chinese firm hired to build the facility, did not start work on time last summer. DKRW later terminated its contract with Sinopec.

In its 2013 annual report to the U.S. Securities and Exchange Commission, Arch listed its total $57.7 million investment in the project -- $44 million in outstanding debts and $13.7 million in remaining equity -- as an impairment loss. The term is used in accounting to signal a company does not expect to recover its investment in a venture.

“Given the absence of a specific path forward and timeline for the project, we concluded that – in keeping with (Generally Accepted Accounting Principles) – writing down the value during the fourth quarter of 2013 was the appropriate course of action,” Arch spokeswoman Kim Link wrote Tuesday in an email to the Star-Tribune. “DKRW continues to seek financing for the project, which is an essential next step in order to move forward.”

DKRW did not return requests for comment on this story.

The company has pursued federal funding to build the plant. The Department of Energy tentatively approved DKRW’s request for a $1.75 billion federal loan guarantee in 2009. The federal approval was contingent on the project passing an environmental review. That review stalled after the Energy Department’s lending program attracted congressional scrutiny for its $535 million loan to the now bankrupt California solar-panel maker Solyndra. But in recent months DKRW officials said they were in renewed talks over the company’s loan application.

Arch’s write-off raises serious concerns over whether federal funding should be used to finance the project, said Autumn Hanna, a senior project manager at Taxpayers for Common Sense, a Washington, D.C.-based watchdog group. The group issued a report last week detailing Arch’s write-off of the project.

“It just looks to me that there is nothing that they can turn it around,” Hanna said. “It is just year after year of losses, and even Arch Coal recognizes that.”

Reach energy reporter Benjamin Storrow at 307-335-5344 or benjamin.storrow@trib.com. Follow him on Twitter @bstorrow

(5) comments

jackel
jackel

Amazing how the truth has been coming out lately within Wyoming. I wonder how the Wyoming DEQ is reacting to this news? Wyoming DEQ could have simply refused permit renewal for DKRW from the industrial siting division, for they were not in complaince.
One thing is for sure the people in Medicine Bow can put away the banners and hope chest for when the coal company pulls the plug as a 63 million dollar loss, that black gold will stay put for now.
One thing is for certain this company has never produced a positive position for Wyoming and their records indicate gasifcation is not gasoline, but hot air.

pappy
pappy

Seems that the Wy Industrial Siting Council is the only one left with an interest in DKRW.

jc45
jc45

And our Congressional Delegation.

dthrogmorton
dthrogmorton

Had elected and appointed officials from the Carbon County Commissioners to the Industrial Siting Council taken the concerns expressed and evidence presented by private, well-informed citizens more seriously, this silliness would have been concluded 4 or 5 years ago. It is frustrating to have internationally respected experts like Dr. Lillegraven pushed to the margins when his expertise should have been central to this discussion from the very beginning. Can we now assume that since DKRW has only attracted one investor and that investor has now written the corporation off as a bad risk that this Enronesque project is finally dead? I will help jackhammer up the garage-sized piece of concrete that they used to feign compliance with the ISC regulations several years ago.

gnarly
gnarly

Somebody named Throgmorton called this one right years ago, angering some who knew very well that The Emperor's New Clothes were real. Here's another thing. To accommodate the god sent industrial project that was going to bring many jobs and big revenues, the state hastily carved a large acreage out of a sage grouse core area. Is it all conceivable that some day the wonderful world of Wyoming politics will restore the core area's original integrity?

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