ADA-ES, Inc. announced today the formation of Crowfoot Development, LLC (Crowfoot), a joint venture with Energy Capital Partners (ECP), focused on the production of activated carbon (AC) for the mercury emissions control market for coal-fired power plants. Previously, ADA-ES announced the commencement of construction of the largest AC production facility in the United States, which Crowfoot is constructing in northwest Louisiana through its wholly-owned subsidiary Red River Environmental Products, LLC. The first production line of this facility will be capable of producing 125 to 175 million pounds of AC per year and is expected to come on-line in 2010. In addition, the air permit for the facility allows for a second production line, which, if constructed, would be capable of producing up to an additional 175 million pounds of AC per year. Crowfoot has plans to develop and construct this second production line and additional facilities in the future.
The total capital cost for the first production line has been estimated at $350 million. Pursuant to the joint venture agreement, ADA-ES and ECP will provide, subject to certain conditions, the equity capital required to construct the first production line. The first production line is being built under an engineering, procurement and construction contract with BE&K Construction Company. Two major power generators have signed long-term contracts to purchase AC from the facility to reduce mercury emissions at their coal-fired plants.
In addition, ECP has entered into a securities purchase agreement, pursuant to which ECP will purchase, subject to shareholder approval and the satisfaction of certain other conditions, 3.6 million shares of convertible preferred stock of ADA-ES, the proceeds of which will be used by ADA-ES to make equity contributions to Crowfoot pursuant to the joint venture agreement. ADA-ES will file a Form 8-K which will provide additional details on the agreements between ADA-ES and ECP.
Dr. Michael D. Durham, President and CEO of ADA-ES, commented, “We are thrilled to be partnering with ECP. With its $2.25 billion fund established for energy infrastructure projects, ECP is able to provide the resources to help us implement our plans to serve the growing demand in the power plant mercury control market which include building multiple AC production plants.”
Dr. Durham continued, “In addition to ECP’s extensive financial resources, ECP brings significant transaction and project development experience to Crowfoot. Over the years, members of the ECP team have played leading roles in numerous transactions that have collectively involved over 100 separate energy assets and total capitalization in excess of $10 billion. This expertise has been extremely valuable to ADA-ES over the past six months, as we have jointly resolved complex contracting issues related to our engineering contract, off-take agreements, and other aspects of the project.”
Peter Labbat, a Partner from ECP, stated, “We are excited about our partnership with ADA-ES, the leader in mercury emissions control for coal-fired power plants, and our participation in this new market that ADA-ES has played such an important role in developing. We see this as the beginning of a long-term relationship between ECP and ADA-ES, starting with this first AC production facility and growing through additional production lines as the AC market grows.”
Mr. Labbat concluded, “The public remains concerned about mercury in the environment. We are excited to be playing an important role in helping our power generating customers significantly reduce their mercury emissions.”
Review all our latest Carbon Market news