EmberClear writes off coal reserves, advances power project in Pennsylvania

EmberClear Corp. (TSX VENTURE: EMB) said Nov. 26 that it has written off the value of its anthracite coal reserves in Pennsylvania, which are reserves if acquired in part to support a coal-fired power plant at the site that it no longer plans to build.

EMB’s net loss for the twelve month period ending June 30, including discontinued operations, decreased by 51.9% to C$22.8m from C$47.4m for the same period in the prior year. Included in the net loss is a net impairment charge of C$31.7m relating to EmberClear’s coal properties. Due to continued depressed global price of coal and management’s plans to not develop the coal properties, EmberClear has written-off their value.

CEO David Anderson said: “The Company is well positioned and it remains focused on its natural gas based energy project development business in North America. The writing off the coal properties was a step in the right direction. We are optimistic that our current operating model will lead to a brighter future in 2015.”

Additionally, Peter Kinash has resigned from the board of directors of EmberClear effective Nov. 26.

EmberClear is an energy developer focused on low emission commercial scale projects primarily in North America. EmberClear is developing gas to liquids (GTL) and gas to power (NGCC) generating facilities in North America. It said its NGCC Projects benefit from a favorable geographic location that offers access to abundant natural gas reserves and a power market that is served primarily by older, coal-fired, electric generation facilities, expected to be phased out over time.

EmberClear also holds surface and mineral rights in Schuylkill County, Pa. This property is situated in the Southern Anthracite coalfield of eastern Pennsylvania. Mineral rights held by the company include anthracite/pulverized coal injection-capable coal suitable for the steel making industry. EmberClear’s 2012 drilling program indicated that there are approximately 100 million to 216 million potential tons of anthracite coal on the Good Spring Property.

EmberClear working with Tyr Energy on gas-fired project in Pennsylvania 

Said the company in a Nov. 26 financial report about the power project that replaced the coal project in Pennsylvania: “On December 8, 2010, EmberClear received all the necessary permits for the development and construction of a natural gas combined cycle (‘NGCC’) electricity power plant capable of generating up to 270 Megawatts (‘MW’). On May 17, 2012, the Company applied and obtained the necessary permits to increase the output to 300 MW and on November 13, 2012, EmberClear filed key documents with regulators and regional transmission operators for a second 330 MW natural gas fired electricity power plant in Schuylkill County, Pennsylvania. These projects are collectively referred to herein as the Good Spring Power projects.

“It is anticipated that the Good Spring Power projects will serve the largest electricity power market in the United States, including metropolitan markets such as Philadelphia and Harrisburg. EmberClear owns a 560 acre property and a tract of 83 acres of that land has been allocated for these projects. Power grid infrastructure is well developed near the property and a complete analysis for transportation of the plants’ electricity within the Pennsylvania–New Jersey–Maryland power grid (the ‘PJM Grid’) was completed.

“On January 13, 2014, members of the board of directors (the ‘Board’) resolved to dispose of the Good Spring Power projects through an outright sale of the project entities. On March 11, 2014, the Company signed a Membership Interest Purchase Agreement (the ‘Agreement’) and disposed 50% of its membership interest in Future Power PA LLC (‘FPPLLC’ or ‘Good Spring Power Project 1’) and the EmberClear Power PA LLC (‘EPPLLC’ or ‘Good Spring Power Project 2’) to Tyr Energy Inc., based in Kansas City, United States. The Company received a reimbursement of approximately 50% of its development costs leading up to the transfer of the projects assets and the land.

“Subsequent to the transaction, it is expected that both EmberClear and Tyr will jointly develop the Good Spring Projects so that construction on the first Good Spring Project 1 can commence. Construction is expected to commence within 18 months from the initial close in March 2014. Tyr Energy has the option of acquiring the remaining 50% of the Good Spring Power projects at the predetermined conditions set forth in the agreement. No timetable for the construction of Good Spring Power Project 2 has been set.

“FPPLLC is currently negotiating long-term contracts in the form of an electricity power purchase agreement for the Good Spring Power Project 1. The Company is also negotiating long-term contracts for the supply of natural gas as an initial feedstock. Natural gas prices in the U.S.A. are favourable and the relationship between the electricity sale price and the cost of natural gas is a key determining factor for the likely financial returns of the Good Spring Power plant. FPPLLC intends to start the Good Spring power plants as NGCC power plants to take advantage of the price relationships and the anticipated improved financial returns. This plan enables the Company to utilize current permits for the Good Spring Power plant while significantly reducing the required capital investment. Similar engineering, regulatory requirements, natural gas supplies, pipelines, grid interconnection, and labour market conditions are expected to result in meaningful speed and cost savings to take advantage of recent market trends such as the availability and price of natural gas, electricity pricing, and decommissioning coal based power plants in this region of the United States.

“The overall investment for a 337 MW Good Spring Power Project 1 will be approximately [C]$350M to [C]$400M and the proven NGCC technology represents a straight forward configuration that management believes will lead to a shorter construction timeframe when compared to other technologies. FPPLLC expects the contracting for feedstock and off take to be completed by Q1 2015. Competing engineering, procurement and construction (‘EPC’) firms have been identified as being a qualified and desirable party for FPPLLC to proceed with detailed contracting. EmberClear intends to recoup its remaining development costs and a development fees when construction on Good Spring Power Project 1 begins.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.