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In 1984, the Thermo
Companies first became involved in the independent energy business both as a
developer of cogeneration facilities and in the exploration and production of
natural gas. Thermo was the developer of the $60 million 76 MW electric energy
system and steam generating plant at the University of Northern Colorado in
Greeley. The facility still supplies all of the hot water and steam necessary
to heat and cool the campus, sells electrical energy to Xcel Energy, operates
with two General Electric LM-5000 turbines packaged by Stewart & Stevenson
and uses approximately 15 million cubic feet of natural gas per day. Until
Thermo's other power projects came on line it was the largest single consumer
of natural gas in Colorado. The plant, financed by Prudential Insurance
Company, has been featured in national magazines as an example of
public/private partnership and energy conservation.
In 1992 Thermo
began construction of two more Colorado power projects which cost in excess of
$250 million. The 122 MW first phase of Ft. Lupton began the commercial
generation of electricity during the second quarter of 1994. The 150 MW second
phase began operation on month later. These two facilities, operating in
tandem, consume an average of 30-40 million cubic feet of natural gas per day,
surpassing the University project as the state's largest natural gas
consumer.
Both phases of the Ft. Lupton project are approximately
twenty-five miles north of Denver in an industrial park originally owned by
Thermo. Thermo also owned the one million square foot greenhouse, packing, and
administration facility which was leased to the largest tomato greenhousing
company in North America. The two phases of the Ft. Lupton project utilize five
General Electric LM-6000 gas turbines also packaged by Stewart & Stevenson.
Approximately $227 million of financing was arranged through Kidder Peabody,
Prudential Insurance Company, Fuji Bank, and Central and Southwest Corporation,
a unit of American Electric Power. Central and Southwest also purchased an
equity interest in these facilities.
In 1996 Thermo began operations at
a fourth facility. Thermo's project at the ConAgra meatpacking facility in
Greeley, Colorado is located approximately three miles from the University of
Northern Colorado project. This project is also an LM-6000 facility which sells
electricity to Xcel Energy and thermal energy to ConAgra.
Thermo
established a partnership with Kinder Morgan, a natural gas and petroleum
liquids transportation company with other operations in coal terminalling and
carbon dioxide transportation, to own all of the operating cogeneration plants
and to develop and construct up to ten additional power projects. The planned
facilities were to be approximately 500 MW each and were to be designed and
constructed utilizing proprietary concepts developed by Thermo. Orders were
placed with Stewart and Stevenson's Gas Turbine Division, now wholly owned by
General Electric, for all of the major power generation equipment. If fully
constructed, these projects would require capital of approximately $2.5
billion. Each plant is designed with six LM-6000 and one GE frame 7 gas turbine
generators and two steam turbine generators operating in combined cycle. The
first two projects began commercial operation. The facilities benefit from
being located on or near the Kinder Morgan gas transmission systems, assuring
adequate sources of fuel and increased through-put across Kinder Morgan's gas
transmission network.
Through a series of acquisitions
and drilling programs in Colorado and Kansas, Thermo and Kinder Morgan grew
their local natural gas operations to over 150 wells and approximately 563
billion cubic feet ("Bcf") of gas reserves. Thermo's primary drilling programs
achieved greater success than historical average results in the area. By using
improved seismic techniques, success rates increased from 75% to over 95%, this
in an area which historically averaged only 50%. Improvements in seismic and
well completion techniques also increased average well size from .3 to .5 Bcf
per location. These assets were sold in connection with restructuring several
power purchase agreements. After the restructuring the fuel supplied to the
power plants from these gas reserves was no longer required. |
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