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Since 1984, the Thermo
Companies have been involved in the independent energy business both as a
substantial 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 and steam generating plant which began commercial operations in
1988 at the University of Northern Colorado in Greeley. The facility supplies
all of the hot water and steam necessary to heat and cool the campus and sells
electrical energy to Public Service Company of Colorado. This plant operates
with two natural gas fired General Electric LM-5000 turbines packaged by
Stewart & Stevenson Services and uses approximately 15 million cubic feet
of natural gas per day. Until Thermo's other power projects came on line in
1994 it was the largest single consumer of natural gas in Colorado. The plant,
financed by Prudential Insurance Company, has been featured in many national
magazines as an example of public/private partnership and energy conservation.
In 1992 Thermo began construction on two more Colorado power projects
which cost in excess of $250 million. In 1994 these two projects went into
commercial operation at Thermo's Ft. Lupton industrial park in Ft. Lupton,
Colorado. Phase I of the Ft. Lupton facility began the commercial generation of
electricity during the second quarter of 1994. Phase I supplies 122 MW of
electricity to the local utility and 200 MMBTU/hour in the form of steam, hot
water and hot air for use by businesses locating in the industrial park. The
Ft. Lupton Phase II facility began operation one month later. This facility
produces 150 MW of electricity and makes available 300 MMBTU/hour of heat for
the tenants of the park. 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 owned and controlled by Thermo in Ft. Lupton,
Colorado. Thermo also owns a one million square foot greenhouse, packing, and
administration facility which is being leased to the largest tomato
greenhousing company in North America. It is their largest facility. The two
phases of the Ft. Lupton project utilize five General Electric LM-6000 gas
turbines, 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 power generation
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 a gas turbine fired LM-6000 facility
creating electricity for Public Service Company and thermal energy for ConAgra.
Thermo has established a partnership with Kinder Morgan, Inc. (www.kindermorgan.com), a
$10 billion (market cap) 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 will
each be approximately 500 MW and will be designed and constructed utilizing
proprietary concepts developed by Thermo over the last fifteen years. 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 which
totals approximately $800 million. 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 in 2002 and development continues on others. The facilities will
benefit from being located on or near the Kinder Morgan gas transmission
system, 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 its natural gas operations to over 150 wells and
approximately 563 billion cubic feet ("Bcf") of gas reserves. According to
independent evaluations, the oil and gas properties contain more than 135 Bcf
of proven reserves in 325 locations and an estimated 461Bcf of probable
reserves in 921 additional locations. Thermo's primary drilling programs have
achieved greater success than historical average results in the area. By using
improved seismic techniques, Thermo's success rates increased from 75% in 1991
to over 95%, this in an area which historically averaged only 50%. Improvements
in seismic and well completion techniques have also increased average well size
from .3 to .5 Bcf per location. These assets were sold in 2004, in connection
with restructuring several power purchase agreements. After the restructuring
the fuel supplied to our plants from these gas reserves was no longer
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