Colorado company looks to future that includes production in Miss-Lou

Published 12:00 am Monday, November 14, 2005

What would be a leap for Natchez in terms of economic development would also be a huge step for Rentech Inc., a 23-year-old Denver company that wants to manufacture fuel in Adams County.

Rentech has mainly been involved in research and development in coal gasification for years, company officials said.

A Natchez plant and a similar facility in East Dubuque, Ill., would be the company&8217;s first commercial ventures &8212; and perhaps the first of any company in the United States.

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&8220;This is a huge step for the company and for the industry,&8221; said Mark Koenig, director of investor relations for Rentech.

Founded in 1981, Rentech is has developed and licensed patented, proprietary processes for turning natural gas and coal into clean-burning fuels.

Since 1998, Koenig said, Rentech has almost exclusively researched the coal-to-liquids process. The company operated a small pilot plant for research and development, one that produced a fraction of the 13,000 barrels of fuel per day that the Natchez and East Dubuque plants together would produce.

&8220;That was mainly to prove the process,&8221; Koenig said.


In the early 1980s, Rentech began developing its fuel technology &8212; an advanced form of the Fischer-Tropsch process developed in the 1920s. Drs. Charles Benham and Mark Bohn, two founders of the company, helped develop the process.

Rentech had pilot plants from 1982-85, in 1989 and in 1998.

A Pueblo, Colo., plant was the first to produce on the commercial scale, Koenig said. The plant produced 235 barrels of fuel &8212; liquid hydrocarbons &8212; per day, using methane gas.

In 2000, Texaco

leased use of a plant in Laporte, Texas, to test the technology. The plant produced 10 barrels of fuel per day.

Last year, Rentech

began the process of buying the existing East Dubuque plant, seemingly pinning the company&8217;s success on the success of that deal.

The company&8217;s annual report filed last year with the Securities and Exchange Commission noted that Rentech would need working capital in order to achieve its goals &8212; and in the year since Rentech has sold Okon, a subsidiary that made chemical construction products, as well as closed two separate stock offerings totaling nearly $40 million.

Business plan

According to the annual report, Rentech began expanding its business plan in 2004 from research and development and licensing of its technology to acquiring fertilizer plants for its fuel production process.

Rentech is publicly traded, identified on the American Stock Exchange by the initials RTK. Rentech has never paid cash dividends on its stock, noting in its annual report that the company plans to use those funds for future expansion.

Local trust

According to those who have worked behind the scenes on the Rentech deal, the company is respected and reputable.

&8220;This is a group of people who are absolutely legitimate, top-of-their-game people,&8221; said Vidal Davis, a member of the Natchez-Adams County Economic Development Authority board and local real estate broker.

Davis and other members of the EDA board stayed mainly in the dark about the Rentech deal until company officials visited last week. The EDA board gave director Woody Allen the authority to negotiate.

&8220;The deal is still a long way off, but it&8217;s subject to the usual things that any new startup would be,&8221; Davis said. &8220;The funding is in place if they get the necessary licensing and permitting.&8221;

Charlie Williams, chief of staff for Gov. Haley Barbour, said the state has been impressed with the company.

&8220;They&8217;re a reputable group,&8221; Williams said, noting respected financial companies M.A.G. Capital and Credit Suisse First Boston are backing the project.

&8220;It looks like a good investment,&8221; Williams said.

Still, Rentech is an unknown. It has not yet had a commercial coal-to-liquids facility, and state officials are used to dealing with known products.

But the idea of being on the cutting edge of energy technology is &8220;something that&8217;s very attractive,&8221; Williams said.

And state officials were impressed that the company did not try to &8220;oversell&8221; its project with unreachable numbers of employees, Williams said.

The amount spent per job &8220;came out to be a very reasonable commitment&8221; for the state, he said.

As for the environmental aspect, Williams said the state has asked the Department of Environmental Quality to look into the coal gasification process Rentech would use, but he is so far impressed by the company.

&8220;It seems to be a very clean process, one that&8217;s very well known in environmental circles,&8221; he said. &8220;They are prepared to do whatever it takes&8221; to have a safe process.

While the state looks at what incentives it might be able to offer, Koenig said federal aid is available for such technology.

Under current energy policy, tax credits are available to producers of the fuels

The tax credits are expected to expire in 2009 &8212; at least a year before any of the companies working on the technology would be able to get a plant up and running.

&8220;Congress put it out there as a carrot,&8221; Koenig said. &8220;Once they&8217;re being built, they could extend the tax credits.&8221;