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Oklahoma waste firm EESV recycles itself into Alaska energy concern Environmental Energy looks to combine Cook Inlet leases with Jonesville coal operation if it and partner Nerox are successful in reopening the Sutton-area mine Steve Sutherlin PNA Managing Editor
Acquisition of three Kenai Peninsula leases from Northstar Energy Group Inc. in June by Environmental Energy Services Inc. is step one in the company’s strategy to enter the business of acquiring, developing and operating coal, gas and other energy-related assets in Alaska. (See story in Aug. 25 edition of Petroleum News • Alaska.)
Traded over the counter as EESV, the Oklahoma City-based company has historically owned and operated non-hazardous waste disposal facilities and complementary businesses. Since its reorganization as a holding company, Environmental Energy said, it has evaluated a number of promising potential Alaska acquisitions in coal and gas production.
The company has agreed to drill a well on at least one of its new leases, which are located 20 miles north of Homer, within a year of purchase.
“We would like to begin as quickly as we can put the financial part together,” said Environmental Energy Chairman and CEO Leon Blaser.
Probably won’t operate The company plans to fund drilling through a limited partnership. It has not yet determined whether it or another firm will be the operator of the field.
“Several groups have talked to us,” Blaser told PNA Aug. 23. “We may be the operator, but we most likely won’t be.”
Doug Holsted, Environmental Energy president and CFO said the Cook Inlet project represents a new direction for the company. He said the company is tired of fighting government agencies that don’t understand new technologies the company has proposed for environmental cleanup. Oil and gas activities are subject to regulation as well, he said, but regulations are more established and requirements are easier to predict in advance.
While Environmental Energy doesn’t have an extensive history in energy ventures, principals in the firm have, Blaser said.
Blaser has been a member of the Environmental Energy board since January 1996, the company said. He was a founder of WasteMasters Inc., the private predecessor company formed in 1995. From May 1996 to September 1997, Blaser was CEO, and he was reappointed in December 1998. Since 1990, Blaser is also president of Idaho land development company, Interwest Development Inc.
Holsted joined Environmental Energy in June 1999, and has an accounting background.
Previous energy project fizzled The company attempted an energy venture in 2000 as an offshoot of a coal reclamation project. Appalachia Environmental Recovery Inc., a subsidiary of WasteMasters Inc., announced in October 2000 it would build an $8 million coal recovery and environmental reclamation system at New Lexington, Ohio. The project would have converted coal wastes into synthetic gas.
The project never materialized, Blaser said, because local regulators imposed conditions that made the project uneconomic. He said it was unlikely in the near future that Environmental Energy would become involved in a similar venture because federal tax incentives that encouraged such projects have expired.
“The synthetic fuel market window has closed,” he said, however he added that the new federal energy bill might contain provisions that could resurrect the Appalachia project and other similar projects.
Nerox partner in Jonesville coal effort Blaser said Environmental Energy is working with a company called Nerox Power Systems Inc., seeking to obtain permits to reopen the Jonesville coal mine near Sutton. If those efforts are successful, it is likely that Environmental Energy’s Cook Inlet operation and the Jonesville mine will be combined under one company, along with other Alaska ventures under consideration.
At Jonesville, the group intends to use a new recovery process, and deal with reclamation issues left over from the previous operators, Blaser said.
Nerox acquired a 100 percent interest in the Jonesville mine from Placer Dome USA Ltd. for approximately $1,020,000 in October 1995.
Environmental Energy said it would operate the coal facility through contract miners and it has a strong indication of potential delivery contracts for all of the coal.
Rebuilds through acquisition Environmental Energy’s predecessor company, WasteMasters Inc. was de-listed from the Nasdaq stock exchange May 17, 1999, for the company’s failure to maintain a trading price in excess of $1, according to press accounts. The company currently trades on the Pink Sheets.
WasteMasters Inc. merged in August 2001 with WasteMasters Holdings Inc. on a share-for-share basis and subsequently changed its name to Environmental Energy Services Inc. The merger was effected for the purpose of reorganizing the company as a holding company, the company said.
In 2000, Environmental Energy made several acquisitions of landfills and other waste operations, including landfill assets of EOLM Inc. in Lima, Ohio, and assets of Global Eco-Logical Services Inc., a waste company with collection, recycling and transportation activities in Philadelphia and environs, along with a 141-acre construction and demolition landfill in Eastern Ohio. The Global purchase was valued at $4.3 million in stock and assumption of debt.
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