In 1997 Crown Energy Corporation joined with MCN Energy Group Inc. and Enron Corporation, through their wholly owned subsidiaries, in project and equity financing aimed at utilizing Crown’s considerable natural resources to enhance shareholder value. Crown’s vision is to become a force in the asphalt production and distribution arenas.
Perhaps Crown’s most notable recent achievement was its purchase of the asphalt marketing and distribution business of Petro Source Corporation. As a result of this transaction, Crown obtained inventory, assets and facilities in Utah, Colorado, Nevada, Arizona and California. This acquisition creates a vertical integration of Crown’s overall asphalt business and provides a good distribution network for the asphalt production from its Asphalt Ridge project.
Crown’s Asphalt Ridge Oil Sand Extraction Facility near Vernal, Utah, is a first-of-a-kind facility to produce premium quality asphalt from oil sands. The project is substantially complete after encountering some construction delays. Startup and commissioning of the plant began in the third quarter of 1998 and Crown expects production at the design capacity of 100,000 tons of asphalt per year in 1999.
Crown says it believes the asphalt industry provides an excellent growth opportunity. The industry is rapidly changing to the use of a wide array of performance oriented products requiring technical blends of asphalt and other materials. These products require high-quality asphalt and terminal facilities to store, blend and distribute the products. The recent federal highway bill will allocate over $160 billion to the construction and repair of highways with the Western United States set to receive a large portion of this funding. This, coupled with the relatively strong regional economy and special funding associated with the 2002 Winter Olympic Games in Salt Lake City, Utah, indicates strong demand growth for the asphalt over the next several years.
Crown states that the asphalt produced from Asphalt Ridge is the highest quality available in the region and is well suited for blending with lower quality asphalts to enhance performance and meet the technical product requirements of today’s market. Crown plans to aggressively expand its terminal and distribution network in the region. In addition, plans call for expansion of productive capacity at Asphalt Ridge to 300,000 tons per year by 2001.Contract for Mining
Morrison Knudsen Corporation has been awarded a 2-year contract by Crown Asphalt Corporation to provide contract mining services at the Asphalt Ridge project.
The scope of services contracted includes loading and hauling ores to the processing plant, as well as loading and hauling overburden. Other work includes stockpile and haul road maintenance, and construction of surface-water diversion systems. By year-end 1998 the mine was to have reached full production at about 1,452,000 bank cubic yards of material annually.