The Morristown City Council on Tuesday voted unanimously to give Freedom Energy Diesel six more months to demonstrate progress toward a greatly altered plan to produce diesel fuel locally.
The previously modified sales agreement for the property in the East Tennessee Progress Center provided that if F.E.D. didn’t secure funding for the project by the end of 2013, the improved property would revert to city ownership.
On Tuesday, councilmembers agreed to push back the deadline for triggering the “reverter clause” six months to June 30. The original deadline is for demonstrating significant progress toward completion was June 30, 2013.
F.E.D. first proposed converting coal to diesel fuel utilizing extremely high temperatures and cutting-edge technology.
The revised plan is to convert relatively inexpensive and plentiful natural gas to diesel fuel, R. Jack Fishman, chair of the Industrial Development Board of the City of Morristown, told councilmembers Tuesday afternoon.
The change from coal to natural gas, in part, increased the estimated cost from $400 million to $778 million, according to Fishman.
David Wild, one of the F.E.D. principals, said this morning that all indications signal the financing will be finalized by the revised, council-imposed June 30 deadline.
Wild says the gas-to-diesel is “90 percent” proven technology that’s currently being used to produce diesel fuel in the United States.
If all goes as planned, Wild says, the Morristown plant will produce 20 million gallons of diesel fuel – approximately 475,000 barrels – per month.
The number of employees F.E.D. would have, including a large administrative staff, would remain around 450, according to Wild.
The previously stated, long-term plan is for Morristown to serve as corporate headquarters for many diesel-manufacturing plants that would be replicated across the country.
The change in the primary fuel for F.E.D., Fishman and Wild say, is another reason for the delay.
The ETPC plant would require a massive quantity of natural gas, more than was previously available through existing transmission lines.
Wild said this morning an agreement has been forged with East Tennessee Natural Gas to supply natural gas to the diesel-manufacturing firm, a project that will require the construction of larger transmission lines.
Wild says the potential investors required the gas-supply contracts before moving forward with their due-diligence inquiry.
Another reason for the delay, Fishman told councilmembers Tuesday, is the potential investors wanted more vendors for the finished product than Pilot Flying J, a company run by Jimmy Haslam, the brother of Gov. Bill Haslam, that is facing rebate-related legal problems.
-By Robert Moore, Tribune Staff Writer