By OGJ editors
HOUSTON, Feb. 14 -- ConocoPhillips reported Thursday that it would shut down its carbon fibers projectnamed Cevolutionafter a decision that "came after a careful review of a number of different continuation options," the company said, adding that it was the "result of the cumulative effect of market, operating, and technology uncertainties."
"Individually, these factors would not have deterred us, but collectively they painted a picture that the business opportunity has not proven to be as strong as originally perceived," said Jim Nokes, ConocoPhillips executive vice-president, refining, marketing, supply, and transportation.
Then-Conoco Inc. launched the idea for the 8 million lb/year carbon fiber venture, constructed at Ponca City, Okla., in mid-May 2000 (OGJ Online, May 18, 2000).
"The venture will give Conoco a new high-tech product, allowing it to enter markets outside the traditional energy sector," the company said a that time. "Ultimately, this new business holds tremendous potential to redefine how business is done in the carbon fibers industry," Archie Dunham, chairman and CEO had said at that time.
After shutting down the plant, the company will take a $125 million writedown, it said.
"The 175 employees associated with the project will be redeployed or offered severance packages," ConocoPhillips said.
Tyler Dann, analyst with Banc of America Securities LLC said the carbon fibers project was a Conoco legacy asset when Phillips bought Conoco last year.
"While the company has presumable foregone a certain amount of upside potential from a new line of business, we can't say that we were expecting much to come from the Cevolution project anyway," Dann said.