October 25, 2011

Proposed Maine plant would ship wood pellets overseas

By Tux Turkel tturkel@pressherald.com
Staff Writer

A wood products company in Baldwin plans to build an $80 million pellet manufacturing plant that would send most of its output 28 miles by rail to Portland for export to Europe.

The venture would be the first in the Northeast to ship wood pellets overseas, opening a new market for Maine's young but growing pellet industry.

F.E. Wood & Sons hopes to start construction next year at a site off Route 113, next to a state-owned rail line that runs between Fryeburg and Portland.

The mill would have capacity to make 300,000 tons a year, about 70 percent of it produced for export. It would employ 17 workers, and could provide many more jobs in a 50-mile timber harvesting radius and in Portland Harbor, where the pellets would be loaded on ships.

"We knew we had the resources available here," Anthony Wood, the company's vice president, told The Portland Press Herald on Monday. "And we've been able to put all the right pieces together."

Wood hopes to have the mill operating in 2013, but some remaining pieces must come together for the vision to become a reality.

The project's investment bank, Fieldstone Private Capital Group Inc., must finalize the financing. The state must finish restoring the Mountain Division rail line between Windham and West Baldwin. And the company must confirm shipping partners and bulk storage in Portland, as well as clients in Europe.

Mainers are becoming familiar with wood pellets for space heat. In Europe, pellets are in growing demand for electricity production. Utilities blend them with coal to run power plants, striving to meet new standards set by the European Union to boost the use of renewable energy sources and cut air emissions associated with climate change.

The trend has helped the United States and Canada become major suppliers of wood pellets to Europe. They shipped 1.6 million tons last year, doubling the 2008 volume, according to North American Wood Fiber Review.

Most pellet shipments leave for Europe from ports in the Southeast such as Savannah, Ga. In the Northeast, only Maine ports are close enough to the wood supply and have adequate bulk-handling capabilities, according to Biomass Power and Thermal, an industry publication that learned of F.E. Wood's plans at a trade show in Pittsburgh last week.

Maine's three major ports -- Portland, Searsport and Eastport -- have storage for bulk products such as wood pellets, said John Henshaw, executive director of the Maine Port Authority. Eastport now ships wood pulp to Europe and is expanding to handle wood fuels.

"Wood pellets could be significant for Maine's ports," Henshaw said. "It depends on how business develops."

In Portland, F.E. Wood has been in contact with Sprague Energy Corp., which operates the Merrill Marine Terminal and has covered, bulk storage on the waterfront. Officials at Sprague declined comment Monday on the company's involvement.

But David Perlman, managing director for Fieldstone Private Capital Group, was quoted at the trade show as saying the project would include development of a storage facility. Perlman couldn't be reached for further comment Monday.

Beyond port storage and handling, the project needs rail service.

The Mountain Division line is being restored to handle freight again, with work winding down this fall between Westbrook and South Windham. It was funded with a $4 million bond approved by voters. With no state bonding year, the state lacks money to extend the rail work farther west.

State officials say it will cost about $10 million to restore the entire line, including a parallel recreation trail. They're now looking to an upcoming federal transportation grant. The pellet mill could help justify the grant, using as many as 3,000 freight cars a year and putting enough traffic on the line to lease it to a private, short-line operator.

"If the project moves forward, that makes the math work," said Nate Moulton, who directs the state's rail program.

Delayed rail service isn't a deal breaker, according to Wood. Trucks could move the pellets, at least temporarily.

But rail service would give the project an important competitive advantage. Rail freight uses less energy than trucks and creates less pollution, which is a key metric for the European utilities that must cut greenhouse gas emissions.

"They put almost as high a value on that as on the price of the pellets," Wood said.

 

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