Maine ports gearing up to export wood chips to Europe

INVESTORS ARE PREPARING EASTPORT AND SEARSPORT TO SEND CHIPS TO EUROPE TO FEED BIOMASS GENERATORS THERE.

Maine is poised to finally begin shipping wood chips to Europe for power generation next year if plans underway at Eastport and Searsport stay on schedule.

After years of false starts, these developments would be especially welcome now, as the ongoing decline of the paper and in-state biomass power industries has hit hundreds of loggers and truckers who used to harvest and move fiber to Maine mills and generators. The value of U.S.-based wood fuel sent to the European Union in 2015 exceeded $684 million, according to export research firm WISERtrade, but none of it came from Maine.

The state’s first opportunity could come next year in Eastport, where the port authority has been working on export plans since 2009. A company it has partnered with is building special equipment that processes the chips to standards required in Europe. Chris Gardner, the authority’s director, said that while the equipment may be ready by year’s end, he thinks it’s more realistic to begin exporting wood chips in 2017.

“We have been reluctant to talk about this in the press,” he said. “We don’t want to put a lot of false hope into the market.”

Meanwhile, Arthur House, president and chief executive of Maine Woods Biomass Exports LLC, has begun making railroad ties and other wood products in Millinocket along a rail line that connects the North Woods with Searsport. The ties are being sent by rail to Quebec, but the work is a prelude to shipping logs through Searsport to India in January, and wood chips to Europe in early 2018.

“We want to make Searsport a fiber hub,” House said.
Behind the optimism is an EU mandate that member countries get 20 percent of their overall energy supply from renewables in 2020. Part of that means converting coal-burning power plants to wood pellets and chips.
But wood can carry invasive insects, so European Union regulations require all imported wood to be heat-treated to kill bugs. Suppliers need to receive government certification of their process, called phytosanitation.

In Eastport, the port authority has been working with Maine-based Phyto Charter, a company that has been working with the University of Maine to develop a patent-pending system of heating the wood after it’s loaded into the hulls of chip carriers. Once loaded into cargo ships, the chip containers are hooked up to a blower system that delivers heated air that kills any stowaway pests.

Maine Woods Biomass, meanwhile, plans to build a phytosanitation plant in Stockton Springs. It plans to start construction early next year, House said. The technology was proven during a test shipment of fiber for papermaking in Germany.

House has ambitious plans for developing a supply chain network that will process and heat-treat chips, logs and other wood products, with a goal of exporting 600,000 metric tons per year. House said the company has signed long-term contracts for this volume with utilities in Europe.

Roughly three-quarters of the fiber would arrive in rail cars over the Central Maine & Quebec Railway, which connects Millinocket with Searsport, as well as Lac-Megantic, Quebec. The company also has space at the terminal in Searsport to handle the material.

A recent story in Biomass magazine outlined technical details of the proposal, which it said carried a price tag of $25 million. House told the Portland Press Herald the company has raised that much through a combination of equity and investor financing.

LESS COMPETITION FOR WOOD FIBER

Wood pellet and chip cargoes from the United States to Europe and the United Kingdom have been soaring in recent years, but most of it comes from the Southeast. Both House and Gardner say Maine has an advantage over Southeast ports because it’s closer to Europe and buyers can save on shipping costs.

But plans to export wood fuel from Maine have repeatedly been delayed over the years for a variety of reasons that include competing for fiber supply with papermaking. Those worries have largely receded in most of Maine following the closures and cutbacks at mills.

That has people who work in the woods watching the Eastport and Searsport proposals with interest.

“Anything is going to help at this point,” said Brain Souers, president of Treeline Inc. in Lincoln, a logging and forest products company. “I don’t think we can go down any further.”

Souers, a past president of the Professional Logging Contractors of Maine, has visited the Maine Woods Biomass operation in Millinocket. He said he has been talking to House about supplying chips or logs.

Souers and other loggers have been reeling from repeated bad news in the forest products industry. Last week, Verso Corp. announced more layoffs at its Jay paper mill. Loggers estimate that will cut fiber demand by 500,000 tons.

Within the past two years, the Expera pulp mill in Old Town, Verso’s Bucksport mill, the Lincoln Paper and Tissue mill, and the Madison Paper Industries mill have closed, along with two biomass power plants. These and other losses have led to creation of a federal task force seeking solutions, as well as a state study of the biomass industry.

John Henshaw, director of the Maine Port Authority, said it’s too early to say to what degree wood-fuel exports can offset losses in other markets, but that the state could be entering an era in which chip exports become a regular occurrence.

“I think there’s a potential for that,” he said. “I’m cautiously optimistic.”

By Tux Turkel, Staff Writer, Portland Press Herald

Link to original article - http://www.pressherald.com/2016/11/08/ports-gearing-up-for-chip-exports-to-eu/