Preconstruction underway on Maine heat-treated woodchip facility

By Katie Fletcher | November 01, 2016

Maine Biomass Exports Inc. saw opportunity in the EU’s adoption of climate and energy targets for 2020 and 2030 in order to encourage a transition to a secure, affordable and decarbonized energy system. President and CEO Arthur House reported that Maine Biomass Exports is now commencing operations on a portion of its project in Millinocket, Maine, and is in the final stages of preconstruction of its phytosanitation heat treatment facility for processing and sanitizing woodchips for export. MBE established its business primarily to focus on exporting phytosanitized (heat-treated) woodchips to the EU for combined-heat-and-power (CHP).  

Driven by irreversible demands self-imposed throughout the EU, House said, since Oct. 1, 2014, there has been an urgency to replace carbon-laden coal production practices with renewable energy—woody biomass, woodchips. As a precursor to the export of woodchips to EU destinations from North America, woodchips had to be fumigated by some methodology such as methyl bromide (MeBr), or by using aluminum phosphide fumigation tablets to produce 4 gm3 phosphine, on board a vessel, known as “In-Transit-Fumigation” by Phosphine.        

Member countries of the European Union adopted new requirements for the importation of woodchips from North America by implementing rules that required woodchips to be heat-treated or sanitized by a chemical pressure impregnation. On Oct. 1, 2014, the EU would recognize heat treatment as the approved method of sanitizing woodchips for importation. This timing was ideal for MBE because in September of 2014 it had just received its USDA-APHIS approval of its phytosanitized, heat-treated woodchips and completed an export shipment of high-quality fiber to Mercer International in Germany for KRAFT paper manufacturing.

While paper chips were the first commodity exported by MBE, the biomass industry’s CHP demand also required the same heat treatment process for export. Heat treatment is defined as the application of 56 degrees Celsius for a minimum duration of 30 continuous minutes throughout the entire profile of the wood (including at its core).

Entering the EU market was facilitated in a combined effort between MBE and its authorized energy consulting affiliate Aeon Energy Solutions in Huntsville, Alabama. Phytosanitation System equipment for the MBE project is manufactured by Thompson Dehydrating Company Inc. from Topeka, Kansas. The plant is to be situated on MBE land in Stockton Springs, Maine, just five miles from the deep-water Port of Searsport, which is the origination port for export. Long-range plans call for a double line of production to accommodate the contracted export capacity approximating 500,000 metric tons of fiber per year for approximately 15 years with top-tier power producers, according to House. The selected engineering procurement construction (EPC) firm for this two-phase $25-million-plus CAPEX project is AECOM.

Originally slated to be constructed in the town of Prospect, Maine, MBE endured a delay due to a moratorium being implemented in the town, and during the delay, MBE was offered an alternative site to acquire and build on that was not only closer to the Port of Searsport, but also larger and better-suited for the planned project, Arthur said. As a result, MBE chose to refocus its development and construction in Stockton Springs, Maine.

MBE has secured site control over multiple rail siding yards owned by Central Maine and Quebec Railways for all of its planned operations, which include woody biomass processing, debarking and chipping of raw timber, rail tie manufacturing, sawlogs and veneer exports to Quebec and beyond—all primarily on railcars. According to House, MBE has built an infrastructure that provides a competitive advantage by operating from the farthest reaches of the rail from Lac Megantic, Canada, to the Port of Searsport and from the Millinocket rail yard near the Golden Road and direct to the port. MBE has site control over a 10-acre laydown yard at the port as well, thereby creating a seamless supply chain from the forest to the sea, he said.

This October, “marks a five-year development program that is finally coming to fruition,” House said. He further stated that “a project of this size is not put together over night or without significant hurdles that must be overcome.” When asked why it has taken so long to get underway, House pointed out that “the project may have taken 60 months to fully develop, however, four months were lost determining that Eastport could not suffice to be the export location of choice.” Additionally, he listed other delays such as the “terrible accident in Lac Megantic by the predecessor rail line that put the old company out of business,” which delayed the entire project by an additional 18 months.

Add to that the lost six months due to the moratorium and the collective delays total 28 months. According to House, “that leaves 32 months to consolidate six yards, gain site control at the port, execute in excess of $500 million in biomass export contracts, acquire the entire funding necessary through a mixture of debt and equity of approximately $30 million—engage a bankable supply network of land owners, loggers, forest engineers, fiber brokers, and to build a team of advisors, board of directors and industry executives.” MBE was also awarded a $750,000 grant from the Department of Transportation Industrial Rail Access Program for enhancing rail use.

House attributed the success in establishing this project to a 73 percent loss of paper industry business and a shrinking demand statewide for biomass for such entities as the recently closed Covanta facilities. Because of these factors, there became an increased supply. “Put that together with Maine being in the middle of 17.7 million acres of harvestable forest, with a deep-water port in Searsport being one of the two closest ports to anywhere in the EU from the Northeast U.S., the seamless supply infrastructure of the rail to the port, having 10 acres at the port, and the EU in an endless drive toward renewable energy initiatives—there is no other ‘perfect storm’ location that exists more adequately able serve EU clients,” House said.

Existing biomass contracts will begin exporting in early 2018 (hence the timing for plant construction to commence in the spring of 2017, with commissioning projected in the last month of 2017 or first quarter 2018). MBE has also signed a $30 million contract to supply a client in Turkey with medium-density fiber (MDF) chips that do not require heat treating. In addition, MBE has executed log export contracts to India and beyond, is shipping rail ties to Canada, and is preparing to export sawlogs and veneer from rail yards in Maine, also to Quebec locations.

As for employees, House said, they expect they’ll ramp up from about 35 people to 85 by the end of 2017, and in 2018, they’ll be at roughly 180 to 200 direct employees. “This doesn’t count the truckers who go back to work, the idle loggers, local supply people, equipment operators loading and unloading rail cars, and so forth,” House added. MBE has already hired full-time sawyers for its Millinocket plant and is growing its executive team as well by engaging a CFO, a planned hire of a comptroller and several key executive positions now under review. House plans to staff all of MBE’s field positions and production jobs with local workers displaced by paper plant closings, retired and or returned military personnel.

House shared his observation that “biomass is the ‘new normal’ for Maine’s forests,” and that the Port of Searsport will soon be recognized as the deep-water port that allows “Maine’s’ forests to go to sea” like they have done for over 400 years before.