True Sustainability in Pine Bluff

While pellets produced at Highland Pellets’ new facility leave for overseas, the benefits remain in the surrounding community of Pine Bluff, Arkansas.
By Katie Fletcher | February 21, 2017

Highland Pellets ended 2016 on a high note, successfully producing a test batch of pellets at its flagship pellet plant on New Year’s Eve. The first few weeks of 2017 were spent making minor adjustments before the first of four 150,000-ton-capacity production lines were fired up in early February. Each line will be commissioned sequentially, with subsequent lines turned on every three months. On this schedule, the company hopes to reach full capacity in November.

Project developers chose the 209-acre Pine Bluff plant site because of the area’s deep fiber basket and strong logistics chain to the Port of Greater Baton Rouge. Southern Yellow Pine from managed forests serves as the plant’s feedstock source, with most coming from forest thinnings, in addition to tree tops, low-grade trees without an end market, and mill residuals. Although the pellets Highland produces with this raw material will service Drax Power Ltd.’s power station in the U.K., the company recognizes what the pellet operation brings to U.S. soil. Highland Pellets’ founder, Tom Reilley, and his team believe wood pellets are an important new market for sustaining working forests. “We are big fans of the industry, and we think it’s really important that the sustainability story is told,” Reilley says. 

Sustainably sourcing raw material for the plant is estimated to result in 350 to 400 direct cutting and hauling jobs, which are in addition to the bookkeeper, tire salesman, gasoline attendant, spare parts manufacturer, banker and others beyond the forest. According to Reilley, construction of the plant resulted in up to 900 jobs on top of the plant’s 68 direct employees. 

Design Difference
Highland was only able to execute its vision effectively with the help of its partners, including Astec Inc., Wagner Construction, Nexus Program Management Group, Weyerhaeuser Services, Entergy Arkansas and Union Pacific. Astec supplied the vast majority of the plant equipment (conveyors, drying equipment, etc.) from its own group of Astec companies, allowing it to pre-engineer the plant. “We design the equipment on a modular basis, so that means that most of the equipment is completed here in a shop environment, and is highly shippable,” says Malcolm Swanson, president of Astec, from the company’s headquarters in Chattanooga, Tennessee. “That gives us better control of the construction of the equipment, and enables us to deliver equipment in a more completed and higher-quality state.”

Astec channeled its decades of experience making asphalt plants into designing pellet operations. “A lot of what we had in terms of equipment, knowledge and expertise were applicable, so it seemed to be a natural place to expand our business,” Swanson says. Astec built and operated a 5-ton-per-hour prototype plant at its facilities in Chattanooga, prior to building full-scale. The Pine Bluff facility is Astec’s second commercial pellet plant project, having completed previous work on Fram Renewable Energy’s 500,000-metric-ton pellet plant in Hazlehurst, Georgia.

The Pine Bluff facility’s production lines are built independent of each other for maximum redundancy and reliability. “If a critical piece of equipment goes down on one line, the other three can continue to operate,” says Jody Doak, Highland’s plant manager. “This is far from the norm, as most facilities rely on single pieces of critical equipment. Astec’s design allows for redundancy in lines keeping facility downtime to a minimum.”

Doak adds that in other areas of the mill internal to each individual line, Astec provides additional “spares” in the design. For example, four pellet mills are required for each line at full production rates, while five pellet mills are supplied. This spare gives Highland the capability of maintaining optimal production rates with minimal negative impact, should a piece of equipment fail. “While we cannot have a spare for every step of the process, Astec has done a great job at identifying areas more prone to production challenges and designed around it,” Doak says.

Andritz Inc. supplied the pellet plant with 20 PM30, 500-horsepower pellet mills, as well as ancillary equipment like conditioners and lubrication systems. “Every bit of our equipment is there on-site, and line one is fully installed,” says Mike Curci, Andritz North American capital sales manager for biomass. According to Curci, Andritz also signed an agreement to supply Highland with aftermarket support service for an extended length of time.

Another unique component to Astec’s pellet plant design is its drying system, which differs from the conventional convection-type dryer. Highland uses a hot oil tube dryer, which rotates with approximately 550 tubes carrying  heat transfer oil. “The mechanism of providing heat for the drying process is by flow of oil through the tubes in the dryer, and then the material is tumbled over the heated tubes,” Swanson says. “The temperature of the tubes is around 500 to 550 degrees Fahrenheit, so it’s a lot cooler than the convection dryers, and we think a safer dryer, and it’s more gentle on material.”

Even though this project is only the second commercial-scale pellet plant Astec has provided equipment for, it’s gone smoothly. And for experienced civil contractor Wagner Construction Inc., it was the company’s pellet project debut. “We’ve been looking at different market segments,” says Kalan Wagner, president of the company. “The wood pellet industry is relatively new, and we looked at it as a market to get into.” According to Wagner, the company’s involvement consisted of first clearing and grubbing over 200 acres, then installing all of the site utilities and mass grading over 500,000 cubic yards of dirt. Wagner Construction also built a double-loop track railcar system for the project site, and completed all of the structure excavation and backfill for all of the pellet plant components.

The company was tasked with the extra challenge of stabilizing the soil, as the area received record rainfall, but Wagner says his crew was able to keep the civil portion of the project on schedule, which was a “big feat.” Although soil stabilization was needed to keep the project on track, he adds, the project essentially took one year from notice to proceed until the first pellets were produced. A portion of the Wagner Construction crew is still on the site completing structure excavation, backfill, placing aggregates and concrete paving, but Wagner estimates that the work will be complete within four or five months. “The whole team on this project has worked together to produce a high-quality project on schedule and on budget,” he says.

Other partners agree. “Candidly, we’ve been impressed by the way this project has gone, by what we’re seeing thus far,” says Ben Hubbard, Nexus PMG president. Nexus PMG represents Highland’s construction team as independent engineering consultants. Half of Nexus PMG’s business is working with private equity and commercial lenders, but the other half is focused on owner’s engineering, which is the role it took on with the Highland team. The company was brought on during prefinancial close to put together the project execution plan, project schedule, and support in due-diligence efforts. During project execution, Nexus was tasked with managing all of the cost budgets, monitoring the contingency profile, handling change order requests from the contractors, and more.

Although this is Wagner’s first pellet plant project, Nexus PMG is no stranger to the industry. “We work pretty heavily in that space; we’ve worked with many of the major wood pellet producers in North America, and we’ve worked on various biomass power plant conversion projects in Europe, representing lenders, contractors and developers,” Hubbard says. “The Highland project is the first time we’ve engaged with the Astec modular design, which is very different than your traditional black box design where you’re sourcing all of the major equipment from various suppliers, and designing and assembling it yourself.”

Because of the modular design, the main process areas are well understood at the start of the project, thus minimizing design and execution risk, according to Hubbard. “We’re excited to be part of a project that could potentially deliver pellets to the market much faster than any that we’ve seen in our experience, and we’ve seen quite a few,” he says.

Strong Logistics
At full production, Highland could receive 160 truck deliveries of roundwood thinnings and mill residuals each day. “All of our feedstock will come from recognized sustainable sources through our procurement agent, Weyerhaeuser,” says Rob McKenzie, Highland’s managing director. The company has built solid relationships with local foresters such as Bobby Taylor of Shelby Taylor Trucking, he adds, as well as the Arkansas Forestry Association, of which Highland is a member.

Sustainability is key for the company’s operation, and it’s currently undergoing certification through the Sustainable Biomass Partnership. Highland uses a track-and-trace system that is able to record the GPS location and contract number of every delivery of fiber that is brought to the site. “The truck driver provides the weigh bridge with a ticket that has a bar code, so we can quickly scan all the data into our system to check that the fiber has been sourced from legal and sustainable land according to our contracts,” McKenzie explains. “If the truck does not have a correct ticket, then it does not enter our site.”

Once the raw material arrives at the site, there will be different storage areas for the fiber, as well as for the final product after it’s produced. “We have five dedicated silos that are each capable of holding 1,000 metric tons,” McKenzie says. “We are also able to store pellets in spare rail cars.”

Pellets for shipment are loaded into 5,700-cubic-foot enclosed rail cars by an overhead hopper. Each car will be able to hold about 89 metric tons. “We will then use Union Pacific mainline rail to transport the pellets directly to the Port of Greater Baton Rouge using unit trains that will be 80 to 100 cars in length, with six to seven trains per month at full capacity,” McKenzie says.

The cars are unloaded by gates below each car into a rail dump at the port before returning to Pine Bluff. “The total turnaround time for each train will be four to five days, depending on train length,” McKenzie says. “We will have enough rail cars to fill two unit trains, so as soon as the train returns to our site, we will have the cars loaded to dispatch the next unit train.”

Long-Term Bullish
Come May, Highland’s pellets will ship to Drax via Supramax or Panamax vessels, depending on the delivery schedule. Drax Biomass owns the storage domes and loading equipment at the port. According to Reilley, Highland's delivery of pellets to the port, combined with Drax’s existing pellet infrastructure, has been a huge success story for the port. “This has led the port to commit to expanding the rail infrastructure at the port to enable delivery of longer unit trains,” he says.

Highland Pellets also plans on expanding. “Now that our business model has been proven, we are excited to explore other sites in Stephens, Arkansas, and in Enterprise, Mississippi,” Reilley says. The company is currently pursuing the requisite permitting requirements.

If built, Reilley says, these would be 600,000-plus-metric-ton pellet facilities, similar in design and contract chain to the facility at Pine Bluff. Highland is targeting Stephens as its next site, and, if developed, it would supply the Port of Greater Baton Rouge with a further 600,000 metric tons of pellets. Reilley says they are in discussion with other European and Japanese customers regarding supply from the south Arkansas and Enterprise development sites, but which will be utilized, and when, depends on securing an offtake contract, and the customer preference for which port used for export.

As project developers and partners know, developments such as Pine Bluff take considerable time. In fact, the facility saw a delay from its original March 2016 completion date, due to the successive number of regulatory and political developments that increased market uncertainty and prevented buyers from being able to commit to an offtake. These included the European Commission’s lengthy state aid investigation into the U.K. government’s award of a contract for difference for a Drax unit conversion, the end of renewable obligation certificate grandfathering, a U.K. election outcome that raised significant questions about the country’s future energy policies, the end of renewable exemption from the U.K. Climate Change Levy, and the Levy Control Framework budget overspend, which led to widespread reduction in subsidies for some renewable technologies. “The industry needs periods of political and regulatory stability in order to be able to make significant long-term investments,” Reilley says. Another consideration for project development, he adds, has been the local workforce. “Our experience with the people of Pine Bluff has been inspiring and uplifting.”

Highland is long-term bullish about the future of the market, and so are its industry partners. Curci says Andritz expects the company and industry to continue to grow for several more years in regions throughout North America and abroad. “We look forward to see what the future has for many years in the space, and continue in development and process improvement,” he says. “Also, we continue to work on improving the machinery to reduce the operational cost and production of pellets.”

Astec, too, hopes to continue working in the industry, using its success stories with Fram and Highland as leverage. “The whole industry is in a little bit of a lull at the moment, but those in the industry who should know are saying it will be a short-lived lull,” Swanson says. “We are working on proposals for projects that other companies are currently planning to put together.”

Author: Katie Fletcher
Associate Editor, Biomass Magazine
701-738-4920
kfletcher@bbiinternational.com