Sustaining Maine’s Legacy
For Maine’s forest products industry, 2016 was a tough year. It was also a trying year for the state’s biomass power industry, wood pellet industry, and logging and trucking contractor sectors. With a proper understanding of how sustainable forestry works, and what it means to the Pine Tree State’s economy, it’s easy to connect the dots, and understand the massive ripple effects that a flailing wood fiber industry could inflict.
Despite the down year, Maine’s forest products industry contributed an estimated $8.5 billion to the economy statewide in 2016, and supported 33,538 jobs, according to the Maine Forest Products Council. That means one out of every 24 jobs in the state is associated with forest products, and $1 out of every $20 of Maine’s gross domestic product.
Taking a broad look at the state’s resources, about 90 percent is forested, more so than any other state, and of that, 95 percent is privately owned and managed. The Maine Forest Service estimates that some 500,000 acres of forest is harvested each year, with about 6 million cords of wood removed. And still, the wood harvest and forest cover has remained stable. Trees are the livelihood of this industry and many Mainers, therefore, sustainable forest management is a must. Planting, growing, harvesting and delivering wood—on repeat—is a way of life.
For many, that way of life has been in turmoil, at least to some degree, over the past year. The effects of in-state end users of wood fiber are disappearing. Numerous pulp and paper mills and several biomass plants have shut down, for a variety of reasons. For paper, it was declining demand and cheaper imports, and for biomass, it was plummeting wholesale energy prices, as well as new out-of-state energy policies. Specifically, Massachusetts, and its new renewable energy portfolio standard efficiencies, which the industry believes are impossible for stand-alone biomass facilities to meet.
Very early in the year, the writing was on the wall for a chain of events that would put pressure on state legislators to step in, and also help solidify the case for some fiber export projects that have been in the works for several years.
Reviving Old, Seeking New Markets
In January, setting off initial concerns across the wood products supply chain, Covanta Energy announced it would close its two biomass-fired power plants in Jonesboro and West Enfield, towns that are roughly just 100 miles apart. Shortly thereafter, ReEnergy, which operates four plants in Maine, warned that its Ashland and Fort Fairfield biomass plants were struggling and may be forced to close. In May, Madison Paper Industries was the fifth paper mill in two years to shut down, followed by a November announcement from Verso Paper that it would significantly curtail production at its Androscoggin mill, and lay off nearly 200.
Some state legislators known as proponents of Maine’s wood products and biomass industries, such as Sen. Susan Collins, realized the potential implications after the initial few closures in 2017, and began working toward a solution. In a letter to the U.S. Department of Commerce, Collins said that, as a result of these closures, rural communities in Maine “are in the midst of an economic crisis of unprecedented magnitude, creating a situation requiring urgent action…”
The industry and its supporters testimony were enough to prompt bipartisan support for a $13.4 million bailout bill passed in April, which, with stipulations, directed the public service commission to initiate a competitive solicitation for contracts as soon as practicable, and directed investor-owned transmission and distribution utilities to enter into one or more two-year contracts for up to 80 MW of biomass energy.
Aiding the initiative was another passed bill that, in order to study economic, environmental and energy benefits of Maine’s biomass industry, established a commission consisting of legislators and industry stakeholders. The commission delivered its 70-page report to the legislature in December, including recommendations to assist and encourage further investment in the biomass industry.
Fast forward to this spring. Dana Doran, executive director of the Professional Logging Contractors of Maine, says the bill, which he and his organization were very involved in getting passed, has made a big difference. “Roughly, the Covanta facilities when they were running, and the two ReEnergy facilities, they collectively consumed about 2.5 million tons of biomass, and the pulp and paper mill consumed about 1.5 million tons,” he says. “All told, that was about 4 million tons of biomass that had been consumed in Maine, going away.”
The warm 2015-’16 winter and the introduction and full utilization of natural gas by pulp and paper mills has exacerbated the situation, according to Doran. “It led them to use the lowest-cost fuel at the time, and it wasn’t biomass,” he says.
Doran says his industry saw biomass utilization reduced by about 50 percent, or 2 million tons per year. “Obviously, that’s a major impact upon our membership,” he says. “They rely upon that as a revenue source—landowners, and sawmills because of their residuals…it’s an entire value chain speed bump that we’ve all been dealing with.” And roughly, in 2016, his members sold fiber at a 15 to 20 percent reduction in the value paid per ton in 2015.
But this winter has been better, Doran says. As a result of the bill’s passage, the Covanta facilities were purchased and restarted, and though they aren’t at full utilization, they are buying fuel and operating. “And the [operating] pulp and paper facilities are using more biomass than they were last year,” Doran adds. “I’m not sure what the end result will be—if we’ll be back up to 3 million tons of utilization, or 2.5 million tons, but it goes back to the on-again, off-again utilization of biomass. And certainly, when you cut 50 percent of your market out, it changes business plans for logging and trucking contractors.”
Doran underscores the resounding benefits biomass has when compared to any fuel source, indigenous or fossil-fuel based. “It has the greatest economic benefit to our state,” he says. “The resource is cultivated here, and the revenue stays circulating within the state. We were very supportive of that legislation, and we were glad to see it happen. ReEnergy has kept all four of its facilities in Maine running after that, and it encouraged those two Covanta facilities to be purchased by Stored Solar, so that’s good news. That funding is leading to sustainability of those plants, and that leads to sustainability of our contractors.”
Separate from Maine’s biomass bill are two efforts underway that involve shipping Maine wood fiber overseas for use in European power plants. Doran and the PLCM are also backing those efforts, as they could further expand stakeholder market opportunities and balance out the glut. “We’d really like to see all manufacturing and use here in Maine, and we’ve had that luxury of full utilization of this resource for the past 100 some years, but with all of the challenges we’ve been going through—pulp and paper closures, biomass reductions, saw mill production leaving the state—we need markets,” Doran says. “Now, we’re looking at export markets. Other countries are looking to states like ours that have a forest resource for their needs. I think we’re looking very seriously at [export markets]. If we had our druthers, we’d like to see more manufacturing in the state in Maine and not export the wood, but we need it. So if there are export market opportunities, whether they are out of Eastport, Searsport, Portland or Bucksport, we’re going be supportive of those, because of the market opportunity.
Opportunity in Eastport
This spring, a ship carrying wood chips will set sail from Maine’s Port of Eastport, its cargo destined for Europe. The Port of Eastport at the heart of, and a partner for, a project by Phyto-Charter, developer of a shipboard wood chip heat treating system. CEO Stephean Chute says it is a solution to a problem that has stymied wood chip exports in the past. “Requirements for treating wood chips changed in Europe, and now they require that wood fiber, in this case its mixed conifer, to be heat-treated to kill pathogens, including the pine nematode,” Chute says.
But heat treating itself isn’t necessarily the complication. “You can do that in a dry kiln or a drying plant much like you have on the front end of a pellet mill, but with these regulations, there is a specific timeframe from when you heat treat to when it’s exported,” he says. “It’s a very short window—21 days—so you can’t heat treat and stockpile for months.”
Chute says studies that he and his partner, Larry Carrier of logging contractor E.J. Carrier Inc., have done indicate that building a fixed heat-treatment facility at a port would exceed $20 million. “And you’re bound by that location and wood basket,” he points out. “Our system is completely portable, modular, so you can go anywhere with it. It utilizes the vessel as the containment unit to undertake the heat treating, so don’t have to build silos, covered storage or anything. You heat treat at the time you are exporting, and it satisfies the regulatory requirement.”
In a nutshell, the system deployed in the ship’s hold creates a near-airtight chamber, and recirculates the moisture-laden air in a closed loop that includes sensors to measure performance of various components to ensure compliance with applicable codes. The fully saturated air provides an efficient medium of heat transfer through the core of the wood chips.
Phyto-Charter developed the system under an all Maine-based commission with the Forest Biomass Research Institute at the University of Maine, Orono; engineers at Nyle Systems of Brewer; Power and Energy Systems of Portland; Farrell and Norton Naval Architects of New Castle; and design/builder Player Design, of Presque Isle. Player Design owner Tyler Player says the project as a whole is unique, but the company’s role is not a far cry from what it typically does. “We do energy systems, rotary drum dryers and thermal transfer systems,” he says. “Our responsibility here is to supply the equipment, start it up and make it work. In principal, kind of the same, but the practice is a whole different animal—it’s a very unique solution to the challenges of shipping biomass from here.”
Most importantly, the system has received the sign-off by USDA Animal and Plant Health Inspection Service. “To prove this, we went through two layers of evaluation,” Chute says. “The first was technical. We developed this in consultation with USDA-APHIS at the University of Maine, and they traveled to the lab and testing facilities at the university to observe our prototypes and tests, and provided guidance on scaling up and preparing samples.”
The samples, sent to Europe, were awarded phytosanitary certificates, according to Chute, which are mandatory for wood fiber exports into the U.K. and European Union. Likely in April, a ship equipped with the shipboard heat-treatment system and carrying chips, will depart from the Port of Eastport to prove the system at scale, and it couldn’t be setting sail from a more ideal port. The Port of Eastport hosts a depth of 64 feet deep, and departing ships can arrive in Europe two days sooner than from other ports.
The Eastport Ports Authority has licensed the technology and will own it, paying Phyto-Charter a royalty for each ton of biomass that is sent through the port and is treated with the system. The Maine Department of Transportation has provided financing of $1.65 million to help complete the project.
Another project based on the same premise—heat treating wood chips produced in Maine to prepare them for shipment to overseas—is embracing a slightly different concept, focusing on the Port of Searsport as a shipping point.
Setting Sail in Searsport
Numerous observations drove Maine Biomass Exports Inc. CEO Arthur House to found the company several years ago, including Maine’s massive, mostly privately owned forest resource, two very underutilized deep water ports closer to the European Union than any others in the U.S., nearby rail that was also underutilized, and the major slowdown and decline of the paper industry. “With all of these things going on, it became apparent to me that there was a perfect storm brewing, so I acted on this,” House says.
Next to MWBE’s corporate office in Searsport, Maine, is a 10-acre laydown yard at the Port of Searsport. “We acquired site control last year, so we could establish a yard that is capable of handling up to two vessel shipments at a time,” House explains. “Each vessel load requires about 3.5 acres of wood chip storage space. We have enough for two loads simultaneously, and more than sufficient land for other commodities for export, which include saw logs to China, Turkey, India and parts of the EU.” House says MWBE has multi-year contracts for other fiber export commodities as well, including medium density fiber, sawdust, bark and rough-sawn timbers.
At its facility in Millinocket, Maine, built next to the closed Great Northern Paper mill, House says it takes advantage of fiber that comes down that road with no place to go. “In Millinocket, we produce rail road ties for the largest rail tie manufacturer in North America,” he says. “A significant opportunity exists in that we can collect old rail ties throughout Maine and New England regions and process them for export to EU facilities that can cofire the fiber against coal. New rail ties go to the manufacturers; old rail ties come to us in Millinocket, and the life cycle is created.”
The Millinocket facility is a 4,000-square-foot site that houses several sawmill rigs, and can produce an average of 250 rail ties per day at full production, according to House. “The building is currently undergoing a redesign of the interior of the structure to accept new equipment in mid- to late spring 2017, and a ramp up of production in early summer,” he says. “We have also been granted our site approvals for the port lay down yard, and we have started site work and infrastructure construction. In Prospect, Maine, we are currently installing a new truck scale for Route 1A for use by all local loggers.”
And now, after some initial delays and a site change, MWBE is working on a new facility in Stockton Springs, a 20-acre site that will host a phytosanitation heat-treatment operation for processing wood chips. Construction is planned for May, and House expects a 10-month buildout.
Primary production at the new facility will fulfill long-term contracts for phytosanitized wood chips to combined-heat-and-power plants in the U.K. and European markets, according to House, with supplementary production to include nonheat-treated, modified density fiber board for a manufacturing facility in Turkey, and an exclusive, 20-year supply contract for raw fiber to a local pellet manufacturing facility.
The system is being built by Thompson Dehydrating Company Inc. of Kansas, and MWBE has an engagement letter with AECOM to become the EPC contracting/engineering firm of the project.
House says the system is USDA-APHIS approved, and, like Phyto-Charter’s system, is built to conform to EU standards for importation of wood fiber from North America. “The significance of a heat treatment process is that it is similar to that of a pasteurization process for raw milk,” House explains. “The constraints placed upon exporting any plant or forest product into the EU is that it had to be fumigated to protect against the importation of insects, contaminates and other foreign materials that would or could be detrimental to the receiving country. Previously, two processes of fumigation were accepted worldwide—both systems were implemented while the wood chips were being shipped in the vessel holds. This was known as in-transit fumigation, and up until 2015, each of these processes were still approved.”
Before regulations changed, House had been investigating heat-treating methods, and discovered Thompson Dehydrating Company, which had already designed a system in use in Canada. “We contracted with them to process a test shipment of Maine wood chips for export to Germany to a major paper manufacturer,” he says. “In September 2014, our test processing was complete. We were approved by the USDA-APHIS agency and given our phytosanitary certificate. The shipment then went to Germany, and we passed all tests by agencies responsible for the approval of wood chip imports.”
House emphasizes that the concept behind the fixed heat-treatment plant is that the entire operation relies on the rail line as its feeder system, dramatically cutting transportation costs. “All lines lead to the port of Searsport,” he says. “The driving competitive advantage is that we are on the rail, we rely on suppliers all along the rail, all facilities operated by MWBE are on the rail, all operations feed directly to the port, and we are the only forest product exporter at the port.”
House expects his newest project to employ at least 180 local employees, and across the company’s operations, as many as 240 within the next couple of years. “This is significant, because Maine lost over 1,900 direct jobs in the paper industry since 2013,” he says. “In 2015 alone, the closing of Verso paper in Bucksport, Maine, which is eight miles from Searsport, caused a loss of 570 jobs, with an additional 490 lost the next year, by the same company. The displaced workers have an ability to go back to work in a similar industry position.”
The positioning of rail siding throughout Maine adds another dimension to workforce and job creation. “Up until now, most remote land clearing sites were and still are served by locally situated loggers, foresters and trucking firms,” House says. “When truckers had to drive a single load to a mill that is about 100 miles from the cut sites, they can get, on average, four to five loads a week to the mill. Once at the mill, they could face long lines and even rejections of their loads. We offer those same loggers or truckers the ability to bring their loads to a nearest rail yard to put their logs on a rail car. Each rail car can take up to three truck loads, to take to Searsport by rail. That means smaller companies can now participate in the overall operation.”
House says the $20 million project is fully funded, and will begin building in May, timing construction with debt service and when MWBE’s first overseas client can begin accepting wood chips. As for the anticipated timing of production and shipping, MWBE is already shipping containers of logs to China out of a site in Lincoln, Maine, and House says the company expects to load and ship a log vessel as early as May out of Searsport. “Under contract at this time, we have several hundred containers of logs slated for continual export for the next six months. Heat-treated wood chips to the EU will commence early to mid-2018, with a potential for a smaller clientele order into Ireland just prior to that.”
On local and state support for the project, House says it’s been more than adequate. “We have been fortunate to have as much support from all Maine agencies as anyone could ask for,” he says.
MWBE was previously awarded an Industrial Rail Access Grant of $750,000, and House says the company is under consideration for a subsequent grant. “The rail line, central Maine and Quebec, have been a champion of the project, and we hope to move in excess of 3,000 rail cars over their lines in the very near future. The port authority, along with the department of transportation, the forestry department and many other agencies in Maine, are truly proactive in building our forest industry opportunities, and especially in developing an export component from Maine.”
In the meantime, Maine’s tree farmers, loggers, contractors and truckers will serve the markets they can, including the biomass plants aided by last year’s subsidy package, waiting for both projects to become commercially operational. As the forest industry, many Mainers and state officials know, and aptly stated by Maine Sen. James Dill, “This is far greater than a couple of energy plants and their employees. Logging is a Maine legacy.”
Author: Anna Simet
Managing Editor, Biomass Magazine