Port Investments in Pellet Handling

Various North American ports have recently completed or will soon begin major investments in wood pellet storage, handling and loading capabilities.
By Ron Kotrba | September 27, 2017

Operating a port is a Catch-22, says Jenna MacDonald, director of marketing and business development at Belldune Port Authority in New Brunswick, Canada. “You always want more space,” she says, “but you always want that space filled.” The Port of Belledune has been exporting wood pellets since 2007, the year MacDonald, a Belledune native, started there. “My first contract was Shaw Resources in 2007,” she says. The port built a pellet warehouse for Shaw in Terminal 3. Since then, the port authority has made various upgrades, changing warehouse doors, and improving dust collection and ventilation systems. “Shaw’s plant is close to the port and the pellets don’t have much time to cool down, so better ventilation is critical,” MacDonald says. “That upgrade project is just being completed now.”

Port of Belledune currently moves about 150,000 tons of wood pellets a year via two wood pellet clients. Contracts between the port authority, stevedoring companies and pellet producers can be negotiated various ways. “Both arrangements with our two clients are different,” MacDonald says, “and we have a third client we’re talking to. That arrangement would be different yet again.”

For Shaw, the port invested capital and built a pellet warehouse specifically for the client. The port leases the building to Shaw, which has a second contract with Eastern Canada Stevedoring for receiving and handling.

The second wood pellet arrangement at Port of Belledune is “a little simpler,” MacDonald says. “They are in a warehouse that already existed in Terminal 3. The warehouse was originally leased to ECS, it was a break-bulk warehouse that was modified for bulk pellets.” The pellet producer subleases the building from ECS, with which it also contracts for handling and receiving. In this case, no contract exists with the port authority.

Should a third pellet client come through, it would be another unique agreement. For this warehouse, the capital investment would be made by ECS as a private investor, MacDonald says, and the pellet producer would sign a lease with the stevedore for storage, handling and receiving. “Our relationship with ECS is not typical, and it’s not all the time that stevedoring companies make capital investments themselves,” she says.

Typically, no investment is made until an offtake agreement for pellets is signed. “It’s one of the things that ties everything up,” MacDonald says. “There’s only so much you can do until you get that contract in place.”

MacDonald says the most significant investment the port authority makes is the wharf itself, or warehousing. “In the case of Belledune, we are fortunate to have a relatively modern port—it’s only 50 years old—and Terminal 3, where we export wood pellets, was just completed in the late ’90s. Therefore no real upgrades are required since it is so young.” As a result, to accommodate wood pellets, warehousing is the most significant cost for the port authority. MacDonald says the port has utilized mobile conveyers for wood pellets over the past 10 years. “But with the third contract, we are looking at wood pellet handling conveyors—a more modern, fixed facility,” she says. “It is for the new client in particular, but the hope is that the others can make use of them as well.” Currently, all pellets at Port of Belledune are moved by mobile telescopic conveyors. “Conveyors limit fines and dust from wood pellets,” MacDonald says. “That’s the reason we don’t use grabs.”

The port imports coal for a power plant in Belledune. While coal and wood pellets are two very different commodities—coal, like wood chips, can be stored in open piles and, unlike wood pellets, is not adversely affected by moisture—the conveyance systems are largely the same, MacDonald says, except wood pellet conveyors are attached to warehouses. “One of the infrastructure projects we’re looking at is using our 3-kilometer enclosed conveyor system for importing coal to use as a hub of commodities going in and out of the lakes,” she says. “Today, this conveyor is only used about 45 days a year. We look at it for importing cargo the same way it does now, but maybe stockpiling petcoke that arrives from smaller lake vessels and exporting it on larger ocean vessels. This is one of the opportunities we’re looking at with infrastructure we currently have, without spending hundreds of millions of dollars.” 

Terminal 3 completed an expansion project in 2011, but MacDonald says it’s full again. “It will be even fuller if we add another warehouse,” she says. “We are considering expanding the back of the terminal, filling in water with rock to create building space. It’s permitted environmentally, and ready to work on. We are trying to determine whether to do it now or in a year or two. This would give us more space to handle bulk commodities.”

Port of Brunswick
Logistec is one of the largest cargo handling and port logistics companies on Canada’s East Coast, and its U.S. presence is growing. Logistec’s network includes 30 ports and 45 terminals, where the stevedore handles all types of dry- and break-bulk goods and containers. Logistec mainly handles wood pellets in Brunswick, Georgia, and to a lesser extent in Thunder Bay, Ontario, and in Halifax and Sheet Harbour in Atlantic Canada. “The biomass market is an area we want to grow,” says Frank Vannelli, senior vice president of Logistec’s commercial and business development. “Our most significant and recent investments are in Brunswick, where we have committed nearly $40 million to renovating and expanding our facilities.” 

In 2011, Logistec began an extensive development project to completely rebuild and modernize its East River Terminal at Port of Brunswick to prepare the site for increased European demand for biomass cargo. “Over the next five years, we renovated the previous warehouses, overhauled the bulk load-out system, constructed a new ship loader, and made significant upgrades to the conveyor systems,” Vannelli says. In 2014, the company reached an agreement with the Georgia Ports Authority to make additional improvements to the terminal. “In addition to the initial expansion, this ambitious five-year upgrade project includes electrical and rail upgrades, new warehouses, a new tower and conveyor, paving, infrastructure rehabilitation, and dust and traffic control measures.”  

A year into the upgrade project, a significant fire ravaged the terminal. “The property damage was extensive, but most importantly, no one was hurt,” Vannelli says. “Through our team’s hard work and support from our partners, the terminal is completely rebuilt and we’re back on schedule. Our two new warehouses are expected to help us handle over 1 million tons of export cargo per year.”  

Vannelli says Logistec incorporated industry best practices in design and construction of the new pellet warehouses to maximize safety, cleanliness, efficiency and dust control. “The frames are steel and the roofing is made of tin,” he says. “The structure is coated with fire retardant materials and the sprinklers are specifically designed to cover the entire conveyor system.” Contractors Allen & Graham Inc. and Clark Nexsen won an Associated General Contractors 2017 Build Georgia Award for their work on these buildings. Vannelli adds that the professionalism and support from Harold Arnold and the team at Fram Renewable Fuels LLC—a major pellet producer exporting to Europe out of the Port of Brunswick—were invaluable in the terminal upgrades. “They are, in the truest sense of the word, our partner,” he says. Throughout the construction process, Logistec’s project manager was also in regular contact with local fire officials, engineering consultants and the Georgia Ports Authority.

Versatility and adaptability are keys to Logistec’s success, Vannelli says. “Most of our bulk facilities are quite versatile,” he says. “One of our greatest strengths is that we can adapt our operations to the size, scope and specific needs of our customers and partners. Our operations team is very resourceful in cases where we need to adapt existing facilities and storage for specialty cargo.” In one port, Logistec handled bulk wood pellets via a vacant grain silo, Vannelli explains. “We can also handle shipments of specialty pellets as break-bulk in super bags at both ports and inland terminals. And through our container terminal in Montreal—Termont—we are also getting residential pellets to European markets via major shipping lines such as Mediterranean Shipping Co.” 
 
Port Metro Vancouver
Fibreco Export Inc. has been in the export business for 40 years, says Kerry Lige, president and CEO. Most facilities in Port Metro Vancouver in British Columbia, Canada, operate on a long-term lease with the port, but Fibreco is unique since its shareholders own the land for its terminal. The company has a water lease with the port authority. The terminal was originally designed to ship wood chips primarily to Japan.

In 2005, Fibreco invested $25 million into pellet handling capabilities—adding six silos and a shed to provide 45,000 tons of pellet storage, while modifying other infrastructure. For several years, Fibreco handled pellets in concert with chips. “We were using the same infrastructure like the ship loader, but in different ways in terms of storage,” he says. Challenging markets and public pressure, however, led Fibreco to exit the chip export market. “We now sell chips to domestic pulp plants in British Columbia and export only wood pellets in Port Metro Vancouver,” Lige says. 

Over the past 12 years, Fibreco adjusted and continued to invest in its pellet handling capabilities by adding bag houses to contain dust, and heat sensors throughout its systems, including conveyors. Fibreco serves three pellet clients out of Vancouver: Pinnacle Renewable Energy, Pacific BioEnergy, and Premium Pellets. Today, Fibreco moves 1 million tons annually out of its Vancouver terminal, down from its peak of 1.6 million tons before Pinnacle built its own terminal in Prince Rupert, up the British Columbian coast.

In order to diversify and invest capital back into its terminal, Fibreco has been investigating ways to complement its current wood pellet export business. “Embarking on agricultural products allows us to invest significant capital to do two things—handle agriculture products, and enhance our infrastructure for pellet handling,” Lige says, adding that ag products have very similar handling characteristics to pellets. “This endeavor complements what we do today and enables us to do more in the future.”

Lige says as the pellet industry—and its standards—evolve, handling must follow suit. “We need to all be better positioned to handle pellets appropriately,” he says. “We believe it is best to minimize the creation of dust versus just containing it, and soft handling is the answer to that.” 

New transfer towers, softer handling capabilities on how the cargo flows, minimizing the distance pellets fall from the dumper to the conveyor belts, cascading chutes to minimize distance pellets fall from the ship loader to the cargo hold—all of these approaches would help reduce product degradation and dust creation. “It’s a very different philosophy,” he says, “and this is the new infrastructure we are envisioning.”

The design for these upgrades is complete, and Fibreco is pursuing appropriate regulatory permits to begin. “We’ve gone to the port and civil authorities,” Lige says, “and we are now seeking full board approval and funding.” The full buildout will cost around $100 million, including additional, segregated storage for agricultural products. “Before we get full approval to spend, we must make sure there are committed contracts in place with future customers,” he says.

Diversification is a means to dramatically improve Fibreco’s current pellet handling capabilities. “It’s not only about diversifying, but also enhancing the bulk handling we do today,” he says. “Investment into other products allows us to complement our existing handling capabilities. Shared infrastructure, like a new ship loader with soft handling capabilities, is better for both commodities.” 

The planned upgrades include adding Vibrafloors to silo bottoms. “These are flat-bottomed silos that currently require augers to get product completely out,” Lige says. “This can be a hazard. We want to just push a button and drain the bottoms. We’ll also add a bucket elevator to recirculate cargo from one silo to another.”

Finally, Lige notes Fibreco is sensitive to contamination risks in handling wood with ag products. “We have proper, standard operating procedures for cleaning the conveyors when we move from commodity to commodity,” he says. “We handle the loading in a manner that’s appropriate—it’s our role, and we’re sensitive to it, making sure we implement proper cleaning methodology into what we design and build to minimize the risk of contamination.”

Port of Prince Rupert
Pinnacle Renewable Energy is the world’s third largest pellet producer, with nearly 1.5 million tons of annual capacity, according to Vaughan Bassett, senior vice president of sales and logistics. He expects with its current construction and expansion projects, capacity will exceed 2 million tons in 2018.

In January 2014, after servicing Asian and European pellet markets for years through Fibreco’s terminal in Port Metro Vancouver, Pinnacle opened its new Westview Terminal in Prince Rupert. Westview was the first purpose-built wood pellet export facility in North America. The terminal was built to save Pinnacle hefty transport expenses railing product to Vancouver from its pellet mills located closer to Prince Rupert. In addition, the new terminal helps accommodate production expansion. Bassett also says it reduces risk as an exporter. “It gives us two export terminals instead of one,” he says. “We’re shipping a lot of material to the U.K., which is a tremendous distance via the Panama Canal, and our customers can’t afford supply disruptions from that distance.”

Today, the company ships about a half million tons of pellets out of Vancouver and 1 million tons through Westview terminal in Prince Rupert. Westview Terminal was built out from a much smaller, existing Pinnacle terminal at the port. In Canada, coastal land is owned by the federal government, whose agent for land management is the port authority. “We have a lease with the port authority on the land,” Bassett says. “The terminal is serviced by Canadian National Railway. We have an agreement with CN, the port authority and the local First Nations Bands, too. It gets complicated here in our neck of the woods. It took maybe the better part of two years for all the paperwork to be sorted out to get the authority to proceed.” Long Beach, California-based Metro Ports commissioned the operation, after which Pinnacle took over operations.

Located next to the Prince Rupert community, Pinnacle was careful to design the operation to make minimum noise and generate no dust. “This was largely community driven,” Bassett says. “To minimize dust, we had to install gentle handling equipment. We wanted to do that anyway to deliver intact wood pellets instead of shiploads of dust to our customers.” This meant incorporating a system that makes use of laminar flow. “Instead of pellets falling from great heights to the bottom of the silo, they descend down a pipe with baffles so the product weaves or flows through these baffles, always in contact with itself,” Bassett explains. “There’s no impact, no breakage, no dust creation. That’s what soft handling is. We use this for our feed system into the silos, our bean ladders and also on our ship loader. The ship loader is thing of beauty. There’s absolutely no dust. You can stand there with an open hatch and watch the material loading in at 2,000 tons an hour, and it produces not a lick of dust.” 

Bassett says Pinnacle has expansion plans for Westview Terminal. “With our new pellet factories and expansions coming online in the next few years, most product will be coming through Westview for export,” he says. “It’s good for 1.2 million to 1.5 million tons now, but we’ll soon max out our Westview handling capacity. We would need to put in more rail handling capacity in the back end, and we might need to put in another silo. Nevertheless, we plan to increase capacity over time, and we could double what we have today.”

Author: Ron Kotrba
Senior Editor, Pellet Mill Magazine
218-745-8347
rkotrba@bbiinternational.com