Northern Energy Solutions studies feasibility of pellet plant
Northern Energy Solutions Ltd. is investing in an estimated $300,000 to $400,000, eight-month feasibility study to confirm details needed for the construction of a proposed 200,000 ton-per-year pellet plant in the Miramichi, New Brunswick, region. NES was created for this particular project, and although new to the pellet industry, the company comes backed with years of experience. Ross Creelman, NES owner and president, recently sold Marwood Ltd., a wood products company near Fredericton, to a group of employees. Creelman owned the company for more than 40 years. “He is bringing that experience with him to this new venture with NES,” said Fenton Travis, project manager with NES.
The provincial government’s forestry plan prompted NES’s investment in the study. The company has received a letter of intent from the New Brunswick Department of Natural Resources stating, if the project moves forward, the company will be supplied with 378,000 cubic meters of softwood from forestry Region 3 (Nepisiguit-Miramichi).
The company has already conducted preliminary studies that have helped assure Creelman and Travis that the plant will be built. “We’re pretty confident,” Travis said. “We’ve done some preliminary feasibility already and those studies show that it looks like a pretty good idea thus far.”
The current investment is in the next level of analysis. “The study will define the capital cost within a very, what we like to call, investment-grade level, which is plus or minus 10 percent level of accuracy,” Travis said.
A fair investment, as well as a site location are required to accomplish the level of accuracy needed for the study. Currently NES has engineers looking at two potential plant sites in the Miramichi city area. According to Travis, the prospective locations are at the former UPM pulp and paper mill and groundwood mill site. The location is expected to be chosen by the end of October, and then the company will proceed with the investment-grade feasibility study. If all goes as planned and the plant is built, the company is hopeful for pellet production in late 2016, early 2017.
The Miramichi region has three key resources needed to construct a pellet plant: export access, electricity and wood supply. The two sites being examined for the pellet plant are within 100 kilometers of the Port of Belledune, which is already exporting pellets by Shaw and Groupe Savoie. The Miramichi plant would ship pellets to industrial energy plants overseas as a coal replacement. Travis also said both contending sites are “served by 138 kV transmission lines right up to the door step.”
The region’s large wood supply is the primary reason for constructing a pellet plant. “There has been quite a gap left over from the departure from UPM,” Travis said. “There is a good amount of wood left over from the pulp paper days, and we’re going to move in there and provide a market for the pulp wood that used to go to the paper mill, as well as some of the lower-grade materials that can be used to make pellets.”
As part of the province’s forestry plan, successful study results will offer pulp wood for the plant. “If the results from Northern Energy Solutions feasibility study are positive, the province will provide 200,000 cubic meters of pulp wood from forestry Region 3 (Nepisiguit-Miramichi) under the forestry plan,” said Sheila Lagacé communications officer with the New Brunswick Department of Natural Resources.
The plant would also need additional wood allocations requiring approximately 100,000 cubic meters of pulp wood annually from private woodlots.
The proposed plant is anticipated to cost between $45 million and $50 million. Estimates are that the plant will employ 25 technicians and engineers, and support 75 jobs in the woods.
Additional jobs are expected to result from a Strategy for Crown Lands Management for the province released in March 2014 by the provincial government. The plan is expected to stimulate $600 million in investments across the province, which will create 500 direct jobs and 1,200 construction jobs. “The government of New Brunswick is adding up to 660,000 cubic meters of softwood to the allowable harvest,” Lagacé said. “This provides companies with the certainty that sufficient fiber will be available to justify the large investments they are making.”
Increased annual royalties to the province and a greater demand for fiber from private woodlots as mills modernize and the industry grows are other anticipated results. “It is expected the new mill investments will result in a more stable sector for decades to come,” Lagacé said. “The modernizations will provide a larger and more predictable market for wood from private woodlots.”