Biomass Secure Power secures location for Louisiana pellet mill

By Katie Fletcher | July 25, 2014

The board of directors of the Natchitoches Parish Port Commission approved a notice of intent to lease Biomass Secure Power Inc. 75 acres of land to build their proposed pellet plant within the confines of the Port of Natchitoches.

In 2012, BSPI was approached by Louisiana Economic Development to determine if they were interested in building such a plant in Louisiana, offering BSPI $26.3 million of estimated benefits to locate the plant in the state. After considering the business opportunity BSPI decided to proceed with the development of a facility in Natchitoches Port. To date, design and basic engineering work for the proposed wood pellet plant is complete, as well as the now secured lease of land upon which the plant will be located.

The project will have a significant economic impact on the Natchitoches Parish and surrounding parishes, resulting in job creation in the area. “We are going to have approximately 90 employees hired directly,” Jim Carroll, president and CEO of BSPI said. He added that there will be close to 500 other jobs connected to the plants development from “the truckers and everything else in between.”

The initial term of the lease will be for a term of 30 years, with an option of a 15 year term. As consideration for the proposed lease, Biomass Power Louisiana LLC will pay the port commission a base rent of $12,500 per month for the leased premises. This was determined after the property was appraised to be valued at $160,000.

Phase 1 of the project will be located upon the leased land with the intention for BSPI to enter into a long term lease with the port and build out the plant in two phases, each with a total capacity of 1.6 million tons per year of white wood pellets, according to the company website.

Total construction of this phase is estimated to be around $137 million. The projected gross income of the plant is expected to be approximately $160 million with earnings before interest, taxes and amortization of approximately $47 million.

Phase 1 will include three lines capable of producing 340,000 tons of pellets each annually. Torrefied pellets are planned to be added upon completion of the first line of phase 2. Torrefied will not be implemented with phase 1 because of current market demand, but the capability will be there. These pellets require a long term supply agreement for both pellets and bio-oil byproduct before capacity is installed.

“You lose about 30 percent of your mass by torrefying, but you generate off gases and oils that can be used for burning and possibly selling,” Carroll said. “Right now there is not a market for those off gases or the biodiesel that comes as a byproduct, so until the market develops we are not going to put in torrefied.”

Carroll added that down the road if torrefied can be offered at the same price as white pellets and the byproducts can be sold it is in the plans to convert to torrefied. The production line for torrefied pellets will be the same as white pellets at 340,000 tons per year. The company says, once production levels for these pellets are proven, all lines in phase 1 may be fitted with equipment that will allow the plant to produce either regular white pellets of torrefied pellets, depending on what the customer requires.

As for now securing the site marks progress in moving towards ground breaking. BSPI expects to execute the lease agreement on or around August 25, with the port commission board meeting prior to the date to consider approval for a resolution to enter into the lease.

“We’ll be breaking ground later this year,” Carroll said. “We’re projecting that we’ll be in full production with phase 1 commissioned first quarter of 2016.”