White paper highlights critical areas in pellet making process

By Katie Fletcher | January 13, 2016

On Jan. 12, FutureMetrics LLC released a white paper author and senior consultant John Swaan said could be called “wood pellet making 101." The paper highlights several critical areas in the process of making wood pellets. Although the process appears simple and straightforward, Swaan said the reality is far more complex.

Swaan stated in the paper, “the apparent simplicity of the process has caused many project developers to fail to incorporate the knowledge, skills and, most importantly, the wisdom gained from experience into the plant designs and operations protocols.”

The white paper provides a checklist with some of the more common areas that Swaan said turn into project show stoppers or margin minimizers. The areas FutureMetrics identifies in the white paper include the importance of a well-crafted fiber strategy and fiber preparation, the importance of the process flow and technical design, the importance of operations management and a properly trained operations team, and the importance of logistics.

Each area of importance includes several bullet points addressing shortcomings seen in the wood pellet industry, some obvious and some less so. The first area of importance Swann identified is the procurement strategy of a plant. A few suggestions to avoid fiber-related issues include locating a plant within a 50-mile radius of the majority of the fiber supply and avoid fiber baskets which have competing pulpmills, board plants or other wood pellet plants that may demand the same feedstock. Another suggestion is to have a strategy that provides as consistent a species mix and quality as possible. Besides deteriorating the pellet quality and durability, lower quality feedstock and variable species mix also stresses the equipment and increases operating costs. Even so, often to cut costs, lower cost and lower quality feedstock is used. “In almost all cases, the cheap becomes the expensive,” Swaan said.

Swaan added that maximizing operational uptime and minimizing production interruptions begins with understanding the significant importance of fiber preparation and homogenization. A few tips identified in the white paper are blend species at consistent ratios and protect chips and sawdust residues from extreme weather conditions if possible.

The second area of importance Swaan addressed is in the process flow and technical design of a plant. “We often say that the manufacturing process of wood pellets is 70 percent technical and 30 percent art,” Swaan wrote. “Engineers may get the 70 percent right (or may not), but if the 30 percent art (experience, knowledge and skill, wisdom) is not acknowledged, the project could spend many years in its commissioning phase or scuttled due to impatience on realizing the expected rate of return on the investment.”

Swaan said that FutureMetrics knows from experience that relying on an EPC may be a gamble, because although they may have several projects they’ve undertaken, they typically don’t have the benefit of operations experience. Also, the white paper stated equipment suppliers should not always be relied upon to provide performance guarantees. “Final informed decisions on selecting process equipment for the correct size and capacity for the desired performance should be the responsibility of the project developer under the guidance of a seasoned pellet-making expert,” Swaan said.

FutureMetrics acknowledges that not all engineering firms and equipment suppliers serving the wood pellet industry aren’t qualified, but that just typically they are missing the “30 percent art” part.

Pellet plant operations also require the correct design and placement of wood yard equipment, dryer island, hammermills, pelletmills, coolers, material handling and product storage. The white paper outlines critical decisions to make with pellet plant design and equipment placement. One decision to make is that the front end of the operation should always deliver correct-sized chips from chip suppliers or from the plant’s own wood yard to the dryer. How much inventory and how it is stored are other critical decisions. There are a few considerations to keep in mind when selecting a dryer to avoid issues including what type (drum or belt), what is the optimum drying temperature, what design will be able to handle the worst case moisture content scenario, and how should the dryer be engineered to determine the best flue gas particulate separation and emission controls for the worst case species mix and worst case variations in moisture content.

Although the white paper does not provide an exhaustive list, a few other critical decisions to make include how to design optimal surge bins or silo between process centers to eliminate just-in-time operations, how to design an optimal surge silo prior to the pelleting island, how to ensure plant safety and how to make the plant operator friendly and as robust as possible.

Swaan highlighted that a plant built correctly, only operates and performs as well as the people that operate it. “A well trained and disciplined operations team is essential,” he wrote.

The final area of importance in the white paper is logistics. Swaan said that understanding the variables that impact logistics costs are critical to properly assessing the potential degradation in project internal rate of return from some of the following: unexpected costs from demurrage (truck, rail or ships/barges), unexpected costs dead freight or non-performance penalties, currency risks, payment terms and timing and the impact on working capital needs, unexpected costs from sampling and record keeping while loading cargo, and others.

Overall, FutureMetrics wants to emphasize that pellet production should avoid bad surprises. “The best way to avoid bad surprises and losing money making pellets is to have seasoned expert advice as early in the project cycle as possible and to ask challenging questions that are informed by operational experience,” Swaan said.

The full report can be downloaded on FutureMetrics website.

FutureMetrics is currently working with the owners of two pellet operations in the U.S., one in the South and one in the West, to help them find buyers for the operations. The western operation is West Oregon Wood Products’ mills in Banks and Columbia City, Oregon. The plants produce a super-premium 100 percent Douglas fir pellet. Total nameplate capacity is 80,000 tons per year. The southern operation is Bayou Wood Pellets’ nameplate capacity 130,000-ton-per-year pellet plant, which is currently not running. The mill experienced a fire about six months ago that took out the truck dumper and infeed system, but the rest of the plant is fine. The mill produces a hardwood/softwood blend pellet.