Pellet CEOs speak candidly about opportunities, growing pains

By Tim Portz | October 30, 2013

Bullish industry optimism was punctuated by hints of an industry confronting its inevitable growing pains during the final panel of the U.S. Industrial Pellet Association’s 3rd Annual Exporting Pellets Conference, held Oct. 27-29 in Miami. Seth Ginther, executive director of the USIPA, moderated the panel, which featured CEOs representing the largest producers.

Ginther asked the members of his panel and growing organization to begin the discussion by outlining the progress the industry had made since the event and USIPA were first formed. James Roecker, CEO of Georgia Biomass, framed up the industry’s rapid growth by reminding attendees that the industry had added nearly 6 million tons of capacity since the association’s first event. Using this fact as a means to move the conversation towards some of the challenges the industry faces, Enviva CEO John Keppler implored his colleagues and the room to consider the role of public perception by noting, “The scrutiny that comes with success is something we need to think about.”

The group agreed, noting the industry must work to succinctly share its story with the general public and policy makers in North America and abroad.  “We should embrace every opportunity there is to tell our story,” said Roecker.

The group agreed its message needs more refining and broader distribution. The story of how the use of woody biomass feedstock to produce electric power has driven increased carbon sequestration through replanted forest capture and capture and storage of atmospheric carbon dioxide is complex. Recognizing that activist NGOs will likely never be convinced, Green Circle Biomass CEO Morton Nerras identified policy makers in the United Kingdom and other European Union member nations as the audience the industry needs to concern itself with.

After spending time discussing the outreach and public education effort that lies before them, the panel moved into a discussion about the steep learning curve they have been climbing as they work to perfect the large scale production of industrial wood pellets.

“The learning curve is very steep,” said Nerras. He continued by stating that, in his opinion, there are currently no EPC firms operating in the industry that are well versed in the construction of pellet mills at this scale. “We hired an EPC firm and realized they were simply just a chapter ahead of us in the book,” he said.

Keppler contrasted the relatively young industrial pellet industry to well established production operations, such as the chemical industry. While he agreed that the construction and commissioning of new facilities continues to challenge the industry, he also said, “I do think that at some point there will be an EPC that can do this.”

The panel agreed that variability from plant to plant in incoming feedstocks is a challenge industry builders and vendors currently face. USIPA chairman and Fram CEO Harold Arnold agreed. “We had difficulty at every stage of the manufacturing process,” he said.  Keppler captured the essence of the challenge noting that each facility is “bespoke in nature because of the uniqueness of each facilities fiber basket.”

All of the panelists agreed that the market opportunity would continue to draw solutions from a talented vendor base and that increased training was vital to each producer’s success. Continuing the comparison between the pellet industry and the chemical industry, panelists pointed out that the pellet industry doesn’t currently enjoy a large stable of experienced operators.

The frank and candid discussion between the panelists about the growing pains they are all encountering as they work to perfect the production of wood pellets at industrial scales couldn’t deter the group from bullish optimism about the year in front of them.  Summing up the panel’s discussion and the conferences overall and unofficial theme, Keppler concluded by saying, “the opportunities [in pellets] is great but the potential pitfalls are just as great, if not greater.”