Pellets promise new demand for wood
Bastrop, Urania, Mississippi, Texas sites due for construction this year

By James Ronald Skains
Journal Correspondent

During December, two companies announced plans to build plants in Louisiana for manufacture of wood pellets for use as boiler fuel for power generation in Europe. Separate plants are to be located near Bastrop in Morehouse Parish, and at Urania in LaSalle Parish. (Separate story.)

Drax Biomass International, a Burlington, Mass. based company that is a unit of Britain's Drax Group PLC, has created the biggest splash in the Piney Woods, with announced plans to build a pellet mill in Morehouse Parish, as well as one in Amite County, Mississippi near Gloster.

The company says that Morehouse BioEnergy and Amite BioEnergy will begin operations in 2014 with a combined capacity to produce 900,000 metric tons of biomass pellets annually.

In addition, Drax Biomass International will lease 10 acres at the Port of Baton Rouge and spend $30 million for storage and loading facilities.

The Baton Rouge Port Facility (BRPF) will have storage capacity of 80,000 metric tons of biomass pellets that will arrive by rail and truck. Drax noted that both the states of Louisiana and Mississippi have provided financial incentives. The BRPF is expected to handle some 30 ocean going vessels of pellets per year which represents some 9,000 rail cars of pellets.

Drax' budget for both the Morehouse and Amite pellet mills is about $100 million each. Drax says that it will hire 45 people in Gloster, 47 people in Bastrop and 16 people in Baton Rouge at the Port. Average pay plus benefits is expected to be in the $35,000 range annually at the pellet mills.

Drax presently owns the largest coal fired electricity generating plant in Britain. This plant alone, which produces 7 percent of the electricity used in Britain, is currently fed by four coal mines that will be shut down once the plant is converted totally to biomass pellets. The conversion of the plant from coal to biomass is an attempt to reduce carbon emissions in Britain.

"Drax Biomass is focused on building and operating clean, safe manufacturing facilities that will support local economics, create long-term jobs and interface with the local forest industry," Drax Biomass CEO Chuck Davis said in a statement released by the company.

"Loggers certainly welcome Drax Biomass into Louisiana and Mississippi," Travis Taylor, longtime piney woods logger and current President of the American Logging Council told the Piney Woods Journal. "What I'm anxious to hear is what these companies can afford to pay for their biomass chips and wood."

"For a logging contractor to compete in this biomass pellet business, they are going to need to get around $40 per ton for clean chips and $27-28 per ton for boiler fuel," Taylor, a former chip mill owner and operator added. "Even at those numbers, the land owner will only be getting $8-10 a ton for their timber."

With 169,000 acres of timberland as a renewable resource near its Morehouse Parish base, Drax will also draw on forestry products from a 50 mile radius of its pellet mill. The plant location is 10 miles north of Bastrop in the Beekman community. The pellet mill will tap forestry resources with private and industrial landowners who manage sustainable forest. Drax will utilize log residual forest products that will be sized and dried at the Drax plant before being prepared for transportation overseas out of the Port of Baton Rouge.

Mississippi currently has two pellets mills in operation, a 136,000 metric ton plant in Wiggins in south Mississippi and a 90,000 metric ton operation in northeast Mississippi at Amory. The pellet mill at Amory is located near the navigable Tombigbee River which flows south toward the Port of Mobile.

According to forest industry officials, Mississippi loggers currently cut down trees equal to only half the annual new growth of trees on Mississippi forest land. Mississippi Development Authority (MDA) Director Brent Christensen said in a released statement, "With Mississippi's abundance of biomass resources, our state offers importance advantage to businesses that rely on biomass for their operations."

MDA spokesman Tommy Craft pointed out that his state will provide Drax $2.63 million Hurricane Katrina related federal community aid to improve roads and other infrastructure in Gloster. Also, $100,000 in MDA cash will be provided to Drax for its Gloster operation. In addition, for infrastructure work the town of Gloster will kick-in $75,000 and Amite County will provide $87,500.

Louisiana's financial commitment to Drax is $1.7 million in aid that will not have to be repaid if the company meets its new job commitment pledge. Drax is also eligible for Louisiana tax credit on capital investment up to $1.8 million, as well as free job training and property tax breaks.

Drax will send biomass pellets from Bastrop by rail to the Port of Baton Rouge, while wood pellets from Gloster, 60 miles north of the Port will be trucked to the storage site.

Meanwhile, back in Britain, everyone is not happy with this apparent move to produce electricity from wood pellets. The Global Forest Coalition released a statement on December 10, 2012 which says in part:

"Expansion of wood-based bioenergy will lead to further destruction of bio-diverse native forest in the US South and elsewhere as they are replaced with monoculture tree plantations. This could even include highly destructive engineered tree plantations if they are legalized. Any scheme to address climate change that advances the conversion of carbon-rich forest to carbon-poor plantations is absurd and bound to fail."

The Global Forest Coalition did note that Europe's single biggest carbon emitter, energy giant RWE, plans to increase pellet production for their power stations in the UK and elsewhere in Europe from 3 million to 6 million tons a year. Each ton of pellets requires 2 tons of fresh wood. The Coalition also pointed out that 1/5 of the wood pellets produced globally is now burned in RWE power stations.

On the other side of the fence in Europe, Giuseppe Recchi, chairman of Eni, an Italian oil and gas told CNBC in part, "This shale gas, fracking economy is changing the dynamics of the gas business in Europe and Asia as well as the industry dynamics in Europe and Asia."

Reechi, also noted that his company, the biggest oil company in Africa, "had recently made a major gas find in Mozambique. The reserve has enough gas to meet the annual consumption in Italy for the next 25 years."