WoodFuels contract at Morehead City is second pellets deal for NC ports

bsiceloff@newsobserver.comOctober 1, 2013 

— With the approval Tuesday of plans for a new export terminal at Morehead City, North Carolina now has two manufacturers cranking up plans to start shipping wood pellets from both state ports to serve electric utilities in Europe.

The Council of State approved a 20-year contract for Raleigh-based WoodFuels North Carolina to build a $25 million terminal that will export 600,000 tons of pellets a year from Morehead City, starting in late 2014.

The nation’s biggest pellet-maker, Maryland-based Enviva LP, already is shipping 865,000 tons a year from two mills in northeastern North Carolina, through the port at Chesapeake, Va. In a separate deal involving a $40 million terminal at North Carolina’s port in Wilmington, Enviva plans to begin exporting 1 million tons a year by 2015 from two pellet mills to be built in southeastern North Carolina.

“We’re just thrilled to be here,” Steve Mueller, the WoodFuels president, said Tuesday. “I think it’s a very exciting time in North Carolina now for our industry. It’s a growing industry.”

Environmental policies in Europe have created a booming market for wood pellets from forests across the southeastern United States. In an effort to reduce carbon emissions that contribute to global warming, electric utilities are starting to burn imported wood pellets in their boilers in place of coal.

Forestry researchers at N.C. State University say that U.S. exports of pellets will grow from 3 million tons a year in 2009 to 10 million tons by 2015. That could prove to be a conservative forecast. Britain expects its biomass consumption, 3 million tons last year, to grow tenfold over the next five years.

The pellets market is rooted in a climate-friendly, carbon-neutral rationale. The idea is that carbon emitted from burning pellets eventually will be recaptured from the atmosphere by new trees grown to replace the trees from which the pellets were made.

But environmental groups say European climate policies and pellet industry practices are bad for the climate and bad for sensitive wetland forests. They warn that woodland owners will resort to industrial-style clear-cutting to satisfy Europe’s voracious appetite for pellets, and they offer carbon calculations that portray pellets as even “dirtier than coal.”

The Virginia-based U.S. Industrial Pellet Association, a trade group, countered last week with a study burnishing the industry’s green-energy credentials. The report said European utilities are making a substantial reduction in carbon savings by replacing fossil fuels with pellets

“We help coal utilities reduce their emissions,” Mueller said.

The state Department of Transportation said the new Morehead City agreement will generate at least 150 direct and indirect jobs and give the state $840,000 a year to invest in more port improvements.

“I am pleased to see that our port infrastructure is playing a role in helping North Carolina, and various industries, grow our economy and create jobs,” Gov. Pat McCrory said in a statement.

WoodFuels will make the pellets at a mill now under construction at Sims in Wilson County, drawing on timber harvested from a 50-mile radius, and ship them by train to Morehead City. They’ll end up at the Drax Group electric power plant in Yorkshire, Britain’s biggest carbon polluter, which is converting half of its boilers from coal to pellets.

As pellet makers look for opportunities to meet new demand from overseas, they are moving into voids left by the closings in recent years of pulp and paper mills across the Southeast. In many cases, they’re buying wood that previously was sold to make diapers, paper and other products.

Like Enviva, Mueller says his company uses only the low-quality leftovers – thinnings, branches, treetops, hollow trees – from logs harvested for more valuable use as saw timber. The wood often is reduced to chips in the forest before being hauled to the mill to be ground up, dried and compressed into dense pellets.

Mueller said a recent NCSU study showed the woodlands near his mill in Sims are expected to grow more than enough trees to meet the demand – producing 3 tons of new wood fiber each year for every ton to be harvested by WoodFuels and other timber buyers.

“You don’t want to be taking out more fiber than you’re growing,” Mueller said.

Siceloff: 919-829-4527 or blogs.newsobserver.com/crosstown Twitter: @Road_Worrier

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