The Pellet effect

Ridley Terminals may be on the cusp of yet another product to offer the shipping lines of the world. A project underway in the Houston area could spur development on the Ridley site and see yet more shipments from Prince Rupert's shipping facility.

A wood pellet plant in Houston is in the planning stages and upon completion will be shipping pellets for storage and then shipment from the Ridley Terminal operation. It's a return to Prince Rupert for wood pellets, which used to ship out of the Fairview Port prior to it's change into a what will soon be a container facility. It's a positive sign for Ridley which has seen more than a few ups and downs based on the coal industry, with a bit of diversification things may even out over the long haul now.

There are more details from Friday's Daily News, podunkicized below:

RIDLEY ENERGIZED BY WOOD PELLET PROJECT
Leanne Ritchie
The Daily News
Friday, April 7, 2006
Page One

Three companies in Houston are in the process of developing a wood pellet plant that could result in additional traffic and new facilities at Ridley Terminals.

Canadian Forest Products, Pinnacle Pellet, and the Moricetown Band have formed a partnership to develop a wood pellet plant next to the Canadian Forest Products sawmill in Houston.

“Everything is progressing very well,” said Leroy Reitsma, business development manager at the Houston Sawmill.

“Our hope is to have pellets moving through Ridley Terminals by the first quarter of 2007. That is our plan at this time, although obviously we have some stages to get through.”

The plans hopefully signal a return of wood pellet shipments through Prince Rupert’s facilities. Shipments from a different manufacturer ceased a year and a half ago when the port began the process of turning Fairview Terminals into a container port.

The wood pellet plant in Houston is part of a larger project at Canadian Forest Products that includes the installation of a new bark-fired energy system at the sawmill.

Reitsma explained bark, which used to be burned in the Tier 1 Beehive Burner at the Houston sawmill, will instead be used for bark-fired energy system for the mill’s kilns.

In turn, the sawdust made by cutting logs and wood shavings made by planning the lumber – which used to create energy for the kilns- will now be used to create wood pellets.

Once the project is complete, Canadian Forest Products will be able to phase out the Tier 1 Beehive Burner by the regulated December 31. 2007 phase-out date and reduce the amount of wasted wood product at the facility.

Reitsma said they chose to work with Ridley Terminals to ship their product because Ridley has the capacity to handle the goods and because wood pellets, which are used as fuel, seemed a good fit with the coal currently moving through the shipping terminal.

“We were also able to establish a good working relationship with Ridley Terminals management,” he said.

The three companies involved in the new wood pellet plant include Pinnacle Pellet Inc., a privately held company based in Quesnel with a reputation for producing high-quality wood pellets as well as the Moricetown Band and Canadian Forest Products Ltd.

The latter two parties have a long standing relationship through Kyahwood Forest Products, which is a profitable joint venture that employs 75 people in Moricetown in lumber remanufacturing and finger-jointing.

Besides building the wood pellet plant and bark fired energy system in Houston, the companies will also have to build receiving facilities at Ridley Terminals.

“We are just in the process of hammering out the details,” said Reitsma.

The companies will have to install a receiving facility that will remove the pellets found in rail cars, silos in which to store the pellets and an interconnecting platform for the ships on to which they will be loaded.

“The primary difference between pellets and coal is that pellets have to be stored in a way where they aren’t exposed to the rain. They are moisture sensitive,” said Reitsma.

The market for wood pellets is pretty much world wide, however the companies will focus on sales to Europe and Asia. The product produced in Houston will be suitable for both industrial and home heating.

Cam McIntyre, manager of finance and administration at Ridley, said they will be able to sign long-term contracts for the pellet shipments once government approves the Crown corporation’s 2006 plans.

The plan is currently before government and McIntyre said they hope the plan will be approved within the next month.

“We don’t expect any hurdles,” he said.

Handling wood pellets is another way the terminal hopes to diversify the product it handles in order to cushion it from the ups and downs of the coal markets.

“Sometime down the road, if coal prices drop again, this is one of the products we hope to still be shipping,” he said.