ADEQ Approves Emissions Permits For Two South Arkansas Biomass Plants

The state Department of Environmental Quality has approved air pollution permits for two full-scale biomass plants in South Arkansas, opening the door for both multi-million dollar development projects to get underway and start production by the end of 2016.

Zilkha Biomass Monticello LLC and Highland Pellets of Pine Bluff, both backed by two privately-held, out-of-state investor groups, announced in the summer of 2014 plans to make use of Arkansas’ huge inventory of unused forest dregs, logging leftovers, imperfect commercial trees, dead wood and other non-commercial trees that need to be thinned from crowded, unhealthy, fire-prone forests.

ADEQ officially approved Zilkha’s Title V permit on July 2, allowing the Houston-based renewable energy group to move forward to build a $90 million proprietary black wood pellet manufacturing plant in Monticello that company officials said could be easily integrated into the energy grid as a clean energy alternative to coal-powered electricity.

Highland’s Title V operating permit was approved on Sept. 15 by state environmental regulators, but the Boston-based investment group must wait 30 days to see if anyone submits public comments requesting a hearing before the Arkansas Department of Pollution and Control and Ecology Commission.

If no review is requested, ADEQ officials said Highland can move forward with plans to build its $130 million plant in Pine Bluff that will create more than 35 direct jobs and another 482 offshoot jobs that would provide an $86 million a year financial bounce to local communities.

“The facilities can start construction the day the permit is final,” ADEQ spokeswoman Katherine Benenati said of both the Monticello and Pine Bluff biomass plants. “All conditions the facilities must meet are in the permit. There are no requirements outside of the permit.”

According to the U.S. Environmental Protection Agency, so-called “major sources” of air pollution are required by the federal Clean Air Act to apply for a Title V permit. A “major source is an industrial facility that emits or has the potential to annually emit 100 tons of any air pollutant, 10 tons of any hazardous air pollutant or 25 tons of a combination of hazardous pollutants, the EPA said.

HIGHLAND
In an email response to Talk Business & Politics, Highland Chairman Tom Reilley said his company’s construction schedule is pending submission and approval of local business permits. “We anticipate mobilizing before the end of October,” said Reilley, a former Wall Street banker.

The former Bear Stearns executive also said his Boston-based investment group backing the 600,000 metric ton biomass project in Pine Bluff has completed an economic analysis of the south Arkansas project that shows “a significant regional positive result.” According to Highland’s website, the company is also involved in “active site negotiations” for its second plant site in the Southeast to build additional production capacity.

“For the employees, (we will pay) fair living wages and benefits packages in a positive and high performing work environment,” Reilley said. “The company will be engaged in the community and will be a good local citizen.”

ZILKHA
Meanwhile, although Zilkha received Title V approval from ADEQ over two months earlier than Highland, it may take a little longer for company officials to get the Monticello biomass project off the ground.

In approving Zilkha’s air emission permit earlier this summer, ADEQ’s staff peppered the Houston-based company with questions about the proposed design of the equipment that will be used to control air emissions at the Monticello biomass plant.

One of the concerns posed by the ADEQ staff was that Zilkha officials had not provided regulatory officials with any manufacturer’s specifications, vendor guarantees or other information on the company permit application to determine emission limits.

In its draft operating permit submitted in early May, Zilkha officials requested that a long list of emission requirements and recordkeeping be revised or removed from the final Title V permit.

However, Steve Spencer, chief of ADEQ’s air division, refused to remove most of the conditional emission requirements, and told Zilkha officials that nothing was in the permit record “to support any decision that those compliance mechanisms are unnecessary.”

Still, Zilkha spokesman Jonathan Ohueri said none of the conditions and findings in the ADEQ permit approval would alter the company’s timetable to begin commercial production between late 2016 and 2017.

“Now that we have been granted this permit, our last step is to finalize an offtake agreement before commencing construction,” Ohueri told Talk Business & Politics. “Our plan is to have the offtake agreement finalized by early 2016. The date for construction to begin will hinge on this finalized agreement.”

Once in production, officials at both companies said they will be ready to quickly get up to full operational mode with interested buyers and commitments already in place from European sources. According to the EIA, almost three-quarters of all U.S. wood pellet exports were delivered to the United Kingdom (UK), mainly for the purpose of generating electricity.

The main driver for growing wood pellet consumption in Europe is the European Commission’s 2020 climate and energy plan, which aims to reduce greenhouse gas emissions and increase the contribution of renewables to total energy consumption in the European Union, according to the EIA.