Boston group’s $200 million Arkansas pellet facility on target to fire up in November

A former investment banker who is heading up development of the state’s first biomass plant said Wednesday the construction phase of the $200 million privately-financed project in Pine Bluff is still on schedule and production is expected to begin this fall.

Privately-held Highland Pellets of Boston first unveiled in August 2014 plans to build the 600,000 metric ton wood pellet facility in south Arkansas. In town this week to look at the expansive 200-acre project in Jefferson County, Highland Chairman Tom Reilley said the project is on schedule to begin production in late 2016 despite recent spring showers that slowed progress.

“It is really impressive, … and we are still on target for November to manufacture our first wood pellet,” Reilley told Talk Business & Politics after visiting the construction site.

Reilley’s forecast of a 2016 production start means the Highland facility will be the state’s first full-scale biomass facility to manufacturer wood pellets for energy generation. According to the U.S. Energy Information Administration (EIA), wood pellet exports from the U.S. nearly doubled in 2014, from 1.6 million short tons (approximately 22 trillion Btu) in 2012 to 3.2 million short tons in 2013. More than 98% of the exports were to Europe, and 99% originated from ports in the southeastern and lower Mid-Atlantic regions of the country.

Reilley said 100% of the company’s production will be shipped to Europe. In the United Kingdom, wood pellet imports from all sources have grown from near zero in 2009 to more than 3.5 million short tons in 2013, EIA data shows. Because of the United Kingdom’s Renewables Obligation program, the operators of several large coal-fired power plants have either retrofitted existing units to co-fire biomass wood pellets with coal or have converted to 100% biomass.

Highland and Zilkha Biomass of Monticello 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.

The state Department of Environmental Quality (ADEQ) approved Zilkha’s Title V permit on July 2, 2015, 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 Sept. 15, 2015 by state environmental regulators, and Reilley and his executive team have moved to complete financing for the project and move forward on an aggressive timetable. Reilley also said his Boston-based company decided on the south Arkansas location after prospecting several other potential Southeast U.S. sites.

“You need a renewable fiber base, … but you just can’t locate where there is a bunch of wood. You got to locate where there is a workforce and a working forest ecosystem that you can draw from, (and) if you don’t have anyone to harvest and manage the land, you don’t have a business,” Reilley said. “So it is not just a good fiber basket, you need a fiber basket with infrastructure.”

ELECTRIC GENERATION FROM BIOMASS RISES IN THE U.S.
Highland will begin production in Arkansas at a good time for the biomass industry, Reilley said. U.S. electricity generation from biomass across all sectors grew from 56 terawatthours (TWh) in 2010 to 64 TWh in 2015, a new EIA report shows.

Much of this growth occurred in southern states such as Virginia, Florida, and Georgia, where electricity generation from biomass across all sectors accounted for 11.3% of renewable electricity generation and 1.6% of total electricity generation in the U.S.

Nearly half of the electricity generated from biomass in 2015 was at industrial facilities outside of the electric power sector, such as pulp and paper mills. Within the electric power sector, biomass accounted for 6.3% of renewable electricity and 0.8% of total U.S. electricity generation.

Electricity generation from biomass uses several types of fuel, including forest wastes from clearing and thinning, sawmill residues, and urban landscape trimmings. The fuels can have widely varying physical properties and moisture contents, meaning biomass electricity generation plants often face unique fuel-handling challenges. Many power plants that burn biomass are cofiring plants, meaning they use biomass as a partial substitute fuel.

BIOMASS EFFORTS IN SOUTHERN STATES
According to the EIA report, several states in the South Census region have increased electricity generation from biomass. These states have in common ample forest resources, poor wind resources, and relatively unfavorable solar resources, making biomass among the more readily available renewable energy resources in the region.

Virginia has a statewide program to convert coal plants to biomass, with several plants that converted during 2013. Three of the plants, each rated at 51 megawatts (MW) and operated by utility giant Dominion Power, are located in Alta Vista, Hopewell, and Southampton. The conversions to biomass are part of Dominion’s effort to achieve Virginia’s voluntary goal of generating 15% of its electricity from renewable sources by 2025. Also in 2013, the Northern Virginia Electric Cooperative (NOVEC) commissioned a 50 MW wood waste biomass plant in South Boston, Va.

In 2012, Miller-Coors Brewing opened a biomass-based electricity plant in Elkton, Va., to dispose of brewing wastes. An industrial plant in Altavista switched from natural gas to biomass as its primary fuel and upgraded capacity to add wood solids to its fuel mix.

Increases in electricity generation from biomass in Georgia and Florida were each primarily from a single new plant. In Georgia, the 55 MW Piedmont Green Power plant began operation in 2013, fueled by urban wood waste and mill and logging residues. Georgia Power built the plant to improve its fuel diversity. Florida opened one of the largest new biomass plants in the U.S., the 102.5 MW Gainesville Renewable Energy Center. The plant began generating power commercially in December 2013.

The western part of the U.S. also had notable growth in biomass between 2010 and 2015, increasing electricity generation from biomass by 15% over that period. Most of the growth in the West comes from a few large plants in California that are helping the state meet its renewable electricity target.

By 2017, Arkansas could be among the states with the largest spike in biomass fuel generation when the Highland project and Zilkha’s competing $90 million black wood pellet facility in Monticello are in full production.