Announcement: Pellet Plant Plans Feasibility Study

The owner of a pellet mill near Fredericton has gotten a promise of wood allocation from the NB government, and is moving ahead with a feasibility study to build a pellet mill in Miramichi that would employ 100 people.

Ross Creelman is the former owner of the Marwood pellet mill outside of Fredericton, and the owner of a new company called NES (Northern Energy Systems). Creelman is a UNB Forester, and has 40 years experience in the industry in New Brunswick. In 1992 he built one of the first pellet plant in Canada, and laughingly admitted they had to give away a lot of their product because there was no market for it. But now, the pellets he produces are used widely in Europe to produce power, and are in short supply. Creelman said his company continued to operate profitably through the last recession, and is largely unphased by the cyclical nature of the forest industry.

The company has received a letter of intent from the Department of Natural Resources stating that if the project is feasible, the company will receive 378,000 cubic metres of softwood from forestry Region 3 (Nepisiguit-Miramichi).

“We have been working with Northern Energy Solutions and are impressed by their vision for New Brunswick’s forestry sector and for the Miramichi region,” said Natural Resources Minister Paul Robichaud in a government statement. “Our government is fully supportive of the overall investment and job creation that would result from a pellet plant, which is why we are pleased to provide the wood allotment from crown lands. I look forward to the results of their research and anticipate that together we can create new forestry jobs in this area for generations to come.”

The allotment is specifically for low grade wood that is often left to rot in the woods as it is not even usable as pulp. This will provide a much needed market for woodlot owners and saw mills who need a place to sell their waste wood.

The proposed plant will cost $50 million to build, and will produce 200,000 tons of pellets a year. Creelman said the sites they are interested in are either of the two former UPM sites because they have access to rail.

Minister Robert Trevors was listening in on the questions, and indicated the government would be more than willing to turn the properties over to a company for that purpose. Soon.

[caption id="attachment_29648" align="alignleft" width="237"] Alward and Creelman[/caption]

Premier Alward added that the sites Creelman is looking at has good access to electricity, and that province has stable electricity rates. The sites also have upgraded rail lines on each side of the river.

Creelman said his engineers will be evaluating each site later this month. "Our estimate would be late 2016 or early 2017 to commission the plant," he said.

"We have full confidence in Ross and his team. His expertise and his ability to deliver," said Alward. "It's obvious we feel very good about whatever site they choose."

Creelman said it would be their intention to move the pellets by rail to Belledune where that can be shipped to Europe. Creelman was asked if he had considered using the port in Miramichi, but he said it was his understanding that the facilities were already available in Belledune, and it made more sense to dovetail into that operation.

Premier Alward added that it was important to realize that the whole northern part of New Brunswick will benefit from the project. "The upgrades taking place on the CN rail lines allow us to attract the industry in the region and grow opportunity," Alward said.

What will a feasibility study reveal?

"Our pre-evaluation study was very positive and now we take it to a more detailed stage. We look forward to getting the study underway and we will keep the public apprised of our progress," said Creelman in the government press release.

The media scrum that took place after the announcement included questions from Miramichi Chamber of Commerce President Mike Hill.

"We have the best labour force in the region, we have the wood laying on the ground, probably the best quality resource as well, What's left to study? I have a shovel in the car we can start right away. Pick a site."

"All that is left to study is the fine tuning," said Creelman. "That fine tuning required firstly a committed wood supply, and without that a plan doesn't function. I have been a value adder for 40 years, and I understand the need for wood. There is no question about the quality of people here, some good sites to choose from, and also having sawmills in the area to supply us with residue is also important. We feel it will be a success."

MLPI Financial Office Hal Raper was at the announcement. Raper and Fritz Weirathmueller announced to city council on May 22nd that they had completed a feasibility study on placing a group of four companies on the former UPM site, one of the companies being pellet mill. The group only needed a commitment of wood, the same type and amount of commitment that Creelman received, so they could go forward and seek financing.

Raper said he was somewhat surprised by the announcement, but conceded that finding ways to use the whole tree had been a goal of theirs for 4 years. MLPI will be able to sell residue and low grade wood to the pellet mill.

Should we get our hopes up?

How excited should anyone get about a feasibility study that gets announced in a region with 20% unemployment one month before an election? That's a rhetorical question, by the way. Miramichiers, especially those who worked in the forest industry in the past, and those who are looking for an opportunity to work closer to home, have learned over the years not to get their hopes up. Umoe Solar, Riverstone Plywood are names of companies that people got their hopes up about, only to be disappointed. You might even be able to add Cormer to that list.

Mike Hill of the Chamber of Commerce says it doesn't matter who owns the mill. "It's just one of several mills you want open." Hill said he assured Creelman after the announcement that entire Chamber of Commerce was at his disposal if he had any issues or any concerns about his investment in any capacity. "It's the jobs that are important," said Hill.

Hill says he is still in regular contact with another mill owner, Jean-Yves Cardinal of Riverstone Plywood. The former ATCON mill still has an allocation, but it has been diverted to other operations while the mill is dormant. Hill says Cardinal has delivered the business plan the government had been looking for, but still no word on wood. Hill said he expected Cardinal to be confused further with the announcement of a 378,000 cubic meter allocation for the pellet mill.

In MO)))'s last discussion with Cardinal in October 2013, he said he was trying to secure a meeting with then Minister Bruce Fitch to get a decision on his allocation. In July Cardinal told MO))) that while his business plan was being developed, he was trying to negotiate a wage subsidy with the province for the 100 jobs the mill would create. Cardinal said his lenders wanted that assurance, because they were being cautious with the forest products market.

Former employees of the plywood mill made an appeal to city council on October 25th to put some pressure on the provincial government to honour their promise of having wood cut in Miramichi benefit Miramichi businesses. The workers feared if the company did not get wood to run the mill, it might be dismantled and sold.

Other people MO))) talked to at the announcement today seemed to feel this news about the pellet mill came out of the blue. Everyone seemed to be expecting news about other mills first. There seems to be a lot left unsaid in both the Riverstone Plywood issue and the MLPI issue. Maybe in this case the province was just waiting for the right businessman to come along. Alward's endorsement for Creelman could say it all:

"We have full confidence in Ross and his team, and his expertise and his ability to deliver."

Creelman recently sold Marwood Ltd. (the pellet mill near Fredericton) to a group of its employees. He owned the company, which has more than 200 employees, for more than 40 years. He was also one of the pioneers of pellet plant construction, having built one of the first in Canada 23 years ago.