Local wood pellet business heating up
Published Thursday December 23rd, 2010
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By STEPHEN LLEWELLYN
llewellyn.stephen@dailygleaner.com
Nashwaak Valley Wood Energy Inc. is getting ready to add a second shift of workers at its wood pellet manufacturing facility 35 kilometres outside Fredericton.
"We have been operating on one shift for the last month," said company president Peter deMarsh.
"We will be going to two shifts ... after the holidays.
"When we are at two shifts, we will be employing 12 people."
The company - which is owned by 125 shareholders from the area, most of whom are local woodlot owners - is finishing its first year of operations.
"Startups are always rife with challenges, but ours is finally going well," said deMarsh.
"The plant is running very well and we will be producing at our full capacity rate of 15,000 tonnes a year fairly consistently."
As Nashwaak Valley Wood Energy gets ready to increase production, the Canadian Bioenergy Association is ramping up its Go Pellets Canada promotional campaign.
"We believe that Go Pellets Canada will help pellet use grow in the Atlantic region at about 20 per cent a year for the next 10 years," said Bruce McCallum, vice-president of the Canadian Bioenergy Association in a news release.
"Increasing our pellet use at such a rate will be a great benefit for Atlantic pellet producers and it will shield pellet users from increases in the cost of heating oil that are bound to come in the future."
The association, also known as CanBio, is a national, industry-driven, non-profit organization of individuals, businesses and non-governmental organizations interested in the development, promotion and use of bioenergy.
Wood pellet production is rising steadily in Atlantic Canada as new pellet plants come online, said the association.
Pellet production capacity in the Atlantic region is at about 450,000 tonnes a year and it's growing rapidly as new plants start up, said CanBio.
There are 10 pellet plants in the Atlantic region: six in New Brunswick, two in Nova Scotia and two in Newfoundland. Those operations employ at least 500 people.
Most Canadian wood pellets are being exported to Holland, Belgium and Sweden.
Pellet consumption in Atlantic Canada is only about 50,000 tonnes per year, most of which are burned in pellet stoves, said the association.
"Exporting wood pellets to Europe can be a good business for pellet producers in the Atlantic region, but putting all of our eggs in one basket is risky, as recent history has shown," said McCallum.
"It does not make sense for us to sell our green and economical pellets to Europe and then turn around and buy more expensive imported oil to heat our homes and larger buildings.
"We should be using a lot more of our pellets here at home."
A tonne of pellets displaces about 490 litres of heating oil in an efficient pellet furnace, he said. That's equal to about 55 per cent of the price of heating oil.
In an interview, McCallum said boosting domestic consumption of wood pellets will be good for everyone, especially companies such as Nashwaak Valley.
"They are a small producer and they don't really have the opportunity to play on the international market," he said.
"They need the domestic market and at the moment the domestic market is very small."
McCallum estimated that the money invested in new wood pellet plants in New Brunswick in the last couple of years is worth between $50 million and $100 million.
"Wood pellets are a very good-news story for New Brunswick," he said.
"We need these plants to be successful and be producing to capacity," he said.
DeMarsh said his company has received good support from businesses and customers in the Fredericton area.
"We have people coming directly to the plant to buy from us," he said.
"The local market in the Fredericton area is expanding very quickly and very steadily."
People see pellets as a green, renewable alternative to oil and electricity, said deMarsh.
"They also like the fact we are a local supplier owned by local people in the Nashwaak Valley and using wood from local wood lots as our source of raw material," he said.
"So it is kind of combing renewable green energy with a very secure source of energy."
Nashwaak Valley makes wood pellets using machinery produced by Nakawic-based Pellet Systems International Inc., which boasts of using less energy than traditional pellet-making equipment.
DeMarsh also said the equipment makes better, denser wood pellets, which means it has less dust in the pellet bag and higher heat content.
Their pellets also have a low ash content as required by a premium pellet, he said.
When the company was being planned five years ago, it expected to export pellets to Europe, said deMarsh. But the value of the Euro has declined and the cost of shipping has gone up, he said.
"The reality has been that all of our sales have been in the Maritimes and, increasingly, in the Fredericton area," he said.
"That is where we see the future."
That will mean lower transportation costs, building on the local brand image and taking currency exchange concerns out of the equation, he said.
Nashwaak Valley supports the Go Pellets Canada campaign, said deMarsh. That campaign is providing good background information for consumers who want to know about home heating savings, what furnaces and stoves are available and how efficient they are, he said.
"People like to have a third-party source of information," he said.
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