Wood Pellet Businesses Ail As Demand Plummets
– by Tux Turkel, February 21, 2016, Portland Press Herald
The combination of low heating oil prices and a mild winter have whipsawed the state’s four wood pellet producers.
A year ago, homeowners were having trouble finding bags of pellets for their stoves to combat record-cold weather, so manufacturers ramped up production. This winter, they’re laying off workers and looking at stacks of unsold pellets.
“They geared up to be running at full speed,” said Bill Bell, executive director of the Maine Pellet Fuels Association. “Last winter at this time, they couldn’t make them fast enough.”
The lack of demand is hurting each of the mills.
The Maine Wood Pellet Co. mill in Athens shut down in early January. The plant typically has 36 workers on three shifts, producing 110,000 tons of pellets that are sold across New England. It relies on roughly 200 loggers and truckers for its wood supply. It also is building a small biomass boiler for waste heat to dry wood and sell some electricity to the regional grid.
“We’re waiting now to see what the market’s going to do,” said Bob Linkletter, the company’s president.
Corinth Pellets LLC let nine workers go in January and was down to 28, according to Bell. It’s operating three shifts, but only three days a week, instead of seven.
Lignetics, the nation’s largest wood pellet producer, took over a mill in Strong last year as part of an expansion plan into northern New England. It supplies many big-box stores with bagged pellets.
“We put a lot of pellets into the system and now are having to scale way back,” according to Jeff Allen, a Lignetics general manager.
In Ashland, the Northeast Pellets mill has been running every other week. It had 14 workers, but was recently operating with two full-timers and the others “on call.” It uses sawdust from three area sawmills and is located next to a ReEnergy biomass plant.
Northeast Pellets suffers from an added complication. The exchange rate has made Canadian wood pellets less expensive. That has led the University of Maine at Fort Kent, which has a biomass heating plant, to buy nearly 90 percent of its pellets – 302 tons – this winter from Canada. Bell’s trade group has called on the university to resume buying pellets in bulk from local mills.
But 95 percent of Mainers who burn pellets have stoves and buy the fuel in bags, according to Bill Strauss, president of FutureMetrics in Bethel and an expert on wood fuels. He calculated the equivalent cost of heating a home in the Northeast with wood pellets and oil. In 2008, bulk pellets were about half the cost, when oil heat spiked to $4,404. Earlier this winter, oil heat was $1,725, while pellet heat was $2,174. So homeowners who keep their oil furnaces for backup are using them more, to save money.
“We have a lot of garages with tons of pellets that aren’t getting burned,” Strauss said.