Fuelling A New Market
Prince George-based Pellet-Flame and two other pellet companies have found a market in energy-conscious Sweden for the high-energy wood pellets they produce from sawmill residues.
Sometimes, an idea just won't go away; it keeps re-asserting itself. Eventually, developing that single idea can dominate its owner's heart, body and soul - just ask John Swaan of Prince George, BC.
Swaan knows that particular entrepreneur's curse very well. In his case it came about as something of a mistake. He was in the feed business in Quesnel, BC, during the late 1980s and wanted to achieve better utilization of existing equipment He came up with the idea of pelletizing wood wastes, converting them into a source of heat and energy.
"I never lost the desire to do something with the idea. I kept working it over in my head. The idea wouldn't leave me alone," recalls Swaan.
Good thing. Today, his Pellet-Flame plant in Prince George is running full bore to support domestic markets and, in a major coup, is helping a Swedish city stay warm and comfortable.
It's been quite a ride. When Swaan realized he was only going to exorcise his demon idea through action, he developed a business plan for pelletizing wood wastes. In early 1994, he approached another Prince George entrepreneur, Bill Kordyban Sr., whose family owns and operates Carrier Forest Products in Prince George. A year later, Pellet-Flame was up and running. (The Kordybans are no longer involved in the venture).
Pellet fuel, formed under pressure and possessing high-energy calorific values, can be manufactured from a variety of wood residues. Pellet-Flame's main diet is planer shavings of spruce, pine and occasional fir. But use can be made of any wood residues generated in sawmills, planer mills, value-added plants, finger-jointers and from molders and sanders. "Whatever passes through the floor," says Swaan. Modest percentages of bark can also be utilized. As a rule, the harder the wood, the harder it is to densify.
Producing the pellets was one thing, but early marketing efforts proved tougher. BC pellet manufacturers manufactured 35,000 tonnes of product in 1995/96, of which 20,000 to 25,000 tonnes were sold. The BC Pellet Fuel Manufacturers Association was formed in 1996 to help educate the public about the pellet option. In the following season, BC pellets were marketed in Canada and the US, as well as in BC.
Swaan explains some of the marketplace dynamics: "The first generation of pellet appliances were like the Model T; you had to have some knowledge and tenacity to operate them. They weren't consumer friendly." They are now. Another factor was the introduction of natural gas as a competing energy source.
Pellet fuel sales overall are growing, but not quickly enough to sustain plant infrastructure. BC's pellet fuel manufacturers began looking at their options. They noticed pellet fuel sales were expanding rapidly in northern European countries, especially Sweden. Swaan went there to find out why.
Sweden is serious about controlling CO2 emissions from fossil fuels, unlike North America. Sweden underlines its commitment to combat the greenhouse warming effect with increased taxation on fossil fuel use. The Nordic country has also started decommissioning its 12 nuclear reactors, the first one scheduled this year. Those two factors have the Swedes in the vanguard for using alternative, renewable energy sources. The focus is on wood biomass and pellets specifically. It has levelled the playing field, says Swaan. Wood biomass in pellet form offers better control of operations, ease of handling and high calorific value.
Swaan recognized the Swedish opportunity and went for it. Serious negotiations followed. Swaan racked up frequent flyer points, the Swedes were satisfied with the integrity of the Pellet-Flame plant and product as well as those of its partners, and six months after a memorandum of understanding was forged, a culminating contract was signed.
Pacific Bio Energy Corp. was formed as a joint venture, with Pellet-Flame, Pinnacle Pellet Inc., of Quesnel and Princeton Co-Gen of Princeton, BC supplying it with pellets. Pacific Bio Energy exports the pellets to a city of about 80,000 people on the west coast of Sweden. The city uses the pellets (and coal for electricity) to produce energy in a central heating system at dockside. In the process, steam is produced to heat water. "The hot water is piped through the city like a gas line going up the street here," explains Swaan. Homes there use a radiant rather than a forced-air type of heating system.
Before the first shipment, Swaan's learning curve took a few unexpected curves. Agriculture Canada had to certify Pellet-Flame's plant prior to issuing the necessary sanitary certificates for product export. It was Swaan's responsibility under the contract to deliver the pellets to dockside in Sweden.
"We acted as our own cargo agents," says Swaan. It involved a fast lesson in ocean-going transportation, inspecting vessel holds, supervising loading and dealing with ships' captains who were not averse to taking advantage of a neophyte.
John Swaan (right) of Pellet-Flame was on hand in Sweden earlier this year when 16,000 tonnes of pellet fuel arrived.
But on a rainy day last February, the Mandarin Moon inched out of Prince Rupert harbour with 16,000 tonnes of BC pellet fuel secured in her holds. Swaan was on hand at the other end where the shipment was greeted with much attention and hoopla. "It seemed like all Sweden was there to watch. We were the first ones to do this from North America," says Swaan. "The Swedes are very energy-conscious." (About $8 million was invested in infrastructure at the port to accommodate the BC pellets).
A second shipment of 20,000 tonnes left Prince Rupert in June and subsequent cargos are expected every three months during the contract's three-year life. Swaan continues to follow other business leads in Sweden.
Pellet-Flame's plant was ramped up to full capacity to meet the Swedish contract and domestic sales. At times in the past the plant was running at 20 per cent capacity. The plant has a design capacity of about 60,000 tonnes of pellets/year and is operating 24 hours a day, seven days a week.
About 25 loads a day of raw material are trucked into the plant, unloaded and stored. Moisture content can reach 60 per cent, depending on the mix of green and dry materials. It is fed into a dryer where a uniform moisture content of eight to nine per cent is achieved. A hammer mill produces the standard size of particle required. An extruder exerts up to 80,000 lbs. of pressure in a continuous process designed to densify the material. The pressure creates temperatures up to 350' C and exit temperatures of 275' eliminate natural pitch and more moisture. Pellets are suspended in a cooler to return them to ambient temperature. The pellets then pass across a screen deck for sizing. Fines are removed and used for other products (like a material for environmental spill clean-ups) or recycled to create a pellet.
"There's no waste. It's all product," he says. "What we have that's different is an engineered product." It won't float, for example, weighing in excess of 40 lbs/cubic metre. At 9,000 BTU/lb, the pellets produce 2,000 BTU/lb more than natural wood. The pellets are about 1/4" in diameter and 1/2" to 3/4" long. They have a moisture content of about 4.5 per cent.
Pellets can be bagged or, in the case of product headed for Sweden, loaded in bulk into covered trucks for transportation to the CN rail head. There they are put into hopper cars similar to grain for transport to Prince Rupert and silo storage to wait for the next vessel. Pellet-Flame employs about 18 people.
The company is continuing to develop the domestic market. A new small-log configuration is expected to boost home heating sales. Swaan predicts the market will continue its steady growth. As it does, there's time for another of those ideas to come along, lodge itself in John Swaan's consciousness and ...
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