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Former UPM mill sites being eyed for pellet plant

Miramichi Leader KRIS MCDAVID

Miramichi (08/19/2014) – The company behind a planned $50 million pellet plant development in Miramichi is eyeing a pair of vacant former mill sites in the city as potential locations to house the operation.

Ross Creelman, president of Northern Energy Solutions, said during a news conference at the Rodd Miramichi River Hotel on Tuesday that his company has identified the former UPM-Kymmene paper mill property at Curtis Corner and UPM’s former groundwood mill site in Nelson as ideal locations for the facility.

Both locations have direct access to rail transportation, which Creelman said would help the company to easily ship its product north to the Port of Belledune where it would be then transported overseas to European markets where he said wood pellets are currently in high demand.

“We have evaluated several sites in the Miramichi area and the former UPM mill sites are of great interest to us because they both have rail service,” he said. “We expect to have the final decision about the site before the end of October.”

Creelman is targeting late 2016 or early 2017 to have the plant up and running but said plenty of work needs to take place before it can happen.

Step one of that process was guaranteeing a wood supply, which it accomplished this week with the province revealing it had signed a letter of intent that would secure Northern Energy Solutions with a Crown allocation of 378,000 cubic-metres on the Miramichi-Nepisiguit licence.

Creelman, who owned Fredericton-based forestry firm Marwood Ltd. before starting up his latest company, said the venture would employ about 25 direct workers while creating about 75 additional jobs in woodlands and trucking operations.

Provincial officials on hand for the announcement were hailing Creelman’s plans as a strong sign that New Brunswick’s forestry sector is getting stronger, calling it a positive development for the Miramichi region and, more specifically, its private woodlot owners who have lacked a stable market for their low-grade cuts.

The plant will churn out 200,000 tonnes of wood pellets each year. The company says it will require roughly 100,000 cubic-metres of wood from private sources each year in order to fuel the operation, wood Creelman said would otherwise be rotting on the forest floor.

“We intend to use low-grade, low-value wood from the Miramichi region that is currently being under-utilized,” he said “We all know that since the closure of the large pulp and paper mills here, the Miramichi has lacked a buyer for pulp, biomass and residual wood products; our plant will be complementary to the other forestry producers in the region by purchasing all of these products.”

Premier David Alward and Human Resources Minister Robert Trevors, the Tory MLA for Miramichi Centre, praised Creelman’s 40-year track record within the industry and said his expertise would be a clear asset to the Miramichi’s regional forestry sector.

“This is a $50 million private sector investment by Mr. Creelman in this community and, again, that construction project is a very complex project but it’s going to be great,” Alward said.

“Our recent investments demonstrate that our government believes the future of our province’s biggest economic sector is as bright as its past.”

The project is contingent on the company completing a $400,000 feasibility study and deeming it worthwhile to move ahead with, but Creelman said he didn’t foresee any obstacles getting in the way at this stage.

The Crown wood allocation would only be assigned upon completion of that study.

For his part, Trevors, a former forestry worker, called the development “exciting” and another sign that that forestry in Miramichi still has a key role to play in the region’s future.

“You will see that this will be a very large scale plant and will mean a lot to the economy here in Miramichi,” he said. “I have often heard about the woods from the Miramichi being used on the Miramichi; well, if this plant goes ahead that is exactly what will happen.”

Despite the cyclical nature of the forestry sector and the ebbs and flows of the domestic and international demand for wood pellets in particular, Creelman stressed he’s seen more than enough evidence to suggest the operation will be sustainable over the long-term.

The product, which would be made out of things like pressed sawdust, wood chips and other wood waste, is being sold at a premium to European industrial users who have turned to pellets as a cleaner alternative to coal in providing energy to the grid.

“I’ve been through a few cycles in forestry and Marwood continued to operate profitably through the last recession,” Creelman said. “Right now the demand for pellets in Europe far outstrips the supply which gives the opportunity to develop this project here.”