Park Falls paper mill shifts to wood pellet fuel; completes pilot engineering to make ‘green’ products.   12/3/2008 by Wayne Nelson

(Photos: Flambeau River Papers president Robert Byrne; aerial view of Flambeau River Papers with the wood pellet plant circled, lower center.)

PARK FALLS, WI— Creditors who rescued a paper mill swept into bankruptcy early in 2006 by rising natural gas and coal costs are weaning it from fossil fuels and pressing ahead with a $300 million plan to produce “green” industrial products, ranging from transportation fuels to industrial waxes.

On Oct. 16, an affiliate of Flambeau River Papers here began producing densified fuel pellets at the mill from sawmill residue and other waste wood. The new pellet plant is key in a plan to produce steam and electricity for papermaking entirely from woody biomass. The paper mill relies on coal for about one-third of the fuel that fires its No. 6 boiler. When fully operational producing 13 tons of pellets daily, the Densified Fuel LLC affiliate will reduce coal use to about 10 percent, said Robert Byrne, president of Flambeau River Papers.

“We’ve already reduced fossil fuel dependence by 33 percent. We’re funded for another 33 percent and we’re going to get to 100 percent,” he said in mid-October.

Byrne also heads Flambeau River Biofuels, another affiliate charged with bringing the $300 million expansion to reality. The stakes are huge for the paper mill and logger network that supplies it within a 150-mile radius, from as far away as Cook County in Northeastern Minnesota.

A fully functional biofuels operation would consume 1,600 tons of green woody biomass daily (1,000 bone dry tons). That’s about twice the wood waste the mill currently consumes to produce process steam and electricity, and promises a new market for the region’s financially strapped sawmill operators and loggers.

Woody biomass is waste wood — small branches and such species as tamarack and basswood — that loggers leave on the forest floor because there’s no viable market for them.

Removing that residue also can make forests less susceptible to insect infestation and fires, and improve productivity, according to forest ecologists.

The startup of the wood pellet plant is another milestone for the new owner group that bought the closed mill and brought it out of bankruptcy in mid-2006, and for nearly 300 rehired union employees represented by the United Steelworkers of America. Armed with $4 million in grants and loans from the state of Wisconsin, and a federal grant of up to $30 million, all parties are collaborating to bring it to fossil fuel independence and profitability in a difficult time for the wood products industry.

That plan is evolving through a tortuous process.

In late 2006, just four months after the mill reopened, the company applied for an $80 million grant from the U.S. Department of Energy to help finance a $215 million “biorefinery” that would produce cellulosic ethanol, other biofuels and biochemicals from renewable wood waste. That first request was narrowly rejected.

In mid-2007, the company reapplied in a new round of renewable energy grants to build a smaller scale demonstration plant. In August 2008, the federal Energy Department qualified Flambeau River Biofuels for up to $30 million in a revised plan to produce “green” electricity, sulfur-free biodiesel fuel, waxes for a host of industrial products and naptha, an integral input for pulp and papermaking — all from woody biomass.

Gone from the original plan is an attempt to produce cellulosic ethanol. Byproducts of the sulphite pulping process used at the mill don’t have the right characteristics to produce cellulosic ethanol, Byrne said.

“We’re going to continue to work to be fossil fuel free. We know we also can produce ‘green” (warm weather) diesel and parafinic waxes,” he said.

Essentially, the project has become a two-step process. With the $3 million advanced to date from the federal agency, Flambeau River Biofuels has nearly completed preliminary engineering for the $300 million biofuels expansion at the Park Falls mill. It also is financing construction of a small scale demonstration plant to be built in Raleigh, NC that will test the modified “Fischer Tropsch” technology proposed in the project’s first round.

Franz Fischer and Hans Tropsch, German scientists at the Kaiser Wilhelm Institute in petroleum-poor but coal-rich Germany, successfully produced synthetic liquid fuels with the original technology they developed in the 1920s. Germany and Japan used their process to convert coal into fuel, supplement their crude oil needs during World War II.

Byrne conceded that the drop in oil prices and full-blown credit crisis since Oct. 1 — the mirror image of the environment that spawned widespread interest in renewable fuels — will make it more difficult, but hardly impossible, to raise the $250 million in private capital still needed for this project.

“We have Department of Energy support,” he said. “It’s not a sure thing, but I’d say the changes are still better than 50-50.”

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