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INFORMING CONSUMERS: The Pellet Fuels Institute has a new brochure available for producers and distributors to promote pellet heating.
reported North American wood pellet exports to Europe reached 4.7 million tons in 2013, with the Southern states shipping 63 percent. The overseas demand is not limited to industrial pellets. Residential stoves and furnaces are popular and high-grade American pellets and stove technology are also being exported. For example, Greenwood, a high-tech pellet furnace that exceeds even the strict Washington state emissions standards, has found a growing market in the United Kingdom as well as New Zealand. In the West, a new and potential gold mine of opportunity seems to be emerging with the booming natural gas production industry. Brandon Kramer, a former cellulosic ethanol producer, opened Rapid City, S.D.based Deadwood Biofuels LLC in 2010 with retail pellet intentions. His primary source of raw material is the thousands of acres of beetle-killed ponderosa pine found across the western landscape. Deadwood relies mostly on material from state and private land. By 2012, almost all of his 50,000 ton annual capacity was shipped to oil and gas producers. It’s an overall win for Kramer and any other pellet manufacturers within 1,000 miles of an oil field, he claims. “It’s a year round outlet for 100 percent of our production, minus the cost of packaging.” Jennifer Hedrick, executive director of PFI, confirms that more of her mem-
bers are finding an oil and gas market emerging. The much-maligned hydraulic fracking for oil and gas requires some form of absorbent in the clean-up process around drilling operations. According to Kramer, the oil industry has discovered wood pellets cost half the price and are a more effective absorbent than fly ash (a byproduct of coal combustion).
Price Correction Due Even with the recent European hunger for wood as an alternative energy source, pellets are typically a single digit margin affair. The industry has struggled financially for five of the past six years. The cause, in part, was an oversupply, which depressed prices. It started after the 2005 Katrina event and worsened with the 2008 run-up of oil prices. To stay in business, manufacturers must annually develop a delicate algorithm of supply and demand. “Pellets are due a price correction, and when it corrects, pellet fuel will stay at home more,” says Darryl Rose, vice president, sales and marketing for Pennsylvania-based Energex American Inc. There is an increase in demand, but it can be exaggerated. “Europe is driving the market, but we’ve not had a significant residential pellet shortage. We’ve not
Q3 2014 | PELLET MILL MAGAZINE 25