2021 Issue 1 - Pellet Mill Magazine

Issue 1, 2021

HOT COMMODITY Ports Advance Infrastructure Buildout Page 10

AND: The BTU Act:

What’s Next?

Page 16

Reviewing Russia’s Market Page 20

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Contents »

2021 | VOLUME 11 | ISSUE 1

FEATURES

10 INFRASTRUCTURE

Building Out For New Business Pellet Mill Magazine evaluates some ports serving—or working to attract—the growing export market.

By Luke LeRoy

16 DOMESTIC

Staying the Course The residential portion of the BTU Act has passed, leaving it up to stakeholders to spread the word and capitalize on the tax credit’s full value.

By Anna Simet

04 EDITOR'S NOTE Eyes on Domestic, Export Market Growth

By Anna Simet

05 EVENTS

COLUMNS

CONTRIBUTIONS 20 MARKETS

Russia’s Global Wood Pellet Supply Potential Already one of the world's largest wood pellet producers, Russia has substantial potential for further capacity growth.

By Maria Frolova

06 Window of Opportunity

By Tim Portz

07 Black Pellets in Japan’s Ambitious Hydrogen Plan

By Larry Price

08 BUSINESS BRIEFS

Pellet Mill Magazine

Advertiser Index 28

2021 Int'l Biomass Conference & Expo

25

Baum Pneumatics, Inc.

8

13 2

12 14 18 15 23 19 9

22

SPONSOR SPOTLIGHT 24 BAUM PNEUMATICS

Explosion Safety, Fast Recovery Design Approach

By Ehsan Tootoonchi

26 BUTLERWOOD

Quality, Consistent Cook Wood

By Pellet Mill Magazine

2021 National Biomass Summit & Expo Bengal Machine ButlerWood

Delta Energy Services, LLC

Industrial Bulk Lubricants (a Dansons company) KEITH Manufacturing Company L&R Timber Company

Mid-South Engineering Company MoistTech

Oxidizers, Inc.

Screw Conveyor Corporation

ON THE COVER

The Port of Belledune in New Brunswick, Canada, has been exporting wood pellets since 2007 and will soon hit 1.5 million metric tons.

PHOTO: BELLEDUNE PORT AUTHORITY

WWW.BIOMASSMAGAZINE.COM/PELLET 3

« Editor's Note

Eyes on Domestic, Export Market Growth

Anna Simet

EDITOR asimet@bbiinternational.com

The high today in Minnesota is 1 degree Fahrenheit, day four of a cold snap that is expected to last two weeks, with highs either below zero or just above. Deep freezes such as this one—particularly in the Northeast U.S.—have potential to quickly change the relative success of a given heating season and have a measurable impact on inventory levels.

Speaking of success and the domestic wood pellet industry, what you’ll find mentioned in several instances throughout these pages is the recent passage of the residential provisions of the BTU Act. On the surface it seems fairly cut and dry—a tax credit for buying an efficient wood heating appliance, meaning more money in consumers’ pockets and an easier sell—but it is more complicated than what meets the eye. Each part of the entire supply chain has work to do in order to maximize the benefits of the BTU Act, including appliance manufacturers, pellet manufacturers, and the retailers of pellets and appliances. In “Staying the Course,” on page 16, I examine much of what’s on the table for the wood pellet sector, including the supply and demand balance of which domestic heating fuel producers are always in pursuit. While industry stakeholders are optimistic of the BTU Act’s potential, many factors at play will influence its ultimate success, perhaps most significant being promotion of it to consumers.

The accompanying feature in this issue pivots to the export market, focusing on the continued buildout of wood pellet handling infrastructure at North American ports. In the story, “Building Out for New Business,” on page 10, author Luke LeRoy covers improvements with several ports in the U.S. and Canada that either view wood pellets as an export commodity increasingly important to their operations, or one that could be. Growth of the wood pellet export market has justified substantial investments in some ports to allow them to expand their capabilities in storing, handling and shipping many millions of tons of wood pellets from U.S. and Canadian soil to overseas customers.

The final story I’ll mention is our page-20 contribution, “Russia’s Global Wood Pellet Supply Potential,” by Maria Frolova, which provides a comprehensive account of the country’s industry, from fiber sourcing to market prices to demand drivers. The detailed article estimates that Russia manufactured about 3 million tons of wood pellets in 2020, growing by about 20% year-over-year, making it only second in growth to the U.S. The end of the article discusses some new production facilities expected to come online in 2021, which will collectively add greater than 1.1 million tons to the country’s current capacity.

By the time this issue arrives on your desk, the virtual International Biomass Conference & Expo will be just around the corner. Pellet and other densified biomass producers qualify for free admission, so be sure to take advantage and join us on this innovative platform—there are nine sessions focused on pellets and densified biomass, so we have lots in store for you.

Subscriptions to Pellet Mill Magazine are free of charge—distributed 4-times/year—to Biomass Magazine subscribers.To subscribe, visit www.BiomassMagazine.com or you can send your mailing address to Pellet Mill Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Back Issues & Reprints Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or service@bbiinternational.com. Advertising Pellet Mill Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Pellet Mill Magazine advertising opportunities, please contact us at 866-746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Pellet Mill Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to asimet@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

4 PELLET MILL MAGAZINE | ISSUE 1 2021

Industry Events »

2021 International Biomass Conference & Expo

March 16-17, 2021 VIRTUAL EVENT

Editorial

EDITOR Anna Simet asimet@bbiinternational.com ONLINE NEWS EDITOR Erin Voegele evoegele@bbiinternational.com

DESIGN

VICE PRESIDENT, PRODUCTION & DESIGN Jaci Satterlund jsatterlund@bbiinternational.com GRAPHIC DESIGNER Raquel Boushee rboushee@bbiinternational.com

Publishing & Sales

CEO Joe Bryan jbryan@bbiinternational.com PRESIDENT Tom Bryan tbryan@bbiinternational.com VICE PRESIDENT, OPERATIONS/ MARKETING & SALES John Nelson jnelson@bbiinternational.com BUSINESS DEVELOPMENT DIRECTOR Howard Brockhouse hbrockhouse@bbiinternational.com SENIOR ACCOUNT MANAGER Chip Shereck cshereck@bbiinternational.com CIRCULATION MANAGER Jessica Tiller jtiller@bbiinternational.com MARKETING & ADVERTISING MANAGER Marla DeFoe mdefoe@bbiinternational.com MARKETING & SOCIAL MEDIA COORDINATOR Dayna Bastian dbastian@bbiinternational.com

The 14th annual International Biomass Conference & Expo unites industry professionals from all sectors of the world’s interconnected biomass utilization industries—biobased power, thermal energy, fuels and chemicals. Produced by Biomass Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop– the world’s premier educational and networking junction for all biomass industries. This event provides the opportunity to meet face-to-face via live private video meetings with industry experts who will offer new technology and solutions to making plants and facilities safely operate at peak capacity and optimum efficiency.

(866) 746-8385 - www.BiomassConference.com

2021 National Biomass Summit & Expo

July 13-15, 2021

Minneapolis Convention Center - Minneapolis, Minnesota

Organized by BBI International and produced by Biomass Magazine, this sister event to the renowned International Biomass Conference & Expo will bring U.S. producers of bioenergy and biobased fuels together with waste generators and biomass aggregators, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. Supported by the attendance of nearly 2,000 industry professionals at Bioenergy Week, the Summit is a can't-miss summer networking junction for all biomass professionals.

(866) 746-8385 - www.FuelEthanolWorkshop.com/Biomass.html

2021 International Fuel Ethanol Workshop & Expo

July 13-15, 2021

Minneapolis Convention Center - Minneapolis, Minnesota

From its inception, the mission of this event has remained constant: The FEW delivers timely presentations with a strong focus on commercial-scale ethanol production—from quality control and yield maximization to regulatory compliance and fiscal management. The FEW is the ethanol industry’s premier forum for unveiling new technologies and research findings.

The program is primarily focused on optimizing grain ethanol operations while also covering cellulosic and advanced ethanol technologies.

(866) 746-8385 - www.FuelEthanolWorkshop.com

Please check our website for upcoming webinars www.biomassmagazine.com/pages/webinar

COPYRIGHT © 2021 by BBI International

Please recycle this magazine and remove inserts or samples before recycling TM

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Window of Opportunity

BY TIM PORTZ

As if to underscore that 2020 would go down as the most unpredictable year in all our lives, a long-sought tax credit for wood and pellet heating appliances was signed into law in the year’s final week. The inclusion of select provisions of the Biomass Thermal Utilization Act (BTU Act) in the massive COVID relief bill came with little notice, and almost before the news was widely disseminated, the entire relief bill—BTU Act provisions included—was signed into law by Donald J. Trump.

This policy victory comes with an asterisk, as commercial installations were left out of the relief package, as well as an expiration date, currently set for Dec. 31, 2023.

While industry advocates are at work to ensure that the full vision of the BTU Act is eventually signed into law, specialty hearth retailers and appliance manufacturers have moved on to the task of raising consumer awareness of the tax credit with the hopes of selling more stoves. Early reports from the field suggest their efforts are already bearing fruit.

After a decade of advocacy to gain a tax credit on qualifying wood and pellet appliances, the broader wood heating category pivots to maximize potential while this window of opportunity remains open. For the inclusion of the provisions of the BTU Act in the Federal Register to represent a victory for wood pellet producers, annual demand for heating pellets must increase appreciably. As obvious as that assertion may be, it does not mean the desired outcome is guaranteed. For this tax credit to move the needle for pellet producers, consumers who otherwise would not have purchased a pellet appliance must choose to do so. A consumer already considering a pellet appliance purchase selecting a more efficient model to qualify for the tax credit does not create additional demand. For the tax credit to meaningfully increase the market opportunity for wood pellet producers, a consumer walking into a specialty hearth retailer without a predetermined idea of which appliance they intend to purchase must leave with a pellet appliance. When that happens, the market-expanding promise of the BTU Act will be fulfilled.

How, then, does the Pellet Fuels Institute leverage this tax credit to increase overall market opportunity for all pellet manufacturers? I think the answer is two-fold.

6 PELLET MILL MAGAZINE | ISSUE 1 2021

First, the Pellet Fuels Institute must position itself as a curator and distributor of information about the tax credit and how it works. Which appliances are eligible? What costs are covered? How do consumers claim the credit on their income taxes and what supporting documentation will they need to keep? Already, we have built a page on pelletheat.org to serve as a repository for answers to these and other questions. Now we need to work hard to keep it current, robust and helpful enough that retailers will see it as a resource worthy of their recommendation to interested consumers.

Next, the PFI must reinvigorate the overall value proposition of wood pellets. It would be hard to deny that the tax credit will increase consumer interest and inquiries about wood pellet appliances, but I think its dangerous to assume it will automatically guarantee an increase in pellet appliance sales. Remember that the BTU Act extends the same tax credit to qualifying wood stove appliances that it does to qualifying pellet appliances, and while most appliance manufacturers and hearth retailers benefit from either sale, wood pellet manufacturers do not. In this regard, the work of putting pellet heating in the most favorable light and extolling its virtues as compared to other fuel types falls to the PFI. Finally, I think it will be critical over the life of the tax credit—however long that may be—to shore up confidence in the surety of pellet supply. While the last two months of 2020 have not yet been captured in the EIA data, it seems all but certain that 2020 set a record (in the life of the report) for overall pellet sales. Additionally, the BTU Act is not the only wind in our sector’s sails right now.

Robust growth in BBQ demand is drawing interest across the sector, and producers are contributing more press time and fiber to their BBQ product offering. The market drivers our sector has asked for have finally been realized, and the challenge of meeting this increased demand starts now.

Author: Tim Portz Executive Director, Pellet Fuels Institute tim@pelletheat.org www.pelletheat.org

Black Pellets in Japan’s Ambitious Plans for Hydrogen

BY LARRY PRICE

In March 2019, Japan released its third Strategic Roadmap for Hydrogen and Fuel Cells. The plan targets reduction in hydrogen production costs and leadership in carbon capture strategies to convert hydrogen from fossil fuels. Investments are flooding in on this plan’s strength.

We are optimistic about the courage and vision that the Japanese nation is showing in the hydrogen economy.

Here in the U.S., officials are projecting a 2028 timeline to commercialize hydrogen as a fuel. It is obvious that Japan is much more aggressive and pushes the envelope in research, development and full-scale production operations. One recent example is the Mitsubishi Heavy Industries steel plant project in Australia, which is using hydrogen instead of coal.

Hydrogen Automobile Market Japan’s top two carmakers have been steadily selling hydrogen fuel cell cars at a loss in California for more than a decade—two car generations. This business model has been valuable to both companies and the Japanese government, based on customer feedback and increased interest in supporting the U.S.’s build-out of a hydrogen infrastructure. These are cars limited to use only in California, where the U.S. has 44 of its 47 hydrogen fueling stations.

The idea of a vehicle or any industrial process that requires burning fuel, such as foundries or agricultural dryers, emitting only water as an exhaust emission is great.

The alternative in the automotive space, electric cars, create environmental concerns associated with lithium and rare earth metals mining and processing.

Hydrogen from Seawater Hydrogen production from seawater has been a commercially viable solution since Iceland experimented with switching its automotive and commercial fishing fleet to hydrogen in the early 2000s. Norway and Finland have seen some success in “at-scale” hydrogen production from seawater. This hydrogen production method is desirable to a nation like Japan, which has seawater ac-

cess in most major population centers. One concern with seawater production is the large amounts of electricity required to perform the process. Norway relies on abundant wind and hydropower, while Iceland once depended on its hydro and geothermal generating capacity to supply clean, renewable, low-carbon electricity for the process.

Currently, hydrogen has a dirty secret: 95% of the world’s supply of hydrogen is generated from steam reforming of natural gas, petroleum, or coal—all fossil fuels. This process releases significant amounts of CO2.

Hydrogen from Pellets We have worked with others in the biofuel and biofuel derivatives market to see how our Zilkha Black Pellets work in biosyngas reactors, where companies typically generate methane and other heavier petroleum replacements that can be converted to hydrogen. Most of these processes are not currently at full production scale. The factor holding many of them back is the variability of feedstock. When different feedstocks, or even the same feedstock with varying particle or different moisture contents are added, the process must sometimes be adjusted significantly to avoid loss of product, equipment and other hazards. This process requires a skilled workforce and advanced safety parameters in the process control units.

Using Zilkha Black Pellets as a base for bioreactors ensures a stable, uniform size, moisture and makeup feedstock to which smaller amounts of varied feedstocks can be added. These pellets cost significantly less to transport than raw biomass ever will.

Hydrogen from biomass is a viable, low-electricity solution, and we are excited to work with companies operating in this space. Using a stable uniform feedstock, especially in the initial full-scale production phases, can mean the difference between a successful project and one that never reaches its goal.

Author: Larry Price NextGen Biomass Technologies lprice@nextgenbiomass.com nextgenbiomass.com

WWW.BIOMASSMAGAZINE.COM/PELLET 7

Business Briefs

PEOPLE, PRODUCTS & PARTNERSHIPS

PHOTO: BRUKS SIWERTELL

Bruks Siwertell expands Enviva’s truck-receiving facilities Bruks Siwertell has secured a truck-receiving system order from Enviva, adding to a range of the company’s technology already operated by Enviva across a number of its sites.

The back-on truck dumper, with receiving hopper and collecting belt conveyor, is designed for Enviva’s wood pellet production plant in Greenwood, South Carolina. The contract also includes modifications to an existing screen tower to accommodate the new truck-receiving system. Enviva’s new truck-receiving system will be delivered in spring 2021 and is expected to be part of its wood pellet production capacity boost at the plant, along with supporting its measures to reduce dust emissions.

CV Technology releases new explosion isolation device CV Technology has announced the release of new explosion isolation device Interceptor-QV. The Interceptor-QV uses a patented system with a differential pressure switch that continuously monitors the pressure drop across the mesh cartridge, alerting operators if buildup of dust occurs on the PHOTO: CV TECHNOLOGY mesh.

The core feature of the Interceptor-QV is the stainless steel mesh cartridge, which is based on the tried-and-true flameless Quench Tubes that CV Technology has been applying for over 25 years. Another patented feature of the Interceptor-QV is an integrated thermocouple. When exposed to the intense heat of a deflagration, it will indicate, via relay, that the system has been involved in an event.

Frank Pellets joins PFI Frank Pellets, a pellet manufacturer located in Mill City, Oregon, has become the Pellet Fuels Institute’s newest fuel manufacturer member.

Frank Pellets was established in the fall of 2008 to utilize the wood waste streams from the adjacent Frank Lumber’s sawmilling operations. The company markets its pellets under the Packsaddle Pellets brand, focusing its sales on pellet retailers in the Pacific Northwest.

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EIA: Densified biomass fuel sales reach 870,000 tons in September The 83 manu(tons) facturers surveyed for Production 1,000,000 the September edition of the U.S. EIA's 500,000 Monthly Densified Biomass Fuel Report had a total combined 0 Heating pellets Utility pellets production capacity of 12.37 million tons (tons) per year, compared Sales 1,000,000 to 11.84 million tons in September 2019.

500,000 Respondents purchased 1.47 million tons of raw biomass 0 Heating pellets Utility pellets feedstock during the SOURCE: U.S. EIA month, produced 800,000 tons of densified biomass fuel and sold 870,000 tons. Production included 173,333 tons of heating pellets and 629,927 tons of utility pellets.

Domestic sales of densified biomass fuel in September reached 224,964 tons at an average price of $173.50 per ton, compared to 237,265 tons at $165.63 in September 2019. Exports in September reached 658,081 tons at an average price of $165.88, compared to

631,871 tons at an average price of $162.67 for the same period in 2019.

Inventories of premium/standard pellets were at 148,848 tons in September, compared to 176,409 tons in September 2019. Inventories of utility pellets were at 377,630 tons in September, compared to 340,472 tons a year prior.

American Wood Fibers buys former Nature’s Earth Pellets plant American Wood Fibers Inc. has purchased the former Nature’s Earth Pellets site in Laurinburg, North Carolina, and will invest $19.5 million to add new capabilities to the facility.

AWF owns and operates 10 production facilities across the U.S., processing over one billion pounds of wood byproducts into animal bedding, pet litter, wood pellets and wood fibers. In Laurinburg, the company will produce wood pellets for fuel, bedding and barbeque markets, installing new equipment to improve the safety, pollution control and overall capacity of the plant.

Drax acquires Pinnacle Renewable Energy Drax Group plc announced on Feb. 8 it has signed an agreement to acquire Canada-based pellet producer Pinnacle Renewable Energy Inc. The transaction will boost Drax’s wood pellet production capacity by 2.9 million metric tons. With the addition of Pinnacle’s 11 sites, Drax will own 17 pellet plants and development projects, with the capacity to produce 4.9 million metric tons of wood pellets annually by 2022.

« Infrastructure

Wood pellets currently account for 26 percent of the Port of Belledune’s exports.

PHOTO: PORT OF BELLEDUNE

10 PELLET MILL MAGAZINE | ISSUE 1 2021

BUILDING OUT FOR

NEW BUSINESS Ports across North America are upgrading facilities, tweaking logistics and increasing marketing efforts to attract tenants involved in the growing wood pellet export market.

BY LUKE LEROY

A

s the North American wood pellet export industry continues to grow, ports on every shore of North America are strategizing to accommodate market momentum and bolster more business. From Georgia to Washington, and from New Brunswick to California, major investments have been made by ports striving to show prospective clients that they have the capabilities and wherewithal to assist in meeting overseas contract obligations.

Port of Stockton Located on the banks of the San Joaquin River roughly 75 nautical miles from inland from the pillars of the Golden Gate Bridge, the Port of Stockton claims the title of fourth largest port in California. Little more than a year ago in December 2019, the port announced that its first wood pellet shipment was successfully loaded onto the M/V Global Serenity—roughly 2,000 metric tons (MT) of torrefied wood pellets—destined for Japan as a trial shipment of Stockton’s planned expansion into the wood pellet industry.

But the port’s movements began long before that trial shipment. “As early as 2016, the Port of Stockton was contacted by several potential wood chip and log shippers, and it’s a market we’ve been chasing since that time,” says Pete Grossgart, marketing manager for the Port of Stockton. “There have been three or four entities that got to the point of picking a site at the port, but ultimately those entities were unable to make the numbers work. As for the future, we’re in negotiations with pellet manufacturers and exporters to locate at the port—it’s early yet, but we’re hopeful.”

Despite the lack of a formal relationship, the port is indeed a formidable suitor for exporters looking to ship wood pellets from its banks. As a potential wood pellet export customer, Stockton offers many suitable amenities. “We currently can offer ‘old school’ solutions for loading and moving pellets, such as portable conveyors, stackers, near- and on-dock storage … including covered storage,” Grossgart says. “However, there are plans to develop a state-of-the-art facility, one capable of handling significant tonnage of a variety

WWW.BIOMASSMAGAZINE.COM/PELLET 11

« Infrastructure

The Port of Stockton made its first-ever shipment of (black) pellets in late 2019, and has been actively working with renewable fuels producers for several years.

PHOTO: PORT OF STOCKTON

of bulk cargoes, with pellets—again, hopefully—being one of the foundational cargoes handled.”

As it currently sits, the Port of Stockton is dual-served with rails from both the BNSF and UP, with switching services provided by the Central California Traction Co. The port is approximately 2 miles from Interstate 5 (I-5), the main north-south artery that services the West Coast, as well as residing within a few miles of I-580, CA-4 and CA-99. Plus, Stockton is less than an hour from I-80, which is the main east-west artery in northern California. “The Port has 15 berths, three licensed stevedores and an experienced ILWU workforce,” Grossgart adds. “Additionally, we have available acreage, depending on the outcome of current negotiations, 100 to 200 if successfully concluded, 500-plus if unsuccessful.”

With a rich history dating back to 1933, the Port of Stockton appears ready and well-suited geographically, logistically and struc-

turally to deliver wood pellets to the front steps of Asia’s growing demand. “Our continued growth adds contributes to the regional economy,” says Port Director Richard Aschieris, in a recent interview with Pellet Mill Magazine. “The Port of Stockton supports over 10,000 family-wage jobs. We made a strategic move to diversify our cargo base and began making focused investments in our infrastructure over 10 years ago.”

Port of Belledune Located in the protected Chaleur Bay, along the northeastern shores of New Brunswick, the Port of Belledune is strategically located near the Northumberland Strait, offering Canada’s Atlantic coast a deepwater facility capable of year-round port solutions.

As a longtime service port of the energy, mining and mineral, agriculture and modular sectors—and previously servicing the for-

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12 PELLET MILL MAGAZINE | ISSUE 1 2021

The fourth largest port in California with much to offer, the Port of Stockton has long sought over wood pellet export customers.

PHOTO: PORT OF STOCKTON

est commodities with solutions for wood pulp, wood chips and lumber—the Port of Belledune’s ventures in wood pellets is still new, yet extensive.

The Port of Belledune has rail connectivity directly on the marine terminals, making it a principal location for an export hub along the eastern coast of Canada. In addition, the Trans-Canada Highway is located just three miles from the marine terminal, accessed via a direct and uncongested travel corridor. The Port of Belledune owns more than 1,000 acres of industrial zoned land adjacent to the port, offering ideal geographic logistics for future development opportunities. All this—with the obvious inclusion of sea-shipping infrastructure—Belledune offers strong consolidation and export hub services for wood pellets.

“The Port of Belledune became involved with wood pellets in 2007, when Shaw Resources opened a wood pellet facility in Belle-

dune, roughly 3 kilometers from the port,” says Jenna MacDonald, vice president of marketing, communications and government relations for the Belledune Port Authority. “Shaw chose the location based on several factors: being next to a sawmill where they could get sawdust, having the ability to purchase and retrofit an existing facility and, of course, being located very close to a seaport.”

In a move to grow with industry momentum, the Port of Belledune built a warehouse for the Shaw Resources’ pellets, and the first shipments left the port in 2008. “Since that time, three more wood pellet customers have started using the Port of Belledune for export, making it Atlantic Canada’s leading wood pellet export port,” MacDonald says. “Shaw Resources, Groupe Savoie, JD Irving (Great Northern Pellets) and GDS all use the Port of Belledune as their export terminal.”

As a serious wood pellet exporter, Belledune took initiative

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« Infrastructure

THE INDUSTRY LEADER IN PELLET MILL

LUBRICANTS

to ensure the port offered superior material handling, storage and ship-loading resources. “QSL is the terminal operator handling all wood pellet exports at the Port of Belledune,” MacDonald says.

“During the past 13 years, the Port and QSL have invested in many different storage facilities and pieces of loading equipment to ensure wood pellets are handled in the best, safest way possible.”

'The Port of Belledune is approaching a milestone that all of the shippers (Shaw Resources, Groupe Savoie and Great Northern Pellets) are part of. We are one vessel away from exporting 1.5 million MT of wood pellets through the Port of Belledune.'

Jenna MacDonald vice president of marketing, communications and government relations for the Belledune Port Authority

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877.303.3134 iblsales@dansons.com GDQVRQV FRP 14 PELLET MILL MAGAZINE | ISSUE 1 2021

Since investing in the wood pellet industry in 2008, the port has seen significant growth in the sector, currently totaling roughly 26 percent of the port’s total export. “During the past 13 years, there has been steady growth, shipping just over 20,000 MT of wood pellets in 2008, and more than 170,000 MT in 2020,” MacDonald adds. “In addition, 2021 will see the addition of a fourth wood pellet shipper and is expected to be a recordbreaking year … with more than 300,000 MT of wood pellet exports projected.

“The Port of Belledune is approaching a milestone that all of the shippers (Shaw Resources, Groupe Savoie and Great Northern Pellets) are part of,”

MacDonald continues. “We are one vessel away from exporting 1.5 million MT of wood pellets through the Port of Belledune.”

More Ports of Note

Port of Olympia Servicing the Pacific Northwest, the Port of Olympia is built upon a 70-acre facility that features complete breakbulk services and a container yard, a 76,000 square-feet on-dock storage warehouse, on-dock rails services by both UPRR and BNSF, and three deep-water berths.

From breakbulk to containerized cargo, and from forest products to livestock, the Port of Olympia has positioned itself as a full-service solution capable of handling nearly any port-transportation service needs. Offering a facility that’s “big enough to offer the services of larger ports, but small enough to serve your customized needs,” the port’s location between Portland, Oregon and Vancouver, British Columbia, is prime for servicing the forestry industry of the Northwest, and potentially, the growing wood pellet market.

Regarding dock facilities and freightmoving logistics, Olympia’s three deepwater berths total more than 1,700 feet, with a load capacity of 1,000 pounds per square foot and direct rail-discharge capabilities. A 140-ton mobile harbor crane, bulk yard handling equipment, front-end loaders and log handles cater specifically to the Port’s forestry clients, as does the bulk-cargo conveyor system. The port also offers easy access to Interstate 5 less than a mile away, a dock-side warehouse and a tug and barge company on-site.

Though local reports indicated that, in 2018, the port was in conversations with a customer intending to ship pellets to Japan, the potential tenant ultimately decided to go elsewhere.

East River Terminal— Port of Brunswick In August 2011, the Georgia Ports Authority, in conjunction with terminal

operations company Logistec, announced a shared investment in the East River Terminal of Brunswick, in an effort to expand its wood pellet export capabilities. By April 2013, tonnage moving through the East River Terminal increased 14% as compared to the same time frame the previous year, reaching nearly 670,000 tons, led by biomass fuels.

In fiscal year 2019, Logistec moved 1.2 million tons of bulk cargo through the East River Terminal in Brunswick, which it reports as 20% increase associated largely with the movement of wood pellets, perlite and peanut pellets.

Strategically located to serve Georgia’s biomass industries, the Port of Brunswick has developed specialized storage and handling facilities specifically for those products, investing nearly $80 million during the past decade to rebuild and modernize the site. New warehouses, an overhaul of the bulk load-up system, construction of a new ship loader, and largely redesigned conveyor system.

Another critical piece of the port’s efforts to be better suited for wood pellet export included the Georgia Ports Authority’s dredging of an additional 6 feet—to a new depth of 36 feet—to accommodate the terminal’s capabilities of handling larger ships for the export of wood pellets.

“With the expansion and the deepening of the channel down to 36 feet, we are capable at this time of moving close to anywhere from 35,000 to 40,000 tons of wood pellets in a vessel,” according to David Proctor, Logistec’s terminal director. “There are economies of scale with the larger-size vessels, and this additional draft allows us to attract a new target market when serving the large-size utility companies overseas.”

Author: Luke LeRoy Freelance writer, Pellet Mill Magazine www.biomassmagazine.com/pellet-millmagazine

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« Domestic

PHOTO: STOCK

STAYING THE COURSE A milestone for achieving the historically elusive parity of biomass heat with other renewables, the BTU Act has finally passed. Now, industry stakeholders must strategize and collaborate to capitalize on momentum.

W

hen the BTU Act was first introduced roughly a decade ago, its rightful passage seemed imminent. Solar, wind and other technologies had already been receiving a federal investment tax credit of 30% for several years per the Energy Policy Act of 2005, and modern wood heat had been inadvertently left out. Surely, an oversight that would be rectified, granting modern wood heat parity with other competing technologies.

That, however, was far from the case.

Year after year since then, the BTU Act was brought before Congress, where it eventually

16 PELLET MILL MAGAZINE | ISSUE 1 2021

BY ANNA SIMET

died. While some grew wary and resolved to dismiss it as a pipe dream, those who staunchly believed in the bill’s purpose and potential continued to rally behind it. And, in December, they finally succeeded. “I think that credit is due to those of us who persisted in the face of industry skepticism and hopeful optimism only to be dashed at the last minute multiple times,” says Charlie Niebling, one of the bill’s advocates largely credited with its passage.

“Lots of people just said to heck with it, but a lot of us didn’t, and the result is a credit worth many tens of millions of dollars to the residential wood heating industry.”

Niebling, partner at Natural Resource

Solutions LLC and consultant to wood pellet manufacturer Lignetics, says there are a number of shortlist items that the industry should immediately focus on in order to maximize the tax credit’s potential. “First, the industry needs to promote the heck out of it to consumers,” he says. “We need to do everything through all means available up and down the value chain.”

Another priority is getting the tax credit extended. “We’re hoping that with this new focus on climate and energy policy, there will be an opportunity to revisit the period of authorization,” he says. “The original BTU Act always envisioned a minimum of five years

to really give the market an opportunity to respond to the policy price signal the credit represents, and grow. We have a similar expectation for consistent support over a meaningful period of time like solar, wind and other renewable energies have had for over a decade.”

Getting the credit extended would up it back to its original 30%. “They added this provision into Section 25D, which was the result of legislation in the budget omnibus bill two years ago,” he explains. “There were stepdown provisions. So it’s now at 26% for two years, then drops to 22% in the 2023 tax year.

And then, unless Congress acts, it will go away after that.”

And, of course, getting the commercial component of the BTU Act wrapped in is another goal. It was excluded this time for a number of reasons, Niebling says, but seems more likely to pass once Congress and the government has recognized and accepted the benefit of the residential credit for modern wood heat appliances.

Finally, he adds, because it’s a new provision of the tax code, industry needs to ensure the guidance issued by the IRS is workable, accurate and helpful. John Ackerly, president of the Alliance for Green Heat, emphasizes the importance of properly interpreting and following the EPA’s efficiency criteria.

Informing Consumers “Much of the guidance the IRS is expected to issue about wood heaters is noncontroversial and will likely be consistent with solar,” Ackerly says. “There is one distinct issue that has plagued this industry in the past: how is 75% efficient at the higher heating value (HHV) defined and how much leeway do manufacturers have to stretch the meaning?”

Congress stipulated that it must be HHV, Ackerly says, but the final language did not say that the EPA list of certified heaters is the definitive way to determine efficiency, although that is almost certainly what the IRS will allow. There is no other consistent, reliable way for retailers and consumers to know which heaters are actually 75% efficient or higher,” he says. “Over the past seven years, there have been a number of bills and extensive correspondence about strengthening

the definition of 75% efficiency and moving wood heaters from section 25(C) to 25(D).

The only method that Congress has referred to is using the efficiencies on the EPA list of certified stoves. No other method has been suggested.”

Tim Portz, executive director of the Pellet Fuels Institute, points out that currently, there are 51 pellet appliances in the EPA wood heater database that are 75 percent efficient or greater. “But just below the 75 percent—the appliances that don’t qualify—there are 19 pellet stoves that are 70 to 74 percent efficient, but these are ones you cannot use the tax credit for,” he says, adding that good retailers will let their consumers know which appliances do and don’t qualify.

While big box stores often don’t have the expertise—an issue that could slightly hinder spread of the word about the tax credit in general—specialty hearth retailers like Martin Sales & Service in Butler, Pennsylvania, have that knowledge and will play a key role in educating consumers. “The challenge the tax credit leaves our industry is informing the end consumer,” reiterates Adam Martin, owner. “We all need to work together to spread the news, because we all benefit from more homeowners heating with wood pellets or wood heat in general.”

Martin views it as a tipping point in making a sale, and has already experienced an impact. Despite only being passed a couple of

months ago, the tax credit has resulted in an uptick in pellet appliance sales. “I have had a few customers who seemed to be a bit hesitant about making a final decision to purchase a pellet stove or wood stove, but informing them about the 26% tax credit seemed to make that decision process much simpler because of the significant savings,” he says.

Another piece of the puzzle is the fuel going into these appliances—balancing production and inventory with market demand, when it comes to wood pellets.

Gauging Demand As is likely the case with many pellet manufacturers, Portz says that upon passage of the BTU Act, he began thinking about what, exactly, the real impact will be. “Will we sell more pellet appliances than we otherwise would have, or will we incentivize those already wanting a pellet appliance to buy a more efficient model? We have to persuade the fuel agnostic people to choose pellet heating, and it matters what our retailers tell them. Does this create a situation in which—outside of being motived by the renewable aspect or feel of pellet heat—it’s viewed as a commodity purchase, a way to cost-effectively heat their home?

“Our members recognize that we have a good thing now, but another question is, when and how does it start to impact overall wood pellet demand? Looking at the data that we’ve

Domestic Wood Pellet Inventory Levels, 2016-2020 700,000 650,000 600,000 550,000 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0

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WWW.BIOMASSMAGAZINE.COM/PELLET 17

« Domestic gleaned from the EIA, the reality is, we’re got a situation where most producers are making as many pellets as they can make,” Portz says.

That’s not to say they couldn’t sell more, Portz is quick to add. “They could sell more, but some can’t get any more fiber, and some are just tapped out in terms of capacity—they enough fiber, but don’t have another press to run,” he says. But producers know better than to make quick capacity investment decisions in reaction to seasonable surges. “Not only is it because it’s tough to hire and train someone and maybe fill a graveyard shift, but you don’t want to have to do all of that just to lay them off months later.”

Unfortunately, Portz points out, there is no way to track how many appliances are sold as a result on the BTU Act. “You can argue it certainly will result in more sales, but this situation exacerbates the lack of visibility producers currently have on appliance sales.”

The Hearth, Patio and Barbeque Association does track shipment data on the primary hearth fuels it represents, including

18 PELLET MILL MAGAZINE | ISSUE 1 2021

pellet appliances, says Emily McGee, director of communications. That information is released in April of each year along with data on other primary hearth fuels, with a limited amount available for public disclosure, she says. According to that data, approximately 60,805 pellet stoves were shipped in 2019, a dip from 2018’s 72,105. While lower, that number only represents appliances shipped to retailers and does not include the number of actual appliances sold.

The uncertainty around that number, Portz points out, could eventually lead to some challenges. “I’m not sure how we’ll be able to determine the number sold as a result of the BTU Act, unless there is a way to obtain that data from the government,” he says.

“Manufacturers know exactly how much fuel is being produced, how much inventory they have, how much they’re paying for inbound raw material, the average wholesale price, etcetera. But they don’t know anything about appliances—the best thing they can use is what they’re told by their retail suppliers.”

Historically low inventory has been indicative of a healthy wood pellet market, data that is tracked and released by the U.S. EIA’s Monthly Densified Biomass Fuel Report.

In August 2016, there was 620,000 tons of inventory on the ground, Portz points out.

“That’s a bad position for producers to be in—at $165 per ton, that’s a $102 million of shrink-wrapped pellets, just sitting there. In comparison, there was just under 195,000 tons in 2020.”

But while lean inventory means less money on the ground and more revenue, it is very much a balancing act—especially with a new catalyst for market growth. “In 2019, in the West, in October there were 45,000 tons of wood pellet inventory,” he says. In November, it dropped to 29,000. That means the rate of production needed to be subsidized by 15,000 tons in a month. December took another 12,000-ton bite out of inventory, and in January, we were at 10,000 tons.”

February finally saw a few thousand-ton bump. “If the weather plays out differently

and we go to zero—if a cold snap hits—with all the inventory in the retail category, we could have a situation where consumers in Washington and Oregon can’t get wood pellets,” Portz says. “We love the opportunity for new appliances to get sold, but as a sector, we have an obligation to ensure we have enough fuel available to satisfy all the demand.”

Portz says that doesn’t necessarily mean there is a capacity issue, but rather, it is perceived as a “shortage” by consumers if they visit several retailers and can’t buy fuel. Recognizing the glass-half-empty nature of this viewpoint, Portz is quick to add that he believes the market will sort it out. He is aware of several producers readying to or currently making investments in new capacity, and the continuing surge in the grilling pellet market is providing manufacturers some leeway to spend more money on fiber that, in prior years, they wouldn’t have thought twice about.

“Up until now, producers wouldn’t spend more than $30 per ton of fiber if the

final product was heating fuel, because they need to find their margin,” he says. “Lots of feedstocks wouldn’t even be looked at because it just wouldn’t pencil out. Now, with what’s happened with the barbeque market, people are looking at all kinds of fiber.”

With all the above under consideration, cheap fossil heating fuel is one more weight to balance.

Fossil Fuels and Carbon Accounting “It’s tough out there—we’ve been struggling in this era of cheap oil, gas and propane,” Niebling says. While that doesn’t look like it will change any time soon, what could make a difference is a renewed focus on an aggressively regulated carbon economy under the Biden administration. “But that cuts both ways—it really will depend on how biomass, pellets and chips, are viewed in whatever carbon accounting scheme becomes the basis for deciding which technologies are on the benefit side of regulating carbon and which aren’t,” he says. “And we know well that there

are organizations and individuals who say that burning biomass at any scale, for any purpose, is bad for the climate, and will be pushing hard on that message.”

Niebling emphasizes that while the focus is on the practical benefit side of having a tax credit and incentivizing consumers, it’s also an important symbolic victory. “Modern, efficient use of wood as a heating fuel is now on par with solar and wind, where it ought to be,” he adds. “It has been overlooked, and we need to take stock in that. There is real value in being able to say that we’re recognized as being worthy of the support of the taxpayers. So, beyond the fact that you can knock $1,000 off a pellet stove, we have credibility and legitimacy in the eyes of government, and that’s important.”

Author: Anna Simet Editor, Pellet Mill Magazine asimet@bbiinternational.com 701-738-4961

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« Markets

Geography of wood pellet mills in Russia SOURCE: WHATWOOD

Russia’s Global Wood Pellet Supply Potential

A

BY MARIA FROLOVA

ccording to official data, Russia is one of the world's largest wood pellet producers, ranking among the top five. The country’s current share in global output is about 6%, and it ranks fourth in terms of exports with a 7.6% share of the global market (Food and Agriculture Organization/United Nations Economic Commission for Europe, 2020).

The Russian wood pellet industry is exportoriented—85% of output is sold to foreign markets. Such dependence on exports determines the quality of wood pellets produced

by Russian companies.

Russian wood pellet manufacturers are currently guided by the requirements of ENplus standards or by contractual technical specifications close to the European standard. As of the beginning of 2021, 57 ENplus certificates have been issued in

Russia (including 51 certificates issued to manufacturers). The exact number of Russian wood pellet producers is unknown. According to WhatWood's estimates, about 500 companies are engaged in the production of wood pellets in Russia. The 40 largest producers account for about 80% of the market. The main wood pellet production hub in Russia is the Arkhangelsk region (ULK Group, Sawmill 25, Region-Les, etcetera.)

The top 10 regions account for 55.6% of the total wood pellet output in Russia.

Russia has substantial potential for further capacity growth. According to WhatWood's preliminary estimates, about 3 million tons of wood pellets were produced in Russia in 2020. The output growth was about 23% year-over-year, ranking only second to the U.S.

Exponential Growth in the Next 10 Years An evaluation of the past five years indicates that the Russian wood pellet industry has rapidly grown. Although the history of wood pellet production in the country dates back over 15 years, it was during the past five years that a breakthrough was made. It so happens that the wood pellet industry in Russia is significantly conditioned by the development of sawmilling. There is a direct correlation: The higher the output of saw timber, the higher the output of sawmilling byproducts—sawdust, shavings and chips, which are used for wood pellets.

Despite rapid development in recent years, Russia still lacks large enterprises with a consistent wood pellet business without integration with sawmilling, for example, such as U.S.-based Enviva or Canada-based Pinnacle Renewable Energy. Although there are many more prerequisites for creating such a business in Russia, opportunity is ripe. According to rough estimates, 15–20% of the volume of harvested timber remains as sawmilling waste in forest depots, especially in Siberia and the Far East.

It seems the first wave of active wood pellet production growth in Russia has ended, as nearly all large sawmills have provided their plants with wood pellet production facilities.

Approximately 75% of wood pellets in Russia are produced from sawmill waste. Future production growth may be driven mainly by small- and medium-sized sawmills. While it is not improbable that one major player will form and, in line with Russian realities, adopt the North American model of doing business (that of Enviva and Pinnacle). There are certain prerequisites, however, as the export of roundwood of coniferous and valuable species will likely be banned after 2022. About 8 million cubic meters of roundwood is subject to the ban. It is likely that investments will be made in the processing of these raw materials and, firstly, production of saw timber. This could provide the market with an additional output of 1.7–2 million tons of wood pellets annually.

CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Pellet Mill Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

20 PELLET MILL MAGAZINE | ISSUE 1 2021

Markets » 3.0

Figure 1: Wood pellet production in Russia in 2010–2020 (million tons)

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State aid can contribute to the more active development of the sector. For example, instruction released by the Russian Federation president on Nov. 6, following a meeting on the development and decriminalization of the timber industry, stipulates that municipal boiler houses switch from fuel oil and coal to biofuels. This provision will be formalized in the new timber industry development strategy, and then a federal program will be formulated for its implementation.

This issue is also being regulated locally in some regions.

Wood Pellet Prices According to WhatWood's Russian Wood Pellet Market Price Review, there was a significant decline in prices for wood pellets on foreign markets in 2020, which was conditioned by low demand, full warehouses and the start-up of many new production facilities. The decline in prices on foreign markets was offset by the weakening of the

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Russian ruble against the U.S. dollar and the euro. Thus, the average annual ruble to euro exchange rate increased by 15% in 2020 compared to 2019, and by 30% if measured December-to-December. Along with that, a so-called "deferred demand" may be observed in 2021. Starting from March 2020, export prices in Russia were dropping by 5–10 euros ($6-12) per ton every month. By December, the decline totaled almost 40% compared to the beginning of the year.

The average price for a ton of premium quality wood pellets exported on FCA St. Petersburg terms was 115.5 euros back in January 2020. By December, it ranged between 65 and 75 euros per ton, averaging 70, and even sinking to 60 euros per ton. As explained by market participants, the price of 60 euros reflects the real current cost of wood pellets for large shipments, while smaller quantities of goods can be occasionally sold at higher prices in a range of 75–85 euros per ton. The reasons for the continuing decline in prices

10% Figure 2: Sources of raw materials for the production of wood pellets in Russia

15%

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Other source of raw materials Sawmill waste supplied by other enterprises Own sawmill waste

75%

are both the complete availability of wood pellets to European consumers and the current weather conditions. Continuing the trend of the previous year, autumn and winter were abnormally warm for the usual level of consumption in the wood pellet market.

As for the demand from Europe, Russian market participants are noting the almost complete absence of it. Wood pellets are shipped in this direction only by major market players such as CM Biomass. Thus, CM Biomass has been making record onetime shipments of 32,000–35,000 tons of wood pellets almost every month since June 2020. The company continued this trend in January 2021. In total, CM Biomass shipped 744,000 tons of wood pellets at the Sea Port of St. Petersburg in 2020, which means an increase of more than 65% compared to 443,500 tons recorded at year-end 2019.

Smaller enterprises note the market lacks desired stability—shipments are occasional and in small batches. One port reports there were no shipments of wood pellets at all in November. In addition, there was a delay in contracting procedures from September (the normal beginning period for entering into new long-term contracts). At the moment, long-term contracts are "postponed" until Q1 2021.

The prices in the market are determined by the weather conditions in Europe. The second wave of COVID-19 also exerts a slight impact, as it contributes to limiting industrial production in Europe. According to market participants, however, weather conditions are still the key factor. In addition to weather conditions, Russian wood pellet producers are under the influence of output growth in other exporting countries such as the U.S. and Canada. In addition, some European countries, such as the Czech Republic, are significantly intensifying wood pellet exports. Shipments from the country amounted to 102,000 tons in Q2 2020, which is 16% more than in Q2 2019 and 1.6 times more than in Q1 2020.

Clients are constantly increasing wood pellet quality requirements that must be confirmed by the availability of relevant certificates. One of the ways to develop the wood WWW.BIOMASSMAGAZINE.COM/PELLET 21

« Markets pellet market may be disintermediation. As market participants note, more and more contracts are being executed directly between producers and consumers, which helps reduce the final price. One of the limiting factors for such transactions, however, is that companies only have operational warehouses for receiving and shipping cargo, which are not intended for long-term storage of goods.

To be successful, companies need to improve the efficiency and flexibility of wood pellet production and logistics, build a buffer warehouse for raw materials and finished products, and comply with increasingly stringent European certification requirements.

Despite the near-absence of demand from European consumers, the market is witnessing the commissioning of new production facilities and expansion of wood pellet lines. Facilitating that is the growing rubleto-euro exchange rate, making it possible for companies to gradually reach positive

profitability values. One of the enterprises, which reduced output by three times during the pandemic (from 3,000 to 1,000 tons), increased it to 1,400 tons in September and was planning to reach 2,000 tons in October.

Another producer plans to put into operation a pellet wood line that will increase capacity by 1.5 times. Amid developments like these, other companies are continuing to operate and sell products at a loss since the complete suspension of production will lead to even greater losses.

Prices: Short-term Expectations According to WhatWood's estimates, spot prices for Russian industrial wood pellets will soon range between 65 and 80 euros per ton. The lowest possible price for this type of wood pellets can reach 50 euros per ton.

Prices may increase slightly in Q1 2021 to average 75 euros per ton.

Remarkably, a large volume of Russian

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premium quality wood pellets (with ENplus A1 quality certificates, relevant confirmation from Incolab and SGS, as well as with Sustainable Biomass Partnership/Forest Stewardship Council/Programme for the Endorsement of Forest Certification) are sold in Europe in the segment of industrial consumption. That is, they are bought and consumed by energy corporations such as Ørsted, Stockholm Exergi, Fortum and Drax at 70 euros per ton (on FCA St. Petersburg terms). These same wood pellets could be sold by Russian producers in the private consumption segment of European retail at a price of 200–250 euros per ton since they conform to the required quality and specifications. More and more producers are offering 15- to 20-kilogram (33- to 44-pound) packages.

Not all large Russian wood pellet suppliers are ready to lengthen the sales channel, develop logistics in target markets, rent warehouses and offices, invest in branding and packaging, etc. to transition sales from industrial to private consumption.

Based on WhatWood's estimates, changes in prices, as well as significant changes in demand, are not likely in the near future. Spot prices will depend on weather conditions and how quickly the current surplus of wood pellets will be consumed by customers. Moreover, lack of demand leading to lower production profitability, as well as the potential for no positive price dynamics but increasing competition from Russian producers and European, American and Canadian industries, may force small-scale wood pellet enterprises that cannot afford to produce products at a loss to suspend and completely cease operations in the near future.

Notably, prices for long-term contracts will also decline in 2021. One of the major producers has announced a cutdown of its November/December 2020 price starting in January, by 5-10 euros. Additionally, there were reductions in volumes or complete terminations of purchases under long-term contracts (when allowed), as well as a downward revision of price conditions in the autumn and winter of 2020.

Along with the decline in the FCA price for wood pellets, there is an increase in freight charges for them. Therefore, if freighting a vessel to deliver to a Denmark port cost about 16 euros per ton in July 2020, then the cost rose to 21 euros by November, and to 23–24 euros per ton by December. As a result, the freight price increased by 8 euros per ton, or almost by 1.5 times over six months.

Based on market participant expectations, wood pellet demand can fully recover only by the beginning of preparations for the heating season of autumn and winter 2021–‘22, particularly by September. That hinges on whether active consumption of wood pellets will be accompanied by the stabilization of subzero temperatures. While this consumption will primarily be met by the current stocks, as customers' warehouses are full, it will not be possible to soon resume the usual volume of exports. At the same time, market participants are observing a rise in both prices and consumption of wood pellets within the country.

Russian wood pellet producers may feel price pressure from European consumers. Due to increased competition in the domestic market because of the commissioning of new production facilities, as well as the growth of the ruble-to-euro exchange rate, Russian enterprises have advantages over European manufacturers that are below the breakeven point already and cannot afford to reduce prices (the selling price of 110–115 euros per ton of industrial wood pellets (FOB Baltic ports) will result in negative profitability of their production).

Meanwhile, Russian producers are noting that they have reached positive profitability values, thanks to the growth of the rubleto-euro exchange rate.

New Production Facilities Intensify Market Pressure Greater than 1.1 million tons of wood pellets are scheduled to be commissioned or expanded in 2021. The largest project is that of Luzales, which will increase its capacity to 180,000 tons of wood pellets in Komi, the village of Chovyu. The start-up of the

facility was previously scheduled for 2020.

In total, production capacity of Russian enterprises increased by 670,000 tons in 2020. Another 850,000 tons of capacity were announced, but not put into operation.

One of the largest production facilities commissioned in 2020 is a wood pellet plant owned by RegionLes Group in Arkhangelsk, with an annual capacity of 80,000 tons. In the coming years, it plans to build a sawmill with a feed capacity of 350,000– 500,000 cubic meters of raw roundwood at this site, and modernize the wood pellet shop to increase its annual capacity to 100,000 tons.

Author: Maria Frolova Analyst, WhatWood Maria.frolova@whatwood.ru www.whatwood.ru

Figure 3: Weighted average spot, medium-term, and long-term export prices for premium quality wood pellets (FCA St. Petersburg, in 1-ton big bags), euros per ton.

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€ 140 € 130 € 120 € 110 € 100 € 90 € 80 € 70 € 60

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« Spotlight: Baum Pneumatics

By Ehsan Tootoonchi

Explosion Safety, Fast Recovery Design Approach

Baum Pneumatics high-efficiency cyclone PHOTO: BAUM PNEUMATICS

Along with passive preventive measures, fast recovery after a controlled explosion incident should be a top priority in engineering design criteria of pneumatic conveying devices. Passive strategies are preferred when it comes to explosion safety scenarios, as they are automatic in nature and do not require an action from other parts of the system. For example, Baum Pneumatics Fire Locks (also known as isolators) benefit from this strategy to stop a flame front coming into the feeder from any direction. This bidirectional passive isolation is the result of three main design parameters: close clearance between rotor vane tips and feeder body, multipocket isolation, and optimized vane thickness. All three parameters are passive methods and do not require a trigger event.

Passive prevention and fast recovery criteria are also applied to the Baum Pneumatics high-efficiency cyclone design. High-efficiency cyclones separate dust particles from air flow by taking advantage of centrifugal forces. This unique design eliminates the need for any moving parts and results in a low-maintenance dust collection approach. With advancements in engineering tools, highly efficient cyclone designs can deliver collection efficiencies equal to baghouses.

On the other hand, baghouse design requires a buildup of fine dust to act as a filter. As a result, it separates and stores the fine particles inside, which contrasts with a cyclone design that has a constant outflow of fine particles separated from the airstream. From a fire safety point of view, fine particles for any given material have a higher dust deflagration index (KSt) value due to higher surface area and better surface chemistry. Therefore, the severity of an explosion in a cyclone is less compared to baghouse design. In addition, due to the filtering mechanism, baghouse design carries significantly more fine dust (fuel) than cyclone design, which can become suspended in air with any vibration or impact.

Handling accidents and mishaps in a safe and efficient way is part of a well-thought-out strategy, especially in an environment where efficiency matters and interruptions can be costly. A key criterion to ensure fast recovery in a potential dust explosion is ensuring that the pressure buildup remains well below the enclosure strength or Pred, which can be achieved by effective venting calculation. In addition, the placement of the explosion vents should reduce or eliminate the back draft and reintroduction of oxygen into the enclosure.

Venting calculations are in accordance with general guidelines from standards such as NFPA 68 or VDI 3673. Baum Pneumatics 24 PELLET MILL MAGAZINE | ISSUE 1 2021

computational fluid dynamics (CFD) calculations on dust explosion can show the effectiveness of such calculations and provide alternative ways of achieving higher safety based on specific hazard scenarios.

To simulate a worst case explosion scenario in a high-efficiency cyclone and test the effectiveness of venting design, the following extreme conditions were selected: ● Particle concentration of 1 gram per liter with an ideal distribution ● Fine wood flour particle size (3-80 micron) ● KSt 100, 200, 300 (Bar-m/second) ● Pmax of 8.7 (bar) ● Ignition source placed at the center of dust cloud It should be noted that in real-world events, concentration varies inside the cyclone, with particles moving close to walls at a high concentration while the middle section has low particle concentration. Ignition sources in these calculations also insert a high energy amount to ensure an explosion that might be a rare event in a real-world scenario.

Chemical composition of wood flour was assumed to be a mixture of methane, hydrogen, carbon dioxide, water, ash and carbon in different phases of solid, liquid and gas. Mass fraction of chemicals, along with reaction rates, were adjusted to achieve the same KSt and Pmax (maximum explosion pressure) measured in a Siwek explosion test chamber according to NFPA 69 and ASTM-E1226. Explosion vent panels are designed to pop open at 100 millibar (mbar) of pressure. To capture the time of vent activation, a very refined time step of 10e-6 sec is used, allowing us to visualize and track the pressure wave originating from the point of explosion. This 100 mbar pressure front is shown by a 80-100 mbar contour and is an indication of explosion panel activation (pop) when the pressure front reaches an explosion panel. After vents are open, high-pressure gases can exit the enclosure.

Gas velocity and pressure inside the cyclone are monitored along with the pressure exerted on walls. The max wall pressure during simulation will be the basis of finite element analysis to ensure that the design can withstand the max pressure due to explosion.

To see a timestep video of this explosion simulation and more information, please visit: www.baumpneumatics.ca/explosion-venting.

Author: Ehsan Tootoonchi Mechanical Engineering 604-445-3394 etootoonchi@baumpneumatics.ca

« Spotlight: ButlerWood

By Pellet Mill Magazine

PHOTO: BUTLERWOOD

Quality, Consistent Cook Wood When Roy Butler and his two sons founded ButlerWood 18 years ago in Seguin, Texas, their vision was to deliver a quality and consistent wood product while providing exceptional customer service, an imperative component of the growth and success of the small, family-owned business.

Having helped expand the business while attending college, brothers Austin and Jake Butler have since taken over. While the company’s mission and values have remained steadfast over the years, its capabilities and offerings have evolved. “We started out supplying barbeque restaurants with quality cook wood,” Austin Butler says. “About four years ago, we began selling wholesale cook wood to pellet manufacturers and others making retail wood products. We’ve really found success in this by doing our own distribution to these facilities with a trucking company.”

And, Butler says, the company has moved toward land clearing to get closer to the woods, enabling it to secure large tracks of cook wood product. “We clear it ourselves, and then distribute it ourselves directly to the people who are making retail product or cooking high-end meat with it,” he says. “We knew we needed more product than what we could get from our local loggers and cutters, and it was apparent that in order to do that, we needed more control, and we needed to come up with better processes that work for this wood type.”

That wood type is mesquite, which is difficult to cut down and ship due to its twisted, crooked nature. And, Butler adds, pecan is often unreachable in most weather conditions throughout the year— 26 PELLET MILL MAGAZINE | ISSUE 1 2021

that is, except for in Texas. “You can’t get to pecan when it’s raining—it grows in wet country—but here, it’s fairly dry and we can get to most of it,” he says.

Demand for mesquite and pecan has been rocketing, Butler says. “On the pellet side of things, we have seen about a 40% growth each year, for the past three years. More people are using cook wood in their pellet grills at home, and that’s really where the growth is.

We’ve been supplying a lot of the bigger names in the cook wood pellet market.”

Paralleling ButlerWoods’s efficient distribution model is price consistency, Butler emphasizes, a quality of particular importance to pellet producers with typically tight margins. “By shipping it on our own trucks, we pretty much ensure the price of this wood is flatlined—oftentimes, it’s inconsistent with trucking, especially long distances.”

Butler says in addition to new customers producing solely BBQ pellets and those making heating pellets looking to diversify their offering, even appliance manufacturers are looking to get into the game. “We get calls from companies saying they developed a BBQ pellet smoker, and now they want to develop a line of pellets to go with it. There are a lot of new players in this game.”

ButlerWood has the raw product, distribution and price stability, he reiterates. “We know cook wood, and if the pellet mills are making a cook wood product, they can be assured they will get the best product from us.”

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