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Friday
Oct212016

For This Wood Pellet Manufacturer, Small is Beautiful

Erik Carlson remembers exactly where he was when he got the idea of getting into the wood pellet manufacturing business.

It was September of 2015 and he was emptying a bag of pellets into the stove at his home. He looked at the bag and noticed that the pellets were made in — Canada. Canada? Huh, he thought, and we’ve got so much low grade wood in Maine.

That epiphany launched Carlson, a forester and logger who lives in Edgecomb, on a year-long quest. Now it’s October 2016 and he’s a couple of weeks away — he hopes — from going into production of wood pellets.

Erik Carlson's Pellet Mill Building“We’re pretty much in the final phases of getting up and running. We’re fine-tuning the machine and putting in some last minute upgrades. We’re making pellets. We had a batch tested at the University of Maine. We’re really close to where we need to be, grade-wise,” he said.

Carlson’s reasoning behind adding pellet mill owner to his forestry and logging businesses, known as C&L Forestry, was simple. He looked around and saw paper mills closing, biomass electrical generators shutting down. Outlets for the sale of low grade wood were drying up. “Some of it was to create my own market” for the low grade wood he harvests, he said. Diversification too was a factor.

“And I figured, well, I’ll try to be part of the solution. Maybe the answer is to make more smaller biomass-using facilities,” he said.

It hasn’t been easy. He’s been working pretty much non-stop for months, getting financing, lining up land, building a building, going to China to check out a wood-pellet manufacturing system, getting it shipped over, getting it set up.

“The biggest challenge was getting the funding and just doing it all by yourself. You have to learn a lot about everything as you go. It’s been 14 months of problem-solving, business-wise,” Carlson said. “Meanwhile I’ve been trying to keep up with management plans, keep timber sales going and trying to keep cutting some wood on my own jobs while I’m getting this together. It’s been pretty much seven days a week for quite a while.”

Carlson figures that when his operation in the Boothbay Industrial Park gets going and he hires a person to run it that “this will be self-sufficient” and he can breathe a little easier.

He’s looking to hire one or two people right away to run the pellet mill and another two in a couple of years, if sales take off. His production target is two to three tons of pellets a day, or about 15 tons a week.

Carlson said the project has, so far, provided quite an education, in everything from global trade to how to arrange shipments to the U.S. from a foreign port. The most interesting part was traveling to China to visit the factory where they manufacture the equipment.  “That piece opened my eyes greatly on what global commerce means and the value of it. That was pretty interesting. It showed me how much we rely on each other,” Carlson said.

Carlson said cost was the major factor in his decision to purchase a Chinese-made pellet system rather than from a U.S. manufacturer. He spent $111,000 for the system, including the pellet mill, debarkers, dryers and so on. “My whole project, including the land and the building I put up comes in at half of what just the equipment would have cost domestically,” he said. When all is said and done he’ll have $600,000 to $700,000 invested. When someone asks about why he went overseas for machinery, he points out that most of his investment was local, in land and the building. And, he adds, the numbers wouldn’t have worked if he hadn’t.

“The rule of thumb is if you want a plant to produce a ton of pellets per hour you need to invest $1 million. By going overseas and importing the machines it allowed me a starting point with the capital available to me,” he said.

The most frustrating thing he’s encountered is trying to set a schedule and stick to it. Setting it is fine, but with so many moving pieces sticking to it is darn near impossible.

When he’s up and running, Carlson’s mill — the company will be known as C&L Forestry Wood Pellets — will produce about three tons a day. By comparison it takes 30 tons to fill a tractor trailer and some of the bigger pellet mills in the state can churn out 300 tons a day. “I wanted to go small, to keep things at a manageable scale where the numbers work and you’re not looking at a huge land base to keep this mill going,” he said.

He plans to use mainly low grade wood from his own logging operations or those he handles for clients and to market the product in the Boothbay area to keep transportation costs down. He said he’s already getting interest from potential customers. “The benefit that I have here right on the coast with these peninsulas there’s a lot of people that really like to buy local,” he said.

In mid-October Carlson was still tweaking the system and fine-tuning the pellet production process. You might think that would be easy. After all, what are wood pellets but ground up wood fiber that’s been pounded into pellets?

Well . . . it’s not quite that simple. “I underestimated the length of the learning curve for sure. It’s easy to make pellets, it’s not easy to make really, really good ones. The physics behind it is really easy, but fine-tuning the specifics to make really high quality is where the learning curve comes in. It’s trial and error,” Carlson said.

Nationally accepted standards for premium pellets include things like durability, density, ash content and residual dust, said Carlson. He had a batch of pellets tested at the University of Maine. The values were close, but in mid-October he was still grappling with the dust issue. “There was a little too much dust. We needed to drop the moisture content prior to the pellet press so we get a little more hardness and density.”

When Carlson gets up and running his mill will join four other big pellet mills in Athens, Corinth, Strong and Ashland and a fifth smaller mill in Patten.

The big mills market throughout the northeastern U.S. through big box stores like Wal-Mart andPellet Manufacturing Equipment Tractor Supply and the building supply companies, said William Bell, the executive director of the Maine Pellet Fuels Association. “Small producers are not going to change the larger equation, but they do fine in the local market,” said Bell, adding that they “remind people . . . that every time they buy those pellets they’re helping out a local businessman. And that’s one of our industry’s selling points right now.”

Like any energy industry, it’s not for the faint of heart.

Two winters ago, when oil prices were high, Maine pellet mills couldn’t keep up with demand. Demand melted in last winter’s mild weather, forcing mills to shut down or drastically limit production. Some had to store leftover product over the summer.

Heading into the winter of 2016-17, retailers and homeowners with pellet stoves are placing orders. “The question is, how well will the demand hold?” asked Bell. That may depend largely on the weather, as well as on the price of oil. It’s still slightly less expensive to heat with oil than pellets, according to state statistics, but in early October the difference amounted to $1.66 per million BTUs.

Bell said what would really boost the industry is if homeowners convert to central heating pellet systems. Rather than using three or four tons in a small pellet stove, they’d be burning 10 to 12 tons, he said. “That’s necessary if this industry is going to meet the promise we think it has,” he said.

The Finished ProductAt this point Carlson isn’t thinking about that. He’s too busy with his production line. “Everyone wishes me great luck on the project,” he said. “Some people say I’m crazy, others that I’m a genius. But what are the options?” he asks.

 

 

Joe Rankin writes on forestry, nature and sustainability. He lives in New Sharon.