By Greg Amos, Staff Reporter
Wednesday December 16, 2009

Timber supply solutions are on the horizon for a proposed bioenergy plant, after a lengthy meeting last Tuesday (December 8) at the Tumbler Ridge town hall.

Houston, Texas-based Zilkha Biomass Energy is proposing to build a plant that could process up to 500,000 cubic metres of wood per year into wood pellets bound for export markets in Europe. The meeting allowed the company to better understand the forestry tenure process, and opened doors to new sources of wood fibre, explained Mayor Larry White.

“If everything goes the way they want, Zilkha would like to have a plant up and running by the end of 2010,” he said. The Tumbler Ridge plant could employ 60 to 70 people, and another 30 or 40 at the timber supply end of the operation. Zilkha would invest between $20 million and $40 million in the community, White said. But tenure, cost and environmental issues would need to be addressed first.

In attendance at the meeting were three representatives from Zilkha, two from the Peace Forest District, White, councillors Darwin Wren, Jerrilyn Schembri, and Rob MacKay, and McLeod Lake Indian Band chief Derek Orr.

Zilkha would require at least 100,000 cubic metres of wood to start the proposed plant’s operation, and is looking for a 10 to 15 year timber supply. Partnering with the McLeod Lake band could allow the company to utilize the band’s tenure, keep band members employed through logging, and satisfy a First Nations engagement component of the project, explained White.

The Peace Forest District is now undertaking a review of available fibre and will factor in Zilkha’s tenure needs, as outlined in a letter of intent the company plans to submit. Of the 1.6 million cubic metres of tenure available to be logged in the district, long-term licenses cover about 800,000 cubic metres. The review should be complete by April, and Zilkha’s letter may put the company in a better position to gain a long-term tenure, White said.

Standing timber affected by the pine beetle is the preferred feedstock for the plant, since the wood is considered unmerchantable timber. After withstanding two years of beetle infestation, trees in pine beetle infested cutblocks are generally seen as unusable for dimension lumber.

“A lot of companies have no use for the pine beetle wood – using dead wood doesn’t work too well in a sawmill,” commented White.

At the meeting, the forest district indicated there are 143,000 hectares of pine beetle-affected wood within just a 50-kilometre radius of Tumbler Ridge. Zilkha indicated wood found within a 120-kilometre radius of the plant, whether dead, under “red attack”, or freshly infested, could be economically viable to harvest. The plant would not be limited to using pine trees as a feedstock, but it’s expected they would comprise the majority of the input. Residual logging debris left on the ground is not usable in the wood pellet plant.

A community forest being pursued by the District of Tumbler Ridge could also be a source of up to 20,000 cubic metres of wood. The district had lined up community forest license in 2006, but that summer’s forest fires had burned the proposed area. Word about a new community forest license, which would supply roughly 180 cubic metres per hectare, could come to the district within the month, White said.

A provincial incentive called a receiving license is another timber supply option, one that would allow Zilkha to remove unmerchantable timber from another tenure holder’s area, without affecting their annual allowable cut (AAC).

Zilkha CEO Jack Holmes cautioned the plant is only a proposal at this point. The company has already investigated potential sites in Quebec and Ontario, and is now looking at locations along the CN rail line to Prince Rupert. The differences in transportation rates at points along the line are not significant, and the loadout facilities used by local coal mines are seen by Zilkha as an asset, White said.

Strong markets for the pellets exist in Denmark, the Netherlands, and Germany, where they are used to replace coal in power plants, Holmes said.

“The kinds of coal being substituted is lower-quality, high-sulfur coal, or lignite coal,” he said. “We’re hopeful and optimistic the same thing will happen in North America, but it hasn’t happened yet. The European market is probably 20 years ahead of North America in renewables.”

“We’re looking to utilize an underutilized asset,” he said. “If you can make it into a carbon-neutral fuel and put people back to work, it’s a win for everybody.”

Holmes said a power generation facility could be included with the pellet plant. That local source of electricity could cut down on blackouts that occur due to Tumbler Ridge’s location at the end of two long transmission lines, White noted.

Two other bioenergy proposals remain on the District’s drawing boards: a biodiesel plant that would require 1.2 million cubic metres of wood per year, and a power generating plant that would require 200,000 to 300,000 cubic metres of wood per year.

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