Talk about the global economy.
The Port of Wilmington may reap the benefits of environmental regulations in Europe that have spurred a huge increase in demand for forest byproducts from the southeastern United States.
Wood pellets, often used in wood-burning stoves, are taking the place of coal in many European power plants with the aim of reducing their carbon footprint.
“Without a doubt the demand for this product is being driven by clean energy requirements in the U.K. and Europe, and the Atlantic Seaboard is economically advantaged in supplying the pellets,” said Jeff Miles, acting executive director of the N.C. State Ports Authority.
European demand will continue growing for many reasons, from business to policies and regulations, said Daniel Saloni of the Department of Forest Biomaterials at N.C. State University.
Consumption of pellets is expected to grow from 8.3 million tons in 2009 to 17 million by 2015, according to materials in a study by Saloni.
U.S. production is expected to increase from 3 million tons in 2009 to 10 million by 2015.
That demand is expected to boost production of the pellets throughout most of the South Atlantic states as more companies build plants in the region, Saloni said.
Wilmington hopes to get in on the business.
The N.C. State Ports Authority is planning facilities at Wilmington and Morehead City that would receive, store and transfer wood pellets to ships. Total cost of the facilities would run $100-$120 million.
There are several options on the table for financing the wood pellet facility, said Danny McComas, chairman of the authority's Board of Directors. One is joint financing with a company and another is to go to the bond market, he said.
McComas said the ports hope to get shipments of pellets from a new plant planned at Sims, N.C., by International WoodFields. Production there would total 300,000 metric tons a year, Saloni said.
Virginia, however, has the jump on pellet production in the Southeast with 13 plants, followed by Georgia with seven, Florida and South Carolina with four each and West Virginia with three, according to research by N.C. State.
Are North Carolina and its ports too late to the game?
Enviva L.P. operates a plant in Ahoskie and is completing one in Northhampton, both in North Carolina. They'll produce 350,000 and 500,000 metric tons of pellets, respectively. Enviva broke ground last summer for a plant at Southhampton, Va., that also would produce 500,000 metric tons.
And in 2011, the Bethesda, Md.-based company also acquired deepwater facilities in Chesapeake, Va.
That affects prospects of North Carolina ports, because Enviva ships or will ship production from its three Southeastern plants through Chesapeake.
But there's still plenty of time for Wilmington to get its chunk of the business, port officials said.
“We are not late to the game. We have a very high quality supply of trees and the economics of transporting wood fiber a great distance is challenging,” said the N.C. ports' Miles, adding that the natural flow of wood to a port is within 150 miles.
The planned wood pellet facilities are important for a couple of reasons, Miles said.
“It's going to have a great positive impact on employment throughout the supply chain – cutting the trees and transport to plant, then to the port,” he said.
Miles also said that handling wood pellets at Wilmington “doesn't require some of the other infrastructure upgrades that other uses might.
“We don't need to deepen the port or revamp the transportation infrastructure,” he said, adding that pellets would be received by rail.
“There are going to be reception facilities to unload rail cars, a network of environmentally friendly, dust-free conveying systems to put into a storage facility. There will be another system of conveyors to reclaim the pellets and send to a ship loader.
“Central is the storage facility, which more than likely will be a series of domes to handle and store,” Miles said.
Handful of ports
Miles said there are only a handful of East Coast ports – in Virginia and Georgia – now shipping pellets.
“Some 31 export wood pellet mills are in various stages of development or operation in the U.S. South, all looking to load and ship a potential 12 millions tons of product annually from limited port facilities,” writes William Perritt, executive editor of the Wood Biomass Market Report.
In Georgia, for example, wood pellets are exported from the Port of Brunswick, said Edward Fulford, spokesman for the Georgia Ports Authority.
In 2012, Georgia ports handled 225,095 tons of wood pellets.
That figure has climbed steadily for the past three years, from 136,809 tons in 2010.
“Most of our wood pellet exports are bound for Northern Europe, where the cleaner-burning pellets are used to improve emission at power plants,” Fulford said.
The ports' McComas sees the pellet business “as something to help jump-start us,” for the ports to take advantage of other opportunities.
“I don't think we are late” at getting into the pellet export business, he said.“This is the very right time.”