Don’t panic: Popular pellets plentiful

Bangor Daily News
Posted July 24, 2008, at 12 a.m.

EAST CORINTH, Maine&nbsp- There are 300 tons of waste wood in enormous piles outside the entrance to the Corinth Wood Pellets LLC, leftovers from construction sites and sawmills.

In a new storage facility nearby, 1,000 tons of sawdust air-dries before going through a series of electric dryers.

Drums turn, augers drill, and while the smell of Christmas hangs heavy in the air, wood pellets are formed — tiny bits of compressed sawdust that will burn 20 times cleaner than firewood and cost less than oil.

George Soffren, general manager, said that stove manufacturers may have greatly underestimated their sales of pellet stoves this year, but pellet manufacturers are handling the demand for the fuel quite easily.

“In the short term, the demand for pellets is like a gold rush,” Soffren said recently. “But we could sell more pellets than we are making. The demand is there. The problem is that people are panicking and hoarding both stoves and pellets. We’ re getting calls from Connecticut, New York, New Jersey.”

Matt Bell of Northeast Pellets LLC in Ashland said people are unnecessarily buying enough pellets for two to three years.

Soffren said that retailers are also hoarding. “The retailers are panicked and are overbuying. I think they are unnecessarily stocking up, and I expect them to call in October and cut back their winter orders.”

There are three wood pellet manufacturers in Maine — Maine Wood Pellets Co. in Athens is the third — and at each location, business is booming.

At Athens, co-owner Bruce Linkletter told consumers at a recent Pittsfield energy forum that his company just began production in May and it’ s already looking at expansion.

“Not in our wildest dreams did we think this would be as big as it is,” Linkletter said. Maine Wood Pellets is working three shifts, hand-bagging pellets. “We can’ t even begin to scratch the surface of the demand,” he said, but agreed with Soffren that hoarding is definitely going on. “We’ re producing 200 to 350 tons a day.”

The demand isn’ t just coming from U.S. consumers. Firms in the United Kingdom are already sourcing wood pellets in Maine, Linkletter said.

“I see the demand continuing throughout the winter, and then in the spring, when stove manufacturers begin to catch up on their orders, it will increase again,” he said.

There’ s a big difference right now between the cost of heating with wood and heating with pellets, Soffren noted. “It costs two and a half times more to heat a house with oil rather than pellets,” he said.

But Soffren cautions that homeowners are unable to obtain pellet stoves because manufacturers did not increase production fast enough, and Corinth Wood Pellets, which began production in April 2007, cannot sell all of its pellets in Maine.

“We sell about two-thirds of our pellets in Maine,” Soffren said. “That means we are displacing 10 million gallons of oil. I love that. With oil, for every $1 spent, 85 cents leaves the state. This year, Mainers will save $20 million by switching to pellets, and they are grown, processed and sold all within our borders.

“The pellet industry is a gigantic economic engine in the state of Maine,” he added, “but it is still very young and there is tremendous potential.”

Pellet stoves may not be the right fit for all consumers who face the heating dilemmas of the coming winter.

When comparing pellet stoves and conventional oil furnaces intended for home heating, pellets emit 50 times more particulate matter than oil, Chris Jackson, vice president of the Maine Oil Dealers’ Association, said Wednesday, citing data from a recent study commissioned by the association.

“Pellet stoves compare poorly to oil heat systems,” Jackson said.

Meanwhile, the three pellet manufacturers in Maine keep growing their markets. Of the three, Northeast Pellets in Ashland has been in business the longest, starting production in 2005. Matt Bell, co-owner and president, said the company is on target to produce 20,000 tons of pellets this year and hopes to increase production within the next few years to reach a goal of 40,000 tons annually.

Bell said his company sells only to retailers and “we are very, very busy. We aren’ t taking on any new customers.” His mill is running 18 hours a day, six days a week.

But Bell said no one needs to worry that the pellet supply will dry up, and hoarding is unnecessary.

“People are buying a two- to three-year supply,” he said. “I think they have a bad taste in their mouths because of oil prices and they think that pellets will do the same thing. But in the past five years, oil has gone up, what, 200 percent? We’ ve only gone up 12 [percent] to 15 percent. To say that pellet prices will follow oil prices is just not the case.”

Soffren said that beyond profits, using pellet heat is the “right thing to do. For me, the real neat thing is that it is renewable energy. We have 55 people working here and we are keeping our money in the state, while at the same time we are reducing our reliance on foreign oil.”

Pellets, Soffren said, burn 20 times more cleanly than the wood in wood stoves. “We have two things to sell: cost savings and a clean environment,” he said. “We have to think in the broader sense, think environmentally sound.”

Those 300 tons of waste wood stored outside the mill would have gone to landfills, he said. “This process allows us to create something valuable out of waste.”

Soffren said that when Corinth Wood Pellets went on line last year, immediate upgrades began. Changes are under way that will increase the mill’ s capacity five times over. “We learned a lot that first year,” he said, noting that the pellet boom has a lot of newcomers contemplating opening mills.

“There will be some good and some not so good, but it will all settle out,” Soffren said. “The good ones will survive.”

Soffren predicts that as more consumers become familiar with the benefits, both financial and environmental, of heating with pellets, many more will convert their existing heating systems.

In Vermont, for example, Soffren said a rebate program provided cash for those trading in an old wood stove for a pellet stove. “The first time they offered the program, 50,000 people applied. The second time, 80,000 people applied,” he said.

“In 10 years, I think 40 [percent] to 50 percent of Maine homes will be heated with pellets,” he said.

http://bangordailynews.com/2008/07/24/sports/dont-panic-popular-pellets-plentiful/ printed on July 11, 2014