Power company needs partner to restart mill

Posted Nov. 10, 2009, at 9:06 p.m.
Last modified Jan. 30, 2011, at 12:09 p.m.

MILLINOCKET, Maine — Brookfield Renewable Power might have plans formulated as early as February or March for the reopening of the Katahdin Paper Co. LLC mill.

The power company is searching for a partner to operate a proposed 30-megawatt biomass boiler needed to power the paper mill and for companies to buy the electricity the boiler would generate, Daniel Whyte, a Brookfield vice president, told the Town Council on Monday night.

But the company currently has neither, Whyte acknowledged. He said the most crucial aspect of any attempt to restart the mill is Brookfield’s securing a contract to supply electricity to other companies.

“We believe we have done all the development work that needs to be done,” he said. “We have a project that is attractive to ratepayers [of electricity] and investors.”

Council Chairman Scott Gonya called Whyte’s message unsurprising but helpful. It was one of the company’s periodic updates as the council continues to track efforts to restart the mill, one of the Katahdin region’s single largest employers.

“They are making a good-faith effort to keep us informed,” Gonya said.

Parent-company Brookfield Asset Management of Toronto shut down the mill in September 2008, idling most of its 207 workers, because of the mill’s profit-killing burning of more than 200,000 barrels of oil in 2007 to create steam needed for papermaking.

The biomass conversion would take 10 to 12 months once a partner is found. That means that if all contracts are negotiated by March, the mill could restart as early as March 2011, Whyte said. Brookfield Renewable Power thought it had a biomass partner in the summer of 2008, but that party balked at doing the engineering work needed to install the mill’s boiler.

Late last month Brookfield submitted a bid through the Maine Public Utilities Commission for a 20-year contract to supply electricity to Bangor Hydro-Electric Co. and Central Maine Power Co. Brookfield hopes to have negotiations concluded within two months.

A signed contract would not guarantee a mill reopening, nor set a timeline for its restart, but it would make finding a partner to run the biomass operations, which Brookfield lacks, much easier.

Absent a contract with someone interested in buying the boiler’s electricity, attracting a biomass partner to install the boiler and restart the mill is just about impossible, Whyte said.

“How do you, in this [paper manufacturing] market, get an investor to invest in this project when he has to rely on paper as a sole source of revenue? You can’t,” Whyte said.

Yet Brookfield sees the boiler and mill as a tandem effort. The company’s only thought has been to restart the mill with steam provided by the biomass boiler. No other plans are contemplated, Whyte said.

As electricity generators, most biomass boilers are unprofitable without an industrial use for the steam they produce, and the paper mill would be a much more competitive enterprise, with a 60 percent reduction in its steam costs, if fed by such a boiler, he said.

“We have an enormous investment in the mill,” Whyte said. “The only way we would get a return on our investment is if we restart the mill.”

Whyte hinted that a boiler operator and partner to Brookfield would get universal support and, possibly, grant money, though Brookfield has not included grant funding as part of its business model, he said.

As many as 90 new jobs would be created among woodsmen to provide the boiler with biomass — tree bark and other wood waste — while also, Whyte said, improving the forest environment by removing wood wastes from forests.

The biomass boiler is perfectly in line with Gov. John Baldacci’s goals for creating alternative energy sources to wean the state from profit-killing addictions to oil, and state and federal officials have promised to do all they can to restart the mill, he said.

“This is a project that creates Maine jobs,” Whyte said.

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