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Tom Logan can't sell from an empty fibre basket.
The Toronto wood pellet entrepreneur is hopeful that an upcoming meeting this week with Ministry of Natural Resources officials in Marathon will produce some “clarity” in forging ahead with a bio-coal project in the North Shore community.
The president of Protocol Energy was in the United Kingdom in early January, meeting with executives from large utilities who are converting coal-fired power plants over to biomass.
“Their appetite for biomass is extraordinary,” said Logan, who claims he has term sheets in hand from willing customers in Europe.
“I was meeting with an organization today that has 4,000 megawatts of coal power, the size of Nanticoke (Generating Station), and the CEO wants to convert all of it to biomass.”
But attempting to drum up business for his $100-million 'black pellet' project and sign customers to long-term contracts without a committed supply of Crown fibre is a problem.
Logan wants to set up shop in the closed Marathon Pulp mill and install a leading edge technology that makes torrefied wood pellets, which are growing in popularity in Europe as a clean fuel replacement for coal.
The pellets will be exported to the U.K. from the former Marathon Pulp commercial dock on Lake Superior.
But so far, Protocol and the Town of Marathon have struck out in securing fibre through the government's wood supply competition and they're hoping a sit-down with government officials will expedite the process.
Accompanying Logan to the meeting is his new “strategic” partner, Cate Street Capital, which has secured the North American distribution rights for a European technology that makes torrefied pellets on a commercial scale.
The New Hampshire investment firm made a $20-million deal to acquire the rights to a machine called Targeted Intelligent Energy System (TIES) from Scotland-based Rotawave Biocoal.
The first showcase of this machinery will be in a Maine pulp and paper mill with start-up production plans of 100,000 tonnes scheduled for export to the U.K. by late 2012.
Logan said he's not asking for a hard commitment from the province, but wants some details on the short- and long-term availability of Crown fibre and the readiness of the former Marathon Pulp site.
“There doesn't seem be 100 per cent clarity on how much fibre is still available.”
The former Marathon pulp mill site, which closed in 2009, remains in the hands of a court-appointed receiver.
Outstanding brownfield contamination issues still remain to be resolved, said Logan.
“If we take over the site, what are we getting? There are some flies around it that have to be fixed.”
Last year, an Ontario Environmental Review Tribunal ruled in favour of an agreement calling for a multi-party agreement for the cleanup of the mill site, which was run by multiple owners over its 64-year operation.
Tembec was ordered by the Ministry of Environment to clean up chemical spills at the mill site in 2009 and 2010.
Marathon's economic development officer Daryl Skworchinski said the outstanding contamination issues over a landfill on the property and a stabilization basin can be cleaned up fairly quickly.
“There's nothing that we're aware of that are any sho stoppers to prevent new investment from coming onto the site. It's been an industrial site since the 1940s. It's a brownfield in the truest sense.”
Hopefully, the wood supply issues can be alleviated with Marathon's participation in a pilot program for the province's new Local Forest Management Corporations (LFMC), a community-oriented method of harvesting and selling Crown wood.
Protocol Energy would be the LFMC's main customer.
But a nagging concern for Skworchinski is the year it will take to get the LFMC up and running through the government's approvals process. It may pose a problem if Protocol and Cate Street acquires the mill this spring and wants to be operating within six months.
“Nobody is going to make a $100-million commitment to revitalize the Marathon mill if they don't have the guarantee of a long-term wood supply,” said Skworchinski. “If the project doesn't get done in Marathon, it's going to get done somewhere else, which would be a real shame.”
