Tuesday, October 21, 2008

Katahdin may enter green energy business

Katahdin’s closed paper mill in Millinocket, Maine may enter the “green” electricity business when it starts making SCA (supercalendered) paper again, its customers were told today.

The company is “proposing to retrofit a large, existing oil-fired boiler with a modern biomass gasifier,” Fraser Papers Limited stated in a letter to customers. Fraser operates Katahdin's mills in Millinocket and East Millinocket; both companies are subsidiaries of Toronto-based Brookfield Asset Management. Fraser has previously cited the use of more than two barrels of oil per ton of paper as the major reason that Millinocket’s one machine shut down in early September.

The new boiler would provide steam for the mill and 20 megawatts of power to the market. But there are several conditions that have to be met, including financing, permits, having a reliable supply of biomass (presumably from trees), and expanded transmission capability, the announcement said. Another Brookfield subsidiary already sells electricity into the grid from a hydroelectric dam at the Millinocket mill.

Demonstrating its intent to reopen the mill, Fraser pointed out that it is spending nearly $1 million to winterize and protect the paper machine and another $500,000 on feasibility studies.
Fraser has not indicated whether rapidly declining prices for oil and kraft pulp, which it purchases on the market, might entice it to reopen even before a biomass conversion is completed.

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