A proposal to develop a wood-pellet manufacturing facility at the former Louisiana-Pacific (LP) oriented strand board (OSB) mill in Baileyville is no longer being considered, because a proposal by another company to convert the mill to a waste-to-energy plant appears to have derailed the project. The German-based company that put forward the wood-pellet proposal still might be interested in a facility in Washington County.

The wood pellets would have been shipped through the port of Eastport to markets in Europe, and the Eastport Port Authority had been proceeding with the necessary permitting to build the necessary infrastructure, including three silos at the Estes Head terminal. The port authority had been working with the company, Enligna, since last November.

Negotiations for Enligna to purchase the LP mill, though, did not proceed, as LP set stipulations centered around the supply of wood, since the company still is in the wood business in Maine, according to Eastport Port Director Chris Gardner. Port officials spoke with the governor's office to help with negotiations, and although both the governor and state Senator Kevin Raye were helpful, the negotiations did not take place. "It's a major setback," says Gardner, but he notes that the port will continue to work with Enligna to find a site for a wood-pellet manufacturing operation in Washington County that would be close to the port. The company recently opened a sawmill and pellet mill in Nova Scotia, with a capacity of 120,000 tons of pellets and 500,000 tons of wood shavings per year, and is opening another pellet mill in California.

Another company is proceeding with purchasing the LP mill for redevelopment. The Baetel Corporation, a Kennebunk-based company founded in February 2008, announced at the end of last month that company officials and representatives from St. Croix Green Energy had met on July 28 with Governor Baldacci, Department of Economic and Community Development (DECD) Commissioner John Richardson and Rep. Gary Connor of Kennebunk to outline plans for redevelopment of the former mill in Baileyville. Baetel has entered into a joint venture agreement with St. Croix Green Energy LLC to redevelop the mill for use in electrical generation, fuel production and the development of a green business and energy park. According to Baetel representatives, the company is finalizing the details of the acquisition of the Baileyville property.

Baetel is a waste-to-energy company that uses a new catalytic reaction process, called KDV, to convert oil and organic wastes to mineral diesel. The company is investigating the conversion of such wastes as municipal solid waste, paper mill waste, auto shredder residue, natural and manmade disaster debris and animal manure.

Another plan for additional jobs in Baileyville, the proposal by Insulated Component Structure Inc. (ICS) to make building panels, is on hold. The plans, which would include hiring 65 to 70 people, with a goal of 150, had been announced in July 2007. Damar Dore, president of ICS of Maine Inc., says he cannot comment at this time on whether the ICS project is still being considered. "Maybe in a few weeks I can say more." Dore says he is not involved with St. Croix Green Energy or the Baetel Corporation.

Mary Cohn, manager of corporate affairs for LP, which is headquartered in Nashville, Tenn., says the company cannot discuss any negotiations for the sale of the Baileyville mill. She adds, "We are still actively pursuing a sale." LP also has a mill at Houlton and has invested more than $140 million to expand and convert it from an oriented-strand board mill to a laminated-strand lumber facility, which opened in June of this year. LP laid off more than 100 workers at the Baileyville mill at the end of 2004, because of higher raw material costs and weaker market conditions, and permanently closed the plant in April 2005. The company acquired the Baileyville OSB mill in 2002 from Georgia-Pacific, restarting it in June 2003.

Raye says LP had expressed concern about competition for the supply of wood in the area based on a misunderstanding, since the company had been given an erroneous figure about the amount needed by Enligna. "They were given the need company-wide," not the amount needed by a plant in Baileyville, says Raye. He then spoke with Jack Cashman, who was the governor's "point man" for economic development, and a meeting was set up with Cashman, port officials and an Enligna representative in an effort to resolve the issue. Cashman offered to speak with LP representatives, but "unfortunately, there was a lack of communication within the Baldacci administration," says Raye, since DECD Commissioner John Richardson was involved with bringing the Baetel Corporation to the table to negotiate about purchasing the LP mill in Baileyville. Of the Baetel proposal, Raye says, "In and of itself it would be hopeful for Washington County, but it came at a time that it derailed something that people here locally were working on." Raye says Cashman was not aware of the Baetel proposal, and he finds the lack of communication between the governor's office and DECD "inexplicable," adding, "Apparently, that's what derailed the wood pellet project, to the surprise of the port and Federal Marine Terminals."

"I am troubled the way this all happened," says Raye. "We had a well-known and well-respected company" that was eager to proceed with the wood-pellet project. He says the Enligna proposal is "a very promising project for Washington County," for the jobs at the Baileyville mill, the port and a proposed intermodal facility. "This new one is shrouded in secrecy," he says of the Baetel project. "It's disturbing the way it came about, with so little communication with the people locally."

Port officials were hoping that Enligna would deed to the port land between the Domtar and LP mills that could be developed into an intermodal facility for transferring cargo between trucks and rail cars. A rail spur operated by Pan Am Railways connects from Baileyville to the New Brunswick Southern Railroad, which then comes back into Maine at McAdam. Federal Marine Terminals Manager Skip Rogers says the intermodal facility could have been used for shipping other products through the port, such as high-value, large equipment. "It could have put us at the table," for trying to attract such shipments, he says.

The wood pellet proposal called for vessels loading 30,000 tons of bulk cargo at the Eastport pier on a monthly basis. Enligna also was willing to invest in the silos and conveyors needed for loading the ships, according to Rogers.

"It's really unfortunate," says Rogers, that the Enligna proposal for the LP mill has not worked out. "It seems like DECD was on another tack," he notes, adding that LP and Enligna representatives had not even spoken with each other.

"In my 17 years I've been here, I've seen a lot of ideas come and go. I thought this one had a good chance," he says, noting that Enligna has the capital to make the necessary investments. He adds that if the pellet shipments were successful, then the port might be able to attract more wood pellet exports. "This was the project I really thought was the one to keep Eastport viable as a port into the future."