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Maine Paper Industry Turns to Natural Gas to Cut Costs
03/11/2013   Reported By: Jay Field

After more than a decade of decline, manufacturing in the U.S. is going through a small, but significant renaissance. A big reason: new sources of energy, like natural gas, that are helping companies cut costs, produce more products and hire more people. Here in Maine, one of the state's best-known paper mills in East Millinocket is betting on this formula for resurgence and growth. Jay Field begins his report at Great Northern Paper inside the boiler house.

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Maine Paper Industry Turns to Natural Gas to Cut C Listen
 Duration:
3:51

Ned Dwyer: "Which way you want to go Brad?"

Brad Pelkey: "You want to get close to the boiler, we'll go that way. It's down right now. Not running."

Ned Dwyer: "Yeah, let's walk by."

Ned Dwyer and Brad Pelkey lead me across a walkway of steel grates high up in the boiler house. Dwyer is the mill's president, Pelkey it's utility superintendent.

It's been almost a year and a half since this industrial collage of steel reopened along the bank of the Penobscot River, taking, for the second time in its long history, the name Great Northern Paper. Dwyer says for papermaking to be sustainable again here, the company has to solve the energy problem that's made it so tough for recent owners to turn a profit.

"You look at the economic calculations for making paper and it's, essentially, fiber energy and manpower. Fiber and the manpower remain fairly constant year round. And so the variable here, seasonally, is the energy costs," Dwyer says.

The mill has three boilers. One produces steam by burning biomass - wood chips and other leftover detritus from the forest floor. The other two boilers run on oil. When it's warm out, during the summer, running the biomass burner alone generates all the steam needed to make paper. It's the winter that's the problem, says Dwyer.

"The heat load in the facility increases substantially in the winter," he says. "And so that requires more steam capacity than the biomass boiler has. We need a second boiler."

But Brad Pelkey says firing up one of the oil boilers has become more and more expensive. "Seven-hundred to 800 barrels of oil per day, if the oil boiler had to run."

"This past winter we didn't operate it at all," Dwyer says. "We just curtailed the paper machine production."

Dwyer would not say how much the decision cost the company financially. But it's not the kind of problem Great Northern can afford to have much longer, if hopes to compete with papermakers abroad and re-establish the industry in Northern Maine.

It's a big reason why, last fall, the mill signed onto a unique partnership with a fledgling start-up company, operating on the grounds of another papermill in Baileyville, near the Canadian Border.

"This pipe is coming from the Maritimes Northeast Pipeline that is running trans-state, out of Canada," says Clyde Coleman, who heads up engineering at Xpress Natural Gas, or XNG. He's showing me the natural gas processing and distribution site the start-up is leasing from Woodland Pulp LLC.

In a few weeks, Great Northern Paper will begin converting one of its oil boilers to natural gas. The East Millinocket Mill isn't near a pipeline. That's where XNG comes in. Coleman leads me over to a filling station, where a long red hose is attached to a valve on the back of a tractor trailer.

"These are the trailers that actually transport the gas - we are a pipeling on wheels, if you will," Coleman says.

When the boiler conversion is complete in June, XNG trucks will begin supplying natural gas to Great Northern Paper round the clock. Ned Dwyer says that will immediately make the mill more competitive.

"Historically, oil was cheap. And its not any longer. It's quite expensive," Dwyer says. "And so the availability of natural gas - that differential cost is really significant."

Dwyer says the mill expects to begin operating a second paper machine and hire an additional 40 workers, when the boiler conversion is complete in June.



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