The manager of the new Highland Pellets plant spoke Tuesday about the global wood pellet market, the capabilities of the new plant and a revised estimate of its economic impact.
The plant manager, Jody Doak, told the Pine Bluff Rotary Club that the company plans to hire seven more full-time employees than originally planned, which would bring the number from 68 to 75. He cited a 2017 study by the Arkansas Economic Development Commission that projected the plant would contribute 1,000 indirect jobs, such as hauling product, in Jefferson County and surrounding counties. A 2016 study by consulting firm Novogradac & Company LLP had estimated the plant would yield 900 indirect jobs.
The plant’s direct financial contribution to the area is $68 million annually, Doak said.
While little-known in the U.S., wood pellets are a growing source of electricity overseas. The pellets are made from low-quality pine timber and timber by-products. The vast majority of the wood pellet market is in Europe, Doak said, where countries have made pledges to reduce carbon emissions by 2020 and 2025. Asia is an emerging market.
The demand from overseas means most wood pellet facilities in the U.S. are located near the coast to minimize transportation costs, Doak said. Pine Bluff is an outlier, Doak said, but its economic advantage is the timber harvest in southern Arkansas, known in industry terms as a “wood basket.”
“Pine Bluff is far inland, but you guys have such a phenomenal wood basket here,” Doak said. “By the time we outweighed the cost of the extra logistics [at the coast], by the cost of the fiber here, it was a win.”
Doak said Highland is investing $229 million each year to procure 1.4 tons of wood fiber annually. Most of that product comes from within a 40-mile radius of the plant, in areas such as Star City and Sheridan.
The plant sits on 209 acres in the Jefferson County Industrial Park. The plant features five storage silos with a capacity of 1,000 metric tons each. A 2.5-mile rail line loops through the property, and a crane loads the pellets onto rail cars. The company initially planned to load 41 cars per train, and by the fourth quarter of 2017 it expects to be loading 80 cars per train.
The pellets are shipped 356 miles south to the Port of Baton Rouge in Louisiana. The Drax Group, an electrical utility in England with several coal-fired power plants, then takes possession of the pellets. Drax has converted three of its eight coal power plants to wood pellets, Doak said.
Highland must harvest lumber under the guidelines of the Sustainable Forestry Initiative (SFI), which prohibits clear-cutting and the cutting of endangered hardwoods, he said. Thus, a property owner wishing to clear-cut some acreage to create pastureland could not sell the lumber to Highland. Instead, the timber must be part of a plan for the trees on the property to be periodically thinned.
Doak said he does not foresee wood pellets becoming an energy source in the U.S. anytime soon, due to the presence of large quantities of natural gas reserves that are accessible by fracking.
He said that Highland wants to be a positive influence on the local community, referencing the work undertaken by Highland Pellets Chairman and CEO Tom Reilley. Reilley has helped form a non-profit called Pine Bluff Rising with wide-ranging goals of improving Pine Bluff’s economy and community. Pine Bluff Rising is currently seeking funding to restore the Hotel Pines downtown, which it purchased for $1 earlier this year.
In addition to Reilley’s efforts, Doak said the company has engaged in street cleanups near its plant.
“We really want to be good members of the community, not just for what Tom’s doing in Pine Bluff, but what we’re doing in the area,” Doak said.