Woodland Pulp to invest US$12M in conversion of its Baileyville, Maine, pulp mill to natural gas facility from oil powered, receives state approval to connect to natural gas pipeline

BAILEYVILLE, Maine , September 18, 2011 () – The Maine Bureau of Protection recently approved the linkage of Baileyville’s mill — formerly Domtar and now Woodland Pulp LLC — to a natural gas pipeline. The conversion is expected to cost $12 million but will save millions in fuel costs for the company.

“The pipeline is under construction, as of last week,” Scott Beal, mill spokesman, said this week. “We expect it to be active by the end of the year. This an absolutely amazing project for us.”

The former Domtar pulp mill in Baileyville was bought a year ago by Grand Investment Corp. of China and Taiwan for $64 million and renamed Woodland Pulp LLC. The new owners are investing $12 million to convert the oil powered facility to natural gas.

Earlier this year, Beal said, the project was given a huge boost when the Maine Legislature approved allowing the mill to be regulated by the Maine Public Utilities Commission rather than federal agencies. This move will allow the project to be completed a year earlier than otherwise.

Beal said the legislative action filled a statutory gap. Usually, the Maine PUC can only regulate utilities and not private companies. With the change, the PUC now will regulate the project, which Beal said ensures the mill’s future growth.

Beal said the primary reason for the conversion is to save fuel. “Last year, we used 10.3 million gallons of No. 6 oil,” Beal said in an interview at the time of the Legislative approval. “Because the price fluctuates, we cannot precisely say how much we will save but we estimate that there will be a one-year payback of this investment in avoided costs.”

The mill, which makes hardwood pulp used in manufacturing paper, will be linking with the Maritimes and Northeast Pipeline that runs through Maine about 4½ miles north of the mill.

Maritimes and Northeast’s natural gas transmission main originates at Sable Island in Nova Scotia and crosses New Brunswick into Maine, continuing through to Westbrook where it interconnects with the Portland Natural Gas Transmission System. The pipeline crosses the border at the St. Croix River north of the Baileyville pulp mill and was installed in 2000.

Beal said this week that the economic benefits of the project are clear. Woodland Pulp LLC employs 310 people and is an important economic engine in Washington County.

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