Canfor Energy Project Plan Sees Rising Costs

Wednesday, April 30, 2008 08:40 AM

Prince George, B.C. – Canfor Pulp Partnership continues to explore the opportunities for energy production to provide electricity to the B.C. Hydro grid, but CEO Paul Richards says there are concerns about fibre availability because of sawmill curtailments.

One of the factors now playing in the decision is the carbon tax. The company says it now has targets to reduce greenhouse gas emissions so, a co-gen plant that produces energy may be better used by the company itself to meet its targets for natural gas use reduction.

As the analysis of the energy production possibilities continues, Canfor Pulp says the main cost factor is the fibre, and while it would be cheaper to use materials from sawmills, curtailments would drive up the price for that material but it may still be cheaper than harvesting the material from the forest floor.

Chief Financial Officer, Terry Hodgins says it really boils down to what price B.C. Hydro would be willing to pay for the electricity produced. “So if we decide we will only go with the higher priced fibre (harvested) is that a price that B.C. Hydro is uncomfortable paying?” He also indicated the actual cost of the project is also starting to escalate.

Canfor Pulp expects to have a final outline of their proposal to B.C. Hydro in June.

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Posted on Wednesday, April 30, 2008 08:40 AM in News by 250 News

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Comments

Posted by: lunarbase on April 30 2008 3:01 PM

The stupid thing is BCH will pay 10 times the current price of what they can purchase electricity for. In about 5-6 years people expect your Hydro bill to easily be 4 -5 times what it is at present.

Posted by: kagee on April 30 2008 3:07 PM

Why are they not looking at using the steam to produce energy?

Posted by: Palopu on April 30 2008 7:18 PM

They do use steam to produce energy..Thats what it is all about. The fibre is burnt to produce the steam.

Posted by: astro on April 30 2008 7:57 PM

lunarbase said, "The stupid thing is BCH will pay 10 times the current price of what they can purchase electricity for."
This is because the BC Liberals have not let BC Hydro develop any new energy (except for Site C.) All BC Hydro can do is get new energy from private sources who will charge us an arm and a leg for it. Campbell and his gang are screwing us. If BC Hydro derveloped new energy (wind, run of rivers, tidal, etc. they would charge us cost for it the way they sort of do now. I say sort of because the Libs have started to push the hydro rates up as well.

Posted by: Eagleone on May 1 2008 1:16 AM

I agree with Astro.

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I also think Canfor Pulp Partnership should look at doing a joint venture with Plateau for co-gen. Plateau produces 2-tons a minute of wood waste that is currently sent to a beehive burner. That alone is enough wood waste to run a co-gen plant good enough to power the whole valley from Vanderhoof to Fraser Lake. Throw in the LeJack wood waste nearby and then Fort St John and you have a central location for the wood waste supply chain.

IMO the rates are enough today to make it happen, but if we really wanted the jobs and to see the local production of electricity of this type... then I ask why not give them a lower amortization period on the capital investments for depreciation expenses, or some other type of tax incentives that government would never see the revenue of if the project doesn't go ahead anyways.

Its Canfors wood waste already... so its no cost to them for the fiber, but what if there was an imposed cost for burning the wood waste as they do now? Or what if they could defer amortization write downs on expenses until later years when profits were greater as an incentive to build within a set time period? I think it could go both ways to get the same result.

I read Canfor as saying yes its doable, but until you make us do it through either regulations or incentives... then we will just think about it. So I would say the ball is in the governments court to decide what the game plan is. That is where our problem lies IMO....