Steve Johnson

Nippon biomass cogeneration plant remains offline; Port Angeles facility slated to undergo repairs starting in September

PORT ANGELES — Nippon Paper Industries USA’s upgraded $85 million biomass cogeneration plant, which has not been fully operational since it was dedicated in November, continues to be shut down and will undergo major surgery this fall.

The new facility’s mud drum, a water-pressurized main component of the new boiler, and 1,560 pieces of piping will be replaced beginning in September, mill manager Steve Johnson said Wednesday, predicting the new facility should be up and running by October.

“We don’t know how much the final cost is going to be, but it will be substantial,” Johnson said.

“It will be what it is to make it right.”

Nippon’s aging No. 8 boiler, which will be replaced by the new boiler, has been upgraded and is providing steam for the factory without any slowdowns, Johnson said.

That’s allowed Nippon to continue manufacturing paper for telephone books and newspapers, including the Peninsula Daily News, 24 hours a day with a fully staffed workforce of about 220 employees, he said.

Like the No. 8 boiler, the cogeneration plant will create steam for the plant by burning biomass, or woody debris such as forest slash and peeled bark.

But unlike No. 8, the new boiler will generate 20 megawatts of electricity for sale as green energy.

Port Townsend Paper Corp.’s $54 million project to upgrade its own cogeneration plant and produce up to 24 megawatts was abandoned earlier this year by company officials who blamed environmental challenges and inexpensive natural gas for dooming the effort.

The cost of Nippon’s project rose from an estimated $71 million in 2010 to $85 million by the time Nippon officials from the company’s Japanese home base toasted the new facility during elaborate dedication ceremonies in November.

The cogeneration plant, which has never been up and running full bore, shut down completely March 11 after cracks were discovered in the 25-ton, 30-foot-long mud drum, he said.

The mill had stopped producing paper for two weeks beginning in February for a maintenance shutdown that had been moved ahead of schedule.

The cracks were discovered after the mill started up again and water-pressure tests were conducted on the mud drum to see whether there were any leaks.

“That’s when we found the cracks,” Johnson said.

The Nippon and Port Townsend Paper Corp. projects survived numerous legal challenges from environmental groups.

Nippon is now faced with potential legal challenges of a contractual nature.

Lawyers for Nippon and Covington, La.-based FSE Energy, which built the boiler, are communicating over who is responsible for fixing the boiler — and who will pay — but no civil action has been filed by either party, Johnson said.

“We are at the beginning of the process of dispute resolution,” he said.

“They felt it was something we did in the operation of the boiler that caused the cracking. We strongly disagreed.

“We feel they have some responsibility; they feel they have none,” Johnson continued.

“With that, we are working through arbitration and mediation.

“Until that’s all done, it’s a very delicate situation.”

Bo Thibaut, CEO of FSE Energy, did not return calls for comment Wednesday.

Jim Thibaut, Bo’s father and founder of the company, has “personally delivered over 75 turn-key boiler projects,” according to the company’s website, www.fseenergy.com.

With FSE vacating the site “at their doing,” Nippon has hired Portland, Ore.-based CH Murphy Clark Ullman Inc. to build a new boiler, Johnson said.

The 50,000-pound forged steel mud drum is encased inside the boiler.

Workers will cut a hole in the side of the boiler, put the mud drum on rails and roll it out through the side of the boiler building, “not unlike taking a roll out of the paper machine,” Johnson said.

Nippon has signed contracts to sell electricity generated by the cogeneration plant that remain in effect, Johnson said.

The company began purchasing green power for those customers from other sources “a few weeks ago” to keep those contracts valid, he added.

Johnson would not comment how much that power is costing Nippon but characterized the financial impact as “painful.”

“We should be up and running and supplying that power,” he said.

“It’s hard to accept.”

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Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 5060, or at pgottlieb@peninsuladailynews.com.

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