NewPage Halts Biofuels Gasification Project With Chemrec Due to Costs

17 July 2009

NewPage Corporation is discontinuing work on the biofuels gasification project at the Escanaba, Michigan pulp and paper mill due to escalating costs. The plant, which would produce methanol and dimethyl ether from the gasification of kraft pulp black liquor, was announced in August of 2007 in partnership with Chemrec AB of Sweden. (Earlier post.)

Chemrec has proprietary technology and had approached the Michigan Economic Development Corporation (MEDC) looking for a United States partner. A three-phase study was outlined at that time, with the ability for either company to opt out at the conclusion of each phase.

While this type of new technology is exciting to consider, unfortunately the escalating cost of the installation of the Chemrec process and the substantial investment required to modify our existing operations precludes us from proceeding with this project.

Unlike Europe, the demand for methanol and dimethyl ether as transportation fuels has not developed in North America. The lack of demand for these products in our country doesn't support the feasibility of the project. To be a viable project, the costs for the installation would need to be much lower and the current market prices for methanol and dimethyl ether would need to improve as well.

—Rick Willett, president and chief executive officer for NewPage

Willett said that NewPage might revisit the technology in the future “as biofuel gasification develops, United States energy policy evolves, and the economy improves.”

Chemrec has operated a pilot plant in Piteå, Sweden for two years and recently announced a full scale production plant at another location in Sweden. (Earlier post.)

NewPage Corporation is the largest coated paper manufacturer in North America, based on production capacity, with $4.4 billion in net sales for the year ended 31 December 2008.