Natural Gas Use

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April 25, 2003 Green Energy Conference Opportunit
ies and Challenges In the BC Interior (Prince
George, BC) Wood Residue Waste or
Resource? Presentation by Michael Jordan, P.
Eng. Environmental Affairs Manager, Canfor Email
mjordan_at_mail.canfor.ca Tel [phone]
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April 25 Green Energy Conference

• Outline
• Canfor background, energy use, GHG Emissions
• Wood residue - quantities, utilization, strategy
• Green Energy Initiatives
• Emerging Technologies
• Opportunities, Challenges Green Energy Projects

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(No Transcript)
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Manufacturing
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Canfor Sawmill/Pulp Mill Operations
British
Columbia
Alberta
Hines
Creek
Ft. St. John
Taylor
Sawmills
Chetwynd
Pulp Mills
Mackenzie
Grande
Tier 1 Burners
Prairie
Polar
Major Communities
Smithers
Ft. St. James
Highways
Isle Pierre
Prince George
Houston
Upper Fraser
Rustad
Clear Lake
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Energy Use
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Energy Use
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Sawmill Wood Residue

• Quantities
• 13 Sawmills generate 1.25 million tonnes
  annually
• PG/Houston area 70 or 875,000 tonnes
• Alberta/Peace area 30 or 375,000 tonnes
• Currently 40 or 520,000 tonnes utilized
• Uses include pulp mill boilers, sawmill energy
  systems, particle board, pellets, and pulp
  manufacture
• 60 of our wood residue or 750,000 tonnes/year
  is burned in beehive or silo burners
• This represents a huge under-utilized renewable
  resource

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Wood Residue Opportunity/Strategy

• Opportunity
• Surplus wood residue could generate 125 MW of
  electricity or about 1,100 GWh or displace 10
  million GJ of natural gas
• Key strategy goals/considerations
• Maximize utilization of wood residue
• Create value from our wood residue (revenue
  stream)
• Increase energy self sufficiency to help cover
  price risk on purchased natural gas and
  electricity
• Meet beehive burner phase out obligations
• Position Canfor to meet future greenhouse gas
  emission reduction requirements

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Canfor Greenhouse Gas Emissions
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Initiatives - Prince George
PRIMARY HOG FUEL SUPPLIERS
Prince George Sawmill North Central
Plywood Rustad Sawmill
Carrier Lumber Lakeland Pas Planer
Lakeland
Pas Planer
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Houston Pleasant Valley Power Project

• The Project
• 45 MW (net) power plant located at Canfor Houston
  mill 370 GWh 110 120 million capital
• Canfor, Weldwood, West Fraser wood residue
  suppliers 305,000 tonnes, Canfor share close to
  160,000 tonnes
• Eliminate Canfor Houston, Weldwood HFP Tier 1
  beehive burners and potentially 2 other burners
  (Babine, Decker)
• EPCOR had originally planned on submitting a
  tender in March 2003 in response to the BC Hydro
  Customer-Based Generation call
• Mill Owners are in the process of seeking new
  proponent for project
• Bid in on next BC Hydro call anticipated Spring
  2004
• Project could be in service in 2006

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Houston Pleasant Valley Power Project
Smithers
Ft. St. James
Houston
Prince George
Isle Pierre
Burns Lake
Fraser Lake
Vanderhoof
Sawmills
Tier 1 Burners
Major Communities
Highways
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PG Region Initiatives

• Bear Lake Biomass Power Project
• Proposed by Greenbelt Renewable Energy
• Short listed on BC Hydro green power call (March
  03)
• 25 MW cogeneration project, 200 GWh
• Utilize 150,000 tonnes wood residue from Canfor
  and other sources
• BCH Tender date August 29, 2003
• Could be in service in 2006

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PG Region Sawmill/Pulp Mill Operations
Polar
Smithers
Ft. St. James
Isle Pierre
Prince George
Houston
Upper Fraser
Rustad
Clear Lake
Pulp Mills
Sawmills
Tier 1 Burners
Major Communities
Highways
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Sawmill Energy Systems

• Chetwynd Sawmill
• 7 - 8 million capital cost system to burn
  25,000 tonnes/year bark provide lumber dry kiln
  heat
• Third party build/own or operating lease concept
• Displace 290,000 Gj natural gas use
• Received proposals including conventional hot
  oil energy system gasification/oxidation system
  package steam boilers with 1 MW cogeneration
• Fort St. James Sawmill
• Looking at options for a system to burn wood
  residue and displace natural gas use

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Peace/Alberta Region Initiatives

• Grande Prairie Power Plant
• Canadian Gas Electric 25 MW 55 million
  capital
• Originally scheduled to be in-service early-2003
  Now Q3 2004
• 115,000 130,000 tonnes wood residue
• 9 MW electricity purchase for GP, Hines Creek
  mills 35 GWh Power sales to City of Grande
  Prairie, Alberta Infrastructure
• 15 20 year electricity purchase agreements
• Kiln heat offset 210,000 Gj/year natural gas GP
  mill
• Community heating potential

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Peace/Alberta Sawmill Operations
British
Columbia
Alberta
Hines
Creek
Ft. St. John
Taylor
Chetwynd
Mackenzie
Grande
Sawmills
Prairie
Tier 1 Burners
Major Communities
Highways
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Emerging Technologies

• DynaMotive Energy Systems
• Fast Pyrolysis technology that converts wood
  residue into BioOil, a renewable liquid fuel
• DynaMotive have successfully operated 10 tpd
  pilot plant
• BioOil has potential as a green fuel
  replacement for natural gas in industrial
  applications
• 2002 BioOil was successfully tested as fuel for
  Canfor lumber dry kiln in Prince George
• Pilot lime kiln trials currently underway at UBC
• DynaMotive in the process of siting a 100 tpd
  commercial scale plant in Ontario which could
  lead to commercial scale plants in BC and
  elsewhere

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Opportunities/Challenges

• Opportunities
• Wood residue availability
• BC Hydro going to IPPs for new electricity
  sources reasonable base price, green and GHG
  premium
• BC Hydro Power Smart Program
• High natural gas prices
• Developing market for GHG credits
• Federal incentives emerging technologies

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Opportunities/Challenges

• Challenges
• Competition for scarce capital within companies
• IPP financing post Enron
• Lead time and up front development costs for
  projects
• Federal stance on Credit for Early Action do we
  have credits or not?
• Cash burn rates and time to commercial for
  emerging technologies
• Separating myth from potential reality for
  emerging technologies

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Closing

• Is Wood Residue a Valuable Energy Resource?
• You bet it is!