Potlatch Mulls Biorefinery Plant in Arkansas

Jan. 10, 2006 (Press Release) - Potlatch Corp. [yesterday] confirmed that it is collaborating with several partners in studying the feasibility of a pilot biorefinery for converting forest and agricultural waste to biofuels and other chemicals at its Cypress Bend, Arkansas, pulp and paperboard mill.

Although still in preliminary stages of study, the proposed biorefinery pilot project could potentially reduce Potlatch's energy costs and use of fossil fuels and, as a result, reduce atmospheric greenhouse gases.

Potlatch officials stressed that the collaborating partners, who include Winrock International, the University of Arkansas at Monticello, and the Division of Energy of the Arkansas Department of Economic Development, are preparing a response to an expected January 2006 solicitation from the U.S. Department of Energy (DOE) for integrated biorefinery pilot projects for producing value added products such as biofuels. The partners hope to receive a DOE grant to develop the project.

The project is an outgrowth of Potlatch's participation in Agenda 2020 Technology Alliance, an industry-led partnership of government and academia to conduct collaborative forest industry technology research, development, and deployment.

Potlatch Chairman and Chief Executive Officer L. Pendleton Siegel emphasized that collaboration is essential to the project and praised the support of the project's partners and the encouragement from Arkansas' governor and Congressional delegation.

Governor Mike Huckabee said, "I appreciate the efforts of Potlatch Corporation to be an industry leader in looking at alternative sources of fuel and energy. This effort could provide a wonderful boost to the southeast Arkansas economy as well as give America another much needed renewable source of energy."

Congressman Mike Ross echoed the Governor. "I am extremely pleased that Potlatch Corporation and others are interested in establishing alternative energy projects in Arkansas. I believe Arkansas is in an excellent position geographically and contains the necessary bio-base to support bio-mass energy projects," he said. Senator Blanche Lincoln added, "A forest biorefinery in Arkansas creates new opportunities for the pulp and paper industry and demonstrates again how our natural state is rich in valuable sources for renewable fuels."

Potlatch officials cautioned that biomass gasification is cutting-edge technology, with high technical and financial risks. "To make this project a reality, Potlatch will rely on the existing partners and seek additional partners. We must balance the company's participation in the project with financial risks to the company's shareholders," Siegel asserted.

Harry Seamans, Vice President of Potlatch's pulp and paperboard division, explained that the potential benefits for Potlatch are considerable, and could cut both natural gas consumption and purchased electricity very significantly. "Our Cypress Bend mill could potentially reduce natural gas usage by 1,600,000 MMBTU per year and purchased electricity by 80,000 MWH per year," he said.

Tom Belin, senior production engineer at Cypress Bend, explained that the pilot operation, if successfully developed, would bring agricultural and forest residual (waste) biomass from throughout the Mississippi Delta and southeast Arkansas to the Cypress Bend plant where existing technology, newly applied to our industry, would use gasification and catalytic processes to covert it to a crude oil to be further refined into fuel products and a variety of chemicals.

"Applied on a wider scale, the technology could reduce the environmental impact of burning fossil fuels, increase viability of agricultural operations and provide additional forest management options for landowners while creating new high-paying jobs and increasing tax revenue," Belin said.

Potlatch is a diversified forest products company with timberlands in Arkansas, Idaho, Minnesota and Oregon.

SOURCE: Potlatch Corp.

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