NewPage Opts Out of Biofuel Project at Escanaba Mill

July 17, 2009 - NewPage today said that it has decided to shelve the biofuels gasification project at its Escanaba, Michigan pulp and paper mill.

The plan, 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. Chemrec has proprietary technology and had approached the Michigan Economic Development Corporation (MEDC) looking for a U.S. 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," said Rick Willett, president and chief executive officer for NewPage.

"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," Willett added.

NewPage said it has worked closely with Chemrec officials, Senator Debbie Stabenow, Governor Jennifer Granholm and the MEDC, as well as numerous other state and local officials during the preliminary phase of the project.

"We appreciate the dedication, involvement and support from everyone who worked on this project," Willett said. "As biofuel gasification develops, United States energy policy evolves, and the economy improves, it is a possibility that NewPage could revisit the technology in the future."

Chemrec has operated a pilot plant in Pitea, Sweden for two years and recently announced a full scale production plant at another location in Sweden.

The Escanaba facility has one kraft and one refiner mechanical pulp (RMP) mill, three paper machines and three off-machine coaters plus supporting equipment and one pulp dryer. The mill produces approximately 770,000 tons per year of paper and about 500,000 tons per year of hardwood, softwood and refiner mechanical pulp. It employs about 1100 people.

SOURCE: NewPage Corp.

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