A pellet manufacturer is curtailing production after one of its biggest customers elected to buy pellets from a Canadian supplier.
Northeast Pellets LLC of Ashland has reduced operations to three days a week, citing several reasons, including dampened demand because of warm weather and the loss of University of Maine at Fort Kent as a customer, which represented 15 percent of its business.
“I was optimistic that we could endure the impact of low oil pricing, warmer-than-expected weather and an extremely competitive Canadian exchange rate,” said Matthew Bell, president of Northeast Pellets, in a news release announcing the indefinite curtailment. The plant’s 13 employees had been working 24-hour shifts, five days a week, with maintenance performed on the weekends.
Bell said that retail bag sales were down due to the unseasonably warm weather, but the greater blow came when the university announced it would begin sourcing its bulk pellets from a Canadian supplier to fuel boilers. Bell said he had no option but to reduce his operations to avoid a complete closure.
UMFK, however, says its continues to support the local pellet industry. The university’s subcontractor, which provides heat, is required by contract to buy pellets
from two independent sources. The subcontractor, Daigle Oil Co., buys pellets from Northeast and a Canadian supplier, “due to the fact no other local suppliers exist in this area,” said Sonya Dechene LeBoeuf, marketing manager for Daigle Oil, in a press release.
In partnership with the local school district, the university campus launched a project in 2013 to convert its heating and hot water systems to biomass. The conversion was expected to save the two educational systems more than $4 million over the next decade.
Over the past 12-16 months, Bell said nearly half a million dollars has been invested to increase the mill’s capacity and efficiency, and bulk storage and loading facilities.
Northeast was the state’s first pellet plant, starting operations in 2006. Since then, three other, larger pellet plants have come on line.
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