Northern Pulp plans to restart the power boiler at the Abercrombie Point pulp mill in Pictou County to burn biomass, which it would sell to an unnamed “local energy authority.”
The plan, oddly named the “Power Island Option,” is detailed in an affidavit filed with the Supreme Court of British Columbia on April 24 by Carlo Dal Monte, Paper Excellence Canada Holdings vice president energy and business development.
Northern Pulp and six of its affiliates, all owned by Paper Excellence Canada and Hervey Investment BV (Netherlands), have been under creditor protection in the British Columbia court since June 2020.
A year ago, Supreme Court of British Columbia Justice Shelley Fitzpatrick agreed to a request from Northern Pulp, and forced the province of Nova Scotia into closed-door mediation with the company on a range of issues related to the re-opening of the mill. While Northern Pulp is under creditor protection, it is not repaying Nova Scotia the more than $86 million it owes from previous loans.
In his affidavit that is part of Northern Pulp’s latest request to the court for extended creditor protection, Dal Monte argues that, “There were a large number of trees blown down by the hurricane [he is referring to post-tropical storm Fiona] and this wood fibre needs to be used before it deteriorates.”
“Without an operating pulp mill, the next best viable alternative is to use this wood fibre to produce biomass energy,” states Dal Monte.
Northern Pulp has been “negotiating a letter of intent” with the unnamed power authority for a power purchase agreement for the energy that would be produced by the mill’s power boiler.
The Halifax Examiner has asked Nova Scotia Power if it has been approached by Northern Pulp for a power purchase agreement. Spokesperson Mia Atia replied, “We aren’t aware of any discussions.”
“The viability of the Power Island Option depends on satisfying a number of conditions,” Dal Monte warns. He stipulates that Northern Pulp will have to reach “agreeable terms” for a power purchase agreement (PPA) with the energy authority, complete an environmental assessment process, and renew its water supply agreement with the province.
The contentious water supply agreement
Northern Pulp’s water supply agreement expired along with its Industrial Approval in January 2020. The water supply agreement dates back to the 1965 Scott Maritimes Act, which accorded the new pulp mill 25 million Imperial gallons (114 million litres) of fresh water every day from a dam across the Middle River.
Nova Scotia Environment tried to reduce the supply in 2015 when it drafted a new five-year Industrial Approval for the mill, proposing a 34% decrease in the daily water use.
Northern Pulp protested, eventually taking the province to court. A year later, in 2016, Nova Scotia Environment capitulated, and rewrote the Industrial Approval, granting Northern Pulp the use of more than 92 million litres of fresh water a day until 2020.
It’s unknown how much water, exactly, Northern Pulp would be expecting the province to allow it to use in a renewed water supply agreement, which Dal Monte says is needed for the Power Island Option to restart the power boiler to burn biomass. There are also questions about where the waste water would go, given that the mill’s effluent pipe has been dug up and the Boat Harbour effluent facility closed.
A troublesome power boiler
The power boiler at the Northern Pulp mill also has an interesting history.
A $28.1 million grant from the Harper government in 2011, just weeks before Paper Excellence acquired the Northern Pulp mill, reportedly went to upgrading the power boiler so it could use less heavy oil and more wood waste and clean up its act. At least that is what Northern Pulp claimed.
In February 2012, the NDP government issued a directive to the mill to fix the scrubber on the power boiler, which had been out of commission since 2006. But in March 2015, emissions tests done by Stantec showed that the mill’s power boiler was still pumping out more particulate matter than it was allowed. In June 2015, Nova Scotia Environment ordered Northern Pulp to provide a written report about what it planned to do about its problematic power boiler, and in 2016, issued yet another a directive for Northern Pulp to do something about its entire boiler system.
The mill has been in hibernation since 2020, and there is no sign from the court documents that any money has been spent upgrading it.
Dal Monte writes that, “While negotiations are ongoing, if agreement on the PPA is reached and progress is made satisfying other conditions, the Petitioners [Northern Pulp and the affiliates under creditor protection in the British Columbia court] will return to the Court to seek approval of the PPA, including authorisation to make any necessary repairs and upgrades to the Mill’s power boiler and energy systems.”
‘Power Island Option’ not a replacement for restarting the mill
Dal Monte is clear in his affidavit that the Power Island Option does not replace or affect Paper Excellence’s plans to revamp and restart the mill, which he says is still Northern Pulp’s primary objective.
Rather, Dal Monte says this biomass plan “presents an opportunity for the Petitioners to generate revenue in the interim until the Mill can be restarted.”
In his latest affidavit — his 14th since Northern Pulp sought creditor protection under the Companies’ Creditor Arrangement Act in the British Columbia court — Bruce Chapman, general manager of Paper Excellence Canada Holdings Corporation and general manager of Northern Pulp, writes that the Northern Pulp has been meeting every month with Nova Scotia Environment and Climate Change (NSECC).
Chapman notes that Northern Pulp requested a renewal of the water supply agreement from the Nova Scotia Department of Public Works in 2022, and is discussing the request with the province. In what sounds like a thinly veiled warning, Chapman writes, “It is imperative that Northern Pulp negotiate a renewal of the Water Supply Agreement in a timely manner.”
Chapman also makes several assumptions about the timeline for the re-opening of the mill. Among them, that Northern Pulp will submit its Industrial Approval applications shortly after its Environmental Report for the Class II environmental assessment process, and that the “minister will provide a decision on the EA report and NSECC will make a decision on the IAs very shortly following the Minister’s decision.”
Chapman says the timeline is also based on assumptions “mediation will advance to permit resolution” and that “Northern Pulp and the Province will agree to a renewal of the Water Supply Agreement.”
Northern Pulp and its associates “anticipate” the minister’s environmental assessment approval for the project to revamp the mill will come in August 2024, and the Industrial Approvals for its construction and operation will come in September 2024.
In their application to the court for another extension of the creditor protection, Northern Pulp and its affiliates say it is “necessary” to provide them with the “breathing space” to, among other things, “continue to engage in the Mediation Process” and “continue negotiations regarding the potential Power Island Option.”
The hearing on the Northern Pulp’s application for an extension of the creditor protection will be heard in the British Columbia Supreme Court Friday (April 28) afternoon.
The Nova Scotia superintendent of pensions has told the court he will not be attending, as everything contained in his April 2022 response still stands. In that response, the superintendent expressed concern that Northern Pulp had not paid special defined benefit pension contributions due in 2020 ($342,267), in 2021 ($3.34 million), or in 2022 ($3.34 million). “The Superintendent continues to harbour serious concerns with the failure to make contributions in respect of the post-2020 Special Pension Payments,” said the response last year. This failure, he wrote, “is contrary to law.”