Potlatch may build refinery in Arkansas

Potlatch Corp. is looking into the possibility of building a refinery at its Arkansas pulp and paper mill to turn agricultural waste and wood scraps into synthetic crude oil.

The refinery, if successful, could provide 80 percent of the energy needed to run the Cypress Bend mill.

“Arkansas is an ideal place for us to run a pilot, because there’s lots of agricultural waste and forest residue,” said Mike Sullivan, spokesman for the Spokane-based forest products company. “But this could be applicable almost anywhere.”

Potlatch is studying the biorefinery’s feasibility in conjunction with partners that include the University of Arkansas, the Arkansas Department of Economic Development and Winrock International, a nonprofit focused on sustainable economic development. The partners will apply for a federal grant through the Department of Energy to pursue the project.

A feasibility study, due out next month, will provide more details on the refinery, including a price tag. At this point, Potlatch is only estimating the cost at “millions of dollars.” Most of the company’s contribution would come in the form of in-kind donations.

The technology to convert agriculture and wood waste into synthetic crude isn’t new. When other petroleum sources ran dry, the German government used it during World War II to produce fuel for tanks and other war-related operations. But the technology hasn’t been economically feasible over the long run, Sullivan said. The pilot project would look at practical applications for manufacturing operations.

Field residue from Mississippi Delta crops of rice, cotton, soy beans and corn, along with tree branches and wood scraps, would go into the refinery. In simplified terms, the organic material would be mixed with high heat and chemicals to produce the synthetic crude, Sullivan said. It’s the same kind of process that resulted in the earth’s fossil fuels.

Heat recycled from the refinery would be used to run the pulp and paper mill. “Right now, we burn a lot of natural gas to produce steam and heat,” Sullivan said.

Arkansas’s congressional delegation held a press conference Tuesday to tout the project. But Potlatch officials cautioned that the refinery still has technical and financial hurdles to overcome.

In addition to applying for the government grant, the company is looking for partners to chip in funding. Potlatch’s participation is balanced against its need to return a profit for shareholders, company chairman Penn Siegel said in a press release.