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Les Otten holds a handful of wood pellets next to his new wood pellet burning furnace at his home in Greenwood, Maine, on Thursday, June 19, 2008.Pat Wellenbach/The Associated Press

A B.C. company's plan to make wood pellets the fuel of choice for more customers in Europe and Asia has been given a boost by regulatory approval for a $42-million terminal project in Prince Rupert.

The Prince Rupert Port Authority announced it has approved Westview Terminal Redevelopment Project, which will include docks and storage facilities to ship up to two million tonnes a year of wood pellets through the port. The project, steered by pellet manufacturer Pinnacle Renewable Energy, is part of a growth strategy that aims to boost the company's export base, says company president Leroy Reitsma. "Today, the primary market is Europe and that's why the shipping logistics of this business is critical – which is why we were so focused on this project," Mr. Reitsma said.

Construction on the project, reviewed under the Canada Port Authority Environmental Assessment Regulations, could begin later this year.

As of 2012, Canada has 42 plants with about 3 million tonnes a year of capacity, with more than half of that – about 65 per cent – coming from B.C., according to the Wood Pellet Association of Canada.

B.C.'s wood-pellet industry has grown in recent years as operators take material that used to be burned as scrap and turn it into potential fuel. Wood-pellet operators are capitalizing on raw material resulting from a mountain pine beetle infestation that has made a lot of wood unsuitable for lumber, but fine for pellets.

Industry forecasts say that changing regulations and other factors could result in increased demand for wood pellets in export markets.

Some analysts are saying demand in Britain could grow by 10 to 15 million tonnes in the next three to five years. South Korea is also expected to be a potentially strong export market.

End users for the wood pellets include electricity generating stations and other industrial plants that are shifting partly or completely from coal to biomass.

The wood pellets are more expensive than coal but some jurisdictions – including the European Union – are providing financial incentives to encourage customers to switch.

Currently, the wood-pellet sector is caught up in a regulatory and safety review that was triggered by two sawmill explosions earlier this year.

A new industry report, posted last week by the Wood Pellet Association of Canada, suggests that dust in wood-pellet plants should be precisely measured and those measurements shared with workers to help control dust and prevent dangerous explosions.

"Without knowing the [minimum explosive concentration] and dust bulk density, the safety rules for a production plant and safety management becomes a guessing game," says the Aug. 29 report from the Wood Pellet Association of Canada.

"A safety margin policy of 50 per cent or better should be established for any pellet manufacturing plant."

Dust levels are under scrutiny following two explosions earlier this year. Those explosions – at Babine Forest Products in Burns Lake in January and at Lakeland Mills in Prince George in April – involved sawmills that were making lumber, not pellets.

"Dust explosions and fires has [sic] become a major issue in the pellets industry as well as in other woodworkding industries," says the report, titled Determination of Explosibility of Dust layers in Pellet Manufacturing Plants.

"The [pellet] industry is struggling with ever increasing insurance premiums and has been looking at cost effective means of mitigating the risks."

The report, along with outlining how dust explosions occur, notes that housekeeping "traditionally has not had the priority it deserves for a number of reasons," including a focus on keeping plants running and profitable.

The report suggests relatively low-tech meaures – such as tripod-mounted lasers to take spot measurements – could help inspectors and auditors compare dust levels to safety benchmarks and help build an information database.

WorkSafe B.C. is investigating the sawmill explosions.

Mr. Reitsma said he had not yet read the report posted by the Wood Pellet Association of Canada, but that Pinnacle is aware of dust and safety concerns and is participating in WorkSafe's review and inspections. An explosion at a Pinnacle mill in Armstrong last year involved an equipment failure, he said.