BURNHAM -- The state's capacity for manufacturing wood pellets is in for a significant upgrade.

International WoodFuels has pushed back its timetable slightly, but the company plans to break ground on a $20 million wood-pellet plant by early spring. Laura Sawall, International WoodFuels marketing manager, said Wednesday that the permitting process is nearly complete.

"The big vision," Sawall said, "is to be up and running at this time next year. We plan to produce 100,000 tons of pellets a year."

International WoodFuels in July announced plans to build the mill on Route 100 next to Pride Sports, the world's largest manufacturer of golf tees.

According to the Maine Pellet Fuels Association, the four existing pellet plants in the state produce about 350,000 tons a year.

Maine Pellet Fuels Association director Bill Bell said that fires have put the Strong and Ashland plants out of operation, but both are on track to go back online.

"We are seeing a steady demand for pellet-stove pellets," Bell said. "We import more than we produce."

The company will be well-positioned to meet the public's need for an alternative to oil heat. It will blend Pride's leftover hardwood -- mostly white birch -- into the pellets. The plan is to create 24 jobs in the plant itself, and about a dozen new logging jobs, Sawall said.

Sawall said that the pellets will be comprised of approximately half hard, half softwood.

"We're not taking any waste residuals," Sawall said. "We're only taking whole logs, and not using any bark."

Sawall said that the town has the mill area designated as a state Pine Tree Development Zone, which will provide for tax breaks. The town's planning board also has approved the construction project, and WoodFuels is only waiting for an air permit from the state Department of Environmental Protection, she said.

Bell said that demand for pellets peaked in the summer of 2008, when heating oil was priced at more than $4.25 a gallon, and the call for pellet stoves increased 500 percent from 2007.

The average price of heating oil in the state is $2.55 per gallon now, he said. WoodFuels sells for about $255 per ton, the equivalent of a $2.10 heating oil price.

"People were placing multiple orders with multiple retailers, who said 'we can get you your pellets in November,'" Bell said. "Then once they got some in, they were canceling the other orders."

Pellet manufacturers, meanwhile, have gone through a learning curve. Some of the wooden nuggets were too dusty, and left too much ash in the burn pot.

"One plant thought they were doing the right thing by using wastewood and bark," Bell said, "but there's too much ash in wastewood and bark. That was the big discovery."

Peter Lammert, project forester for the Maine Forest Service, said that people who ordered two or three years' worth of pellets last year might be regretting it. Long storage can disintegrate the pellets, he said.

"Bags should be dated," Lammert said. "I have not seen it yet on any bag that I've looked at."

The arrangement between WoodFuels and Pride is intended to help both the pellet mill and Pride. The company will need 200,000 tons a year of whole logs to operate the pellet mill at full capacity. That's five times greater than what's now coming in.

The added volume and the sharing of a log yard will help Pride save money on wood purchasing.

The savings are important, according to Randy Dicker, senior director of manufacturing at Pride. The company's profitability has been undermined in recent years by a flood of imported golf tees from China, he said.

Larry Grard -- 861-9239

lgrard@centralmaine.com