Coastal Paper Company, a wholly owned subsidiary of Cellu Tissue Holdings Inc., announced September 28 it has signed a 15-year energy supply agreement with Intrinergy, a provider of renewable energy to industrial customers.

Under the agreement, Intrinergy will provide the Coastal Paper's facility in Wiggins, Miss., with up to 50,000 pounds of steam per hour by supplying synthesis gas to displace the use of natural gas in major portions of Coastal's manufacturing processes. Intrinergy will also supply up to one megawatt of base load electricity to the facility.

"At a time of volatile natural gas prices, this agreement will ensure our access to a predictable supply and price for steam to keep our products competitive. For example, the price of natural gas on the futures market surged by 14 percent in just one day last July as a result of the nationwide heat wave and uncertainties in energy supplies. By displacing natural gas with renewable synthesis gas generated onsite by our energy partner, Intrinergy, we will maximize our competitiveness by securing our energy supply at a predictable price," said Russ Taylor, chief executive officer of Cellu Tissue.

The agreement provides that Intrinergy will build, own and operate an approximately $10.5 million state-of-the-art gasification unit at the Coastal Paper facility to convert biomass like wood and other agricultural materials into steam and electrical power.

"The economic savings and environmental benefits we see possible for companies like Coastal Paper and communities like Stone County, Miss., demonstrate the power of doing traditional things in non-traditional ways," said John Keppler, chief executive officer of Intrinergy. "We've taken a combined heat and power solution and added a unique component - renewable energy, which can be sustainably fueled with local resources from right here in the state of Mississippi. It's a model we hope to replicate with forward-thinking companies across the country and around the world."

Keppler said he expects the Intrinergy unit to be operational by the third quarter of 2007 and that Intrinergy would have up to eight employees at the site and another 10 for feedstock processing.

For more information, visit http://www.intrinergy.com/.