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Labour charges drive up project costs for Tembec cogen

Tembec’s cogeneration project at the Temiscaming, Que., site is running behind schedule and will cost more than expected, the company reported at the end of July.

Tembec’s cogeneration project at the Temiscaming, Que., site is running behind schedule and will cost more than expected, the company reported at the end of July.

The press release for Tembec’s Q3 results contained an update on the $235-million cogeneration project, which is now forecast to cost about $255 million. The overrun is largely due to higher labour costs, the company says. The initial estimate was for total labour man-hours of 810,000. The current projection is for a total of 927,000 man-hours. “As a significant portion of the additional man-hours relate to higher cost, specialized trades, the fully-loaded cost per man-hour is forecasted to be 7% higher than originally planned,” the release states.

“The boiler erection is essentially completed and the remaining work will focus on piping, insulation and electrical work,” it continues. “The commissioning of several ancillary systems has begun and will accelerate as the summer progresses.”

The turbine was scheduled to produce contract power by mid-October 2014. This is now expected to occur in late November, a delay of approximately five weeks.

When the cogeneration project was initially announced in March 2012, it was expected to be a $190-million upgrade, with the boiler start-up scheduled for December 2013, and the turbine in May 2014.

At that time, Tembec said the upgrade would replace three old boilers with one new high-pressure boiler designed to burn waste sulfite liquor to produce steam. The steam would drive a new electricity turbine that would increase the Temiscaming facility’s green electricity production capacity.