BAILEYVILLE – Baetal Corp. of Kennebunk is poised to open operations in the former Louisiana-Pacific mill in Baileyville after competing with a German wood pellet manufacturer for use of the facility.

Baetel, a waste-to-energy firm that has been in operation since February, announced last month that it had entered into a joint venture agreement with St. Croix Green Energy LLC to redevelop the mill “for use in electrical generation, fuel production, and the development of a green business and energy park,” according to a statement on the company’s Web site.

L-P shut down its oriented strand board manufacturing operations at the plant in 2005, and the facility has been idle since then. The company continues to manufacture laminated-strand board at its mill in Houlton.

The option on the Baileyville building is held by Damar Dore, vice president of ICS of Maine Inc., who said Wednesday that negotiations with Baetel are continuing and an agreement has yet to be reached.

Dore also had been negotiating with Enligna AG of Germany, which planned to manufacture wood pellets in Baileyville and ship them through the Eastport port to destinations in Europe.

Enligna’s plans were derailed after L-P placed restrictions involving the amount and type of wood that Enligna needed to operate, which would have put Enligna’s wood demands in direct competition with L-P’s Houlton mill, according to Dore. He declined to speak more specifically about the issue.

An L-P spokeswoman said Monday that company policy prevented her from commenting on ongoing negotiations.

The apparent loss of the deal with the wood pellet manufacturer has some people in Eastport upset.

Skip Rogers, general manager of Federal Marine Terminal in Eastport, said Monday that the deal with the German company would have benefited the port. Right now, the Montreal-based Domtar Inc. in Baileyville is the port’s only shipper. Domtar ships about 300,000 tons of pulp a year. The wood pellets would have given the port more diversity, according to Rogers.

Chris Gardner, director of the Eastport Port Authority, said Monday that Enligna asked the port to intercede with the governor’s office.

“Those conditions were restrictive, and they felt they had a better opportunity to get those restrictions discussed if they could meet with L-P more directly,” Gardner said. “We just helped facilitate the meeting.”

The port approached the governor’s then-right-hand man, Jack Cashman, while Baetel was working with the Maine Department of Economic and Community Development.

Sen. Kevin Raye, R-Perry, said Monday he was disappointed that Enligna’s proposal was no longer on the table. He said he was concerned about how the state handled it.

“There appears to have been a lack of communication and coordination within the administration,” he said.

Cashman confirmed Monday that he had spoken with Enligna after he was asked to.

“We [the governor’s office and DECD] quickly came to the conclusion that it was L-P’s call,” he said of the two proposals.

Gregg J. Dinino, Baetel’s executive vice president and chief information officer, declined Monday to elaborate on the deal because negotiations are ongoing.

When asked how many jobs the company might generate in Washington County, he said, “It is hard to say. In phase two we would like to have as many jobs as we can. It is a big site; there is a lot of potential. We know there is a highly skilled work force up there, and we’d like to make the most of that.”

The company hopes to make an announcement this fall.

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