August 15, 2005

NS pulp and paper mill will be first to install Thermal Energy's Flu-Ace system

Thermal Energy International, based in Ottawa, has been awarded a contract valued at between $1.5 and $2 million to supply a Flu-Ace(r) heat recovery system to Johnson Controls. The contract is part of Johnson's multi-million dollar energy efficiency project at Minas Basin Pulp and Power's mill in Hantsport, Nova Scotia. Work on the project is to begin immediately, with installation of the system occurring over the next 10 to 12 months.

Application of the Flu-Ace system will make Minas Basin "the first pulp and paper operation in North America to implement this innovative technology," said C Scott Travers, the firm's president and chief operating officer and chairman of the Pulp and Paper Technical Association of Canada (PAPTAC).

"We were the first mill in Nova Scotia and one of the first in Canada to totally comply with all federal pulp and paper effluent regulations and one of the first to use 100% recycled fibre in production. Now we are adding another first in reducing energy utilization and further reducing emissions and greenhouse gases," Travers added.

Thermal Energy president and CEO Tim Angus noted that "This will be the largest Flu-Ace contract to date for Thermal Energy and represents a tremendous breakthrough for our company into a major industrial market. We placed a priority on entering the pulp and paper industry and through the excellent efforts and support of Johnson Controls we have now achieved this important goal," he added.

The Flu-Ace technology recovers waste heat from paper machine dryers, industrial ovens, boilers, incinerators, cogeneration and process heaters, sometimes providing a complete smokestack replacement, while removing harmful pollutants, and returning "free" clean hot water for industrial processes. Flu-Ace also provides an attractive return on investment by significantly reducing fuel consumption and generating certifiable emissions credits.

Thermal Energy's detailed engineering evaluation has confirmed that the project will reduce the consumption of fossil fuels at the Minas Basin plant, saving millions of dollars. It will also deliver significant environmental benefits, equivalent to permanently removing 1,840 cars from area roads. This includes annual emission reductions of 8,350 tons of carbon dioxide (CO2), 92 tons of sulfur dioxide (SO2) and 16 tons of nitrogen oxides (NOX).

The Minas Basin project is expected to come on line by April 2006 and to pay for itself within two years. Johnson Controls has guaranteed delivery of a predetermined volume of heat under a performance contracting arrangement.

Minas Basin Pulp and Power uses the latest in computer technology to produce 100% recycled fibre products. The family-owned and operated company has the capacity to produce 80,000 metric tons per year. It brings in about 250 tons per day of recycled raw material and ships out approximately 240 tons of linerboard and coreboard to other companies for further manufacturing. The company's recycling reduces the need for approximately 10.8 million cubic feet of landfill space each year.

More information is available from Stuart McCarthy at Thermal Energy International, 613/723-6776, E-mail investor@thermalenergy.com, Web site www.thermalenergy.com; Steve Thomas at Johnson Controls, 414/524-4129, E-mail stephen.a.thomas@jci.com, Web site www.johnsoncontrols.com; or Scott Travers at Minas Basin Pulp and Power, 902/684-1343, E-mail stravers@minas.ns.ca, Web site, www.minas.ns.ca.

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