EASTPORT, Maine — The venture capital firm that breathed new life into paper production in East Millinocket is poised to jump-start the economy of Washington County through plans to construct an $80 million wood pellet production facility on a 40-acre site near the Port of Eastport cargo facility.

A source familiar with details of the project said it could eventually create 100 new jobs.

The Bangor Daily News has learned that Cate Street Capital, which is based in Portsmouth, N.H., is expected to announce Friday its plans to build the wood pellet plant on property on Staniels Road last owned by BASF, a German chemical firm.

BASF acquired the parcel in June 2006 from the Englehard Corp., which operated a pearl essence operation that processed herring scales for use in high-end cosmetics.

Formerly the Mearl Corp., the company once employed 200 people and provided a significant portion of Eastport’s commercial tax base. BASF never developed the property, which is in the process of being acquired by the Eastport Port Authority. The deal is pending cleanup of on-site pollutants.

Chris Gardner, the Port Authority’s executive director, declined comment on the wood pellet deal Thursday afternoon.

Jon Southern, Eastport’s city manager, confirmed parameters of the deal Thursday.

“One of BASF’s conditions for the sale was the site would only be used for industrial purposes, so it couldn’t be developed as a residential development,” Southern said. “BASF still owns the site, but the Port Authority has been purchasing it gradually while they clean it up.

“There are many benefits of this project to the city, the key one being that it will allow a 40 percent reduction in [residential] property taxes,” Southern said.

One Eastport source, who asked not to be identified, said it may take several years for the project to fully evolve. The source indicated that a formal announcement of plans to build the Eastport facility was expected to be made on Friday, Feb. 22.

Calls to Cate Street Capital on Thursday were not returned.

Cate Street Capital bills itself online at catecapital.com as a venture capital firm that “invests in new technology and environmental solutions designed to offer long-term growth to high-end investors.”

The company bankrolled one of Maine’s biggest industrial revival stories in 2011 by funding the resuscitation of the Katahdin Paper Company’s mill in East Millinocket, which left more than 200 workers jobless when it was closed in April 2011. That closure pushed the region’s unemployment rate to nearly 22 percent.

Cate Street Capital bought the mill in September 2011 along with a sister facility in Millinocket. A month later, the East Millinocket mill was reopened under its historic name, Great Northern Paper, putting 215 people back to work. By September 2012, the mill’s workforce numbered 257.

Last year, Cate Street Capital announced plans to build a $48 million torrefied wood facility at the site of the Millinocket paper mill. A type of microwaved wood pellet that burns as hot as coal without coal’s pollutants, torrefied wood burns about 30 percent hotter than typical wood pellets. The company hopes to create 25 full-time jobs and have that facility open in the fall of 2013.