Although high liquid yields of a single phase product can be obtained from bark free "white" wood feedstocks by fast pyrolysis processes, lower yields and a two phase product are obtained from feedstocks containing bark and needles as is commonly found with forestry residues. The liquid yield is thus reduced from levels of 70-75 wt %, to those of 60-65 wt %. This will have a significant impact on the economic viability of pyrolysis projects in Scandanavia as forestry residues are a major source of raw materials. The forestry residue product is composed of an extractive rich upper phase which varies from 10 to 20% of the total product and a bottom phase closely resembling the normal bark free wood product. Phase separation occurs due to the higher extractive content of the residues which due to their much lower oxygen phase separate. Extractives are composed of components such as fatty acids, fatty alcohols, terpenes, resin acids, and terpenoids which have lower oxygen content than pyrolysis liquid compounds in general and which phase separate forming an upper phase that has a higher viscosity and heating value than the bottom phase. The phase separation was found to be enhanced by an increase in temperature and/or in storage time.