A study presented to the Baker County Small Woodlands Association last
week showed a biomass-fueled power plant, together with a wood pellet
factory and firewood operation, could provide a consistent market for
wood wastes generated on private and public forests.
Ben Henson, CEO of Renewable Energy Solutions in Wallowa, said the
study concluded that there's plenty of woody biomass available in Baker
County and within 35 miles to supply a $9 million, three-part project.
It would consists of a 1-megawatt gasification power plant that would
use 35,000 green tons of wood a year, a 20,000-tons-a-year pellet mill
and a firewood operation producing 2,000 cords of firewood annually.
Revenue calculations used in the study are based on current prices of 7 cents per kilowatt for electricity, and retail prices of $150 per cord for firewood and $125 per ton for wood pellets.
"We kept away from saw logs because we don't want to compete with Boise Cascade," Henson said.
Henson said there's a growing demand for firewood and wood pellets in larger cities in the Willamette Valley, in California and in other urban areas.
Energy produced from biomass also is a growth industry, given President Obama's goals of increasing renewable energy and decreasing the nation's dependence on foreign oil.
"Running a pellet mill with a gasification plant is a good match for use of excess thermal energy. It's a good cost savings for a pellet manufacturer to have an energy plant next to it," Henson said.
Randy Guyer, secretary/treasurer for the woodlands association, said the combined operation as laid out in the study would employ 14 people at $12 to $15 an hour.
Private forest owners would receive $25 per green ton (or up to $35 with tax credits) under 10-year contracts, and possibly more, depending on the market prices for energy, wood pellets and firewood.
Some association members questioned whether the $25 per ton base price would be enough to cover the cost of gathering and hauling the wood to the proposed plants.
Forest owner Kerry Borgen said prices should be set at a sustainable level so landowners wouldn't lose money if the tax credits are curtailed at some point.
(Editor's note: Borgen is the husband of Baker City Herald Publisher Kari Borgen.)
"All it takes is one catastrophic fire and we'd lose all our fuels reduction money," Kerry Borgen said. "It has to be a stand-alone profitable thing."
However, he pointed out that the wood wastes needed to supply the proposed biomass project is stuff that otherwise has no value.
"This gives us a home for wastes," Borgen said, including wood wastes from saw log operations, as well as from forest health and fuels reduction thinning operations.
Woodland owner Matt Kerns said, "We'll need supply specifications in the supply contracts, so we know what kind of stuff they want delivered."
Henson said he'd try to get supply specs to members of the association by the end of next week.
In the meantime, Henson said the most important step in developing the integrated biomass project is for landowners to determine the price at which they are willing to sign 10-year contracts to supply woody biomass.
If landowners feel the $25 price is too low, he said they need to figure out a price that will work and make an offer, somewhere between $26 and $42 per green ton.
Henson warned, however, that if landowners set the price too high, it may kill the project because there wouldn't be enough profit to entice investors or to make loan payments on the plants.
Near the close of Thursday's meeting, members of the woodland association voted to authorize Henson's company to put together a bid for development of a business plan.
Henson said a business plan should identify which woodland owners are willing to sign 10-year contracts, and name investors willing to put up the money to build the plants, along with likely buyers for the energy, wood pellets and firewood.
Randy Joseph said he thinks the study might be enough to attract investors or to submit to the Forest Service or other agencies with access to existing grant funds or some of the $787 billion in the federal stimulus.
"The big question is 'do we have enough people willing to commit biomass for 10 years,' " Henson said.
Gene Stackle of the Baker City/County economic development team said time is of the essence in terms of securing a slice of the federal stimulus.
He said the Forest Service and other government agencies keep talking about wanting shovel-ready projects within seven days.
"They're looking for projects that can be ready in seven days, 30 days, 90 days and 120 days," Stackle said.
Micky Edwards suggested the woodlands association get the county commission and legislators representing Northeastern Oregon to sign an agreement stating the organization's intent to supply wood wastes, develop a business plan and forge ahead with investors or government grants to build the integrated biomass project in Baker County.
"It's time to move," Edwards said. "We've got to move or we will be here talking about it a year from now."
She suggested the association draft a memorandum of understanding within two weeks presenting their three-part project as a shovel-ready, green, renewable energy project that's good for forests.
Henson said it would take longer than two weeks to get county and state officials to decide whether to sign such an MOU, but he said it could be done over a period of few months.
Chris Heffernan, a woodland owner and former member of the Oregon Board of Forestry, also called for action to move the project forward while the stimulus funding iron is hot.
"We've been working on this for 16 years and we are nowhere. Now funds are coming down, and we're lined up and ready to run," Heffernan said.
Between concerns about carbon from forest fires affecting the global climate, and the Obama administration's push for renewable energy sources such as biomass, Heffernan said he suspects it won't be long before slash burning is banned or greatly restricted.
When that happens, he said private woodland owners, industrial forest operators and agencies such as the Forest Service, BLM and Oregon Department of Forestry will be clamoring for a biomass plant where they can bring the wood wastes they used to burn.
"I think we are in a good spot for where our nation is. There's Bush bucks and Obama bucks earmarked for this part of the nation," Heffernan said. "For once I think it will pay to be in nowhere Oregon. There is going to be some pretty good opportunities (for renewable energy and forest health projects)."