Existing Wood-Based Production and Logistics Infrastructure

Tom Barnes, Executive Director, Michigan Association of TimbermenTom Barnes, Executive Director, Michigan Association of Timbermen

MREP Bioenergy & Geothermal Committee MeetingMichigan Public Service Commission

6 October 2010Traverse City Michigan

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Logging CapacityLogging Capacity

Michigan has roughly 1500 Logging CompaniesMichigan has roughly 1500 Logging Companies Harvesting approximately 4,000,000 cords annuallyHarvesting approximately 4,000,000 cords annually Two primary harvesting systems are Cut-to-Length (CTL) Two primary harvesting systems are Cut-to-Length (CTL)

Mechanized and Whole Tree MechanizedMechanized and Whole Tree Mechanized Products range from high valued veneer logs to energy chipsProducts range from high valued veneer logs to energy chips

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Logging CapacityLogging CapacityChallengesChallenges

Dwindling forest industry markets. Three pulp mills lost Dwindling forest industry markets. Three pulp mills lost between 2005 and 2006. One million tons of consumption between 2005 and 2006. One million tons of consumption lost!lost!

Operating cost continue to riseOperating cost continue to rise Lack of stability in existing marketsLack of stability in existing markets Work force challengesWork force challenges Finding or creating new markets to maintain our logging Finding or creating new markets to maintain our logging

capacitycapacity End result will and are going out of businessEnd result will and are going out of business Concern of having enough logging capacity once things turn Concern of having enough logging capacity once things turn

aroundaround04/20/2304/20/23 33

OpportunitiesOpportunities Michigan has the 5Michigan has the 5thth largest timberland largest timberland

resourceresource

Woody biomass includes entire living and Woody biomass includes entire living and dead trees, brush, stems, logs and forest dead trees, brush, stems, logs and forest product manufacturing residuesproduct manufacturing residues

Some woody biomass components are un-Some woody biomass components are un-utilizedutilized

Existing infrastructure utilizing and Existing infrastructure utilizing and producing woody biomassproducing woody biomass

Potential for integrated forest Potential for integrated forest manufacturing processes to utilize manufacturing processes to utilize multiple forms of fibermultiple forms of fiber

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Michigan Forest Inventory AnalysisMichigan Forest Inventory Analysis2004 FIA Data – Million Oven Dry Tons, Percent2004 FIA Data – Million Oven Dry Tons, Percent

Saplings (trees < 5"), 79, 10%

Cull & Dead Bole (trees >= 5"), 45, 6%

Growing Stock Bole (trees >= 5"), 482,

60% Cull & Dead Tops/Limbs/Stumps (trees >= 5"), 16, 2%

Growing Stock Tops/Limbs/Stumps (trees >= 5"), 172,

22%

Source – LaCourt, Donna .2007. Wood Fiber and the Bioeconomy. Powerpoint Presentation. September 11, 2007 04/20/2304/20/23 55

Forestland OwnershipForestland Ownership

Forest Service15%

State and Local20%

Other Federal2%

Private63%

Source – LaCourt, Donna .2007. Wood Fiber and the Bioeconomy. Powerpoint Presentation. September 11, 2007

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Growth to Removal RatiosGrowth to Removal Ratios

3.17

4.91

2.8

3.33

0

1

2

3

4

5

6

Total Timberland National Forest State Private

Source – LaCourt, Donna .2007. Wood Fiber and the Bioeconomy. Powerpoint Presentation. September 11, 2007

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Availability of Unharvested GrowthAvailability of Unharvested Growth

Availability of Unharvested Growth

45%

17%

12%

4%

0%

18%2%

Individual Individual unavailableState State unavailableNational Forests National Forests unavailableCounty and Municipal County and Municipal unavailable

SocialSocial Public policy impacts fiber availability on public and private landsPublic policy impacts fiber availability on public and private lands Landowner behavior research indicates only 17% of Michigan non-industrial/non-institutional landowners Landowner behavior research indicates only 17% of Michigan non-industrial/non-institutional landowners

unwilling to harvestunwilling to harvest EconomicEconomic

Competition with other marketsCompetition with other markets Delivered wood costDelivered wood cost

Un-harvested Growth by Ownership13%

0%

18%

2%67%

National Forests

Other Federal

State

County and Municipal

Individual

Source – LaCourt, Donna .2007. Wood Fiber and the Bioeconomy. Powerpoint Presentation. September 11, 2007

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LegendLargest SawmillsEnergyHardboardOSB

Pulpmill

VeneerOther Primary Mills

GS Removals ft0 - 45000004500001 - 90000009000001 - 1350000013500001 - 1800000018000001 - 22500000

3

Forest Product Primary Millsand Growing Stock Removals

USDA Forest Service Forest InventoryMapmaker Version 1.0 Michigan 2002RPA year Volume of All Removals fromGrowing Stock Inventory (cuft)

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MillMill TypeType LocationLocation VolumeVolume SpeciesSpecies

MenashaMenasha PulpPulp OtsegoOtsego 400 MTons400 MTons Mixed Hardwood, Mixed Hardwood, Sawmill ChipsSawmill Chips

Aspen Bay Pulp & FibreAspen Bay Pulp & Fibre PulpPulp MenomineeMenominee 400 MTons400 MTons Softwood, Aspen & Softwood, Aspen & MapleMaple

SAPPI Fine PaperSAPPI Fine Paper PulpPulp MuskegonMuskegon 500 MTons500 MTons Aspen & Mixed Aspen & Mixed HardwoodHardwood

GFP Strandwood Molding CorpGFP Strandwood Molding Corp Particle BoardParticle Board HancockHancock 20 MTons20 MTons AspenAspen

Georgia-PacificGeorgia-Pacific Particle Board Particle Board GaylordGaylord 600 MTons600 MTons Mixed Hardwoods, Mixed Hardwoods, Aspen, Red and Jack Aspen, Red and Jack Pine, Mill ResiduesPine, Mill Residues

Buskirk Lumber CoBuskirk Lumber Co SawmillSawmill FreeportFreeport 50 MTons50 MTons HardwoodsHardwoods

Michigan Primary Mill Closures From 2003 To The Present

Source – Weatherspoon, Anthony. 2007. Michigan Woody Biomass Inventory. Powerpoint Presentation. May 8, 2007

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Harvesting TypesHarvesting TypesCut-to-lengthCut-to-length

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141404/20/2304/20/23

Harvesting CostHarvesting CostCut-to-LengthCut-to-Length

Cutting & Cutting & ForwardingForwarding

($/Ton)($/Ton)

TransportationTransportation

($/Ton)($/Ton)

Transportation Per MileTransportation Per Mile

After First 20 MilesAfter First 20 Miles

($/Mile)($/Mile)

$15.25$15.25 $9.75$9.75 $0.15$0.15

Source – Personal communication with MAT Board Members

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Operational Cost To Harvest Forest ResidueOperational Cost To Harvest Forest Residue(Cut-to-Length Harvest(Cut-to-Length Harvest11))

** Sold tops on landing to a commercial chipping operation

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Whole TreeWhole Tree

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191904/20/2304/20/23

Harvesting CostHarvesting Cost

Cutting, Skidding & Cutting, Skidding & ChippingChipping

($/Ton)($/Ton)

TransportationTransportation

($/Ton)($/Ton)

Transportation Per MileTransportation Per Mile

After First 20 MilesAfter First 20 Miles

($/Mile)($/Mile)

$15.25$15.25 $8$8 $2$2

Source – Personal communication with MAT Board Members

Cutting & Cutting & SkiddingSkidding

($/Ton)($/Ton)

Loader CostLoader Cost

($/Ton)($/Ton)

TransportationTransportation

($/Ton)($/Ton)

Transportation Per MileTransportation Per Mile

After First 20 MilesAfter First 20 Miles

($/Mile)($/Mile)

$8$8 $2$2 $9$9 $0.50$0.50

Whole Tree including Chipping

Chainsaw Logging

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Operational Cost To Harvest Forest ResidueOperational Cost To Harvest Forest Residue(Whole Tree Harvest(Whole Tree Harvest11))

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Biomass InventoryBiomass Inventory

TOTAL WOODY BIOMASS ON TIMBERLAND IN MICHIGAN (2005 FOREST INVENTORY ANALYSIS)

86

126

167

87

32

47

58

31

7 7

1811

3 36 4

0

20

40

60

80

100

120

140

160

180

EUP WUP NLP SLP

FIA SURVEY UNIT

MIL

LIO

N T

ON

S

'MERCH_BIOMASS_GS_TMLD' 'TOPS_LIMBS_STUMPS_GS_TMLD'

'MERCH_BIOMASS_CULL_TMLD' 'TOPS_LIMBS_STUMPS_CULL_TMLD'

Source – Weatherspoon, Anthony. 2007. Michigan Woody Biomass Inventory. Powerpoint Presentation. May 8,

200704/20/2304/20/23 2222

Growing stock (commercial)Growing stock (commercial) CullCull SpeciesSpecies Possible at county levelPossible at county level Does not address availabilityDoes not address availability

Source – Weatherspoon, Anthony. 2007. Michigan Woody Biomass Inventory. Powerpoint Presentation. May 8, 2007

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John Deere Wood Energy Harvester John Deere Wood Energy Harvester 1490D1490D

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Bundling CostBundling Cost22

Potential production rate of 20 bundles per machine hour (8 bone dry tons {bdt}).

Cost of colleting biomass and creating “Composite Residue Logs” (CRL) would be about $16 per bdt.

Forwarding is estimated to cost $5 per bdt based on 4 loads per productive hour.

With a hauling cost of $0.10 to $0.20/ton-mile, a 50-mile haul would add $5 to $10 per bdt.

Chipping at the energy facility may incur an additional $3 per bdt.

Total cost to deliver chipped hog fuel from CRL’s would be about $29 to $34 per bdt.

Approximately half the total delivered cost is due to bundling function.

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Bundle FactsBundle Facts33

Standard Bundle 30” x 10’Standard Bundle 30” x 10’ Standard Bundle weighs an average of 1,000lbStandard Bundle weighs an average of 1,000lb Average Production 15 – 30 Bundles/hourAverage Production 15 – 30 Bundles/hour Standard Bundle contains enough heat energy to Standard Bundle contains enough heat energy to

produce 1MW of electrical powerproduce 1MW of electrical power Approximately 16 bundles could power the average Approximately 16 bundles could power the average

home for 1 yearhome for 1 year 2 standard bundles equals the amount of energy in a 2 standard bundles equals the amount of energy in a

refined barrel of oil and equal 6 mcf of natural gasrefined barrel of oil and equal 6 mcf of natural gas Biomass is carbon neutralBiomass is carbon neutral

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Retail Price for the 1490D is $450,000.Retail Price for the 1490D is $450,000. Hourly owning cost would be roughly Hourly owning cost would be roughly

$58/scheduled machine hour (smh).$58/scheduled machine hour (smh). Operating cost includes fuel, lube, repair and Operating cost includes fuel, lube, repair and

maintenance, chainsaw and twine operating maintenance, chainsaw and twine operating cost would be $50/smhcost would be $50/smh

Adding Labor total cost to operate $130/smh.Adding Labor total cost to operate $130/smh.

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SummarySummary

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MarketsMarketsBiomassBiomass

Co-GenerationCo-Generation Combined Heat and Power FacilitiesCombined Heat and Power Facilities Wood pellet productionWood pellet production

Residential GradeResidential Grade Industrial GradeIndustrial Grade

Wood to Ethanol ProductionWood to Ethanol Production

TraditionalTraditional High and Low Grade SawmillsHigh and Low Grade Sawmills Pallet MillsPallet Mills Board Production – OSB, Particle, Paneling etcBoard Production – OSB, Particle, Paneling etc PulpPulp04/20/2304/20/23 3232

Timber Harvesting Issues Timber Harvesting Issues Transportation Transportation

Biomass facility delivery distance less then 50 milesBiomass facility delivery distance less then 50 miles Rising fuel cost will increase production costsRising fuel cost will increase production costs

Stumpage priceStumpage price Ever increasing stumpage pricesEver increasing stumpage prices Many cases stumpage prices for forest residue are Many cases stumpage prices for forest residue are

excessiveexcessive Delivery PricesDelivery Prices

Prices for biomass are typically lower then production costPrices for biomass are typically lower then production cost Raw material cost typically largest expenseRaw material cost typically largest expense

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Harvest Removal ConcernsHarvest Removal Concerns

Site QualitySite Quality Nutrient depletionsNutrient depletions Increased site temperaturesIncreased site temperatures Greatest impact on poor sitesGreatest impact on poor sites

Deer/Elk Densities Deer/Elk Densities Increased browsing on natural regenerationIncreased browsing on natural regeneration Forest residue protects regenerationForest residue protects regeneration

Seed SourceSeed Source Removal of forest residue could impact natrual regneration Removal of forest residue could impact natrual regneration

for certain tree species, ie Jack Pine.for certain tree species, ie Jack Pine.

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Benefits of Biomass RemovalBenefits of Biomass Removal

Creates a “park-like” appearance for the landownerCreates a “park-like” appearance for the landowner Job creation in rural communitiesJob creation in rural communities Hazardous fuel reduction, lowers fire riskHazardous fuel reduction, lowers fire risk Markets for non-merchantable fiberMarkets for non-merchantable fiber

Salvage Timber – insect or fire damageSalvage Timber – insect or fire damage Lowers dependency on petroleum based productsLowers dependency on petroleum based products Increases utilization of our renewable resourceIncreases utilization of our renewable resource

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Wood Is Good!Wood Is Good!

Wood is available year round.

Logging & transportation infrastructure for wood is well developed and proven.

Forestry for energy production is environmentally sound

Less site disturbance We’ll make more

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Any Questions?

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ReferencesReferences

1.1. Peterson, Donald; The Cost of Extracting Logging Peterson, Donald; The Cost of Extracting Logging Residues Residues for Biomass Fuels, Great Lakes Region, for Biomass Fuels, Great Lakes Region, September September 2005.2005.

2.2. Rummer, Bob; Len, Dan; and O’Brien, Obie; Rummer, Bob; Len, Dan; and O’Brien, Obie; Forest Forest Residues Bundling Project: New Technology for Residues Bundling Project: New Technology for Residue Residue RemovalRemoval, May 2004. Southern Research , May 2004. Southern Research Station, Auburn, Station, Auburn, Alabama.Alabama.

3.3. Timber Jack 1490D Product Brochure.Timber Jack 1490D Product Brochure.4.4. The use of trade names or references to specific The use of trade names or references to specific

company or products in this publication does not imply company or products in this publication does not imply endorsement; they are intended only as an aid to the endorsement; they are intended only as an aid to the reader.reader.

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