Exploring the Northeast Chapter 4 Social Studies Grade 4 Mrs. Susko.
Low Grade Wood Markets in Northeast US 2016inrsllc.com/Low Grade Situation northeast 2016v3.pdf ·...
Transcript of Low Grade Wood Markets in Northeast US 2016inrsllc.com/Low Grade Situation northeast 2016v3.pdf ·...
Low Grade Wood Markets in Northeast US 2016
Charles Levesque
Innovative Natural Resource Solutions LLC
Phone 603-588-3272
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Sawlogs Pulpwood Biomass
Volume (Tons)
Value ($)
Volume and Value to Landowner of Products from a Timber HarvestNorth East State Foresters 2013
All NH, 2010
Markets for Low-Grade
Pulp and Paper
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016e
Estimated Pulpwood Consumption by Maine Pulp MillsEstimates Based Upon INRS Data
Since 1999, the Northern Forest region has lost 11 pulp mills
New York- Deferiet- Lyons Falls
New Hampshire- Groveton- Berlin
Maine- Westbrook- Bucksport- Old Town- Lincoln- Millinocket- East Millinocket- Madison (May 2016)
Pulp
an
d B
iom
ass
Clo
sure
sSi
nce
20
14
Loss of Low Grade Markets in MaineAnnual Tons (estimated), 2014-2016
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
HardwoodPulpwood
Spruce / Fir Pine / Hemlock Biomass Biomass (displacedby natural gas)
* Biomass displaced by natural gas is at a facility that can use either fuel;
a change in economics of the two fuels would likely result in the resumed use of biomass.
Pulp and Paper• Pulp and paper mills remain region’s largest consumer of wood
products, and represent significant fixed infrastructure.
• Mills produce a variety of products, including market pulp, communication papers (coated and uncoated), and tissue. Each of these markets is unique.
• The Northern American paper industry has been shrinking, both in output and capacity. Individual mills often do well, but new investment in production is extremely limited in the U.S.
• Maine and New York will remain paper producing states for well into the future
• Expect reduced pulpwood consumption, and reduced prices for pulpwood (a bunch of factors in this one, not just demand).
• The closures are NOT cyclical (they are structural world-wide).
Challenges to the Pulp & Paper Industry
• You will hearHigh taxes
High energy costs
High wood costs
And so on
• There are all very real, and present real challenges to the industryMills and regions now fighting over a shrinking worldwide pie
• They aren’t the fundamental issue, which is change in the marketplace (reduced world market), and a capital intensive industry that is hard to change with any reasonable speed.
Biomass electricity
Wood Energy (cont.)
Innovative Natural Resource Solutions, LLC 12
Biomass Power Plants
Wood Energy (cont.)
Innovative Natural Resource Solutions, LLC 13
Biomass Power Plants (new)
Wood Energy (cont.)
Innovative Natural Resource Solutions, LLC 14
Biomass Power Plants (closed)
Biomass Electricity
(MWh)
“Green” Attributes(Renewable Energy Certificate)
Electricity (MWh)
(Wholesale)
Average over the next year$47.14
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
Average Real Time Wholesale Electricity Prices, ISO New EnglandFutures Prices as of 4/25/2016 9:15 AM
Actual Futures
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,0001
99
7
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Biomass Fuel Use - New HampshireGreen Tons / Year, 1997 -2015
Bio Energy Corporation
Bridgewater Power - Ashland
Burgess BioPower
Concord Steam
DG Whitefield (formerly Whitefield P&L)
Indeck – Alexandria
Pinetree – Bethlehem
Pinetree – Tamworth
PSNH Schiller (Portsmouth)
Springfield Power (formerly Hemphill P&L)
Biomass Electricity – Fuel Costs (estimated in New England representing a range of plant sizes)
• ~1.6 - ~1.8 green tons of fuel per MWh• That means if biomass fuel is $28 / ton, fuel cost is ~$44.80
to ~$50.40 per MWh (hypothetical)
•Add in staffing, consumables (emissions control), maintenance, debt service, etc. @ $30 to $35 per MWh•Cost of generation (absent profit) is somewhere around
$75 to $85 per MWh• That’s with $28/ton fuel…
Biomass Electricity – RECs
•Plants need Renewable Energy Certificates (RECs) to operate economically• MA has effectively excluded stand-alone biomass
Set an efficiency standard that cannot be met by a stand-alone facility
Also a forestry standard, which suppliers were responsible for
• CT has a phase-down for biomass beginning in 2018(?)• Biomass a huge economic boost to local regions, forestryand it is the only renewable with ongoing economic benefits• Apparently not as important to Southern New England as
we would hope…
REC Prices (Connecticut, indicative, broker quote, spring 2016)
$- $10 $20 $30 $40 $50
2017
2016
2015
What does it take to operate biomass in 2016?
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
Revenue Expenses
Electricty RECs (CT) Fuel O&M
• Assumes:
Electricity at current futures price for the next year
RECs at current broker quote
Biomass fuel at $28, 1.7 green tons per MWH
O&M at $30 per MWh
• With these assumptions, this is not an attractive business
Biomass thermal
Innovative Natural Resource Solutions, LLC 24
Wood Pellet Plants today
Innovative Natural Resource Solutions, LLC 25
Wood Pellet Plants 1995
26
NH Biomass thermal
• Now have 116 commercial/industrial facilities using wood chips or pellets for heat in NH (up from 30 in 2005)
• Over 1000 residential (homes) using wood pellets in central heating systems
• Economic and Environmental Benefits:
$9.78 million saved in heating costs
$4.7 million direct spending on wood pellets and chips
$29.4 million in total economic benefit to New Hampshire
57,217-ton net reduction in carbon dioxide emissions
The glass is half full…• We have some good low-grade markets, and are incredibly well
positioned compared to other parts of the country
• We have the forest resource and supply infrastructure (landowners, loggers, entire forest industry ecosystem) that would make other regions jealous
• We live in close proximity to (and are part of) the greatest collection of consumers in the history of the world
• There may never be a better time to be develop a project or technology that uses low-grade, particularly softwood.
• But we are in trouble with low-grade…
…2001-02 DRED studies
• PSNH had just bought out 2 wood-fired power plants (Alexandria & TIMCO) and about to buy-out a third (Bio-Energy)
• Fears of more buy-outs
• Beginning fears about Berlin and Groveton pulp mills
• Concern for what reduced low-grade markets can do to good forestry and sawmills because residues are so important to their business model.
…2001-02 DRED studies (cont.)
• Existing biomass power plants
• Pulp and paper manufacturing
• Pellets
• Chip export
• Small-scale gasification
• Process heat / co-location
• Ethanol and biochemicals
• Solid wood composites • Firewood • Animal bedding • Landscaping mulch • Densified logs • Lumber from small-diameter
material • Co-firing with wood at coal-
fired energy plants.
Phase I – review of low-grade market possibilities:
…2001-02 DRED studies (cont.) Phase I conclusions
• Pulp & paper largest low-grade market – work hard to keep
• Biomass power plants – work hard to keep
• Conduct a feasibility study to determine the economic feasibility of siting a Medium Density Fiberboard plant in New Hampshire
• develop a plan for the use of wood in co-firing at Merrimack Station
• Other remote possibilities: Oriented Strand Board, Ethanol, Chip exporting from the Port of Portsmouth
…2001-02 DRED studies (cont.)
• MDF would use 300,000 tons /year
• Cost $153 million (2001 dollars)
• Conclusion:
Power costs too high
Wood costs too high
Too distant to market
• NOT FEASIBLE
Phase II – MDF plant feasibility:
…2001-02 DRED studies (cont.)
• Conclusion of Phase I & II – Only opportunity for large-scale low-grade markets in NH is biomass electricity plants
• To operate in a deregulated market, the wood plants will receive $40/MWh while it costs $54/MWh to produce
• Subsidy needed was $14/MWh or $10.8 million per year for all the plants…
Phase III – Keeping Biomass Electricity Plants
…2001-02 DRED studies (cont.) Phase III – Keeping Biomass Electricity Plants
…2001-02 DRED studies (cont.) Phase III – Keeping Biomass Electricity Plants
Charles Levesque
Innovative Natural Resource Solutions LLC
Phone 603-588-3272Email [email protected]
www.inrsllc.com