Biomass conversions fire ahead

Two entities pursuing new heating options must import wood for fuel

Posted: Tuesday, May 11, 2010

Economics are forcing two new biomass ventures in Southeast Alaska to supply their wood-fired projects with imported wood.

Both the U.S. Coast Guard and Sealaska Native Corp. say the demand for wood products must grow before wood energy can be sourced here.

The Coast Guard, in the process of converting its Ketchikan base to wood heat, plans to purchase pellets from British Columbia, said Robert Deering, environmental and energy branch chief for the Coast Guard Civil Engineering Unit in Juneau.

"We hope the demand will motivate someone around here to develop a local mill but until that demand materializes, we have to import," Deering said.

Sealaska Native Corp. has not yet signed a contract for its wood supply for a boiler to be installed in the company's downtown office building this summer, but Natural Resource Planner Nathan Soboleff said it would likely come from Oregon, Washington or British Columbia.

Both of the projects' managers say they are moving to wood heat to decrease dependence on oil, reduce carbon emissions and save money on energy costs. They had hoped to source wood in Southeast Alaska but wood pellets are not yet available in the region at quantities needed to heat large buildings.

The market is stuck in a chicken-or-egg scenario, they say, with potential suppliers waiting for the demand and potential consumers waiting for the supply. Deering and Soboleff both said they hope their projects spark the industry.

One entrepreneur and his business partners backed away from a plan to develop a pellet mill on Prince of Wales Island in February, after research showed they were not likely to make a profit.

"There's just no market here," said Russell Heath, who said demand for at least 10,000 tons of wood pellets is required for a regional enterprise to work.

"We just didn't see that happening for four to five years," he said.

Other challenges include competition from large producers making low-cost wood products, and the region's small wood stream and high transportation costs, Heath said.

The prospect of carbon taxes also could negatively impact a business in the US, Heath said.

Craig heats several municipal buildings with wood chips supplied by a medium-sized local mill, but it's the only operation in the region.

Creating demand

In addition to its $3 million project in Ketchikan, the Coast Guard is looking into biomass projects on Japonski Island near Sitka and in Kodiak. Stimulus funds are helping to pay for feasibility studies in both of those communities.

U.S. Sen. Mark Begich, D-Alaska, who toured potential biomass projects in three Southeast communities this weekend, said Monday he would work on the federal level to help speed up the conversion of federal buildings.

If the Coast Guard switched to wood-fired boilers at all three bases, it would need more than 14,000 tons of wood pellets a year. A joint project being explored by the Coast Guard on Japonski Island near Sitka would increase demand further, while diverting a total of 3 million gallons of heating oil annually.

Sealaska plans to install a 16-foot-high silo to store wood pellets in the Sealaska Plaza in July, Soboleff said. The boiler was built in Austria and scheduled for shipment Monday, and the system could be turned on by Sept. 3.

The project will require 280 tons of wood pellets a year, and the company hopes additional buildings in the downtown area will be converted once the supply chain is in place.

In Canada's Northwest Territories, the conversion of 15 commercial buildings over four years increased wood demand from less than 200 tons a year to 12,000, Soboleff said.

"That's enough demand for a local pellet mill to survive on," he said.

• Contact reporter Kim Marquis at 523-2279 or kim.marquis@juneauempire.com.



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