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A growing opportunity

Landowners learn about biofuels

July 31, 2013
By STEPHEN ANDERSON - DMG writer (sanderson@mininggazette.com) , The Daily Mining Gazette

BRUCE CROSSING - Western Upper Peninsula landowners may have an opportunity to join a biofuel-producing cooperative that could convert their unused land into green energy crops, create jobs and reduce energy costs across the region.

About two dozen stakeholders gathered at Twilly's Sports Bar and Grill in Bruce Crossing Tuesday night for a free two-hour biofuel workshop to learn more about the opportunity, hear about a recently completed pellet plant business plan and discuss the present biofuel market and opportunities.

"There is a market for this material that is not going to go away," said Kim Stoker, executive director of the Western Upper Peninsula Planning & Development Region, whose organization received funding to look into local biofuel possibilities. "... What we're here for tonight is to listen to whether we can make a strategy work to get people to do something with their property."

Article Photos

Stephen Anderson/Daily Mining Gazette
Landowners and other stakeholders gather Tuesday night at Twilly’s Sports Bar and Grill in Bruce Crossing for a free biofuel workshop to discuss biofuel opportunities in the western Upper Peninsula. Don Peterson, president of Renewable Resource Solutions, is presenting in this photo about a Porcupine Pellet Mill business plan.

Roger Woods, senior lecturer in Operations Management at Michigan Technological University, led the cooperative information session Tuesday, noting there are estimated to be 56,000 acres of retired agricultural lands within 60 miles of Ontonagon. At three dry tons per year, which is on the low end of projected yield, that land could generate 168,000 dry tons of woody biomass per year.

According to the U.S. Forest Service's Forest Inventory & Analysis Unit data, there are about 37 million dry short tons of supply in native forests, but Woods said the average yield of an acre of native forest is five dry tons in a 10-year period - compared to 30 dry tons of hybrid poplars.

Hybrid poplars, as opposed to switchgrass and willow, are the best biofuel crop for the area, according to research from Robert Froese, associate professor in Tech's School of Forest Resources and Environmental Science.

"My recommendation is you look at doing hybrid poplars. As far as the return ... once you get the 3.3 dry tons per acre, you have a positive payback," Woods said, adding that most tests project a yield of about 3.75 dry tons per acre.

Much of the discussion Tuesday night surrounded whether or not producing biofuel crops was economically feasible, particularly with natural gas prices being so low. Woods said natural gas prices will likely go back up, particularly if fracking stops, and biomass is projected to grow about 7 percent through 2040, according to the U.S. Energy Information Administration.

"What I'm trying to get you to think about is not just today's situation," said Woods, who said the best way to make biofuel crops economically efficient is to form a cooperative among landowners.

A cooperative is a member-owned and member-controlled business that operates for the mutual benefit of members, and some of the benefits include leveraging small dollar investment, stability and affordable products and services not available to individuals. For example, herbicide and fertilizer can be purchased cheaper in bulk.

"The goal is, if everyone's interested in a cooperative, is can this be done for cheaper?" he said. "... A lot of co-ops, it comes down to getting critical mass, and unfortunately, based on what we have today, we're not there yet."

Fewer than 10 landowners attended Tuesday's workshop, but Woods, WUPPDR and others are looking for more interested landowners. Anyone interested can learn more about the opportunity at upbiofuel.com, and by contacting James Klapperich, WUPPDR forestry technician, at jklapperich@wuppdr.org or 482-7205, extension 320.

If enough people show an interest, a steering committee will be formed, then a feasibility study will be conducted and a business plan produced.

"When I said energy is king, I still believe it," Stoker said in his closing remarks Tuesday. "I still believe that if the government would have subsidized biomass facilities like they're subsidizing wind power, we'd be growing trees right now instead of putting up (wind turbines)."

J.R. Richardson, technical manager of Traxys Power Group, also spoke Tuesday, noting that wind and solar are entirely dependent on conditions, but a base load, such as biomass is much more reliable. Traxys operates L'Anse Warden Electric Company, a 20-megawatt biomass-burning power plant, which is one potential buyer for the wood that could be produced through a cooperative.

"There's a lot of agricultural land that's not used for agriculture anymore. The whole idea is to use that for something we can harvest," said Richardson, who also noted the job creation benefits of biomass, as opposed to wind and solar power. "Basically, put farmers to work, put loggers to work and put people making power to work.

"... You can probably put four or five green power plants in the Upper Peninsula of Michigan by using closed-loop systems (provide their own wood through systems like the cooperative) and not affect the current supply. It could put 400 people to work."

Also speaking Tuesday were Don Peterson, president of Renewable Resource Solutions, about a recently completed Porcupine Pellet Mill business plan (which can be found at upbiofuel.com), and Jim Yoder, area specialist with the U.S. Department of Agriculture Rural Development, based out of Gladstone.

"The bottom line is what the business plan shows is that right now to be economical you have to produce 60,000 tons (of pellets) per year," Peterson said. "If you produce 60,000 tons, where are you going to sell it? Who's going to buy it? You aren't going to sell it around here."

According to Peterson, Europe is a huge market for pellets, but 95 percent of the U.S. market is residential purchases. Having transportation in place, such as rail or port access is critical as well, which is why most successful U.S. pellet plants are located on the southeast coast of the Atlantic Ocean. A plant doesn't seem feasible in the western U.P. just yet, according to discussion Tuesday.

Yoder only spoke briefly, adding that USDA could be of financial assistance if biofuel production picked up locally, particularly through a cooperative.

"You're going to need a good business plan. At that point, you're going to have a source for your product, you're going to have a market for your product and we can possibly come in and help with some of the financing," he said. "All I'm trying to do right now is put a seed in the back of your mind."

Stoker said he thinks biomass could work in the western U.P., despite concerns about the average age of landowners in attendance Tuesday - close to retirement age, on average.

"A cooperative takes a champion. In Ontonagon, it takes a champion, whether that's the (Economic Development Corporation), the planning commission, the county board or one single landowner that says, 'What do we need to do to make that next step?'" Stoker said.

Richardson added: "To put U.P. people to work, there is no better shovel-ready project than growing trees and harvesting trees and taking coal plants and turning them into biofuel plants. In the U.P., you could put 400 people to work in a year, right there, staring right at us."

To get involved, visit upbiofuel.com or contact Klapperich at jklapperich@wuppdr.org or 482-7205, extension 320.

 
 

 

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