Bioenergy & Wood ProductsConference

January 21, 2004Denver, Colorado

Presented by:William H. Carlson,Vice President

Wheelabrator TechnologiesAnderson, California

Getting the most from your Thinning Dollar

A Checklist for Federal Land Managers

Before

After

Forest Health Math 101

Problem 1

You have 190 million acres of overstocked public land at risk of loss to catastrophic wildfire, containing 80 tons/acre of excess wood. You have 20 years to thin 50% of this land, assuming the rest must be left due to reserves, steep slopes, prescribed fire treatment, etc.

Questions

1. How much wood must you remove per year?

2. What will you do with it?

3. What will it cost?

4. How do I go about it?

Answer to Question 1: How much wood must you remove per year?

380 million tons per year*

*equivalent to half the annual

output of the U.S. coal industry

Answer to Question 2: What will you do with it?

1. Transportation fuels AND/OR

2. Commodity forest products AND/OR

3. Steam and electric power generation

Answer to Question 3: What will it cost?

$0-4.75 Billion per year*

* 4.75 billion figure is $1000/acre

Thinning Without Wood Utilizaton

$800-1,000 per acre

plus poor results

Moving the Annual Thinning Cost Closer to $0

Basis for example:– Nearly 1.5 million acres thinned over 20 years

in N. Calif.– Both public and private lands– Exceptional results from forest health

perspective– Excellent results from public perception

perspective– Low or no cost to landowner

`

Volumes Values Costs Profit

(MBF) (GT) (BDT)

Logs 6 48 27.36 $1,680 $1,200 $480

Pulp Chips 0 0 $0 $0 $0

Hog Fuel 30 17.1 $257 $677 ($420)

BD/RR $117.00 ($117)

TOTALS 78 44.46 $1,937 $1,994 ($57)

Economic Analysis of Forest Thinning Operation(For Multiple Products On Per Acre Basis)

Prepared by S.M. Jolley

moisture content (% water) = 43%green ton log weight /MBF = 8

Product Value Assumptions:$/MBF log value at mill = $280

$/BDT pulp chip value in van = $55 (not used)

Note: Delivered hog fuel value assumed to be: $15.00 /BDTTrucking Costs: $55 per hour

Round Trip Time: 3 hours

BDT of hog fuel per load = 14.25

Product Production Cost Assumptions $/MBF delivered logging costs = $200

$/BDT pulp chipping costs = $50$/BDT hog fuel processing costs= $28

Brush Disposal (BD)/ Road Replac. (RR) = $117 per acre based on: $1.50 per GT removed

Assumptions

Disclaimer:The assumptions used are based on the economic conditions that existed in northern California in 2003, and must be customized to fit other regions, forest types, and economic conditions.

Stand Characteristics:Lands that have been thinned mechanically are generally 0-30% slope. As a result of improved harvesting technology the slope can now be pushed to 50%. Most stands are the result of many decades of selection harvest resulting in thickets that may carry thousands of trees per acre, separated by openings and skid roads that have been reused over the years. The stands have been well protected from wildfire for most of the twentieth century and therefore consist of trees from every diameter class, but are very heavy to the smallest classes. These stands can be described as advanced second growth with a classic fuel ladder problem.

Most thinning operations in stands fitting this description concentrate on removing the suppressed and intermediate (unmerchantable) trees while leaving the dominant and co-dominant trees, but without exception also yield some amount of merchantable log volume. Merchantable trees are removed to achieve spacing goals or to void a stand of defective, diseased, or dying trees.

Why Does this Example Work?• Three principles of thinning:

– Infrastructure, Infrastructure, Infrastructure

• Needs both forest products and biomass plants

• The more wood utilized for forest products, the better the thinning economics– For instance, if good pulp chip market, the

example would yield a positive return– There is no conflict between forest products

and biomass energy.

Answer to Question 4How do I go about it?

Utilize the 10 step checklist that follows!

1. Decide what you want land to look like:– Spacing– Age mix– Species mix– Wildlife provisions

Perhaps prepare a several acre sample plot

A Checklist for Federal Land Managers

Treating maximum acres for minimum cost instead of minimum acres for maximum cost

2. Initially, to establish credibility and limit cost, thin close to existing infrastructure

– Northern California– Southern Oregon– Michigan– Maine

A Checklist for Federal Land Managers

Treating maximum acres for minimum cost instead of minimum acres for maximum cost

3. Use stewardship contracting authority in order to establish proper relationship with contractors and allow agency to focus on final results on the land.

These are not timber sales!

A Checklist for Federal Land Managers

Treating maximum acres for minimum cost instead of minimum acres for maximum cost

4. To create new infrastructure, make the stewardship offering as large as possible.

– 100,000+ acres5. To create new infrastructure, make the

stewardship offering as long as possible– 10 year minimum– 20 years preferable

A Checklist for Federal Land Managers

Treating maximum acres for minimum cost instead of minimum acres for maximum cost

6. Don’t forget that there was once an infrastructure throughout the federal lands that might be brought back with proper offerings.

A Checklist for Federal Land Managers

Treating maximum acres for minimum cost instead of minimum acres for maximum cost

7. Do not place artificial constraints on offerings that will raise the cost per acre

– Arbitrary size limits– Ability to unilaterally change

prescription– Seasonal restrictions

Remember, the goal is to save these lands from loss to catastrophic wildfire.

A Checklist for Federal Land Managers

Treating maximum acres for minimum cost instead of minimum acres for maximum cost

8. In offerings, use thinning along existing road network to block lands into defensible perimeters as quickly as possible

– The Quincy Library Group Model

9. Insure that your agency has done all it can to create the best economic climate for bidders that will result in lowest cost per acre for service

– Help with federal energy bill passage– Help with state energy incentives

A Checklist for Federal Land Managers

Treating maximum acres for minimum cost instead of minimum acres for maximum cost

10. Never, for a minute, forget the ultimate goal:

– Return the federal lands to a sustainable condition as quickly as possible at a reasonable cost

– Treat it like a crisis, because it is!

A Checklist for Federal Land Managers

Treating maximum acres for minimum costs instead of minimum acres for maximum costs

Conclusion

You now have nearly all the authorities you need to begin large scale restoration work. If you carefully, but quickly, proceed, you can accomplish the task well within the authorized amount from Congress in the Healthy Forests Restoration Act of 2003