HomeMy WebLinkAboutAttachment 2 - Port Graham Biomass Project - PGVC Chena Power
Port Graham Biomass Project
Prepared for: Chugachmiut
Port Graham Village Council
By: Chena Power
Winters & Associates
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Port Graham Biomass Project
TABLE OF CONTENTS
1 EXECUTIVE SUMMARY ............................................................................................................................1
2 COMMUNITY OVERVIEW ........................................................................................................................1
3 COMMUNITY FUEL PRICES/CONSUMPTION ...........................................................................................3
4 PROJECT BACKGROUND ..........................................................................................................................5
5 DESCRIPTION OF PROJECT ......................................................................................................................7
6 PORT GRAHAM BIOMASS RESOURCE ASSESSMENT ...............................................................................9
7 LAND OWNERSHIP ............................................................................................................................... 13
8 PROJECT ECONOMICS .......................................................................................................................... 14
9 CALCULATION OF OPERATING COSTS FOR THE GARN ......................................................................... 17
10 BIOMASS OPERATIONS PLAN ........................................................................................................... 22
11 STAFFING AND TRAINING ................................................................................................................ 22
12 EQUIPMENT REQUIREMENTS .......................................................................................................... 25
13 PERMITS REQUIRED ......................................................................................................................... 26
14 FINANCIAL AND OTHER RESPONSIBILITIES ...................................................................................... 27
15 APPENDIX 1 ...................................................................................................................................... 29
16 APPENDIX 2 ...................................................................................................................................... 33
17 APPENDIX 3 ...................................................................................................................................... 40
18 APPENDIX 4 ...................................................................................................................................... 41
19 APPENDIX 5 ...................................................................................................................................... 57
20 REFERENCES ..................................................................................................................................... 58
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1 EXECUTIVE SUMMARY
Port Graham Village Council (Port Graham) and Chugachmiut, a non‐profit tribal organization
serving the Native peoples of the Chugach region, completed preconstruction activities that pave
the way towards reduced local energy costs through the construction and operations of a cord
wood biomass heating system. When operational, the biomass system will provide heat to four
community buildings, reducing diesel consumption by approximately 85% or 5365 gallons
annually. The existing diesel‐fired hot‐water heating system will be retained and used for backup.
Community buildings that will be supplied with hot‐water heat from the biomass system include
the following structures:
Anesia Anahonak Moonin Health and Dental Clinic
Port Graham Village Council offices
Port Graham Public Safety Building/Fire Department
Port Graham Corporation Office Building which also houses the Port Graham Museum and
Head Start Center
In preparation for funding and construction of the cordwood biomass system, the community,
through two different funding sources, has completed a construction cost estimate, final design, a
harvest and operations plan and has secured all required permits. This report incorporates all
necessary documents for Port Graham to proceed with construction of a cordwood biomass
system. The proposed cord wood biomass system displaces 80‐85% of the heat required to heat
the facilities. The project will reduce the funding required for space heating of community
facilities and shift a portion of the cost of energy from out of town corporations to local residents –
allowing for cash to stay in the local economy. Shifting to a local, lower cost fuel source will also
act as an effective hedge against future increases in heating oil costs.
2 COMMUNITY OVERVIEW
Port Graham has a population of 177 (2010 US Census). Its population is primarily Alaska Native
(90.4%) has increased 6.6% between 1990 and 2010. Port Graham is a traditional Alutiiq village
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relying primarily on subsistence (DEC 2012). Primary employment sources are local
tribal/corporation/public sector, the school and health clinic. The U.S. Census Bureau 2006‐2010
American Community Survey estimates 32 Port Graham residents as employed; the local
unemployment rate in Port Graham is 22.0% with another 44.6% of the population out of the labor
force (unemployed and not seeking employment). The average median household income in Port
Graham is $18,942.
Port Graham is an unincorporated community. The Regional Native Corporation that covers Port
Graham is the Chugach Alaska Corporation. The Village Corporation is the Port Graham
Corporation and the Village Council is the Port Graham Village Council. Chugachmiut serves as
the regional non‐profit corporation for the community.
The community is located at the southern end of the Kenai Peninsula on the shore of Port Graham.
It is adjacent to Nanwalek (population 287), 7.5 miles southeast of Seldovia and 28 air miles from
Homer. Winter temperatures range from 14 to 27 degrees F, summer temperatures vary from 45 to
65 degrees F. Average annual precipitation is 24 inches.
Port Graham is not accessible by road. A state‐owned 1,975' long by 45' wide dirt/gravel airstrip is
available. The community offers docking facilities. There is a 4‐mile trail to Nanwalek. The State
of Alaska is in the planning stages for a new airstrip to serve the villages of Nanwalek and Port
Graham ‐ the main transportation connection between the villages and Homer and the road
system. Construction is slated to begin in 2017 or 2018 once land and right of way acquisition is
completed.
All community facilities but one are wood structures with metal roofs and are either on
wood, concrete, or concrete block foundations. These buildings are currently heated with
diesel‐fired, hot‐water systems. A sufficient quantity of biomass is available in the forested
region surrounding port Graham to supply energy to the village. Over 500,000 green tons
of biomass could be accessible from Port graham forested lands with half the availability
located within ¼ mile of the existing roadway (The Potential for Biomass District Energy
Production in Chugachmiut Communities, Energy & Environment Research Center, July
2007 and Port Graham Biomass Resource Assessment, Nathan Lojewski, Chugachmiut
Forest, January 2013).
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3 COMMUNITY FUEL PRICES/CONSUMPTION
Current fuel prices (2013) in Port Graham are $5.95 per gallon for heating oil; prices have been
steadily rising since 2005. Fuel price trends in the Gulf Coast region largely mirror the trends in
the average Alaska fuel prices; prices have increased between two and four dollars per gallon over
the last eight years (Community & Regional Affairs, Research & Analysis, Fuel Price Survey, 2013).
The following table shows historical heating oil prices in two communities in the Gulf Coast
region.
In addition to historical fuel cost data, the Institute of Social and Economic Research (ISER)
annually produces fuel price projections. The Alaska Fuel Price Projections are developed for
the Alaska Energy Authority (AEA) for the purpose of estimating the potential benefits and
costs of renewable energy projects. These fuel price projections are used to evaluate the
economic feasibility of projects, although economic feasibility is only one of many factors of
the project evaluation process.
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The Alaska Fuel Price projections are a statistical estimation of potential utility avoided
fuel prices from 2013 to 2035, based on historic relationships between utility fuel prices and
crude oil prices reported by the U.S. Department of Energy, Energy Information
Administration (EIA). The report does not contain specific data for Port Graham or
Nanwalek; it does contain projections for two other non‐road accessible communities in
the region that are thought to be representative of Port Grahams’ fuel prices/situation.
The community diesel price projections use a Consumer Price Index average (1985‐2012)
multiplier of 3% per year. In modeling the economic benefit of the Port Graham biomass
project, the same assumptions were used, even prices have increased above 3% in the last
five years.
Current year fuel consumption figures (2013) for Tribal and Corporation facilities in the
community indicate fuel usage of 6310 gallons for the year at a cost of $5.95 gallon.
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Historically, fuel consumption has remained flat while prices have steadily climbed since 2005.
4 PROJECT BACKGROUND
Port Graham is moving forward to improve economic conditions in the community by reducing
the cost of living, utilizing local lands and resources, and reducing the cost of energy of tribal
facilities – thereby allowing limited financial resources to be spent on programs, not utilities.
There is a significant timber resource in close proximity to the community that is road accessible.
The forest resource is owned by Native corporations or located on privately held Native
Allotments; The Port Graham Village Council and Port Graham Corporation are large landowners
in the area. The community desires to maintain their cultural association with the land and
owners; Native Allotments are generally underutilized for economic development or timber and
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there is a need to increase the cash economy in the village. Some land owners are content with
current utilization.
In 2005, Port Graham began a process to identify the best technologies and systems to heat village
structures. In 2006, Port Graham was awarded a U.S Department of Energy (DOE) Tribal Energy
Program grant to conduct a biomass feasibility study to analyze the biomass resource data, evaluate
site selection and energy load, evaluate cogeneration technology, and determine the engineering
economics. The feasibility study identified community objectives, generally assessed the biomass
resource and assessed community heat loads, both residential and community facilities.
Technologies were evaluated at a high level, including looking at wood chips, multiple small
systems and a district heat loop.
In 2007 a report, The Potential for Biomass District Energy Production in Chugachmiut Communities
was prepared by Energy & Environmental Research Center. The study examined the economic and
technical feasibility for implementing biomass energy system(s). The authors performed load
evaluation, resource data analysis, reviewed energy and cogeneration technology and conducted an
economic analysis for the tribe. At the time the study was conducted woody biomass was considered a
viable option, as was fish oil from fishery activities. The report concluded the most economical and
technically viable options for the community was fish‐oil diesel blended fuel and indoor wood boilers.
Fishery activities have since ceased, making a fish oil‐diesel blend unnecessary and significantly
reducing the amount of diesel that could be displaced through the use of woody biomass.
The community of Port Graham also developed an Integrated Resource Management Plan (IRMP) in
2006 and further developed the policies to implement the IRMP in 2008. The IRMP represents a
holistic approach to resource management that recognizes that land, sea, sea coasts, freshwater
systems, their people and multiple land uses are all interconnected. The Port Graham IRMP explicitly
supports biomass systems for the community. Policy statements include:
Implement innovative options to reduce energy costs
Maximize natural resource management to ensure we have a forest in 100 years
Community will focus on developing a biomass energy facility.
During the course of evaluating the best system for Port Graham, the community considered the
technical challenges of environmental concerns especially those related to air quality and the
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health impact of smoke from inefficient heating systems. Biomass is by nature a high‐volume fuel
requiring handling by personnel or equipment and protected storage areas, both issues were
considered. In addition the members of the community evaluated systems against the backdrop of
sustainability of forest resources.
5 DESCRIPTION OF PROJECT
After a careful planning process, Port Graham decided to move forward with a hydronic system
with a district heating loop. The hydronic system contains a large boiler that will burn cordwood
to heat liquid (hot water) that is distributed through insulated piping. The hot water will be
distributed out to the Anesia Anahonak Moonin Health and Dental Clinic, the Port Graham
Village Council offices, the Port Graham Public Safety Building/Fire Department and the
Port Graham Corporation Office Building which also houses the Port Graham museum and
Head Start. The hot water is then returned to the boiler for re‐heating. The project design
is based on installation of a WHS 3200 GARN boiler for the heating plant; it is rated at
700,000 Btu output with a tested efficiency of 85%. It has a 3200 gallon capacity of heated
water storage. The wood‐fired system is designed as the primary means to deliver heat to
the four community buildings using cordwood harvested from road accessible lands in close
proximity to the core area of the community. The GARN WHS 3200 has a recommended
wood length of 24” to 42” with a recommended wood diameter of 4” to 12”.
Fuel Demand Heating demand Annual
Area BTU’s MMBTU Diesel annual
Building sq feet HR /year gallon cost($5.95)
Anesia Anahonak Moonin Clinic 3330 260,000 260 1380 $8,211
Tribal Council Building 3600 234,000 234 2988 $17,778
Native Corporation Office 1600 104,000 104 945 $ 5,623
Public Safety Buildings 900 50,000 50 997 $ 5,932
Totals 9,430 648,000 648 5935 $37,545
A significant advantage to a cordwood boiler is that they are batch‐loaded with seasoned
cordwood. As a result, very little infrastructure is needed to manufacture or handle the heating
fuel. Covered storage is required for the cordwood in order to facilitate seasoning of the wood.
Wood storage for the community should hold sufficient material to supply energy needs projected
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from historical and current usage for 2 years and 30% more than the average need. This will allow
the feedstock 1 year to dry to achieve the seasoned moisture rating of about 20% for Sitka spruce in
the Kenai Peninsula. Green wood is typically 40% or greater, which is too wet for efficient
combustion or gasification, generating a smoky exhaust, increased ash production and reduced
heat production. The design considers the potential for colder than average temperatures during
winter months. Storage size about 30% above the average estimated feedstock requirement is
generally recommended for similar projects.
Port Graham Tribal Council has identified two lots (owned by the Council) for wood storage.
One, approximately 6.5 acres and roughly one mile by road from the site of the GARN boiler, will
be used for long‐term storage. It is of sufficient size to store multiple years’ supply of wood; the
project requires an estimated 125 bone dry tons (100 cords) per year. The lot where the GARN
boiler will be situated is on a 2.9 acre lot that also includes the facilities to be heated with the
biomass system. The GARN building will be located on the far northwest corner, close to the lot
line. Right next to the Garn building is the 1/3 acre lot owned by the council – it is roughly 170 x 80
feet and will be used to stage 1‐2 cords wood for daily/weekly use.
Space heat for the community facilities is currently generated through an oil‐fueled boiler hot
water heating system. The existing system will remain in place as a back‐up/fail‐safe ensuring the
facilities are heated at all times. Experience with other biomass systems in Alaska indicates the
biomass system will displace approximately 85% of fuel oil currently used.
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6 PORT GRAHAM BIOMASS RESOURCE ASSESSMENT
With any proposed woody biomass energy project, a number of basic questions arise concerning
the biomass supply including:
How much biomass is there in the vicinity of the community?
What are the characteristics of the biomass (size, species, and quality)?
Where is the resource located?
Who owns the resource?
What are the costs associated with getting the resource to an energy facility?
What management restrictions (if any) are there are on the resource?
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Considering growth rates, cover type conversions, and other factors, what is the
sustainability of the resource?
How large an array of biomass energy facilities could be economically supported on a
sustainable basis by the local biomass resource?
Chugachmiut Forestry recently completed the Port Graham Biomass Resource Assessment (January
2013, Nathan Lojewski, CF, Forestry Manager). The purpose of the assessment was to determine the
maximum sustainable harvest of biomass fuel, or maximum annual allowable cut (AAC) from the
Port Graham vicinity across all land ownerships. The report concluded that the Port Graham
vicinity has abundant forest resources, a developed forest road system, and is an ideal location for
biomass energy projects. With 16, 786 acres of accessible timberland and the potential to add more,
Port Graham has enough timber resources to meet its energy needs. The recommended AAC range
is 30 times greater than the projected need for the GARN boiler. Information for the assessment
was derived from the Chugach Region 2011 Forest Inventory which considered lands with less than a
35% slope, outside of water buffers, readily lending themselves to road access and suitable for long‐
term forest land management.
Typically (outside Alaska) biomass resources are thought of as residue from logging or other forest
activities. Since there is no forest industry in Port Graham, a biomass system requires harvesting
strictly for the system. The forest resource surrounding Port Graham consists of immature forest
(9623 acres) and mature timberland (7163 acres). Wood to be harvested will be Sitka Spruce;
generally there are 150‐200 trees per acre with an average diameter of 16”. The Alaska Energy
Authority estimates Sitka Spruce to contain 19.3‐21.7 MMBtu/cord with a dry cord weight of 1960‐
2520 pounds and a green cord weight of 3190‐4100 pounds. The moisture content of dry weight is
estimated at 12% with 40‐60% for green.
The majority of the resource is accessible from the existing road system (10,758 BDT/Year) and 99%
of the resource is owned by Native Corporations or located on privately held Native Allotments;
Port Graham Corporation and English Bay Corporation are the two largest landowners in the Port
Graham vicinity. The Port Graham Tribal Council owns approximately 369 acres including and
immediately surrounding the town site which has a timber resource as well and is located in close
proximity to the site of the facilities included in the project.
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Costs associated with getting the resource to the GARN site are estimated to be in the range of
$55.00 –$ 65.00 per ton, depending on which option the community chooses to use for harvesting
methods. The cost of getting the resource to the site will allow the Tribal Council to displace
approximately 5365 gallons of fuel oil per year (see detailed operating costs in Project economics
section).
Accessing the plentiful timber resource for a biomass project does not present any specific forest
management issues, although determining the maximum sustainable harvest of biomass fuel, or the
maximum allowable cut from the Port Graham vicinity must be considered. The Port Graham
Village Council has stated goals of sustainably harvesting timber; the biomass resource assessment
conducted by Chugachmiut makes recommendations for the maximum Annual Allowable Cut
(AAC) in keeping with Tribal policies. The recommended range of the AAC is between 3,259 and
6,578 BDT. This is a conservative estimate in order to avoid accidental unsustainable biomass
harvests in the area. The lower end estimate includes only mature forest, leaving out growth from
the 9,623 acre immature forest, and reserving 40% of total volume for higher value timber products.
A more moderate approach would be to reserve 40% of the total forest volume for higher value
timber product and limit the AAC to available mature timber for the first 50 years, resulting in an
AAC of 6,578 BDT. Regardless of which AAC is chosen by the community, the range should be
updated periodically to account for the effects of natural forest disturbances and forest growth.
In addition to standing timber resources, the Port Graham area has two other potential woody
biomass resources – substantial windthrow located on Native Allotment lands and timber cleared
from the upcoming airport project.
The wind thrown timber resources is estimated to be 139 acres. Generally, harvest cost in blown
down timber is higher than that of standing timber. Windthrow timber offers the advantage of
lower stumpage costs and utilizing a resource that has no other use. A recent timber sale in Interior
Alaska sold spruce saw logs for $18.31/green ton, birch fuel cordwood for $10.01/green ton and blow
down timber for $1/ton. Location and cost of operating in blow down influenced the sale price.
Although the sale is in a different region than Port Graham, it can be expected that the price
range/differential will be similar in the South Central region.
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The new airport is in the design phase, and as part of the project, a roughly four mile all season
road will be constructed linking Port Graham and the neighboring community of Nanwalek. In
addition to providing access to previously inaccessible timberlands, the clearing of the road and
airport itself will provide woody biomass suitable for the Port Graham project. The Environmental
Assessment, Nanwalek and Port Graham Airport Project (August 2013) estimates tree clearing
would include approximately 157 acres to ensure the safety of aircraft approaches, and construction
of the proposed airport and access roads. Acreage in the lands surrounding Port Graham generally
yield 150‐ 200 trees per acre; assuming most of the timber is salvageable, it will provide a biomass
resources of 88 BDT per acre of mature Sitka Spruce, which makes up the majority of the
vegetation type in the project area. Costs to the Port Graham Village Council would consist of
transportation, stacking and splitting the wood, a lower cost than harvesting standing timber.
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7 LAND OWNERSHIP
Timber resources being considered for the Port Graham biomass project are those available within
¼ mile of an existing roadway. Land ownership in the identified vicinities are largely Native
Allotment parcels and Port Graham Corporation lands. There are eleven Native Allotment parcels
that are currently road accessible; the average size is 160 acres. Owners have varied goals and
objectives for their land, ranging from preservation to economic development. The blow down
timber that has been identified as a potential source for biomass for the project is located on
Native Allotment lands.
Port Graham Corporation is a for‐profit village corporation that is one of the two largest
landowners in the area (English Bay Corporation of Nanwalek being the second). The corporation
selected lands that have potential for economic development including commercial timber land,
mineral estates as well as lands that have potential for tourism, and lands of cultural and historical
importance to the Alutiiq people, with an eye towards providing a return to its shareholders.
Participation of Native Allotment owners and the Port Graham Corporation will be critical to the
long‐term success of the project as all of the timber resource is located on these lands. The Port
Graham Village Council also owns land approximately 250 acres of timber lands directly adjacent
to Port Graham townsite. This timber could also be used for the biomass project if the Council is
willing to harvest timber directly adjacent to Port Graham rather than continue to provide a sight
buffer.
Native Allotment parcels accessible by road cover 1,339 acres with a maximum Annual Allowable Cut (AAC) of
1,009 BDT. The Port Graham Corporation has 16,024 road accessible acres with an AAC of 7,651 BDT.
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8 PROJECT ECONOMICS
Although economic feasibility is only one of many factors of the project evaluation process,
accurately estimating the potential benefits and costs of a renewable energy project is very
important to the overall project success. The Port Graham Biomass Project enjoys many positive
factors ‐ an ample, road accessible supply of biomass resources, a community that supports the
concept of renewable energy projects and a community that is committed to utilizing its resources
‐ heating facilities with a local energy source rather than paying an outside entity to ship costly
fuel. In order for the community to plan for its future, it must have an estimate of the costs
involved in operating the facility for its total life cycle and compare it to existing non‐renewable
energy systems so there are no financial surprises.
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This section will examine the cost of woody biomass using the least capital intensive harvest
method, the operating costs of the proposed GARN boiler system versus the existing fuel oil
burners and the overall project cost over its life cycle. In addition, the benefit /cost ratio and
simple payback will be calculated and charted to show the sensitivities of the cost of wood for the
biomass system effect the overall project economics.
As is the case for most biomass projects, the cost of the woody biomass resource is of particular
importance to the overall project economics. The two basic cost components are stumpage – a price on
timber calculated in volume (cords or tons) – and harvest costs. And both components have a number of
variables associated with the cost. Stumpage costs can be assessed at market value (based on recent
timber sales) or modified to meet community goals, either to support renewable energy projects that
infuse cash into the local economy through paying stumpage fees. With varied landowner goals, the Port
Graham project is particularly sensitive to the cost per ton of wood.
In general, cost factors are highly dependent on the harvest method used. For the purpose of
calculating project economics, the manual felling system of harvesting will be used with a total
requirement of 100 cords per year (or 125 BDT/year). Although mechanized logging systems result
in higher productivity, the Garn system to be utilized in Port graham requires only 100
cords/annually, so a manual system is likely the most cost effective (the Port Graham Biomass
Project Harvest and Operations Plan explores various logging systems and their relative
productivity and cost in more detail). Stumpage price is based on a recent timber appraisal near
Port Graham in 2012 the price was $35/MBF or $17.50/cord. Extrapolating from a West Virginia
study on cost analysis of harvesting systems, an assumption was made:
Three man crew working 10 hour days with 8 productive hours, the crew could produce 8
MBF/day or roughly 16/cords/day
100 cords annual need/16 cords/day = 6.25 days of felling and yarding
Port Graham Tribal Council wages ‐ $12.00/hour with a 100% benefit rate (high benefit rate
estimated because of anticipated workers compensation rates) = $24.00/hour
Three person crew @ $240.00 each/day x 3 x 6.25 days = $4500.00
Plus a 15% contingency cost = $675.00
$5175.00 equals direct logging cost
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FIGURE 1: Year 1 Wood Procurement Costs
Breakdown of Wood Procurement Costs
Cost Item
$ per
Cord
$ per
Ton
Logging Cost ‐ Direct
Falling and Bucking (cutting) $15.00 $12.00
Skidding (wood‐to‐road) $14.37 $11.70
Sorting and Loading (grading) $22.38 $17.90
$51.75 $41.40
Logging Costs ‐ Overhead
General Burden $0.00 $0.00
Mobilization (travel) $0.00 $0.00
Camp (housing) $0.00 $0.00
$5.00 $4.00
Transportation/Handling to Village
$4.75 $3.80
Development and Maintenance
Temporary Roads $0.00 $0.00
Temporary Bulkhead (dock) $0.00 $0.00
Erosion Control $1.00 $0.80
Road Maintenance $0.00 $0.00
Slash Disposal (limbs) $1.00 $0.80
$2.00 $1.60
Harvest cost $63.50 $50.80
Market Value (base price paid to
owner) $17.50 $14.00
Total Wood Cost $81.00 $64.80
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9 CALCULATION OF OPERATING COSTS FOR THE GARN
The Port Graham Biomass Project is designed to use the largest sized boiler GARN makes – the
WHS 3200. In order to estimate operating costs of the GARN, the GARN representatives in both
Alaska and Vermont were contacted. They in turn found a greenhouse operation off the coast of
Maine that runs a GARN 3200 using spruce blowdown as the source of fuel. They are reported to
be “very happy” with that particular model GARN boiler – they burn approximately 100 cords/year
and displace 12,000 gallons of oil (the cost of oil is $5+/gallon). They report that using wet wood
significantly reduces the flue gas temps (400 degrees) and dry wood is optimum (600 degrees).
There are many variables in each biomass system, but in order to estimate operating costs for the
Port Graham project, other entities experience was examined. During periods of maximum load of
600,000 Btu/hour, the operator will have to fire the boiler approximately every two hours. At that
firing rate, the operator will have to remove the ash daily. On the coldest days, the operator will
spend one hour and fifteen minutes firing the boiler and cleaning ash. This rate will only occur
when the weather is coldest. Finishing the day with a full charge will allow a longer holdover and
cool ash in the morning. Figures used to calculate operating cost assume an operator will need
two/hours/day for 365 days of the year, a conservative estimate given the GARN representatives
estimates. The Tribal Council pays their existing Maintenance Worker $12.00/hour with a benefit
rate of 20%, making it $14.40/hour. The chart below uses $10,512 for annual operating and
maintenance costs of the GARN system
2/hours/day @ $14.40 x 365 days/year= $10,512
O&M Costs Fuel
Oil O&M Costs: Biomass + Fuel Oil (supplement)
Oil $37,545 Biomass
Labor $ 1610 Wood Fuel $ 8,125
Supplies $ 950 Labor $10,512
Preventative Maintenance supplies $ 66
Oil $ 5,635
Labor $ 405
Supplies $ 250
Annual Savings
Total
Annual $ 40,105 Total Annual
O&M Costs
$ 24,993
$15,112.00
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O&M Costs
(accrual
basis)
(accrual basis)
It should be noted that the project will provide a benefit (reduced heating costs) to the Port
Graham Corporation, while the Port Graham Village Council shoulders the cost and
responsibilities of the woody biomass system. A heating sales agreement should be negotiated for
a portion of the avoided cost the corporation will realize (see Operations plan for recommended
agreements terms). The sales agreement will offset a portion of the costs of running the system.
Those costs are not figured in the above table or economic modeling, but will favorably impact the
sustainability of the project.
The following chart indicates the Benefit /Cost Ratio, the Simple Payback and how each is effected
by the cost of cord wood. A benefit‐cost ratio (BCR) is an indicator, used in the formal discipline
of cost‐benefit analysis, which attempts to summarize the overall value for money of a project or
proposal. A BCR is the ratio of the benefits of a project or proposal, expressed in monetary terms,
relative to its costs, also expressed in monetary terms. Benefit cost ratio (BCR) takes into account
the amount of monetary gain realized by performing a project versus the amount it costs to
execute the project. The higher the BCR the better the investment. General rule of thumb is that if
the benefit is higher than the cost the project is a good investment.
FIGURE 1: Green Wood Purchasing Scenarios
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FIGURE 2: Modeled Outputs under Primary Scenario
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An energy investment’s Simple Payback Period is the amount of time it will take to recover the
initial investment (capital cost) in energy savings, dividing the initial installed cost by the annual
energy cost savings. For example, an energy‐saving measure that costs $5000 and saves $2500 per
year has a Simple Payback of $5000 divided by $2500 or two years. Simple Payback is useful for
making ballpark estimates of how long it will take to recoup an initial investment.
The following table calculates the project replacement costs and the required capital replacement
fund balances. It assumes a 25 year project life, inflation rate of 3%, and a reinvestment rate of 4%.
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Equivalent Annual Cycle Cost
Inflation Rate: 3%
Reinvestment Rate: 4%
Project Replacement Costs Capital Replacement Fund Balance
Year
Total Assets
Inflated Cost
10% of Total
Asset Cost
Start of Year
Balance
Annual
Deposit
Interest
Earnings
End of Year
Balance
1 $210,634 $21,063 $0 $1,028 $0 $1,028
2 $216,953 $21,695 $1,028 $1,028 $41 $2,097
3 $223,462 $22,346 $2,097 $1,028 $84 $3,209
4 $230,165 $23,017 $3,209 $1,028 $128 $4,366
5 $237,070 $23,707 $4,366 $1,028 $175 $5,569
6 $244,183 $24,418 $5,569 $1,028 $223 $6,820
7 $251,508 $25,151 $6,820 $1,028 $273 $8,121
8 $259,053 $25,905 $8,121 $1,028 $325 $9,473
9 $266,825 $26,682 $9,473 $1,028 $379 $10,881
10 $274,830 $27,483 $10,881 $1,028 $435 $12,344
11 $283,074 $28,307 $12,344 $1,028 $494 $13,866
12 $291,567 $29,157 $13,866 $1,028 $555 $15,449
13 $300,314 $30,031 $15,449 $1,028 $618 $17,095
14 $309,323 $30,932 $17,095 $1,028 $684 $18,807
15 $318,603 $31,860 $18,807 $1,028 $752 $20,587
16 $328,161 $32,816 $20,587 $1,028 $823 $22,439
17 $338,006 $33,801 $22,439 $1,028 $898 $24,364
18 $348,146 $34,815 $24,364 $1,028 $975 $26,367
19 $358,590 $35,859 $26,367 $1,028 $1,055 $28,450
20 $369,348 $36,935 $28,450 $1,028 $1,138 $30,616
21 $380,428 $38,043 $30,616 $1,028 $1,225 $32,869
22 $391,841 $39,184 $32,869 $1,028 $1,315 $35,211
23 $403,597 $40,360 $35,211 $1,028 $1,408 $37,648
24 $415,704 $41,570 $37,648 $1,028 $1,506 $40,182
25 $428,176 $42,818 $40,182 $1,028 $1,607 $42,818
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10 BIOMASS OPERATIONS PLAN
The Port Graham Village Council, working with Chugachmiut, will operate a HELE (high energy
low emission) hydronic heating system with a district heating loop and a wood harvesting
operation to support it. The project design is based on installation of a WHS 3200 GARN boiler for
the heating plant. The wood‐fired system is designed as the primary means to deliver heat to four
community buildings using cordwood harvested from road accessible lands in close proximity to
the facilities utilizing the new system.
The project requires an estimated 125 bone dry tons (100 cords) per year. Mature Sitka Spruce
which makes up the majority of the vegetation type in the project area will be harvested. In order
to produce this tonnage, in the first five years of operation, the Village Council will access
approximately 78 acres of blown down trees. A secondary source of woody biomass fuel to be
utilized is the spruce resulting from the tree clearing of approximately 157 acres (at a rate of 88
BDT per acre) that will occur as part of the construction of the new airport. The majority of the
fuel will be consumed during the cold winter months of November through March. A one year
supply of wood will be maintained at the wood storage lot, with 3‐4 cords stored at the site of the
boiler facility.
The harvest operations are estimated to begin in 2015, or immediately after construction funding is
secured. Harvested timber will required a one year drying period in order for the biomass system
to operate most efficiently. The recommended harvest method is manual felling and cable
skidding. Manual felling will require the purchase of some equipment; two chain saws, a small log
splitter and a log trailer. In addition, the purchase of a cable skidder (preferably used) will be
required should the Council choose that method of harvesting.
11 STAFFING AND TRAINING
There are two staffing components for the new biomass system – ongoing operations and
maintenance of the GARN boiler and harvesting the wood for the boiler. The operation and
maintenance of the boiler will require daily attention during the coldest times of the year and the
performance of more occasional tasks during the summer months.
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Operations and Maintenance. The GARN 3200 has a combustion chamber length of 50” and a
combustion chamber diameter of 40”. Recommended wood length is 24” to 42” and recommended
wood diameter is 4” to 12”. The boiler is manually fed and manually started. The primary control
function of the GARN is combustion control – simply ensuring that the combustion air is
controlled such that the wood burns hot and clean. If more capacity is needed to meet load, the
operator can simply conduct more “burns” per day. When less capacity is needed, fewer burns are
performed. There is very little maintenance required of a GARN boiler. The wood is burned in the
primary combustion chamber, in the secondary combustion chamber only gasses are burned. Ash
removal is required after burning 1‐2 cords of wood. GARN representatives estimate ash removal
time at 15 minutes per removal. Three to four cords of dry spruce will be stored at the site of the
boiler building. Wood will be transported from the larger wood storage lot (approximately one
mile away) as needed.
The Port Graham Village Council currently employs a part –time Office Building and General
Maintenance position that reports to the Tribal Administrator. The position job duties can be
easily expanded, as can the number of hours (see job description in Appendix 4). An additional
two hours/day for 365 days/year were added to the position costs in the Project Economics section.
Tasks for the position related to maintenance and operations of the biomass system should
include:
Load combustion chamber with stick wood
Manually start fire
Clean out ash from combustion chamber as needed
Move/load wood from wood storage lot to boiler facility lot as needed
Perform minor routine maintenance on GARN boiler
After installation and prior to operations, a training class should be conducted in Port Graham.
The GARN dealer in Alaska (Alaskan Heat Technologies) can provide the training; it should be
attended by staff directly involved with the operation of the GARN and other staff that might be
called in as backup should the primary operator be absent.
Wood Harvesting. Production and cost are major factors in choosing a harvesting method.
Manual harvesting systems have a lower capital investment than mechanized harvesting systems;
manual systems have lower output of volume. Mechanized harvesting systems have a much higher
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cost per hour to operate, although its cost per unit volume aren’t affected because of high output
volume. Conversely, manual harvesting systems have lower costs per hour and a higher cost per
unit because of a lower output volume. Because of the relatively low volume of wood required by
the Port Graham Biomass Project, the recommended harvest method is the manual harvesting
system – the manual felling system consists of felling with a chain saw and skidding (dragging)
with a cable skidder.
The Port Graham Village Council has the administrative structure in place to hire a temporary,
three‐man crew to harvest the necessary woody biomass for the project. Based on productivity
estimates, a three man crew can produce the required 100 cords of wood in approximately 12.5
days. In addition to the standard benefit/overhead rate of 20%, an additional 40% benefit rate is
anticipated due to the high cost of workers compensation for logging activities. The Village
Council does not currently have job descriptions for timber harvesting positions but the following
tasks will apply to the positions:
Remove or trim branches and tree tops
Load and Transport logs
Clear area around intended fall of each tree
Plan the tree felling and bucking (sawing the logs)
Operate manual and machine saws to fell and buck trees
Operate machinery such as loading machines, excavators and bull dozers
Maintain equipment
Maintain strict occupational health and safety requirements
Personal requirements are as follows:
Must have the ability to undertake manual and heavy work
Must be observant and methodical
Must have good communications skills
Must enjoy outdoor work
Must enjoy working in teams
Must be alert and safety‐conscious
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Training for the temporary crew will consist of safety training and operations training on the
equipment to be used.
12 EQUIPMENT REQUIREMENTS
Within the manual felling category of harvesting timber, there are still a number of variables,
especially in regards to equipment. The Port Graham GARN Boiler Harvest Plan recommends the
use/purchase of a cable skidder (a type of heavy vehicle used for pulling cut trees out of a forest)
and a small self‐loading log trailer. The logging trailer can be towed with existing vehicles owned
by the Village Council or the Village Corporation. It would be used to haul logs from the harvest
site to the wood storage area and subsequently, down to the boiler site. The cost estimates for the
two pieces of logging equipment from $35,000 ‐ $62,000.
EQUIPMENT TYPE DESCRIPTION USED NEW
Small Cable Skidder John Deer 440, 540, or equivalent $15,000-40,000
Chain Saw (2
minimum) Stihl 460 Chain Saw $1,200
Log Trailer Hakmet, Nokka, or similar
$20,000-
$40,000
Small log splitter
20+ ton unit capable of splitting 4ft
lengths
$1,500 -
$5,000
While purchasing the equipment is optimum, it also represents a significant capital outlay for a
logging operation that occurs twelve days/year. The Port Graham Village Council has a grader that
could be used for pulling logs and a trailer that measures 25.9’ in length by 8.6’ wide. The Village
Council also owns a flatbed truck with knuckle crane with a rated lift capacity of 2000 pounds.
Windy Bay Services (owned by Port Graham Corporation) owns heavy equipment that is available
for rent – either with or without an operator. Rates without an operator for a backhoe are
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$125/hour of $715/day, with an operator the rates are $170/hour and $1015/day respectively. Dozer
rates are slightly higher.
Regardless of which large equipment option is pursued, at a minimum, two chainsaw and small log
splitter will most likely need to be purchased, as well as appropriate safety equipment for the
operation of a chainsaw.
13 PERMITS REQUIRED
Biomass systems are relatively easy to permit. In the case of Port Graham, there are no required
permits from the Kenai Peninsula Borough (telecom, June 2014). There is a requirement for a State
of Alaska, Department of Public Safety, Division of Fire and Life Safety plan review for fire and life
safety requirements. An application for Fire and Life Safety Plan Review (www.akburny.com) must
be completed and submitted prior to construction of the project. There is a one‐page form
provided by the department; applicable documents signed by a registered design professional are
required:
Scaled plot plan: show distance to property lines and existing buildings
Structural Drawings: design criteria, connections
Architectural Drawings: interior, exterior wall details, means of egress, fire extinguisher
information
Mechanical Drawings: hood and duct, fuel tank size and location
Electrical Drawings: emergency lighting, exit signs
Fire Protection Systems: automatic sprinklers, hood suppression, fire alarm
Fire Department Access Letter: access and fire flow approval and notification
Other permit requirement are related to timber harvesting – consultation with the Alaska
Department of Fish & Game is required when harvesting operations are in close proximity or
actually or cross anadromous waters. In addition, the Kenai Kodiak area forestry office (Soldotna)
should be contacted prior to any harvesting activities.
Although not a permit requirement, when harvesting timber on Native Allotment or Port Graham
Corporation lands, a timber sales agreement needs to be negotiated and executed.
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14 FINANCIAL AND OTHER RESPONSIBILITIES
The owner and primary operator of the Port Graham Biomass Project is the Port Graham Village
Council. Port Graham Village Council will be responsible for the use, day‐to‐day operations and
the long‐term maintenance of the biomass boiler, the district heat loop and procuring adequate
cord wood to fuel the system.
The Project will provide heat to Village Council facilities and to Port Graham Corporation facilities
(Port Graham Corporation Office Building which also houses the Port Graham museum and Head
Start). As a result of the project, the Corporation will enjoy a reduction in fuel costs of
approximately 85%, or $4780 per year (2013 usage of 945 gallons x $5.95/gallon) with no attendant
costs or responsibilities. The Port graham Village Council should negotiate a sales agreement with
the Port Graham Corporation for the purchase of heat through the district heat loop. Providing
payment for the purchase of fuel/heat will increase the sustainability of the project for the Council
while providing a cost reduction to the Corporation.
There are several methods to calculate an agreement and the method selected is a matter of policy
to be decided by the Board of the Port Graham Village Council. Perhaps the simplest method is to
charge the Corporation a percentage of cost of heat provided through the biomass system.
Estimating the Corporations share can be based on heating oil usage. For example:
Total cost of biomass heat for all facilities= $24,993.00
Village Corporation consumes 945 gallons/per year out of a total of 6310 gallons/per year,
or 15%
Actual cost or charge to the corporation is $24,993.00 x 15% = $3748.95
Another method is to calculate the cost of the Corporation’s share of the biomass heat is to make
the calculation based on Demand BTU’s Hour which is calculated based on heating area square
feet.
Total biomass system demand BTU’s/HR = 648,000
Corporation facilities demand BTU’s /HR = 104,000 or 16%
Total cost of biomass heat for all facilities on system = $24,993.00
$24,993.00 x 16% = $3999.00
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The Council can adjust the rate to the Corporation in keeping with policy decisions rather than
based on a formula. Currently operating costs are estimates, it will be important to examine actual
costs after the first year of operations so actual expenditures and savings can be examined and any
charges adjusted.
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15 APPENDIX 1
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16 APPENDIX 2
ECONOMIC MODELING:
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17 APPENDIX 3
PORT GRAHAM CONSTRUCTION ESTIMATE:
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18 APPENDIX 4
PORT GRAHAM GARN BOILER HARVEST PLAN
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APPENDIX 5
MISCELLANEOUS DOCUMENTS
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19 APPENDIX 5
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20 REFERENCES
Environmental Assessment, Nanwalek and Port Graham Airport Project, Nanwalek and Port
graham, Alaska, prepared by Dowl HKM, August 2013
Port Graham Biomass Resources Assessment, Nathan Lojewski, Chugachmiut Forestry, January,
2013
The Potential for Biomass District Energy Production in Chugachmiut Communities, Energy &
Environmental Research Center, July 2007
Assessment of Woody Biomass Energy Resources for Rural Villages in Interior Alaska, Will
Putnam, Forester, Tanana Chiefs Conference, 2012
Production and Cost Analysis of Two Harvesting Systems in Central Appalachia, Charles R. Long,
Morgantown, West Virginia, 2003
Cost Analysis of Forest Biomass Supply Chain Logistics, Dalia Abbas, Robert Handler, Dennis
Dykstra, Bruce Hartsough, and Pasi Lautala, July 2013, Journal of Forestry
Preliminary Best Interest Finding (Revised) for a Long Term Timber Sale for Biomass Utilization in
Tok, AK, State of Alaska, Department of Natural Resources, December 2012.
Alaska Fuel Price Projections 2011-2035, Technical Report, Institute of Social and Economic
Research, University of Alaska Anchorage, prepared for the Alaska Energy Authority, Fay, G. and
Villalobos-Melendez, A. and Pathan, S. 2011
Business Operating Plan, Fort Yukon Combined heat & Power Project, September 2011.
Gwitchyaa Zhee Corporation
Fort Yukon Woody Biomass Fuel Implementation Plan, November 2011. Prepared for Alaska
Village Initiatives by Private Lands and Resource Consulting
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