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HomeMy WebLinkAboutAEA QuestionsQuestion 1. The total project amount is stated as $15.8 million with $8.63 million of grant funds requested. The stated plant capacity is 35,000 tons of wood pellets (and hog fuel by-products). How would you meet increased demand – beyond the 35,000 tons of pellets? Answer 1. If you have a sustainable harvest of 70,000 green tons we will be able to produce 35,000 tons of pellets (less self-supportive power energy needs). To meet growing demand we would build additional plants near solid fiber supplies. Question 2. Can the plant be built in one season, given Glennallen’s limited construction season? How would bulk pellets be stored, especially for cold weather deliveries? Answer 2. Yes it can be built in one season but planning needs to be nailed down now. We will use bulk storage bins up to 1000 tons each. Question 3. Section 4 states biomass will be chipped at the landing, while the business plan says there will be a chipping plant. Which is it? Answer 3. The optimum size wood chip to be processed into wood pellets is a ¼” wood chip however; a ¾” wood chip is less costly to produce due to initial equipment investment and production time. Our preference is to do as much wood chip processing in the field as possible. We are currently obtaining timber harvesting bids and identified a price difference from $1-2 per ton between a ¼” and ¾” wood chip. If this price difference is substantiated we would produce a ¾” wood chip in the field and re-grind at the plant location to -¼” before pellet production begins. Question 4. How long will it take to reach full plant capacity (i.e., what is the ramp-up time?)? Answer 4. Two to three weeks after initial start-up. This is dependent on establishing fuel sale agreements over the course of the next several months with entities such as; City of Valdez, Copper River School District and various State of Alaska agencies. Question 5. The FSM inventory used a minimum 5.5 inch DBH and a 5-inch top diameter. What are the harvest specifications for pellet fiber and how much additional material is available, if any? Answer 5. The harvest specifications we are applying to fiber production for wood pellets are a minimum four inch DBH diameter class and two inch top diameter. This will include bark, limbs and volume outside log scaling cylinder. The volume identified in the FSM inventory from only White Spruce 5.5-inch DBH and 5-inch logs is estimated to increase by fifteen percent (USDA Forest Sciences Laboratory-Sitka) by using the entire tree. Additional material, i.e. wood fiber available on a Region wide basis is estimated at 200,000 acres which includes ownership by; State of Alaska; Chitina Native Corporation; BLM, Chugach Native Corporation, University of Alaska and Private Land Owners. Also, new biomass harvesting technology systems are being advanced rapidly which could increase small woody biomass harvesting for this project. Please find attached several models currently being used in Oregon (Bio-harvester 1 and Bio-harvester 2). We are currently in discussion with FECON regarding applications to Alaska conditions and are scheduling an on-site visit and requesting a demonstration later this spring. Question 6. The merchantable timber inventory suggests there are approximately 12 tons per acre (1 green ton per 250 board feet, net Scribner, log basis), while 20 to 40 tons per acre is noted in the business plan. Please provide a stand and stocking table by species for the material to be harvested on either a cubic foot or weight basis. Answer 6. The 20-40 green tons per acre reflected in the AEA Grant Application is from previous harvest activity, i.e. load tickets, conducted by NPI, LLC during 2004-2006. The low volume per acre ranged from slightly more than 20 ton per acre to more than 40 ton per acre and did not include Aspen, limbs or tops smaller than five inches. An “AEA Grant Questions 4-TABLES” attachment with stand and stocking tables is attached to this questionnaire. Question 7. Section 4.2.1C states estimated wood chip costs are $51 per ton within a 20-mile working circle. Other sections suggest $92/ton at the facility. Please address these apparent differences. Answer 7. Initially while the grant was being prepared, harvesting costs were estimated from $40-$70 using previous logging contract rates from 2002-2004 and were subject to inflationary costs and the availability of contractors. The other differences are conversion from green tons at 30-40% moisture content to dry tons at 3-5% moisture content. $45-$60 per green ton is the bid estimates we have received within the past three months for harvesting, chipping and hauling. The $51 per green ton includes inflationary factors such as fuel costs for a 3-5 year timber harvest contract, drying costs, storage/handling costs, Federal, State and Private stumpage sales and non-winter road building costs. Also, harvesting will take place systematically on a region-wide basis and the $51 per green ton used is anticipated to increase $1-$4 per ton on ten mile increments, i.e. $51/ton within 20 miles; $52-$55/ton 20-30 miles; $53-$59/ton 30-40 miles, etc. Question 8. The construction budget does not indicate how large the facility would be. How many square feet would be constructed for the $1.89 million? Please provide drawings or plans, if available. Answer 8. The plant site needs to be a minimum of 10 acres; the production building is 15,000 square feet; raw product storage building is 25,000 square feet. Attached is a Site Plan C View. Question 9. The three largest cost items are the dryer, pelletizing machine and the co-generation unit. Please provide more specifics as to make, model, and source of quote for these three components. Answer 9. Mills: Sprout 400 apx $180,000.00 each; Dryer Burner Cyclone system Onix model 132 apx. $1,200,000; Doty Engineering Gasifier $4,200,000. Prices do not reflect shipping costs to Glennallen. Question 10. Please address the $51/ton and $92/ton costs noted above. Please separate the costs into either a pro forma income statement or a monthly cash flow for the first three years. Answer 10. We have separated the costs in an attached “20-Year Harvest Cost” summary using an average inflation rate of 2.89% and applying different cost scenarios for haul distance which will be applied to our pending timber harvest contract. Basically the cost per ton will increase $2/ton every ten miles to cover additional operating and maintenance costs of the contractor. Question 11. The total project cost on the Application Cost Worksheet is $6.74 million and is less than the annual O&M ($7.035 million) and different than the $8.63 million originally stated. Please address these apparent differences. Answer 11. The difference is from an accounting misinterpretation of the breakdown of the Cost Worksheet, in regards to the Construction Budget of $1,890,000 (AEA Grant Application TABLE 4.4.1A) which includes actual development of the property including buildings, and the Plant Budget of $6,740,000 (AEA Grant Application TABLE 4.4.1B) which includes equipment necessary to manufacture wood pellets. The total for these two budgets are $8,630,000.