Projects and Stories

Local Energy Development in John Day

Forest communities in eastern Oregon are taking advantage of wood heating energy for their local municipal facilities.

The John Day airport is heated with wood pellets made at the local mill from forest restoration by-products.

As former adversaries pull together to work through contentious issues surrounding forest management, commercial forest product availability should not only stabilize, but perhaps increase.

- Mike Billman, Malheur Lumber Company

The communities of John Day and Burns, Oregon are taking an active role in strengthening their local economies. Both communities are located within close proximity of the Malheur National Forest and like many rural communities in the West they depend on the forest for many ecological, economical, and social values.

These communities are commited to a collaborative approach to forest stewardship and are developing associated entrepreneurial opportunities. In partnership with businesses and regional non-profit organizations, they have developed a regional strategy to utilize the byproducts of forest restoration projects to heat local schools and municipal buildings. The utilization of local wood-based fuels is creating local jobs and reducing energy costs.

Success with Biomass Energy Development

In December 2010, Malheur Lumber Company finished an expansion of its existing lumber mill to integrate the production of wood-based fuels. Malheur Lumber is the last remaining mill in the region and this expansion received strong support from two local collaboratives: the Blue Mountain Forest Partners and the Harney County Restoration Collaborative. Small diameter trees removed during forest restoration - trees that otherwise would be piled and burned in the forest - are now being manufactured into wood pellets and bricks.

Crucial to the economic success of this business expansion is an integrated manufacturing model that maximizes value from each piece of the wood at the facility. Malheur Lumber now manufactures a suite of products to produce multiple revenue streams including lumber, shavings for animal bedding, wood pellets and bricks, and thermal energy (heat) to dry lumber.

In addition, the John Day Airport and Blue Mountain Hospital retro-fitted their heating systems to wood-fired boilers. Both utilize pellets from Malheur Lumber Company.

Maximizing energy output

Heat-led biomass facilities are engineered to meet a consumer's thermal energy demand and include both heat only facilities and combined heat and power facilities. Heat-led energy facilities capture up to 70-90% of the total energy in the resource. In contrast, biomass power plants that only produce electricity would capture 15-25% of potential energy.The production of wood pellets and bricks at Malheur Lumber will equate to the generation of 440,000 MMBTUs of thermal energy (equivalent to 18.5 MWs). This amount of energy will displace the equivalent of 3.2 million gallons of heating oil. Comparatively, if the same amount of woody biomass was used to generate electricity alone, only 1/3rd of the total energy would be captured to produce 6.1 MWs.

Job Creation and Reduced Energy Costs

The expansion at Malheur Lumber has allowed the community to retain 75 employees and has created 10 new jobs. This total represents 6% of the private non-farm workforce in Grant County. The facility will also indirectly support jobs for forest contractors.

This regional effort has been a true public-private partnership. After securing an ARRA grant administered by the Forest Service, Malheur Lumber refinanced its $50 million business through a combination of new market tax credits and private equity lending. A regional bank financed the construction of a pellet boiler at the Blue Mountain Hospital based on an assurance of fuel supply, calculated energy savings and supplemental funding received through the State Energy Program.

Thermal energy generated from wood-based heating fuels is half as expensive as that generated from petroleum-based fuels. The wood pellets and bricks manufactured at Malheur Lumber will reduce energy costs by $4.4 million across the regional economy. In addition, spending for these wood-based fuels will be reinvested in the regional economy and serve as a means of wealth capture.

Five keys to success:

  • Malheur Lumber has diverse support from community-driven collaborative processes.
  • Biomass processing is integrated and energy output is maximized
  • Initial federal investment was catalytic to leverage private sector equity
  • Market development was a public-private partnership involving communities
  • The project was bracketed within a regional economic development strategy, including a distributed network of energy facilities.