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Northern region border commission northhern forest kingsley march 2018

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The forests and forest industry of the Northern Forest region - Maine, New Hampshire, Vermont and New York. Presented to a meeting of the Northern Forest Border Commission, March 2018.

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Northern region border commission northhern forest kingsley march 2018

  1. 1. Investing in the Future Forest Economy Northern Border Regional Commission Economic Trends in the Regional Forest Industry March 2018 Eric Kingsley Innovative Natural Resource Solutions LLC kingsley@inrsllc.com Phone 207‐233‐9910 1
  2. 2. Innovative Natural Resource Solutions LLC • Founded in 1994 • Offices in New Hampshire and Maine • Focus at the intersection of forest industry, energy and  economic development • Services include:  ‐ consulting in renewable energy ‐ advocacy ‐ forest management and protection ‐ forest certification and sustainability  • Clients from the private, non‐profit and government sectors • Conducted work in all regions of North America • www.inrsllc.com 2
  3. 3. 3 Source: Harvard Forest and USDA NE ‐32+ million acres NY ‐<19 million acres
  4. 4. 4 Northern New England and New York
  5. 5. 5
  6. 6. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Sawlogs Pulpwood Biomass Volume (Tons) Value ($) Volume and Value to Landowner of Products from a Timber Harvest North East State Foresters 2013
  7. 7. 7
  8. 8. Housing Starts (past 20 years)  8
  9. 9. Housing Starts (past 10 years)  9
  10. 10. Lumber Market Trending Upward http://markets.businessinsider.com/commodities/lumber‐price10
  11. 11. A growing issue for (softwood) mills… • As markets build and production  climbs… • More residue (chips, sawdust,  bark) is produced • Markets for this residue have  shrunk, and this is a danger sign  for a healthy industry 11
  12. 12. Cross Laminated Timber 12
  13. 13. 13
  14. 14. 14
  15. 15. Biomass  Electricity (MWh) “Green” Attributes (Renewable Energy Certificate) Electricity (MWh) (Wholesale)
  16. 16. What does it take to operate biomass in 2018? $0 $10 $20 $30 $40 $50 $60 $70 $80 Revenue Expenses Electricty RECs (CT) Fuel O&M • Assumes: • Electricity at average price for the  past year ($34) • RECs at recent broker quote ($24,  which may be higher than current  market) • Biomass fuel at $25, 1.6 green tons  per MWH • O&M at $30 per MWh • With these assumptions, this is not  an attractive business
  17. 17. 17
  18. 18. Community‐Scale Biomass  Thermal Has Real Potential 18
  19. 19. 19
  20. 20.  ‐  1,000,000  2,000,000  3,000,000  4,000,000  5,000,000  6,000,000  7,000,000  8,000,000  9,000,000  10,000,000 2008 2009 2010 2011 2012 2013 2014 2015 2016e Estimated Pulpwood Consumption by Maine Pulp Mills Estimates Based Upon INRS Data
  21. 21. 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 Madison East Millinocket Lincoln Bucksport Millinocket Old Town Jay Woodland Rumford Somerset Maine Pulpwood Consumption by Mill Green Tons
  22. 22. Emails you never expected…
  23. 23. New Investment at Woodland Pulp 23 FIRST SALEABLE JUMBO ROLL MARCH 16 • 2 new tissue machines • ~$150 million in new  investment • Used New Markets Tax  Credits • 70 new employees 23
  24. 24. SAPPI Announced Investment • $165 million rebuild of PM1  at Somerset Mill • $25 million in new wood  yard (completed)  • Clearly investing in the  future of the mill, New  England’s largest market for  low‐grade wood 24
  25. 25. The Wood 25
  26. 26. The Markets 26
  27. 27. The glass is half full… • We have markets, and are incredibly well positioned compared to  other parts of the country • We have the forest resource and supply infrastructure (landowners,  loggers, entire forest industry ecosystem) that would make other  regions jealous • We live in close proximity to (and are part of) the greatest collection  of consumers in the history of the world • It is cold in New England, we heat buildings, we need process heat • There may never be a better time to be develop a project or  technology that uses low‐grade, particularly softwood 27
  28. 28. I would like to add you to my email list Send an email to kingsley@inrsllc.com to be placed on our monthly email list, which provides information on markets and developments of interest to the region’s forestry community. 28
  29. 29. Eric Kingsley Innovative Natural Resource Solutions LLC Phone 207‐233‐9910 Email kingsley@inrsllc.com 29

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