Forestry industry making more than lumber

The measuring stick for northern B.C. is still made out of wood, but northern B.C. wood is making a lot more than sticks these days.

The contributions of mining, liquefied natural gas, agriculture and tourism have diversified the economic profile of the Central and Northern Interior, but forestry has never been supplanted as the bread-and-butter industry for jobs and career opportunities. It is active in every community from the peaks of the Rockies to the waves of the Pacific, from the Cariboo to the Yukon. As a commodity, it took a temporary pounding during the global economic crisis but as an industry, the players have reinvented and modernized themselves.

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The company at the centre of the new forestry economy is also at the centre of the province. Vanderhoof is in the middle of the B.C. provincial map, an hour west of Prince George. In that small town burns one of the hottest forestry business climates in the world, all based on high-tech innovations, environmental sensitivity, international energy demands, and good old-fashioned penny pinching.

It has been this way since a small sideshow of a company - Nechako Lumber - was founded in 1969.

There were busy little sawmills all over the landscape in those days, and rather than try to be just another hewer of two-by-fours, the founders of this new venture spotted a need and filled it.

Instead, Nechako Lumber made everyone else's rough lumber into smooth lumber by installing the expensive planers that other sawmills were loathe to invest in.

Their main customer was Apollo Forest Products of nearby Fort St. James, and that relationship would also have future importance.

The company was born from innovation, and that has been the word underneath their corporate feet ever since. Three years after the planers started rolling, they had the resources to add a sawmilling component, but the owners - Lloyd Larsen and Mike Manojlovic - still did not wish to compete with the established sawyers. Instead, their new L&M Lumber venture specialized in small-profile pine that was too little for the other saws of the north to handle.

"Nobody else wanted this stuff," said Alan Fitzpatrick, one of the principal executives of the modern day Nechako Lumber/L&M Lumber (the others are shareholders Lloyd Larsen, Mike Manojlovic and Torall Scott).

"The other guys worked with large logs and they would call this stuff 'dog hair' which wasn't much good for sawing into dimension lumber. You cut a couple of two-by-fours out of that sized stuff and you're done, nothing left, but it was good for smaller one-inch cuts for use in things like bed frames. We worked with that sort of market, and because it was such premium wood - I mean, when you tried to count the age rings it was hard to do because they grew so densely you could hardly see between them - it made for the kind of lumber the Japanese market would accept. We were the first supplier of stud lumber into Japan, and we were the largest supplier of bed frame wood in North America at that time, but it was stuff no one else would produce."

To do the fine cutting, L&M Lumber imported rare small-lumber technology from Finland. The first equipment brought to North America by the HewSaw company was installed in Vanderhoof and it is still in operation today.

The innovations were starting to mount, but it was only just beginning. A fire in 1991 destroyed the original Nechako Lumber planer mills, so a reinvestment was made that went on through 2005.

It included grade scanners made by Comact, a Quebec company, with installation help at the Nechako/L&M site by Vanderhoof's BID Group, a machining, fabricating and construction collective. Again, this was a relationship that would prove important later on.

A Gilbert planer was also installed, specializing in speed. With some local modifications, it got even faster.

"Our Gilbert planer is, as far as we know, and we have checked into it, the fastest in the world," said Fitzpatrick. "We have tours here all the time - the latest ones are from Australia, the U.K., and Chile - to learn how we do it. It goes at 3,000 linear feet per minute, which is basically five or six boards per second."

Speed. Efficiency. If the smaller operations can't compete with the big forest companies on volume pricing, they have to do it with quality and minimizing production waste.

"I did it. I closed the loop," said a pleased Lloyd Larsen Jr. one day in about 1997. He and the other executives had finalized the blueprints and business plans for what was, at that time, a shocking evolution.

Partly, the bold move was a response to the B.C. provincial government initiative to ban the beehive burner. For the past 50 years of sawmilling, all the daily woody debris and sawdust left over from the lumber making process got dumped into a giant furnace and burned on site. Prince George once held the dubious nickname The Big Smoke because hundreds of these mega-stoves were alight around the region during the 1920s through 1940s, with dozens inside the town limits.

Air quality advances eventually ended this practice. So what was a mill to do with those perpetually growing mountains of junk wood?

Larsen and friends watched in careful awe as their neighbouring industrialist in Prince George, the bioenergy pioneer John Swaan, established Canada's first pellet plant. Swaan built a factory that made a commodity out of those tiny leftovers of wood. It was a sawdust pill that looked like animal kibble but burned like firewood.

Another ecological factor was presenting an opportunity for Nechako/L&M at this same time. The mountain pine beetle epidemic was gobbling up huge swaths of the B.C. forest. But dead trees were still merchantable, for a little while at least, so a rush was ordered by government to mill then as fast as possible. Now the province is left with all the leftover pine carcasses past the point of making lumber that still have to be cut down and removed to make way for the regenerated forest.

In all these scenarios, these revolutionary new energy pellets were ideally suited.

"We built the second one of those pellet plants that we know of [after Swaan's pilot project]," said Fitzpatrick. Prince George's high-tech fabrication company Del-Tech was behind the pellet plant construction.

"[Swaan] got the pellet industry going and we knew exactly how it would help our operation. Now you see them everywhere around here, some of them are really big operations. We keep ours dedicated to very high quality shavings."

Today they sell about 180,000 tonnes of the wood pills, most of it by the rail-car load destined for Europe but also in 40-pound household bags for homeowners as far away as Alaska.

They called their project Premium Pellet, built it right on the campus of the Vanderhoof planer operation and sawmill where a beehive burner would be.

They decided to once again focus on a niche market, the Grade-A buyer, just like they did with their specialty lumber ventures.

Not all the woody debris on the Nechako/L&M property was good enough to make their own pellet grade. All the so-called hog fuel - bark, branches, dislodged knots, punky patches in the lumber, etc. - is separated from the clean shavings and sawdust.

They found a use for this stuff, too.

They set up a furnace, again calling in Del-Tech to help with the build, to burn the hog fuel on site and use the heat for their kilns.

Each sawmill has to dry its lumber one way or another, by order of the construction industry. Some stack it to dry in open air warehouses for long periods of time, but most bake the excess moisture out of their lumber. The typical temperature for this is about 116 C for softwoods like spruce and pine. Pre-killed pine beetle lumber needs only about four hours in a kiln; healthy trees require about 32 hours.

This total use of the shavings and hog was what Larsen meant by "closing the loop" but he was only talking about the fiber. It was true that every speck of woody material that came into Nechako/L&M hands was now made into a fuel source or product for sale, and in 2014 it amounted to almost $100 million, but there was one more important loop still to close: the energy loop.

The company's instinctual aversion to wasting a single thing led to their latest innovation. Fitzpatrick, Larsen, Manojlovic and Scott couldn't stop thinking, now, about that fire that heated the kilns.

In simple terms, the burning of the woody junk generated a banquet of heat, but the kilns only needed a morsel of it to dry the lumber.

"The way it once was, we diverted the excess heat into the air, and in fact we were spending energy and money on giant fans to cool it down as we dumped it into the air," said Fitzpatrick.

"Although that was pretty normal for sawmills, none of it was making any sense to us. Once you see something as a commodity, you feel the value of it going up in smoke when you are just letting it waft away into the air. So we started looking into solutions for that. We finally settled on an ORC system - Organic Rankine Cycle - to make electricity. Whatever heat is left over after the kilns use all they need, we use to make electricity to offset the whole operation's draw from the BC Hydro grid. And now we are constantly tracing heat loss at all stages of our operations and thinking of ways to engineer a use for it."

The ORC technology had been brewing since the late 1800s. It was in common use all over the world, but never in the lumber industry in Canada. There were no government policies to govern what Nechako/L&M wanted to do. So government started working on filling that gap.

Fitzpatrick, Larsen and their partners turned to a company that was far from experimenting with the ORC system, even if they had never done one so big or to interface with all the forestry components at work on the Nechako/L&M site. Turboden is an Italian-based clean energy high-tech firm affiliated with Mitsubishi and Pratt & Whitney. They also had a working relationship with Del-Tech in Prince George.

"We don't mind going first, but that is a risk, and you have to make risk decisions very carefully, with a lot of study, because you want to be on the leading edge of technology not the bleeding edge," said Fitzpatrick.

The example was the pellet plant. It was a game-changer for a lumber factory to install one, but Swaan had already worked a lot of the bugs out of the technology. This was another case of drafting close behind the real leaders.

"They had to write a whole new rule book for pressure-heat systems that aren't steam-based. The ORC system is thermal oil-based," said Larsen. "We were the first in B.C. so we had to work closely with the BC Safety Authority and government to design the provincial protocols for having one of these. But Turboden has comprehensive safety manuals approved by Austria and Germany for these plants, so, we just had to translate and adjust it for the specifics of our operation. There you have leading edge instead of bleeding edge."

The Vanderhoof project also wrote the rules for a new BC Hydro program especially for industry generating power not for sale to the grid, but to use on their own site.

The ORC system in Vanderhoof flipped the switch two years ago under the company name Nechako Green Energy Ltd. and since then, every set of authoritative eyes in Canada have been fixed on the data metrics.

The results have been even better than calculated. Instead of 1.8 megawatts of expected electricity, the ORC is generating more than two megawatts. It is saving the lumber company about $1 million in electricity bills per year, it covers about one-third of their total energy needs, significantly shrinks their carbon footprint, and it has put enough energy back into the provincial system to power 1,300 homes annually.

The project won BC Hydro's Powersmart Award the year it opened, it was named Clean Energy BC's 2012 Project of the Year and the company's work with the BC Safety Authority won them the 2013 Lt. Governor's Safety Award.

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