OSB Plant in California Using Small Diameter Material – Why Not?

One of the things I like about our world is that you can come back in 40 years and people are sometimes talking about the same thing. In the early 80’s, I worked in south central Oregon, on the Deschutes, Fremont, Winema and Ochoco National Forests. We had a serious mountain pine beetle epidemic. One of our silviculture folks suggested that instead of dealing with all those dead trees, we should just put in a large fuel break around the town of Chiloquin. That idea was certainly thinking outside the box, but at the end of the day many of the dead trees were removed by Weyco (as I recall). The other idea that was much spoken of in those days was getting an OSB plant in Chiloquin. The problem at the time was that the Forest Service couldn’t provide assurances of its share of supply.

Flash forward to today. We’ve talked here before about the difficulties of fuel treatments in California (and elsewhere) because there are small trees to be removed, and there are no markets for small trees. Meanwhile, many environmental groups don’t want big trees removed. The fear is that fuel treatments will take all the big fire-resilient trees or that areas will be clearcut. The solution, perhaps, is to find markets for small trees.

So perhaps it seems like a win-win to establish an OSB plant in California. Having driven through California recently, I see that indeed many Californians use OSB. If we look at the map above of current OSB plants, we can see that these heavy products would have to be transported shorter distances potentially leading to fewer carbon emissions per OSB unit at point of use. And if California’s environmental restrictions on the plant are greater than elsewhere, and if a company can meet those restrictions, wouldn’t that be an improvement over other parts of the country?

Here’s part of the Beck Group’s analysis.

Our raw material supply analysis found that topwood from ongoing sawtimber harvests, small diameter trees from forest health treatments, and sawmill by-products such as lumber trim ends, slabs, and edgings could supply nearly 2 times the prospective plant’s annual raw material requirement. An additional consideration is that the recent wildfires in California, while unfortunate, and tragic may have created a situation where community and political leaders are ready to fully support a large wood products manufacturing facility that can utilize the fuel that has built up in the region’s forests.

..

At a production volume of 750 MMSF (3/8” basis) per year we estimate the nearby annual OSB market size is nearly 4 times larger than the capacity of the plant. We also estimate that a Northern California OSB plant would enjoy an average of about a $35/MSF finished product freight cost advantage over other North American OSB producers, which is about 15 percent of the long-term average OSB sales value.

Here’s a link to their blog post. I’m thinking that this sounds like a win-win. What do you think? Thanks to Forest Business Network for this link.

9 thoughts on “OSB Plant in California Using Small Diameter Material – Why Not?”

  1. Why not? I think the map you used provides a key part of the answer to your question Sharon.

    Oriented strand board (OSB) uses smaller logs from fast-growing species such as aspen, southern yellow pine, poplar or black poplar.

    Also, doesn’t much of this material for OSB comes from tree farms and tree plantations via clearcutting?

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  2. Did the OSB plant the Louisiana Pacific had at Olatha CO close due to economic reasons or due constant air quality violations? The was a good market for small material and aspen. Today, one would never realize that trees were cut to fuel the plant. I think it is a great idea.

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    • According to a May 2002 article in the Montrose Press, the plant closed in November of 2001 because of weak market conditions for oriented strand board (OSB). The November 2001 closure marked the second shutdown at the plant in less than a year. In April 2001, the factory closed because of weak market prices for OSB and the high cost of wood in the area. The plant reopened in June 2001 following a spike in OSB market prices. In May 2002, a LP spokesman also said a decrease in consumer confidence stemming from the terrorist* attacks last September 2001 also contributed to the plant’s closure.

      * Those were not the same “environmental terrorists” who caused the wildfires in California, according to geologist Secretary Ryan Zinke.

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      • Here’s what the Beck Groups says about previous OSB plants in the NW.

        “Why No OSB in the Western US?
        Quite frankly, we’re not totally sure. The most likely reason is that in much of the Western US a relatively high percentage of the timberland is under control of federal and state government agencies. Greatly reduced timber harvests on public lands over the last 30 years and the trend of increasing average OSB plant size have combined to reduce the certainty of a cost-effective raw material supply. Indeed, during the early days of the OSB industry, when harvest levels on public lands were higher and the average plant size was much smaller, there were OSB plants operating at various locations throughout the US West.”

        And no, it doesn’t have to be fast- growing.. look at the map in northern Canada- hard to think that those trees are growing very fast. This link says they use softwood and some hardwood http://www.osb-info.org/technical.html

        Here’s what the Beck Group says about emissions:

        Our research also found that regulatory and permitting issues are notoriously difficult processes in California. One strategy identified for mitigating these issues was to utilize natural gas for the process steam used in the manufacturing OSB. While this approach creates higher operating costs than the more traditional practice of combusting by-products (bark, fines, etc.), it is offset by the ability to operate a competitively scaled plant in California with emissions that are well within allowable levels. We also believe there are opportunities for strategic partnerships that may allow for more flexibility in the navigating the permitting process and allow for utilization of by-products.

        It sounds like the emissions came from combusting the byproducts to create energy.
        And distance from markets would be very different between Montrose, Colorado and northern California.

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  3. I think the fact that western forests tend to be publicly owned is an important difference for another reason, which you alluded to: “The problem at the time was that the Forest Service couldn’t provide assurances of its share of supply.” That hasn’t changed. Under federal law, an agency can not make commitments without going through the proper procedures (think NEPA and ESA), and no volume outcome can be guaranteed. I don’t think their new landscape-scale “projects” are going to prove successful in allowing long-term commitments, at least as long as they insist on including big trees and undeveloped or sensitive areas. But maybe if they made a realistic assessment of what they could sustain in the way of small trees in roaded areas and limit themselves to that, a “deal” could be made.

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    • Jon, I think we have stumbled upon something chicken and egg-y here. If there is only a sawtimber market, then FS people will be tempted to include big trees to be able to afford to do fuel treatments. If there were a market for small trees, then the temptation wouldn’t be there (or not so much).
      In Colorado, we tried to get something like that (some might argue that when all the trees are dead, what difference does it make if they are large or not)? Many investors are spooked by trying to get dead trees from the FS. To me, the OSB plant might be an opportunity for the FS to ask “where and what size is OK?” And for stakeholders to work together so that private land and counties can make money or not lose so much from fuel treatments. I can also see marketing “buy local and help your neighbors with their fuel treatments” with local OSB having a special place at Home Depot.

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  4. OK . . . time to recalibrate expectations in light of yesterday’s (December 21st) Executive Order on Promoting Active Management of America’s Forests, Rangelands, and other Federal Lands to Improve Conditions and Reduce Wildfire Risk:

    https://www.whitehouse.gov/presidential-actions/eo-promoting-active-management-americas-forests-rangelands-federal-lands-improve-conditions-reduce-wildfire-risk/?fbclid=IwAR3ZfFiIDtvSwh97w3rNtpNixyeccxjsdVjkK5X84y4mt1yy5kpdzIEorKs

    How might this change the supply game in terms of building new manufacturing opportunities?

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    • I read most of that, and I am sure that Trump wants to wave his magic wand and mandate things without added funding. It will be, as Spock was often fond of saying, “Fascinating” to see all the wheels in motion, grinding against each other. I just don’t think they have analyzed all the angles, especially in project implementation. I would expect that litigation would succeed on most ‘volume grabs’. Beware of the one-size-fits-all ideas, from either side.

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      • Sec. 2. Goals. (a)(i) The Secretary of the Interior shall review the Secretary’s 2019 budget justifications and give all due consideration to establishing the following objectives for 2019, as feasible and appropriate in light of those budget justifications, and consistent with applicable law and available appropriations.

        The Secretary of Agriculture is given the same mandate at Sec. 2(a)(ii).

        This means that the secretaries are directed to find and move funds from within their existing 2019 budget to assign to work done in accordance with the mandates of the executive order.

        Additional funding will likely be negotiable through the OMB from the nearly $1 trillion that is available as discretionary funding without the executive branch having to go to Congress for specific appropriation. I expect that will be where additional funding will come from . . . with other agencies’ oxen being gored to make it happen.

        (I suspect that, should Congress fail to deliver on the wall funding, the same approach may be used in terms of shifting discretionary funding around . . . but that’s a story for another day . . .)

        Then there is Sec. 5. (b), where the secretaries are told, using the nondiscretionary term “shall” . . .

        “In developing this strategy described in subsection (a) of this section, the Secretaries shall:”

        (All that follows is nondiscretionary on the secretaries’ part, but one of the more interesting mandates is found at § 5(b)(v):

        “Develop recommended actions and incentives to expand uses, markets, and utilization of forest products resulting from restoration and fuel reduction projects in forests, rangelands, and other Federal lands, including biomass and small-diameter materials;”

        Here the secretaries are directed to identify and develop ways to make money on the biomass and small-dimension materials resulting from the projects conducted in accordance with the order.

        Given that the order was likely authored by teams at both Interior and Agriculture, I expect that they will be soliciting innovation from the wood products industry, with an eye toward recovering milling capacity in the United States.

        Reply

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