Jobs… jobs on the range…

December 29th, 2006


There’s a new electrical generation project that’s been fired up in Virginia, Minnesota. Let’s see if I’ve got this right:

Virginia and Hibbing Biomass project
$80 million, 70+ jobs

Excelsior’s Mesaba Project
$2,155,680,783 ($2.2 BILLION), 107 jobs

What’s the better community investment opportunity?
Where do we get more bang for our tax dollar?

$80 million – 70 jobs v. $2.2 billion – 107 jobs

Now I may be in the 44th percentile in math, but DUH!

Info here: Virginia Public Utilities Biomass Project

And from VPUC, here are the numbers:

– up to 70 jobs (at Virginia and Hibbing Public Utilities) retained for 20 years

– 65-100 new jobs created in the wood processing portion of the project

– $52 million in new development at Virginia and Hibbing Public Utilities

– $10 million invested in wood yard and harvesting equipment

– $19.2 million in biomass fuel will be spent annually within 75 miles of Virginia and Hibbing

– predictable steam rates for 3,600 residential and commercial steam customers in Virginia and Hibbing

– cost avoidance of up to $20 million in steam conversions for customers

– environmental benefit of using biomass instead of coal

– pollution control cost avoidance due to using less coal

– new market for region’s loggers and landholders

– $20 million annual community economic value (labor, fuel, materials); $1.2 billion over 20 years

And in the Mesabi Daily News:

Biomass generation begins

Jim Romsaas
Last Updated: Friday, December 22nd, 2006 10:55:40 PM

VIRGINIA â?? The smell of freshly cut trees was in the air and smoke was finally coming out of the smokestack Friday on the long-awaited biomass project at the Virginia Public Utilities.

The smoke from the initial firing was nearly lost in an extensive stream of steam, though, which was being blown through the new biomass boiler lines to make sure they were clean of debris.

The Virginia steam blow on the $80 million biomass energy project was to be done by midnight Friday and commercial operation will follow on Jan. 1. Despite a few minor bugs, everything was going as planned Friday.

â??Quite honestly this startup has gone very well for us,â??â?? said Doug Ganoe, director of power production.

Not only will the biomass project, which includes a similar boiler in Hibbing, preserve high-paying utility jobs (32 in Virginia alone) and stabilize steam heat costs for 20 years, it will also help the local timber industry.

Beset by problems this year, the timber industry will benefit from a $2 million Iron Range Resources grant to the Laurentian Energy Authority, the governing agent for the biomass project. The grant to the LEA is to reimburse the joint entity for product purchased from loggers in the Taconite Tax Relief Area in the first six months of 2007. Reimbursements will be limited to 1,000 cords for each eligible logger.

Virginia utility General Manager Terry Leoni said the effort is a 50-50 partnership with the IRR to try and bridge the downturn in the timber industry by prebuying until, hopefully, Ainsworth Lumber Co. gets back up and running.
Ainsworth closed a Bemidji mill in August and laid off 150 workers at each of the companyâ??s oriented strand board plants in Cook and Grand Rapids in September.

The Ainsworth problems, a downturn in the national housing industry and the high price of raw materials in Minnesota combined to literally shut down the stateâ??s logging industry for a good part of 2006, said Scott Dane, Associated Contract Loggers and Truckers executive director.

â??Itâ??s actually been quite devastating to the timber industry,â??â?? he said. â??Weâ??re in a survival mode at this time.â??â??

From here, the industry has to protect and preserve the logging infrastructure thatâ??s already in place, Dane said. Assistance from the county, state and federal levels is also being sought, he added.

The LEA project will help by using biomass from a tree farm in Aitkin, as well as right of way clearings. Biomass (such as wood) can be combusted directly to produce steam for electricity of it can be converted into a gas to power a turbine.

The boilers will produce 20 megawatts of biomass electricity in Hibbing and 15 megawatts in Virginia, which will all be sold to Xcel Energy under a contract with LEA.

â??This will be a new direction for the Virginia and Hibbing utilities,â??â?? Leoni said, â??one that I hope will reap the benefits that we have been looking forward to out of this project.â??â??

Revenue projections call for about $700 million in gross revenues to the utilities over the 20-year span of the power purchase agreement with Xcel Energy. The revenue will help maintain jobs, create 60-100 construction jobs in Virginia and Hibbing, stabilize steam rates, maintain the local power plants and steam systems, and help customers avoid costs of converting to another heating source.

The potential benefits have been discussed for the last four years and are now coming to fruition. A 24-hour supply of wood is on site and the rest is just a few miles away at the Mountain Iron woodyard.

â??Itâ??s really a great feeling when it all starts up,â??â?? Ganoe said. â??Itâ??s a new world for the guys here.â??â??

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