EUGENE- OREGON – One of North America’s most technologically advanced sawmilling complexes will soon add a $45 million wood-burning power plant to its Eugene-based operation.

Seneca Sawmill Company, founded 56 years ago by Aaron Jones, perhaps the nation’s most successful lumberman, will start construction on its 18.8 megawatt power plant this fall. Once completed, in the fall of 2010, the facility will power all three of the company’s sawmills and its lumber dryers, with enough power in reserve to supply the energy needs of more than 13,000 homes.

The Seneca facility will be the sixth constructed in western Oregon over the last five years. Others include Freres Lumber Company at Lyons, Douglas County Forest Products at Wilbur, Rough & Ready Lumber Company at Cave Junction and Frank Lumber Company at Mill City.

Bill Carlson, a Redding, California energy consultant who is advising Seneca notes that, while wood-fired power plant technology is not new, there has been renewed interest in their benefits in recent years due to the high cost of fossil fuels and, of late, the Obama Administration’s interested in expanding the nation’s renewable energy portfolio.

State and federal tax credits are also making private investments in renewable generating capacity more attractive. Two years ago the Oregon legislature adopted a renewable energy standard that requires utilities to buy 25 percent of their retail energy from renewable sources.

Seneca general manager Rick Re told the Eugene Register-Guard that the company has been reviewing its cogeneration options on a biennial basis for at least a decade, but that until the investment incentives were offered, he hadn’t been able to make the $45 million investment pencil out. Now it does.

Seneca’s announcement was welcome news in western Oregon, where many sawmills have either shut down or scaled back their operations in the wake of the worst housing recession since the early 1970s. Mr. Re attributed the company’s ability to proceed amid such economic turmoil to sound financial planning and a very strong balance sheet. “Our whole philosophy revolves around a belief that if we are prepared for the worst of times, the good times will take care of themselves,” he explained.

Nevertheless, Seneca is sizing its power plant to fit what it knows to be its available supply of wood fiber – its own 165,000-acre timberland base. “It’s a smart move,” Mr. Carlson observed. “You don’t want to outgrow your fuel supply or be vulnerable to vagaries in the marketplace.”

Be that as it may, Seneca’s decision to build garnered enthusiastic praise from Darrel Kenops, retired Willamette National Forest supervisor and a frequent spokesman for the National Association of Forest Service retirees. Writing in a February 5 opinion piece in the Register-Guard, Mr. Kenops noted that six in 10 forested acres in Oregon belong to the federal government and that somewhere between nine and 13 million of those acres need to be treated to reduce the risk of what he called “uncharacteristically severe wildfire.”

“Converting wood from overstocked forests to energy offers a unique opportunity to simultaneously address three challenges,” Mr. Kenops wrote: “The need to restore the health of Oregon’s federal forests, the need to find renewable energy alternatives and the need to revitalize Oregon’s rural communities.”

Kenops also opined that there is broad support in Oregon for taking action. “Cooperation is developing among stakeholders at the federal, state and local levels,” he wrote. “There is the potential addition of federal economic stimulus funding to the state directed at hazardous fuels reduction. This could give us a rare opportunity to create a level of investment in our federal forests that will reverse the trends of severe wildfire, declining jobs and eroding timber-sector infrastructure, the added benefits of reducing our dependence on fossil fuels.”

True enough, but Seneca sees its investment through much more pragmatic eyes. The company currently purchases about 70 billion Btu’s of natural gas annually to heat its lumber dryers. Once the co-generation plant is on line, it won’t need to buy natural gas anymore. Mr. Re believes the combination of savings and power sales will allow Seneca to recoup its entire investment in 10 years. Meanwhile, the 3,500 tons of carbon the company’s gas-fired lumber dryers release into the skies over Eugene falls to zero.