Published in the Herald-Republic on Saturday, December 30,
2000
By Gordon King
Copyright © 2000
Yakima
Herald-Republic
DeltaV boiler solution helps battle skyrocketing natural
gas prices.
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Boise Cascade kiln
operator Dick Phillips shuts a door on kiln 16 Friday
morning as the kiln is closed to dry lumber at the Yakima
mill. Natural gas fuels the boilers that create steam
used to dry the lumber. By Dori Harrell
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Leon Hayes, manager of Yakima's Boise Cascade Corp. lumber
mill, returned from a vacation this week to rumors that his
plant was shutting down due to the high cost of natural gas.
Not true, Hayes said.
That's not to say that skyrocketing prices are not a challenge:
The mill's cost for natural gas is now more than $15,000 a
day. That's a 267 percent increase from November to December,
with the dramatic price jumps blamed on high demand brought
on by the cold winter. "But we don't see any curtailments
as a result, though there was talk about it at the first of
December," Hayes said.
The company re-evaluates its situation every few weeks, but
there are no immediate plans to lay off any of its 400 workers,
Hayes said.
While companies in Oregon have shut down operations and laid
off workers because of increased natural gas bills, that's
not the case for Boise Cascade and food processors here. Boise
Cascade uses about 10,500 therms of natural gas a day to fire
up four boilers used in creating steam to dry lumber. It buys
its supply monthly on the wholesale market. A therm is a unit
of measure for natural gas; about 1.38 therms is the equivalent
of one gallon of heating oil. Just a year ago, Boise Cascade
paid 23 cents a therm. This month, it paid $1.45.
In November, the plant spent $250,000 on improving the efficiency
of another large boiler run on waste-wood products. "We've
seen a 36 percent reduction in gas usage, which at today's
prices equals about $9,000 to $10,000 savings a day,"
Hayes said. Cascade Natural Gas, based in Seattle, pipes the
fuel to Boise Cascade and to about 17,000 other customers
in the Yakima Valley. Based on rising wholesale rates, the
company this month filed for an emergency rate increase with
the state Utilities and Transportation Commission. With this
boost, Cascade's rates will have gone up 40 percent in six
months. A residential or small commercial client using an
average of 80 therms of natural gas per month would see an
increase of $14.95 per month.
Jon Stoltz, a vice president with Cascade Natural Gas in
Seattle, said wholesale prices are still rising but should
peak soon and start declining. In the Northwest, the main
driver of the natural gas market is the energy-shortage crisis
in California, he said. "With the shortage of electricity,
those who can generate it, even with natural gas, are able
to sell it at high prices, driving the wholesale prices up,"
Stoltz said. The average price per therm four months ago was
about 39 cents and has more than doubled since, with prices
fluctuating daily, according to the U.S. Department of Energy.
Several fruit processors have said they're simply soaking
up the extra costs while waiting for prices to drop.
Because of the volatility of the energy prices, Tree Top
Inc. contracts with Cascade for a two-year period for its
natural gas, according to spokeswoman Pat Moss. Tree Top is
in peak processing now, consuming 35,000 to 40,000 therms
a day, Moss said. "Our major concern is a real cold snap,"
Moss said. If usage increased substantially all over, the
amount it's supplied might decrease, she said. Stoltz said
that's a possibility. During a demand surge, customers who
may use more than they agreed to might be cut to just the
amount of their contract, he said. "But there's generally
enough supply to go around to everybody, though they may have
to buy it on the day market, which could be really high,"
Stoltz said. Prices should start dropping in February, he
added -- which is good news for Boise Cascade. "We know
we'll never see prices at 23 cents a therm again," Hayes
said. "But we're hoping for under 50 cents a therm."
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