Tree clearing vast, but some timber not making it to market

BY DAVID FALCHEK

Times Shamrock Writer

Clearing trees for drill pads, natural gas pipelines, and the power lines, collectively amount to one of the largest clearings of land in the region’s history.

Yet, few of the felled logs are making it to the skids or the mills because the companies downing them- oil and gas exploration companies and electric utilities- aren’t in the wood business.

As the housing market makes a plodding rebound and prices across all wood grades edge up, the logs remain on property, stranded by the urgency of utilities and gas companies to get their energy delivered and the mounting cost of moving logs to market.

The irony is that utilities and gas companies often have the timber appraised and compensate property owners for the value of the timber they remove or at least take that value into consideration in negotiations with property owners. Even though they pay for the value, they leave it there for the landowner.

Recovering market

Prices paid at the lot for wood are so low, because the lack of demand from the housing sector, that companies find it is hardly worth worrying about wood.

Cabot Oil & Gas Corp. leaves firewood for the owner of a property where it sites a well pad, after compensating the property owner for cutting it down.

When property owners decide they don’t want the wood, Cabot sends it to a woodyard project of the Wyoming County Correctional Facility, where inmates cut it into firewood and officials provide it to needy families.

“When we cut down trees, it is treated as damage and we compensate the property owner for that,” said Cabot spokesman George Stark. “Historically, it is the way we have done it.”

 

Norman Galvin, a semi-retired forester based in Dalton, said the clearing is having an effect on the price of low-grade wood, since rights of way tend to go through some of the worst terrain. Low-grade wood is typically used by particle board makers and pallet producers.

“There is an awful lot of low-grade wood from gas and utility lines going into the market,” Galvin said. “Most often, they leave it lay – it’s not their end product.”

Despite the poor terrain, sometimes there is a diamond in the scrub. He recently saw a group with a pickup snagging a valuable black cherry log.

Other factors

Paul Lyskava, executive director of the Pennsylvania Forest Products Association said lumber prices are down, but for a myriad of reasons. When the natural gas industry first arrived, the association, foresters and mills worked hard to educate drillers that trees from cleared land had value, Lyskava said.

While utility and gas development pushed more wood into the market, it is not solely responsible for low prices. The housing market collapse cut deep into the demand for forest products. While housing construction has improved, that improvement had been painfully gradual and demand is down in the U.S. and Europe.

State and local regulation has also made it more expensive to get wood to market, Lyskava said.

Localities have adopted ordinances requires timbering permits. Road posting and bonding adds another layer of cost. Many mills are in rural areas and getting logs requires trucks that often exceed the posted weight limits. Under state laws, those trucks have to pay up front for “excess maintenance.”

Recently, that bill has been increasing from a few hundred dollars a quarter to five-figures.

“Haulers and mills have addressed that by factoring in the cost into their bids or just avoiding areas with posted roads entirely,” he said.

While the price paid to landowners for logs on site may be very low, those additional transportation and permit costs add to the price paid by mills and other end users, such as Craftmaster Manufacturing Inc. in Towanda, which produces interior flake board doors with a textured wood finish.

CMI benefits from the rebounding housing market, having recently added 40 employees. But CMI’s raw material manager, Chuck Dibble, said his company is actually paying more for the low grade wood it processes than it did four years ago.

For competitive reasons, he declined to name specific prices, but said he is not getting a break.

“A lot of that wood material coming down from pipelines and electric lines is not making it to market- it’s not a priority, not in the right place, or right amount to be able to utilize it cost effectively,” he said. “Pipeline companies and utility companies see it as something in the way.”

The cost increases he sees are from the logging processors: the middlemen, who face increasing fuel, insurance, and equipment prices, costs they pass onto the mill.

There are logistical challenges to getting those logs out of where they are. Drill pad and rights of way are, by design, in out-of-the-way places that are harder to get to. The logs downed in a right of way clearing are harder to consolidate into a marketable lot because they are coming from a narrow strip of land. Same for drill pads, which are about four acres.

Loggers and haulers usually don’t bother with lots smaller than 10 acres, said Vincent Catrone, forester at Penn State Extension office based in West Pittston.

A logger picks a landing area that requires skidding the logs the shortest distance possible before grading and sorting them for sale. Small lots of wood- or wood from narrow strips of land- just aren’t conducive for consolidating and selling the logs.

He knows a small logger who shifted its business into chipping and spreading, because for the jobs they were getting, the logs weren’t worth grading and getting to mill.