Coming into the Country

Superior Pellet Fuels General Manager Chad Schumacher talks about the long and winding road that led to the construction of Alaska's first operating pellet mill.
By Tim Portz | December 22, 2013

In September 2010, the team at Superior Pellet Fuels LLC brought their pellet facility online but the plant’s story really begins in 2006. Initially conceived as home for the waste streams from a chipping facility, momentum for the plant’s construction picked up significantly in 2008 as energy prices in Alaska skyrocketed. Now the plant serves as a foundation from which the Alaskan biomass energy industry can build. While simultaneously working with institutional users to deploy pellet heat for their facilities, Chad Schumacher, general manager, is also responsible for expanding the plant’s product offerings and spearheading the never-ending pursuit for production perfection.

How does an Iowan end up running Alaska’s only pellet mill?

I have lived in Alaska for nearly 10 years now, and so much has happened it is difficult to attach the Iowan roots to this project. I moved to Alaska in early 2004 when a tremendous business opportunity became available with an import/export company focused largely on the export of wood chips for paper production. My position as the operations and logistics manager presented a great opportunity for a flatlander from Iowa to learn about the timber industry. This experience combined with a passion for renewable energy and local manufacturing led me to where I am today, managing Superior Pellet Fuels.

Tell us a little bit about how Superior Pellet Fuels got started.

I was working for the import/export company in 2006 when we began to analyze changing from in-woods chipping operations to stationary chipping at the port facility. The biggest challenge in regard to a stationary chipper was disposing of residual materials. The pellet industry made sense to add value to this waste product. Once our pellet mill idea evolved, we began looking at potential markets overseas for the pellets. Then, domestic fuel prices increased in what seemed like overnight in 2008 and the opportunity for domestic sales erupted. The owner of our company, our company forester and I determined the raw material availability, high dependence on fuel oil for heating purposes and best location of the facility and formed Superior Pellet Fuels in late 2008 and began making plans for construction. I moved to Fairbanks to oversee the construction project and began preliminary marketing for our wood pellets, which morphed into overseeing all business operations when the mill began production in September 2010.

How long did it take to really perfect that art of pellet production once the facility was built and operational?

Honestly, I don’t know if I’ll ever consider our product perfected. We are now producing pellets for our fourth heating season and have seen tremendous change in our raw material, manufacturing process and experience level with our operators. Every year we see significant improvement from the previous year’s quality standards and have modified our system numerous times to make sure this trend continues. For example, this fall we changed our feed system at the facility to incorporate an automated blending system with multiple conveyors. This has made our blend much more consistent and improved the overall quality of our pellet. Manufacturing premium grade pellets for residential heating provides the opportunity for many homeowner critics and until they are all completely satisfied with our locally manufactured product we will continue to strive for improvement. 

How would you describe the market for pellets in Alaska? Do you track pellet stove sales in the state or is there some other way to gauge growing demand?

The Alaska pellet market is still at an infancy stage. It grows nearly exponentially each year and is driven by the recent availability of locally manufactured wood pellets, high heating costs, poor air quality issues and a focus on renewable energy. We work with most of the stove and boiler dealerships in Interior Alaska and track their pellet system sales in order to estimate product demand, but do not do it on a statewide basis. Since the state of Alaska is so large—nearly one-fifth of the entire land area of the United States—we only track the markets we can competitively reach.  

What role is the Superior Pellet Fuels team playing in market development in the state?

We play a very hands-on role for the pellet industry’s development. Residential markets continue to develop at a rapid pace in Alaska due to the relatively low installation cost and quick payback based on fuel cost savings. The bigger challenge has been the installation of commercial and industrial pellet systems in Interior Alaska. We have worked directly with a number of small businesses to finance and install pellet burning systems including boilers, furnaces and stoves. We have paid for 100 percent of the upfront costs, including system purchase and installation of the system, and financed it with a payback based upon fuel cost savings. We have done this in order to grow the pellet industry and continue to encourage businesses and government agencies to consider utilizing a clean-burning, renewable fuel that offers a 40 percent reduction in heating costs versus fuel oil. 

You’ve added a logged product to your production environment. What drove that decision?

Market demand, air quality issues and economics based on operating efficiencies were all factors that urged us to install the wood pellet log production line. Conventional wood-burning systems such as wood stoves and fireplaces are still very popular in Alaska. Because of the high cost in fuel oil, we have seen the firewood market price increase to as high as $400 per cord. We wanted to address the needs of this market by producing a compressed-wood product with a controlled moisture content in order to provide a cleaner-burning, lower-emission alternative to cordwood at a lower cost than locally available processed firewood. Additionally, with the pellet industry still in its infancy stage, we are only producing at approximately 20 percent of our facility capabilities. We decided to install the pellet log system in order to utilize our labor pool on a year-round basis. This allows us to keep experienced labor employed on a constant basis and improves the overall labor cost for both of our products.

It appears that manufactured logs have a much lower emissions and particulate profile than simple cordwood. Why is that? 

The Fairbanks/North Pole area where our facility is located is a PM2.5 nonattainment area. Because of this determination, our local and state governments are focused to improve the air quality around the area and have rolled out efforts to educate wood burners through a “Split, Store, Stack  & Save” campaign in order to emphasize the importance of using only dry wood. The compressed wood pellet logs ensure the users will have wood fuel available to burn immediately with a much improved combustion efficiency. The two factors that provide these assurances are the low-moisture content—approximately 8 percent, and the high density— greater than 80 pounds per cubic foot.

There is a lot of open country all around your plant. Are there regular encounters with various critters at the plant?

Whenever I talk with people from the Lower 48, two things always come up: wildlife and all of the television shows that give people horrible misconceptions about Alaska. As far as the wildlife goes, we have encountered a number of moose around the pellet facility but have been fortunate enough to have no issues with bears. And, as far as the TV shows go, I would encourage you and your readers to plan a trip to Alaska to see it for yourself. It is a truly beautiful place. Be sure to stop by Superior Pellet Fuels for an update on the Alaskan biomass industry.