United States Department of Agriculture

DEPAR TMENT OF AGRICULT URE

Forest 

Service

Pacific Northwest 

Research Station

General Technical Report

PNW-GTR-936

May

2016

Planning, Implementation, and 

History of the First 5 Years of 

Operation of the Craig, Alaska, 

Pool and School Biomass 

Heating System—A Case Study

Allen M. Brackley and Karen Petersen
In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) 

civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and 

institutions participating in or administering USDA programs are prohibited from discriminating 

based on race, color, national origin, religion, sex, gender identity (including gender 

expression), sexual orientation, disability, age, marital status, family/parental status, income 

derived from a public assistance program, political beliefs, or reprisal or retaliation for prior 

civil rights activity, in any program or activity conducted or funded by USDA (not all bases 

apply to all programs). Remedies and complaint filing deadlines vary by program or incident. 

Persons with disabilities who require alternative means of communication for program 

information (e.g., Braille, large print, audiotape, American Sign Language, etc.) should 

contact the responsible Agency or USDA’s TARGET Center at (202) 720-2600 (voice and 

TTY) or contact USDA through the Federal Relay Service at (800) 877-8339. Additionally, 

program information may be made available in languages other than English. 

To file a program discrimination complaint, complete the USDA Program Discrimination 

Complaint Form, AD-3027, found online at http://www.ascr.usda.gov/complaint_filing_cust.html 

and at any USDA office or write a letter addressed to USDA and provide in the letter all of the 

information requested in the form. To request a copy of the complaint form, call (866) 632-9992. 

Submit your completed form or letter to USDA by: (1) mail: U.S. Department of Agriculture, 

Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue, SW, Washington, 

D.C. 20250-9410; (2) fax: (202) 690-7442; or (3) email: program.intake@usda.gov. 

USDA is an equal opportunity provider, employer, and lender.

Authors

Allen M. Brackley is a research forester, U.S. Department of Agriculture, Forest 

Service, Pacific Northwest Research Station, Alaska Wood Utilization Research 

and Development Center, 204 Siginaka Way, Sitka, AK 99835. Karen Petersen is 

an extension agent, University of Alaska Fairbanks, P.O. Box 19515, Thorne Bay, 

AK 99919.

Cover: (upper left) cedar chips from fuel bin with moisture content of 40 to 60 

percent; (lower left) fuel bin being loaded during commissioning on May 1, 2008; 

(right) end view of the Craig boiler building.
Abstract:

Brackley, Allen M.; Petersen, K. 2016. Planning, implementation, and history 

of the first 5 years of operation of the Craig, Alaska, pool and school biomass 

heating system—a case study. Gen. Tech. Rep. PNW-GTR-936. Portland, OR: 

U.S. Department of Agriculture, Forest Service, Pacific Northwest Research 

Station. 22 p.

A wood-based energy project in Craig, Alaska, to heat the community’s aquatic 

center and two of its schools was the first such installation in Alaska to convert 

from fossil fuels to a renewable energy source. Initial interest in the project 

started in 2004. The system came online in April 2008. This report provides an 

overview of the new heating system’s history, including a review of fuel costs 

during the study period; background information about the climate and wood 

resources in the region; initial conception, design, tendering, and construction; 

and a 5-year summary of operating problems and financial performance. The 

report will provide information to assist others interested in conversion to renewable wood-energy systems.

Keywords: Biomass, wood energy, district heating.
Contents

1 Introduction

1 Evolution of the Craig System

5 Sources of Fuel, Projected Life, and Sustainability of Biomass Supply

6 Special Wood Fuel Problems in Southeast Alaska

7 Initial Design Phase

9 Tendering

9 Phase I—Construction

11 Phase II—Startup and Initial Testing

15 Final Construction Costs

16 Early Lessons Learned

16 Lessons Learned During First Year of Operation

17 Fuel Quality Problems and Solutions

17 Initial Installation Problems and Solutions

18 Operator Error/Need for Training

19 Analysis of the Cost and Benefits of the System

21 Acknowledgments

22 Literature Cited
1

Planning, Implementation, and History of the First 5 Years of Operation of the Craig, Alaska, Pool and School Biomass Heating System—A Case Study

Introduction

In the first decade of the 21st century, the cost of petroleum-based energy products was 

increasing, and individuals and organizations started to focus on lower cost alternative-energy products. Figures 1 and 2 display the national trends for propane (liquefied 

petroleum gas) and fuel oil, respectively, for the years 1991 to 2012, based on data 

reported by the U.S. Department of Energy’s Energy Information Agency (EIA). The 

price of both products after delivery to southeast Alaska is consistently higher than 

these reported U.S. average values. Figures 3 and 4 display the data for 2000 to 2012, 

which, after least-squares analysis, include the smoothed straight-line fit for the raw 

EIA data. The R2 values for the smoothed (fitted) line are 0.95 for propane and 0.90 for 

fuel oil. Nationally, the average initial price of propane during this period was $1.50/

gallon, and it increased at a rate of $0.152 per year. The average national fuel oil price 

was $1.90/gallon and its annual rate of increase was $0.223. For a rural community 

such as Craig, located on Prince of Wales Island in southeast Alaska, fuel costs in 

July 2004 were $1.72/gallon for fuel oil and $1.46 for propane (Miles 2004). Figure 5 

compares the Craig fuel oil price and the EIA national averages from 2004 to 2009. 

Evolution of the Craig System

In 2004, Craig City Administrator Jon Bolling noted that the cost of fuel to heat the 

city’s Aquatic Center had been going up. Many years earlier, the city had chosen 

propane to heat the facility because its price was relatively stable, and a local fuel 

dealer was willing to offer a discount. 

Given the increasing price of propane and the prevailing view that prices would 

continue to rise, the city contracted with Murray and Associates1 of Juneau, Alaska, 

to assess the cost of converting from the propane system to one that used fuel oil. 

At the suggestion of the Prince of Wales Wood Energy Committee, city administrators also asked Murray and Associates to consider the costs and benefits of converting to some form of wood-energy system. The contractor stated that, although they 

were not familiar with wood-heating systems, such a conversion appeared promising (Murray and Associates 2004).

Table 1 presents statistics that outline the fuels and levels of usage that existed 

in 2004. In that year, three municipal buildings in Craig were being heated with 

fossil-fuel systems. At the Craig Aquatic Center, the swimming pool water and the 

rooms that housed the pool and weight room were heated by propane. The initial 

effort focused on a system to replace the propane used in the pool building. 

1 The use of trade or firm names in this publication is for reader information and does not 

imply endorsement by the U.S. Department of Agriculture of any product or service.
2

GENERAL TECHNICAL REPORT PNW-GTR-936

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0

1990 1995 2000 2005 2010 2015

Year

Price 

of propane (d

ollars 

per gallon)

Figure 1—U.S. average price of propane reported by the Energy Information Agency for heating 

seasons 1991 to 2012.

Figure 2—U.S. average price of fuel oil reported by the Energy Information Agency for heating 

seasons 1991 to 2012.

4.50

4.00

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0

1985 1990 1995 2000 2005 2010 2015

Price 

of fuel oil (d

ollars 

per gallon)

Year
3

Planning, Implementation, and History of the First 5 Years of Operation of the Craig, Alaska, Pool and School Biomass Heating System—A Case Study

Figure 3—Annual cost of propane (per gallon) during the period 2000 to 2012, based on nationallevel Energy Information Agency data. Propane (dollars per gallon)

Reported price

Smoothed

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0

Slope = $1.52

R2

= 0.95

Year

1998 2000 2002 2004 2006 2008 2010 2012 2014

Figure 4—Annual cost of fuel oil (locally referred to as diesel) during the period 2000 to 2012, 

based on national-level Energy Information Agency data. Fuel oil (dollars per gallon)

4.50

4.00

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0

Reported price

Smoothed

Slope = $0.233

R2

= 0.90

Year

1998 2000 2002 2004 2006 2008 2010 2012 2014
4

GENERAL TECHNICAL REPORT PNW-GTR-936

As the project proceeded, additional space in the elementary and middle 

schools was also reviewed for inclusion in the project (table 1). Full conversion of 

all fossil fuels to renewable energy sources was projected to replace 39,000 gallons 

of propane and 15,940 gallons of fuel oil (known locally as diesel) each year. 

Based on encouragement from Murray and Associates, city officials contacted 

the Alaska Energy Authority (AEA) for assistance with a second feasibility study 

that focused on renewable wood-based energy systems. T.R. Miles Technical 

Consultants, Inc., of Portland, Oregon, was retained to evaluate the technical and 

economic feasibility of converting the heating system from propane to one using 

some form of renewable wood energy. The Miles (2004) report also concluded that 

although the system to replace the pool system was economically feasible, adding 

the heat load needed by the school represented an opportunity to save additional 

funds. A biomass heating system that would serve both the pool and the schools 

was estimated to require 608 tons of fuel annually (Miles 2004). Cordwood and 

wood chip systems were considered. The study recommended installation of a wood 

chip system with a capacity of 1.2 million British thermal units per hour (Btuh) 

and a total capital cost between $400,000 and $633,000. By summer 2005, the cost 

of fuel oil had doubled, making conversion to a biomass-fueled system even more 

attractive. Note that the rated capacity of this system is described as a medium-size 

application (Kofman 2006).

Figure 5—A comparison of fuel oil costs in Craig, Alaska, with the Energy Information Agencybased national average.

0

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

2003 2004 2005 2006 2007 2008 2009 2010

A

verage price of fuel 

oil (dollars per 

gallon)

Year

National average

Craig, Alaska, price
5

Planning, Implementation, and History of the First 5 Years of Operation of the Craig, Alaska, Pool and School Biomass Heating System—A Case Study

Sources of Fuel, Projected Life, and Sustainability of 

Biomass Supply

City officials were now faced with a new set of issues, many of which were outlined 

by Maker (2004). The first involved selecting the form of fuel that would be used by 

the system. Additional concerns were the sustainability of supply and the service 

life of the installed system. 

Craig is surrounded by the Tongass National Forest, which is administered by 

the U.S. Forest Service. Other landowners in the area include the State of Alaska 

and Sealaska Timber, a Native corporation created under the Alaska Native Claims 

Settlement Act. 

Local economies on Prince of Wales Island are based on fisheries, forest 

products, and tourism. One medium-sized sawmill and several smaller ones are 

located within a 10-mile hauling distance from the site in Craig to be heated 

(Kilborn et al. 2004). City officials were concerned about the sustainability of a 

biomass fuel supply, but during visits to Viking Lumber Company in Klawock, a 

town about 8 miles north of Craig, they learned that the mill produced more than 

60,000 tons of residual products annually (chips and sawdust) that potentially 

could be used as fuel. In comparison, the estimated annual requirement of 608 

tons (Miles 2004) was seen as minimal in relation to the volume produced by 

the mill and other possible sources. Craig officials also decided that even if the 

mill closed and the harvest of timber ended, enough existing wood waste was 

available to feed the new heating system throughout its estimated lifespan of 25 

to 30 years.

Table 1—Fuel types and usage by municipal buildings in Craig, Alaska, in 2004 

(Miles 2004)

Building

Existing 

fuel

Estimated 

annual usage

Btus/ 

gallon

Therms 

(annual) 

Demand 

average Source

Gallons Btuh

Aquatic center Propane 39,000 91,600 35,724 890,000 Murray and 

Associates 

(2004)

850,000 Miles 

(2004)

Middle school Fuel oil 11,000 140,000 15,400 400,000 Estimated

Elementary school Fuel oil 4,940 140,000 6,916 200,000 Estimated

School subtotal Fuel oil 15,940 22,316 600,000

Btus = British thermal units.

Btuh = British thermal units per hour.
6

GENERAL TECHNICAL REPORT PNW-GTR-936

After reviewing the forms of available biomass, Craig officials selected 

sawmill chips as the most desirable fuel. The movement of chips from the 

mill, using a truck modified for delivery, was a simple operation. Seven-ton 

units of chips could be delivered and loaded directly into a fuel storage silo. 

Numerous auger systems could be designed to feed the chips from the silo to 

the burning unit. 

Special Wood Fuel Problems in Southeast Alaska

There are two conventions used to report the moisture content (MC) of forest 

products. Wood technologists concerned with solid-wood products calculate MC 

in relation to the oven-dry weight of the material. Under this system, the reported 

MC can be in excess of 100 percent (dry basis). Pulp and paper technologists and 

combustion engineers, however, calculate MC in relation to the initial weight of 

wood material and water in the sample, and refer to this as total weight basis, or wet 

basis, so that 100-percent dry basis is equal to 50-percent wet basis (Bowyer et al. 

2003, Wilson 2010). These cited reports contain additional information relative to 

wood moisture and the impact of this value on energy values of biomass materials.

Southeast Alaska is located in the temperate rain forest of the Pacific Northwest 

region of the United States. Rainfall in the region can range from 60 to 250 inches 

annually (NCD 2015). Wood is a hydroscopic material that is constantly exchanging 

moisture with the surrounding environment (Bowyer et al. 2003). About half the 

weight of a living tree is that of its water content. Nicholls and Brackley (2009), in a 

study to determine drying rates of young-growth Sitka spruce and western hemlock 

house logs harvested from Prince of Wales Island, determined that nearly freshly 

cut Sitka spruce and western hemlock had moisture contents of 88.3 percent and 

100.6 percent (oven-dry basis), respectively, or 46.9 percent and 50.1 percent (total 

weight or wet basis). 

When trees are felled, they immediately start exchanging moisture with the 

environment. After cutting, the wood starts losing moisture and will eventually 

come to equilibrium with the atmosphere. Using NCD (2015) data for 2007 and 

methods outlined in Simpson (1998), Nicholls and Brackley (2009) calculated the 

annual equilibrium moisture content for the Ketchikan Airport, an area comparable 

to Craig, as 20.1 percent (oven-dry basis) or 16.7 percent (total weight/wet basis). 

The MC of delivered chips from freshly cut logs will vary depending upon how 

long the logs were decked prior to milling and to methods used to store chips. The 

exact MC of chips in exposed piles will be influenced by the amount of rainfall and 

snow that has accumulated from the date of production to the time the chips were 

moved to the storage silo.
7

Planning, Implementation, and History of the First 5 Years of Operation of the Craig, Alaska, Pool and School Biomass Heating System—A Case Study

Engineers retained by the City of Craig and the AEA were aware of the high 

MC of wood fuels in southeast Alaska, specifically in Klawock. The MC of mill 

samples was measured by R&M Engineering. Based on fresh weight, uncovered 

hog fuel had a 67-percent MC, covered hog fuel was at 56 percent, cedar chips at 48 

percent, and sawdust at 37 percent. A request for proposals was issued for the boiler 

in 2005 that specified 50-percent MC fuel with the provision to burn “secondary 

wood fuel” at 70-percent MC. The boiler supplier was not required to provide fuel 

drying equipment. Several suppliers responded that they would not bid unless the 

moisture content was 30- to 40-percent MC wet basis (Miles 2004).

Initial Design Phase

A request for proposals (RFP) was issued in 2005 for the boiler system. Chiptec®

Wood Energy Systems of Williston, Vermont, was the only bidder. This company’s 

boiler has a two-stage burner/gasification system. The system is extremely cleanburning and meets Environmental Protection Agency emission requirements. 

In spring 2006, the City of Craig applied for and received funding to proceed 

with the design and engineering of an automated wood-chip district heating system. 

Funding to support this phase of the project was supplied by the city, the Forest 

Service, and the AEA. Table 2 gives the sources and amounts of funding for the 

design phase. The order for the boiler was placed in May 2007.

Delivery of the system was scheduled for October 2007. It was planned for the 

boiler to be operational by December 2007 or January 2008, but installation and 

setup was not completed until early April 2008. 

R&M Engineering of Ketchikan, Alaska, and CTA Associates of Missoula, 

Montana, were awarded contracts for design and engineering. The city specified 

that the design would be a district hot-water system to meet the needs of the swimming pool and the elementary and middle schools. Also specified was that the 

system would include a chip-drying capability.

Table 2—Funding for wood-energy system design

Source Amount

Dollars

City of Craig 40,000 

USDA Forest Service 30,000 

Alaska Energy Authority 30,000 

Total 100,000 
8

GENERAL TECHNICAL REPORT PNW-GTR-936

The engineering firms designed the distribution component so that hot water 

could be circulated to existing underground insulated pipes. Heat exchangers were 

used to interface with the existing piping, and a control system was designed so that 

in the event of a falling water temperature from the biomass-fueled unit, the existing propane unit would function as a backup to the new chip-fired system. 

After alternative drying methods were evaluated, the boiler vendor was 

asked to supply a modified moving-floor chip bin. The purpose of the unit was to 

reduce excess moisture to the 50-percent MC guaranteed by the boiler supplier. 

This “in-floor” dryer has been used in Europe. The boiler supplier guaranteed the 

unit’s ability to burn at 50-percent MC. Their bid stated that “in order to utilize 

high-moisture-content fuels in the gasifier, the gasifier box must be hot enough 

to evaporate all of the moisture in the fuel and create the pyrolysis gas from the 

biomass itself.” In its proposal, Chiptec noted, “...this system has been installed in 

several other locations, which have reported the ability to utilize fuel with a MC of 

60 percent or more with no performance degradation” (Petersen 2010).

Heat loads were recalculated with the additional drying load, and system 

capacity was increased to 4 million Btuh with allowance for possible future heat 

customers. Even then, the boiler would be operating at less than 50 percent of 

its capacity; such boilers operate most efficiently at 80 percent of rated capacity 

(Miles 2015). The fuel storage, building construction, and heat distribution were 

all upgraded. The design and engineering firm estimated total costs for the system 

to be $1.2 million. Funding for the construction phase of the project was supplied 

by the AEA, the National Resources Conservation Service, and the Forest Service. 

Funding supplied by AEA was in part a grant and the remainder from its Power 

Project Loan Fund. Amounts and sources of funding for construction are presented 

in table 3.

Table 3—Funding to construct the system

Source Amount

Dollars

Alaska Energy Authority 300,000 

Denali Commission 300,000

National Resources Conservation Service 50,000 

USDA Forest Service 117,000 

Loan from Alaska Energy Authority 500,000a

Total 1,267,000 

a Loan from Alaska Energy Authority’s Power Project Loan Fund (in later 

years, a grant of $161,000 was received to pay the outstanding amount).
9

Planning, Implementation, and History of the First 5 Years of Operation of the Craig, Alaska, Pool and School Biomass Heating System—A Case Study

Tendering

The project went out to bid for construction. Two responses were received. 

Proposed costs for the system ranged from $1.7 to $2.3 million. Given available 

loans and grants, Craig needed to find an additional $1.0 million to proceed with 

construction and purchasing. Two actions were taken by the city to address this 

issue. First, the city council voted to assume responsibility and act as contractor 

for the project. By assuming this role, the city reduced the deficit amount to about 

$400,000. The city then was awarded a $500,000 line of credit from a local bank.

Phase I—Construction

The City of Craig hired a project manager to oversee construction of the facility. 

The city administrator functioned as the controller and was responsible for the 

receipt of grant funds and payments for services. Each phase of the project was 

designed as a separate small contract and tendered to local businesses. 

Figure 6 shows the location of the system within the center of the community. 

Ceremonial groundbreaking was held in August 2006. Site preparation took place 

in fall 2006. Actual construction of the building to house the equipment began with 

pouring of the concrete foundation in spring 2007. Figures 6 through 9 provide 

information on the stages of construction. 

Figure 6—Location of the wood-fired boiler system, Craig, Alaska.
10

GENERAL TECHNICAL REPORT PNW-GTR-936

Figure 8—Front view of the Craig boiler building.

Figure 7—Concrete foundation of the Craig boiler system.
11

Planning, Implementation, and History of the First 5 Years of Operation of the Craig, Alaska, Pool and School Biomass Heating System—A Case Study

Phase II—Startup and Initial Testing

In anticipation of startup, a supply of fresh wood chips, blown directly from the 

chipper to the delivery truck, was furnished by Viking Lumber. At the time, the 

chip bin was only partially loaded.

In mid-April 2008, Chiptec owner John Tomasi arrived to oversee final installation and initial firing of the boiler (fig. 10), which had a control system that included 

two computer systems (fig. 11). One system controlled the actual combustion process by regulating oxygen flow to the boiler as well as auger feed rates. The second 

computer controlled the pumps in the hot-water delivery system and the air flow to 

the wood-drying system. Calibration of the computers and their adjustment to local 

operating conditions was a major part of the startup effort.

On April 15, 2008, the feed augers were started and the fuel was ignited to bring 

the system online for 24 hours. At that time, a second load of wood chips was delivered to the facility (figs. 12 and 13). This load of chips, however, was taken from the 

exposed outside storage pile which, as expected, had a high (40 to 60 percent) MC. As 

startup progressed, T.R. Miles instructed personnel in the operation of the dryer and 

in the use of a microwave oven (ASTM 2013) to determine fuel MC (figs. 14 and 15). 

Given the extreme moisture content of the second load of fuel, it was impossible 

to maintain the fire in the boiler. Fortunately, the boiler had produced a sufficient 

Figure 9—End view of the Craig boiler building.
12

GENERAL TECHNICAL REPORT PNW-GTR-936

Figure 10—Views of the Chiptec® boiler system in Craig, Alaska.
13

Planning, Implementation, and History of the First 5 Years of Operation of the Craig, Alaska, Pool and School Biomass Heating System—A Case Study

Figure 12—Loading the fuel bin during commissioning on May 1, 2008.

Figure 11—Boiler control system.
14

GENERAL TECHNICAL REPORT PNW-GTR-936

Figure 14—Cedar chips from fuel bin with moisture content of 40 to 60 percent.

Figure 15—Equipment for determining moisture content using 

ASTM E1358 (microwave method).

Figure 13—Fully loaded fuel bin, May 2, 2008.
15

Planning, Implementation, and History of the First 5 Years of Operation of the Craig, Alaska, Pool and School Biomass Heating System—A Case Study

water temperature to support activation of the “in-floor” drying system. After a day 

of drying, the chips were conditioned to a moisture level that would continuously 

maintain a fire. By the end of the week, the system was maintaining a constant water 

temperature and it was possible to turn off the propane heaters in the pool area. The 

diesel boilers in the schools were adjusted after the renewable-energy system came 

online. At this point, the Craig system was fully operational but was in use only 

until the end of May 2008 when the schools were closed for the summer. Under the 

reduced heat requirement of the summer months, the boiler could not be operated at 

peak efficiency (80 percent of capacity) thus was shut down for the summer. 

Final Construction Costs

The construction phase was reasonably straightforward, despite challenges created by 

the need to ship all material and equipment to Craig by barge. To those who live in the 

region, this is a well-known problem. Contractors and equipment vendors familiar with 

the region recognize a need to factor in the added shipping costs and time delays associated with this mode of transportation. For contractors and equipment suppliers from the 

lower 48 states who are not familiar with the region, it provides a learning experience. 

Table 4 presents the budget and actual costs for each of the components of the 

construction process. The increase in cost for concrete and foundation walls was 

unexpectedly high owing to an increase in the cost of rebar used for reinforcement. 

The city was able to reduce some costs in the mechanical and contingency items by 

performing tasks “in-house” as opposed to contracting for services. In total, actual 

costs of construction came in 4 percent below budgeted levels.

Table 4—Budgeted amounts and actual costs for each of the 

components of the construction process 

Construction costs Budget Expenditures

- - - - - - Dollars - - - - - - -

Engineering 15,000 23,292 

Labor 220,000 209,514 

Concrete foundation and walls 65,609 122,820 

Building 53,936 108,414 

Boiler 385,867 359,495 

Mechanical 660,000 577,042 

Contingency 72,521 10,313 

Total 1,522,933 1,410,890 

Outstanding invoices as of 5/31/2008a 46,165 

Construction total 1,457,055 

a Cost of independent contractors to troubleshoot issues with boiler during initial startup 

period. These costs were paid from budgeted amounts.
16

GENERAL TECHNICAL REPORT PNW-GTR-936

Early Lessons Learned

About 2 weeks after startup, a local contractor accidentally toppled a power pole 

that supplied electricity to the facility. After power was restored, the outage was 

found to have caused the boiler’s computer systems to reset to the manufacturer’s 

specifications, thus the system needed to be reprogrammed to the optimal onsite 

operating conditions. Because power outages are not uncommon in southeast 

Alaska, a battery backup system was installed to prevent this from re-occurring.

Also discovered was that when loads were low and heat was directed to the 

drying floor for long periods, the in-floor drying system was overdrying the 

fuel. Trial-and-error methods during the first month of operation revealed that 

the drying system could reduce fuel MC to a level of 10 percent. In general, 

small-capacity chip burning systems are designed to use fuel at between 20- to 

40-percent MC (total weight basis) (Kofman 2006). Moisture contents below this 

level potentially can cause a number of problems. Augers grind overdried wood 

into small particles and dust. Dust explosions can then result from an electrical 

spark, a common problem in many forest products manufacturing systems, not 

just boiler systems. In addition, excessively dry fuel can “flash burn” and fail 

to maintain a constant heat source. Although identified during the initial startup, this overdrying of fuel presented a major challenge for the boiler’s future 

operation. The challenged resulted from the fact that no provision was made for 

continued instruction in the use of the floor drier or the boiler. These problems 

could have been avoided by better planning and budgeting for startup, periodic 

inspection, and training. 

Lessons Learned During First Year of Operation

After initial startup and less than 2 months of operation in spring 2008, the first 

extended period of operation began in September 2008 and ran through 2009. 

Additional operating problems were identified during this period. During the first 

full year, the city employed an independent engineer to troubleshoot operation of 

the boiler. Although Craig could show a cost savings from the use of wood chips, 

many questions remained about the efficiency of the unit. The engineer classified 

operational problems into four areas:

• Problems associated with the wood-chip supply or fuel quality.

• Problems with the boiler itself.

• Problems with the fuel-oil boilers in the school running when they should 

not be running.

• Operator error.
17

Planning, Implementation, and History of the First 5 Years of Operation of the Craig, Alaska, Pool and School Biomass Heating System—A Case Study

Fuel Quality Problems and Solutions

With respect to the wood-chip supply, one problem was contamination of the fuel. 

The chips delivered to the site were unscreened and contained large pieces of wood. 

Most of the larger pieces could be removed by hand, but often they turned crosswise in the auger system and interrupted the flow of chips to the burn box, resulting 

in a drop in heat output. At one point, a large piece of wood that had jammed the 

feed auger led to shearing of the auger shaft. 

During winter months, wood chips from the mill’s outdoor storage pile were 

often frozen together into solid blocks. Some of these blocks were up to a square 

meter in size. These blocks of unthawed chips would “bridge” the feed system at the 

bottom of the bin and jam the fuel flow. When the in-floor drying system was put on 

high to help eliminate ice, it consumed so much heat that the water temperature in 

the boiler would drop. 

Solutions to these fuel quality problems included both short-term fixes and 

planned modification to the fuel supply systems, both at the mill and at the boiler 

site. First, use of chips directly from the chipper solved much of the ice problem. 

Second, in almost every forest products production system that uses chips (pulp and 

paper mills, particle board plants, etc.), a critical phase in the production process is 

the screening of chips to create a uniform product that will flow through production without plugging the feed system. Screening can be done either at the point 

of chipping or at the boiler site. Screening was discussed in the early planning 

of the boiler. A decision was made to screen and dry fuel at the mill instead of at 

the boiler. In a region in which there is a competitive market for fuel chips, it is a 

simple matter for the purchaser to specify chip size requirements in a procurement 

contract, or to install a screening system at the boiler site to obtain material that 

meets specifications. But this is not the case in southeast Alaska. The second aspect 

of the problem, freezing of chips, is a little more complex. One solution is storage 

of the fresh chips under cover to prevent accumulation of snow and rain on the 

pile. This is a partial solution, but if there is sufficient moisture in the fresh chips 

in extremely cold climates, they will freeze without some form of heating. As a 

temporary solution, chips shipped to Craig were loaded into the truck directly from 

the chipper.

Initial Installation Problems and Solutions

During the last quarter of 2008 and early 2009, analysis of fuel usage revealed 

that the elementary school’s diesel boiler was actually running regardless of the 

level of operation of the chip boiler system. The system log book indicated that the 

temperature of the hot water return line was in fact higher than the delivery line. 
18

GENERAL TECHNICAL REPORT PNW-GTR-936

During summer shutdown in 2009, the in-floor drying system was found to have 

been “stealing” heat from the school hot-water feed line. This installation flaw 

reduced the temperature of the hot-water feed to a level that caused activation of the 

school’s diesel-fueled boiler. The control system assumed that the biomass boiler 

was off-line or down, and turned on the diesel boiler to compensate for the reduced 

feed water temperature. 

When the boiler was shut down at the end of the 2008–2009 school year, the 

burn box grates were found to have been damaged by too much ash buildup. The 

buildup of ash on the grates impeded precise air flow up through the grates and 

resulted in substandard operation of the burner. The ash buildup resulted from the 

use of dirty fuel as well as inadequate grate cleaning (Miles 2015). Also during 

the down-time inspection, an air leak was discovered in the primary burn chamber; 

as a result, the gasifier (second stage of the burn process) had not been operating 

efficiently. The leak and resulting excessive air caused considerable damage to the 

fire brick that had to be repaired (Bolling 2009).

Although these problems have been referred to as boiler installation and fuel 

problems, they may have resulted from inadequate training of the new system’s 

operators, as discussed below.

Operator Error/Need for Training

The initial estimate of staff time needed to operate the new system was about 45 

minutes per day, with occasional extra hours for routine cleaning and maintenance. 

But operation and maintenance typically takes 10 to 12 hours per week for an 

installation of this kind. The boiler as delivered had an automated ash removal 

system, which was assumed to reduce the amount of required maintenance.

In reality, the school district’s maintenance person spent several hours each day 

at the boiler site. During some days, up to 4 hours were spent at the site. One of the 

reasons for excessive maintenance time was insufficient training of the staff and a 

need for unsupervised on-the-job training. 

Tasks initially assigned to the maintenance person included daily logging of 

temperatures and other operating characteristics of the system. Removal of ash 

from the ash bin was scheduled as a weekly activity. Cleaning of the grates in the 

burn chamber and removal of the sawdust from the air channels under the chip bin, 

which were parts of the in-floor drying system, were defined as periodic activities 

to be done as necessary. In retrospect, it became obvious that too much reliance 

had been placed on the automated ash removal system. Failure to schedule routine 

cleaning of ash from the firebox contributed to some of the operational problems 

with the total system.
19

Planning, Implementation, and History of the First 5 Years of Operation of the Craig, Alaska, Pool and School Biomass Heating System—A Case Study

Problems identified during the first complete year of operation have been 

corrected. The staff has been properly trained to maintain the system. Viking 

Lumber was asked to supply clean chips directly from the production process 

to ensure minimum levels of contamination and moisture content. After August 

2009, the boiler was expected to operate at maximum efficiency and meet earlier 

projections of its costs and benefits. However, there has been a continuing problem of dirt in the fuel and resulting high levels of ash. The dump truck used to 

haul fuel was also used to haul gravel products. Failure to clean the dump truck 

prior to hauling chips resulted in contamination. The high levels of dirt and 

resulting ash has made it necessary to conduct extensive maintenance at the end 

of each heating season.

Analysis of the Costs and Benefits of the System

A cursory look at available financial data indicates that the new system has in fact 

reduced fuel costs for the City of Craig. The true potential of the system and a 

complete financial analysis of benefits, however, has been confounded by problems 

inherit in the startup process (the first complete year of operation), a situation that is 

not uncommon with new technology. 

Before we review the specific costs and benefits of the Craig system, we should 

consider the economics of non-renewable energy from 2000 to 2012. We chose this 

period because it exhibits trends in Craig’s energy costs both before and during the 

periods leading up to the decision to build the system. It also reflects what actually 

happened during the early years of operation.

Nonrenewable energy prices, 2000–2012—

From 2000 to 2012, the average annual increase in the price of propane was $0.152 

per gallon (fig. 3), while the average annual increase in the price of fuel oil was 

$0.223 per gallon (fig. 4).

Table 5 compares the quantity and costs of fuel and electricity needed to power 

the new heating system. The wood chips used during the startup period were supplied by Viking Lumber Company of Klawock, Alaska. Dates available for 2010 to 

2015 are reported.

Table 6 estimates savings resulting from the new system by calculating what 

annual propane and fuel-oil costs would have been at then current prices, based on 

preconversion usage levels (Miles 2004), had the new system not been installed. 

Some of these savings have been offset by increased costs for operating and maintaining the boiler. 

Representatives of the City of Craig have expressed a high degree of satisfaction with the system. First, they have noted that savings made additional funds 
20

GENERAL TECHNICAL REPORT PNW-GTR-936 Table 5—Sources and costs of energy used by the Craig Aquatic Center, Elementary School, and Middle School, 2009 to 2014 Fiscal year School fuel oil Aquatic center propane Added electricity to run new boiler unit Chips Total cost

Gallons

Dollars 

per 

gallon

Cost in 

dollars Gallons

Dollars 

per 

gallon

Cost in 

dollars

Kilowatthours 

(Kwh)

Dollars 

per 

Kwh

Cost in 

dollars

Green 

tonsa

Dollars 

per ton

Cost in 

dollars Dollars

2009 15,012 3.00 45,110 10,736 1.58 16,9182010 2,999 3.04 9,110 13,222 2.13 28,181 55,140 0.13 7,168 924 30 27,720 72,1802011 1,987 3.71 7,373 15,243 2.51 38,209 54,382 0.14 7,613 1218 30 36,540 89,7362012 3,658 3.86 14,122 10,010 2.38 23,829 45,810 0.15 6,872 1169 30 35,070 79,8932013 2,380 5.00 11,898 6,821 2.48 16,926 8,657 1302 30 39,606 77,087Source: City of Craig.a Volumetric ton in a dump truck with an estimated load of 7 tons (cubic content of dump body not specified).b Amounts reported by City of Craig included extra propane used in refractory work. The reported amount of 1,500 gallons is not included above. Wood-chip boiler was also direct-fired using propane while repairs were made.Table 6—Estimated annual savings based on preconversion fuel usage (Miles 2004) at current-year prices

Estimated preconversion 

propane usage and cost

Estimated preconversion 

fuel-oil usage and cost

Total 

estimated 

preconversion 

cost

Annual 

cost

Annual 

savings

Gallons

Dollars 

per gallon

Cost in 

dollars Gallons

Dollars 

per gallon

Cost in 

dollars - - - - - - - - - - Dollars - - - - - - - - -

2010 39,000 2.13 83,070 15,940 3.04 48,458 131,528 72,180 59,348

2011 39,000 2.51 97,890 15,940 3.71 59,137 157,027 89,736 67,291

2012 39,000 2.38 92,820 15,940 3.86 61,528 154,348 79,893 74,455

2013 39,000 2.48 96,720 15,940 5.00 79,700 176,420 77,087 99,3332014 39,000 2.20 85,800 15,940 4.05 64,557 150,357 80,989 69,368
21

Planning, Implementation, and History of the First 5 Years of Operation of the Craig, Alaska, Pool and School Biomass Heating System—A Case Study

available to the school system. Other sentiments include pride in installing a system 

that uses local resources, keeps dollars in the community, and reduces the dependency on foreign oil. Officials also reported that, although the system is located in 

the center of the community, it has minimal emissions to the environment. People 

living nearby describe the system as clean-burning and not adversely affecting local 

air quality. 

Craig’s new district heating system represents the first such project in Alaska 

to convert from fossil fuels to a renewable biomass energy source. The system has 

now been in use for five complete seasons and appears to be on track to provide, at 

minimum, a 20-year payback period. The ultimate payback period and return on 

investment will be subject to future changes in the price of fossil and biomass fuels. 

In summary, annual savings in fuel costs for the first 5 years of operation range 

from $59,000 to $99,000.

Craig city officials said that they were highly satisfied with the system but readily admit that installing and operating it has been a “learning process.” This case 

study has been prepared to assist those who are considering similar projects. City 

Administrator Jon Bolling affirmed that because the new system keeps jobs and 

spending within the community, as opposed to supporting foreign sources of oil, 

the system would be a success even if it merely broke even.

Acknowledgments

We thank Tom Miles of T.R. Miles Technical Consultants Inc., 1470 SW Woodward 

Way, Portland, OR 97225, for reviewing the final manuscript and providing additional relevant information.

Metric Equivalents

When you know: Multiply by: To find:

Inches (in) 2.54 Centimeters

Feet (ft) .305 Meters

Square feet (ft2) 0.093 Square meters

Cubic feet (ft3) .0283 Cubic meters

Cubic yards (yd3) 0.765 Cubic meters

Acres (ac) 0.405 Hectares

Pounds (lbs) 0.454 Kilograms

Tons (t) 0.907 Tonnes or megagrams

Gallons (gal) 3.78533 Liters

British thermal units (Btu) 0.000293 Kilowatts

British thermal units (Btu) 1.05505 Kilojoules
22

GENERAL TECHNICAL REPORT PNW-GTR-936

Tree Species Identified in This Report

Common name Scientific name

Alaska yellow-cedar Callitropsis nootkatensis (D. Don) Oerst. ex D.P. Little

Black spruce Picea mariana (Mill.) Britton, Sterns & Poggenb.

Red alder Alnus rubra Bong.

Sitka spruce Picea sitchensis (Bong.) Carrière

Western hemlock Tsuga heterophylla (Raf.) Sarg.

White spruce Picea glauca (Moench) Voss

Literature Cited

ASTM. 2013. Standard test method for determination of moisture content of 

particulate wood fuels using a microwave oven. ASTM E1358-97(2013). West 

Conshohocken, PA: ASTM International. http://www.astm.org/Standards/E1358.

htm. (January 25, 2016).

Bolling, J. 2009. Personal communication. City administrator, PO Box 725, Craig, 

AK 99921.

Bowyer, J.L.; Shumulsky, R.; Haygreen, J.G. 2003. Forest products and wood 

science—an introduction. 4th ed. Ames, IA: Wiley-Blackwell. 553 p.

Kilborn, K.A.; Parrent, D.J.; Housley, R.D. 2004. Establishing sawmill 

processing capacity for Tongass timber. Res. Note PNW-RN-545. Portland, OR: 

U.S. Department of Agriculture, Forest Service, Pacific Northwest Research 

Station. 12 p.

Kofman, P.D. 2006. Quality wood chip fuel. Dublin, Ireland: Council for Forest 

Research and Development. 4 p. http://www.seai.ie/Renewables/Bioenergy/

Quality_wood_chip_fuel.pdf. (August 28, 2015).

Maker, T.M. 2004. Wood-chip heating systems—a guide for institutional and 

commercial biomass installations. Montpelier, VT: Biomass Energy Resource 

Center. 91 p.

Miles, T.R. 2004. Recommendations for the City of Craig pool heating project. 

Report to Alaska Energy Authority. 

Miles, T.R. 2015. Personal communication. Engineer/owner, T.R. Miles Technical 

Consultants Inc., 1470 SW Woodward Way, Portland, OR 97225.

Murray and Associates. 2004. Craig pool cost analysis: propane to fuel oil 

heating system conversion. Report to the City of Craig. Juneau, AK. [Pages 

unknown].
23

Planning, Implementation, and History of the First 5 Years of Operation of the Craig, Alaska, Pool and School Biomass Heating System—A Case Study

National Oceanic and Atmospheric Administration, National Climatic 

Database [NCD]. 2015. http://www.ncdc.noaa.gov/cdo-web/. [Date accessed 

unknown].

Nicholls, D.; Brackley, A.M. 2009. House log drying rates in southeast Alaska for 

covered and uncovered softwood logs. Gen. Tech. Rep. PNW-GTR-782. Portland, 

OR: U.S. Department of Agriculture, Forest Service, Pacific Northwest Research 

Station. 18 p.

Petersen, K. 2010. Craig wood fired boiler—a case study of a renewable energy 

project. Fairbanks, AK: University of Alaska, Department of Alaska Native and 

Rural Development. M.A. project report. 68 p.

Simpson, W.T. 1998. Equilibrium moisture content of wood in outdoor locations in 

the United States and worldwide. Res. Note FPL-RN-0268. Madison, WI: U.S. 

Department of Agriculture, Forest Service, Forest Products Laboratory. 11 p.

U.S. Department of Energy, Energy Information Administration [EIA]. 2012.

Residential propane prices (dollars per gallon). http://tonto.eia.gov/dnav/pet/hist/

LeafHandler.ashx?n=PET&s=W_EPLLPA_PRS_NUS_DPG&f=W. (April 10, 2012).

Wilson, P.L.; Funck, J.W.; Avery, R.B. 2010. Fuelwood characteristics of 

northwestern conifers and hardwoods (updated). Parrent, D.J.; Funck, J.W.; Reeb, 

J.; Brackley, A.M., eds. Gen. Tech. Rep. PNW-GTR-810. Portland, OR: U.S. 

Department of Agriculture, Forest Service, Pacific Northwest Research Station. 50 p.



Pacific Northwest Research Station

Website http://www.fs.fed.us/pnw/

Telephone (503) 808–2592

Publication requests (503) 808–2138

FAX (503) 808–2130

E-mail pnw_pnwpubs@fs.fed.us

Mailing address Publications Distribution

Pacific Northwest Research Station

P.O. Box 3890

Portland, OR 97208–3890
U.S. Department of Agriculture

Pacific Northwest Research Station

1220 SW 3rd Ave., Suite 1400

P.O. Box 3890

Portland, OR 97208–3890

Official Business

Penalty for Private Use, $300