The forestry potential of Penn Virginia Corporation lands

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Virginia Polytechnic Institute and State University

The Penn Virginia Resources Corporation is a large land holding company in southwest Virginia. Approximately 62 percent of their holdings are forested. The major objective of this study was to determine the economic feasibility of utilizing timber on Penn Virginia forest lands as a raw material for selected forest products.

The study was conducted in three phases:

(1) A market and resource analysis;

(2) Estimation of the cost of harvesting and transporting timber from Penn Virginia lands to local processing facilities; and

(3) An analysis of the economic feasibility of establishing new forest products markets utilizing Penn Virginia timber as the primary raw material supply.

Results from phase one of the study indicated that approximately 116 wood-based industries are located within 50 miles of the Penn Virginia forest, and that the forest contains the resources to supply some of these existing markets.

Phase two results were obtained using harvesting simulations. A harvesting system cutting conventional products and recovering residues was the most economical.

A discounted cash flow analysis was employed in phase three of the study to examine the economic feasibility of establishing wood-based plants using Penn Virginia timber. Five mill types were analyzed: pallet mill, dimension mill, SHOLO mill, System 6 mill, and sawmill. Five sawmill configurations were examined. Results of this study phase indicated that the mill types showing the greatest potential for establishment using Fenn Virginia timber were the dimension mill, SHOLO mill, and scragg sawmill. All provided after-tax rates-of-return 0£ approximately 30 percent or higher.