In the present study, the biomass upgrading depot capacity and biomass feedstock moisture were optimized to obtain the minimum production cost at the depot gate for the production of woody biofuels. Three technology scenarios are considered in this study: (1) conventional pellets (CP), (2) modestly torrefied pellets (TP1) and (3) severely torrefied pellets (TP2). TP1 has the lowest cost of $7.03/GJ(LHV) at a moisture of 33 wt.% and a depot size of 84 MWLHV. The effects of climatic conditions and biomass field conditions were also studied for three scenarios. In humid regions of Michigan, TP2 is more economical than other scenarios because of the increased production of combustible gas. The three scenarios have similar sensitivities to biomass field conditions. (C) 2015 Elsevier Ltd. All rights reserved.