HomeMy WebLinkAboutHoldmann-Pilgrim HS Proposal
Renewable Energy Fund Round IV
Grant Application
AEA 11-005 Application Page 1 of 20 7/21/2010
Application Forms and Instructions
The following forms and instructions are provided to assist you in preparing your application for
a Renewable Energy Fund Grant. An electronic version of the Request for Applications (RFA)
and the forms are available online at: http://www.akenergyauthority.org/RE_Fund-IV.html
Grant Application
Form
GrantApp4.doc Application form in MS Word that includes an outline
of information required to submit a complete
application. Applicants should use the form to assure
all information is provided and attach additional
information as required.
Application Cost
Worksheet
Costworksheet4.doc Summary of Cost information that should be
addressed by applicants in preparing their application.
Grant Budget Form GrantBudget4.doc A detailed grant budget that includes a breakdown of
costs by milestone and a summary of funds available
and requested to complete the work for which funds
are being requested.
Grant Budget Form
Instructions
GrantBudgetInstructions4.pdf Instructions for completing the above grant budget
form.
If you are applying for grants for more than one project, provide separate application
forms for each project.
Multiple phases for the same project may be submitted as one application.
If you are applying for grant funding for more than one phase of a project, provide
milestones and grant budget for completion of each phase.
If some work has already been completed on your project and you are requesting
funding for an advanced phase, submit information sufficient to demonstrate that the
preceding phases are satisfied and funding for an advanced phase is warranted.
If you have additional information or reports you would like the Authority to consider in
reviewing your application, either provide an electronic version of the document with
your submission or reference a web link where it can be downloaded or reviewed.
REMINDER:
Alaska Energy Authority is subject to the Public Records Act AS 40.25, and materials
submitted to the Authority may be subject to disclosure requirements under the act if no
statutory exemptions apply.
All applications received will be posted on the Authority web site after final
recommendations are made to the legislature.
In accordance with 3 AAC 107.630 (b) Applicants may request trade secrets or
proprietary company data be kept confidential subject to review and approval by the
Authority. If you want information is to be kept confidential the applicant must:
o Request the information be kept confidential.
o Clearly identify the information that is the trade secret or proprietary in their
application.
o Receive concurrence from the Authority that the information will be kept
confidential. If the Authority determines it is not confidential it will be treated as a
public record in accordance with AS 40.25 or returned to the applicant upon
request.
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 2 of 20 7/21/2010
SECTION 1 – APPLICANT INFORMATION
Name (Name of utility, IPP, or government entity submitting proposal)
University of Alaska Fairbanks, Institute of Northern Engineering, Alaska Center for Energy and Power
Type of Entity:
Government Entity (University Research Center)
Mailing Address
P.O. Box 755910, Fairbanks, AK 99775-5910
Physical Address
525 Duckering Building, 309 Tanana Loop
Telephone
907-474-5402
Fax
907-474-6686
Email
Gwen.holdmann@alaska.edu
1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER
Name
Maggie Griscavage
Title
Director, UAF Office of Grant & Contract Administration
Mailing Address
University of Alaska Fairbanks
PO Box 757880
109 Administrative Services Center
Fairbanks AK 99775-7880
Telephone
907-474-7301
Fax
907-474-5506
Email
fygrcon@uaf.edu
1.2 APPLICANT MINIMUM REQUIREMENTS
Please check as appropriate. If you do not to meet the minimum applicant requirements, your
application will be rejected.
1.2.1 As an Applicant, we are: (put an X in the appropriate box)
An electric utility holding a certificate of public convenience and necessity under AS
42.05, or
An independent power producer in accordance with 3 AAC 107.695 (a) (1), or
A local government, or
XX A governmental entity (which includes tribal councils and housing authorities);
Yes
1.2.2. Attached to this application is formal approval and endorsement for its project by
its board of directors, executive management, or other governing authority. If the
applicant is a collaborative grouping, a formal approval from each participant’s
governing authority is necessary. (Indicate Yes or No in the box )
Yes
1.2.3. As an applicant, we have administrative and financial management systems and
follow procurement standards that comply with the standards set forth in the grant
agreement.
Yes
1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached
grant form. (Any exceptions should be clearly noted and submitted with the
application.)
Yes
1.2.5 We intend to own and operate any project that may be constructed with grant
funds for the benefit of the general public.
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 3 of 20 7/21/2010
SECTION 2 – PROJECT SUMMARY
This is intended to be no more than a 1-2 page overview of your project.
2.1 Project Title – (Provide a 4 to 5 word title for your project)
Pilgrim Hot Springs Geothermal Resource Assessment
2.2 Project Location –
Include the physical location of your project and name(s) of the community or communities that will
benefit from your project.
Pilgrim Hot Springs, Alaska. This project will benefit the community of Nome, as well as other
villages on the Seward Peninsula.
2.3 PROJECT TYPE
Put X in boxes as appropriate
2.3.1 Renewable Resource Type
Wind Biomass or Biofuels
Hydro, including run of river Transmission of Renewable Energy
XX Geothermal, including Heat Pumps Small Natural Gas
Heat Recovery from existing sources Hydrokinetic
Solar Storage of Renewable
Other (Describe)
2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply)
XX Reconnaissance Design and Permitting
XX Feasibility Construction and Commissioning
Conceptual Design
2.4 PROJECT DESCRIPTION
Provide a brief one paragraph description of your proposed project.
The Pilgrim Hot Springs geothermal system was extensively studied in the late 1970s and early
1980s using a variety of geological, geochemical, and geophysical techniques. Unfortunately
the execution of these surveys and interpretation of the data did not result in a thorough
understanding of the area, and the most important conclusions for potential future development
– such as locating the upflow zone of the geothermal fluid – was not determined. In 2010, the
University of Alaska Fairbanks began Phase I of an intensive new exploration program of the
Pilgrim Hot Springs resource, funded mainly through a Department of Energy grant with cost
share provided through a $613,174 award under Round III of the Renewable Energy Grant
Fund. This first Phase, which is currently underway, involves the use of an innovative
geophysical remote sensing techniques (including forward looking infrared radiometry, or FLIR)
intended to map the spatial extent and total heat flow to the surface and make a preliminary
estimation of the developable extent of the reservoir. These remote sensing techniques are
being coupled with more traditional ground-based exploration techniques to pinpoint the location
of the upflow zone, map the spatial extent and total heat flow to the surface, and estimate the
temperature and depth of the reservoir. This proposal addresses Phase II and III of this project.
Phase II involves drilling and testing two 500 ft temperature gradient holes and two 2500 ft
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 4 of 20 7/21/2010
confirmation holes into the resource to confirm the results from Phase I. The third Phase will
involve developing a more complete understanding of the reservoir through flow testing and
water sampling of the holes, and development of a numerical reservoir model. The end result of
this project will be an economic and geothermal resource model of the Pilgrim Hot Springs site
and surrounding area to determine if it can be economically developed, and to what extent.
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 5 of 20 7/21/2010
2.5 PROJECT BENEFIT
Briefly discuss the financial and public benefits that will result from this project, (such as reduced fuel
costs, lower energy costs, etc.)
In 2007, the Alaska Energy Authority funded a preliminary feasibility analysis of Pilgrim Hot
Springs as a potential energy option for Nome. The study was completed by Hattenburg Dilley
& Linnell, LLC, a consulting firm specializing in civil, geotechnical, and transportation
engineering and the report concluded geothermal power produced at Pilgrim Hot Springs could
potentially be an economically viable alternative energy resource for the city. Currently, Nome
requires 12 MW of power, which includes 7 MW for the Rock Creek Gold Mine (not currently in
operation). The proposed program laid out in this proposal is designed to better characterize
the resource to determine how much power could be sustainably generated from the resource,
and what sort of development is most appropriate for the site, as well as adjacent property held
by Mary’s Igloo Native Corporation (MINC), a federally recognized Alaska Native Corporation,
which has expressed interest in relocating their community to their traditional land adjacent to
the Pilgrim site if the resource is developed.
The potential benefit/cost ratio of this project is very high despite the cost. This project will build
on several prior assessments of the site, and if a significant resource is indentified the possible
benefits to the entire region are substantial. According to the Alaska Energy Authority Energy
Pathway Database, the projected annual fuel cost for power generation in Nome is $7,255,696
over the next 20 years. In 2007, Nome Joint Utilities alone spent $2,566,000 in fuel, and this
number could double if the Rock Creek Gold Mine is brought back online. If some or all of this
fuel can be offset through the development of a geothermal power plant at Pilgrim, the benefits
may warrant construction of the facility despite transmission distances. This project represents
the first step toward this goal by quantifying how much potential energy is available for
sustainable development at the site.
In addition, funding for this project will permit the University of Alaska to accept the DOE funding
for Phase II and III of the project ‘Validation of Innovative Exploration Techniques at Pilgrim Hot
Springs, Alaska’. $2 million of this funding has conservatively been listed as match, although
the total project award is over $4 million.
Finally, while this project immediately addressed the developable potential of this resource, it
also supports development of an innovative, low cost remote sensing geothermal exploration
technique that, if proven, could be applied to many other moderate and low temperature
geothermal resources in Alaska. This could potentially save millions of dollars that would
otherwise be spent on future traditional (and more costly) geothermal exploration efforts around
the state.
2.6 PROJECT BUDGET OVERVIEW
Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source
of other contributions to the project.
The overall project budget is $6,218,433. A U.S. DOE award in the amount of $4,274,792 was
awarded to the University of Alaska Fairbanks for this project, under the condition that matching
funds of a least 25% of the total project budget be contributed. $613,174 was awarded under
Round III of the RE Fund, which was enough to provide the necessary match to Phase I of the
project (totaling $1,090,964), as well as part of Phase II. This proposal is designed to complete
this project by providing the remaining required matching funds. (Note that the budget allotted
to task 2.5 in the Round III award for economic analysis does not count toward the U.S. DOE
match)
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 6 of 20 7/21/2010
In addition to the University of Alaska award, Unataaq, LLC, Bering Straits Native Corporation,
and Mary’s Igloo Native Corporation have made substantial in-kind contributions to this project,
particularly related to permitting and local project coordination.
2.7 COST AND BENEFIT SUMARY
Include a summary of grant request and your project’s total costs and benefits below.
Grant Costs
(Summary of funds requested)
2.7.1 Grant Funds Requested in this application. $1,330,467
2.7.2 Other Funds to be provided (Project match) $2,000,000
2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $3,330,467
Project Costs & Benefits
(Summary of total project costs including work to date and future cost estimates to get to a fully
operational project)
2.7.4 Total Project Cost (Summary from Cost Worksheet
including estimates through construction)
$3,330,467 (see cost
worksheet for details)
2.7.5 Estimated Direct Financial Benefit (Savings) $ 0
2.7.6 Other Public Benefit (If you can calculate the benefit in
terms of dollars please provide that number here and
explain how you calculated that number in your application
(Section 5.)
$ Up to $7,255,696 in
annual fuel savings for
Nome (based on AEA
Energy Pathway)
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 7 of 20 7/21/2010
SECTION 3 – PROJECT MANAGEMENT PLAN
Describe who will be responsible for managing the project and provide a plan for successfully
completing the project within the scope, schedule and budget proposed in the application.
3.1 Project Manager
Tell us who will be managing the project for the Grantee and include contact information, a
resume and references for the manager(s). If the applicant does not have a project manager
indicate how you intend to solicit project management support. If the applicant expects project
management assistance from AEA or another government entity, state that in this section.
The PI for this program will be ACEP Director Gwen Holdmann. Ms. Holdmann previously
served as PI for the geothermal exploration and development project at Chena Hot Springs
Resort, and is also the PI of the DOE award that complements this project. The Chena and
Pilgrim geothermal resources are both considered to be part of the Central Alaska Hot Springs
Belt and are expected to contain similar hydrothermal systems.
A current cv for Ms. Holdmann is included with this proposal.
3.2 Project Schedule
Include a schedule for the proposed work that will be funded by this grant. (You may include a
chart or table attachment with a summary of dates below.)
A timeline of the proposed schedule is included at the end of this section. The project schedule
and workplan is outlined as follows:
Phase II: Conduct gradient and confirmation hole drilling program (completed in
November, 2012)
In order to determine total energy (for heat and power generation) which can be sustainably
extracted from the reservoir and create an optimal plan for long-term development of the
resource, the upflow zone will need to be definitively identified and flow tests conducted. This
can only be accomplished through a new drilling program; however based on prior work at this
site we believe the chances of success are very high. A significant portion of this phase will be
covered through the complementary DOE award as mentioned in previous sections. Therefore,
funding requested for Phase II is what is required to provide match for this pending federal
award.
Task 1 and 2 associated with this project are being conducted under Phase I of this project.
Therefore, to remain consistent across all projects (DOE, RE Round III, and this proposal), we
will begin numbering tasks at Task 3. Note that in the timeline at the end of this section, all
Tasks are included.
Task 3. Drilling Program
The purpose of this Task is to access the hotter resource through a drilling program, based on
the conceptual model developed as part of Task 2.3. The drilling portion of this phase will be
largely subcontracted out, including site access development, rig mobilization and
demobilization (likely helicopter supported), drilling, production logging, performing limited flow
testing, casing and cementing, coring, and site remediation. It is divided into two subtasks as
follows:
Task 3.1 Gradient Hole Drilling Program.
A minimum of two TG holes will be permitted and drilled to an estimated depth of 500 ft to
test the conceptual model and further refine the location for the two deeper confirmation
holes. These TG holes can be drilled with either a core or rotary rig during the spring or
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 8 of 20 7/21/2010
summer months depending upon the site location and local equipment availability, and will
be completed with 1 ½” iron pipe so that low temperature Kuster gauges can be run inside
the iron pipes. Holes which encounter liquid water will be sampled for chemical analysis.
Task 3.2 Confirmation Hole Drilling Program. Once the TG holes confirm the optimal
locations for drilling into the reservoir, a minimum of two deeper confirmation slim holes will
be drilled, with the goal of verifying the conceptual model developed as part of Task 2.
Considerable flexibility in the drilling plan is necessary until specific sites are chosen and
access issues are defined and addressed through the Alaska permitting process. These
slim holes are anticipated to be up to 2500 feet deep. A rig capable of drilling NQ core to at
least 2500 feet and perhaps being helicopter transportable is needed due to the shortage of
existing roads in the area and the marshy nature of much of the land at Pilgrim. This raises
issues such as proper sizing of the largest load with helicopter capabilities and availability.
It is unknown what equipment will be locally available in the area two years from now. Our
project team is aware of these challenges and is prepared to address them, should this
project be funded.
To develop a budget and plan for the drilling portion of this project, some worst case
assumptions have been made, such as that a complete drilling rig and supplies will need to be
transported to Nome from somewhere else specifically for this work. A budget totaling
$3,652,000 was developed for the DOE submission based on industry quotes, including
$1,152,390 (31%) included as part of this funding request. Other assumptions made in
developing this budget include: helicopter movement of the rig onto every drilling site, with a
minimum of 4 moves. If it turns out that it is possible to use a local drilling rig for some or all of
the drilling and that some sites can be accessed overland, then there is the potential for a large
cost saving or reduction in the budget. This will not be known until late in 2011 or early in 2012.
As a current example of project costs, one of our project participants worked on a helicopter
supported geothermal exploration core hole in southern Chile in early 2009 where a single 1070
m core hole capable of being flow tested and related supporting costs totaled $1.4M to $ 1.5M.
In comparison, this project at Pilgrim involves 4 holes to planned depths of 500-2500 ft.
Preliminary quotes for the drilling program have been received from two drilling contractors and
indicate a similar magnitude of cost. The first is through the United States Department of the
Interior (DOI) through their Alaska Rural Energy Project (AREP), using their portable
Christensen CS-1000 drilling and coring rig. The rig was used to conduct coalbed methane
(CBM) drilling and testing procedures in Fort Yukon (2004), Franklin Bluffs (2005) and
Wainwright, Alaska (2007). The second quote is from a drilling team including Schlumberger
(experts in exploratory core holes) and Arctic Drilling (the only driller based in Alaska with
significant geothermal experience). This quote is also for a helicopter mounted core rig and
costs are similar to the AREP proposal. These quotes were used in developing the
complementary DOE project budget that was approved by their program managers.
PHASE III: Well Testing and Numerical Modeling. (completed in August, 2012)
This Phase will include flow testing, interference testing, and development of a numerical
simulation model. This model is required to understand the reservoir dynamics and adopt an
appropriate long-term development and production plan. Data from all prior geoscience and
drilling programs and testing will be needed to characterize the conceptual model upon which
this model will be based to effectively predict future performance, temperature, pressure and
flow behavior.
Task 3.3 Well Testing.
Very shortly after the two confirmation wells are drilled they will be briefly flow tested to
characterize their temperature, pressure, productivity, and producing zone depth. One or more
interference tests will be run to obtain pressure data for history matching during the numerical
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 9 of 20 7/21/2010
modeling process. It is expected that some or all of the existing wells completed in the shallow
thermal aquifer will be either flowed or monitored during the interference testing. At the
completion of this task the conceptual model will be updated and form the basis for the
numerical modeling performed in task 4.0.
Task 4.0 Numerical Modeling.
A numerical model will be prepared using Tough 2 and incorporating all available and necessary
data from the current project and previous work. This model is required to truly understand the
reservoir dynamics and adopt an appropriate long-term production scenario. Data from all prior
drilling programs and testing will be needed to characterize this model to effectively predict
future performance, temperature, pressure and flow data relating to the deeper system. This
model will be utilized to predict possible megawatt outputs from the resource under a variety of
possible production/injection scenarios.
This task will be led by Dr. Jo Mongrain, a professor in the Petroleum Engineering Department
at the University of Alaska Fairbanks. Dr. Mongrain has a strong background in petroleum
reservoir engineering, specializing in the development of numerical models and has worked
frequently within multi-disciplinary geoscience teams.
Project milestones follow the Phases and sub-tasks as outlined in Section 3.3. Milestones are
shown on the project timetable below as blue diamonds. A report with preliminary findings on
the Pilgrim site will be released at the end of September 2011, and the final project report will be
completed in August, 2012. A separate paper analyzing economic feasibility including options
for direct use at the site has been funded as part of Phase I and will be completed in February,
2012.
A timeline for this project, including all three Phases, is detailed in the chart below. This funding
request is for Phase II and III of this project.
3.3 Project Milestones
Define key tasks and decision points in your project and a schedule for achieving them. The
Milestones must also be included on your budget worksheet to demonstrate how you propose to
July-Sept Oct-Dec Jan-Mar Apr-Jun July-Sept Oct-Dec Jan-Mar Apr-Jun July-Sept Oct-Dec Jan-Mar Apr-Jun
Task I Thermal infrared mapping and analysis
Task 2.1 Shallow temperature gradient mapping
Task 2.2 Resistivity Survey
Task 2.3 Repair existing wellheads and collect new data
Task 2.4 Develop conceptual model of site
Task 3.0 Preperation for drilling activities
Task 3.1 and 3.2 TG and confirmation drilling
program and well testing
Task 5 Project management
Task 5.1 Economic feasibility studyPhase II Confirmation Drilling ProgramPhase III Reservoir Modeling Year 1 Year 2
2012
Year 3
2013
TASK
YEAR
Task 4 Reservoir modeling
2010 2011
PILGRIM HOT SPRINGS PROJECT TIMELINE
Phase I Geophysics and Ground Based SurveysFIrst FLIR flight
Results used to
develop conceptual
and economic
model (Task 5.1)
Second FLIR flight
Stagegate decision point pending
results of modeling and funding
Permitting completed
Final Report August, 2012Results used for final reservoir model Final Task I Report
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 10 of 20 7/21/2010
manage the project cash flow. (See Section 2 of the RFA or the Budget Form.)
A list of milestones for tasks 2, 3, and 4 is included below. Note that two of the milestones,
while critical to the final outcome of this project, are listed as completed at no cost. This is
because they are already funded under Phase I of this project. These milestones are included
in our budget worksheet.
3.4 Project Resources
Describe the personnel, contractors, equipment, and services you will use to accomplish the
project. Include any partnerships or commitments with other entities you have or anticipate will
be needed to complete your project. Describe any existing contracts and the selection process
you may use for major equipment purchases or contracts. Include brief resumes and references
for known, key personnel, contractors, and suppliers as an attachment to your application.
Project personnel – In addition to the project managers listed in section 3.1, the program will
retain the services of contractor Dick Benoit of Sustainable Solutions as drilling program
manager. One graduate student is included in the budget, and local hire will be used whenever
possible to assist during the drilling program.
Project equipment – The project will use a core drill rig, such as the CS1000 P6 core rig jointly
owned by USGS and BLM. An information sheet on the rig is attached. The rig is trailer
mounted and can be flown into Nome via a commercial flight and trucked to Pilgrim. Equipment
used for well testing is already owned by the University of Alaska.
In addition, Unataaq, LLC, the property owner, has been providing in-kind support to meet
permitting requirements for this project.
3.5 Project Communications
Discuss how you plan to monitor the project and keep the Authority informed of the status.
Quarterly reports will be prepared and submitted to the Alaska Energy Authority. An interim
report will be completed in October, 2011, and a final report will be completed in March, 2013.
In addition, project results will be disseminated on the ACEP website, as well as the Alaska
Energy Wiki site at http://www.energy-alaska.com/.
3.6 Project Risk
Discuss potential problems and how you would address them.
The project involves standard assessment and exploration techniques minimizing any perceived
risk. Project delays may occur related to weather conditions during field activities including the
drilling program. Scheduling field activities during the summer months will mitigate most
Date Completed AEA Funding DOE Match Funding
Task 2 Conceptual model completed December, 2011 $10,228 $135,486
Task 2 Economic model completed December, 2011 no cost no cost
Task 2
Permitting for Phase II activities
completed July, 2011 $15,000 $10,000
Task 2 Final Task 2 Report December, 2011 no cost $22,581
Task 3 Gradient hole drilling program July, 2012 $68,581 $774,000
Task 3
Confirmation hole drilling
program August, 2012 $1,193,303 $990,190
Task 4 Completed Reservoir Model March, 2013 $43,355 $67,743
MILESTONE
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 11 of 20 7/21/2010
expected problems related to field work. The precise cost for drilling operations is also
unknown; however it will not exceed the budget proposed here. If cost overruns occur, the total
footage may be reduced.
The project team is very familiar with the site after conducting extensive field work in 2010,
including a complex well repair task. We have a good relationship with key local organizations
such as Kawerak and Bering Straits Development Corporation, as well as the two property
owners Unataaq, LLC and MINC, LLC.
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 12 of 20 7/21/2010
SECTION 4 – PROJECT DESCRIPTION AND TASKS
Tell us what the project is and how you will meet the requirements outlined in Section 2 of
the RFA.
The level of information will vary according to phase(s) of the project you propose to
undertake with grant funds.
If you are applying for grant funding for more than one phase of a project provide a
plan and grant budget form for completion of each phase.
If some work has already been completed on your project and you are requesting funding for
an advanced phase, submit information sufficient to demonstrate that the preceding phases
are satisfied and funding for an advanced phase is warranted.
4.1 Proposed Energy Resource
Describe the potential extent/amount of the energy resource that is available.
Discuss the pros and cons of your proposed energy resource vs. other alternatives that may be
available for the market to be served by your project.
As a resource assessment, the objective of this project is to determine the potential extent and
amount of the energy resource that is available. Specifically, the Pilgrim project is designed to
provide information on the documented geothermal resource for potential future development of
the resource for power generation and/or local food production. Geothermal resource
development has been demonstrated at other sites in Alaska (Chena Hot Springs), and new
technology has resulted in power production from lower temperature resources such as that
expected to exist at Pilgrim Hot Springs. Preliminary estimates indicate that Pilgrim Hot Springs
could be capable of greater than 5MW of generation. See the graph below which shows
development at other resources around the world, including Chena Hot Springs.
Figure 1. Graph shows production capacity versus heat loss for a number of geothermal
systems around the world. Chena and Pilgrim Hot Springs are included based on
existing data.
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 13 of 20 7/21/2010
Unlike most renewable energy systems, geothermal energy can supply baseload power and
therefore is available 24 hours a day and 365 days a year. In addition to power generation, it is
also a viable resource to replace conventional fossil fuel for space heating.
4.2 Existing Energy System
4.2.1 Basic configuration of Existing Energy System
Briefly discuss the basic configuration of the existing energy system. Include information about
the number, size, age, efficiency, and type of generation.
There is no existing energy system at Pilgrim Hot Springs. All communities on the Seward
Peninsula use diesel gen-sets for primary power generation and fuel oil for heating.
4.2.2 Existing Energy Resources Used
Briefly discuss your understanding of the existing energy resources. Include a brief discussion of
any impact the project may have on existing energy infrastructure and resources.
The existing energy resource is geothermal produced from a moderate temperature geothermal
reservoir. This project will not have any direct impact on the existing energy infrastructure,
beyond reducing diesel generation base load should a project be developed.
4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
If developed, the existing energy market for the geothermal power plant would be the community
of Nome, and possibly other communities on the Seward Peninsula. The potential benefit/cost
ratio of this project is very high despite the cost. According to the Alaska Energy Authority
Energy Pathway Database, the projected annual fuel cost for power generation in Nome is
$7,255,696 over the next 20 years. In 2007, Nome Joint Utilities alone spent $2,566,000 in fuel,
and this number could double if the Rock Creek Gold Mine is brought back online. If some or all
of this fuel can be offset through the development of a geothermal power plant at Pilgrim, the
benefits may warrant construction of the facility despite transmission distances. In order to
supply power to Nome, 37 miles of power lines would be required along the existing road
system. Two alternate routes through Grand Central and Mosquito Pass would reduce the
distance by approximately 10 miles, but the route is not road accessible.
This project represents the first step toward this goal by quantifying how much potential energy is
available for sustainable development at the site.
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 14 of 20 7/21/2010
4.3 Proposed System
Include information necessary to describe the system you are intending to develop and address
potential system design, land ownership, permits, and environmental issues.
4.3.1 System Design
Provide the following information for the proposed renewable energy system:
A description of renewable energy technology specific to project location
Optimum installed capacity
Anticipated capacity factor
Anticipated annual generation
Anticipated barriers
Basic integration concept
Delivery methods
The Pilgrim geothermal system is classified as a moderate temperature resource, with maximum
temperatures from geothermometers estimated at ~150 °C. Steam is not expected to be
produced in the system, and as such a binary power plant such as the one installed at Chena
Hot Springs will be required. The plant at Chena operates off 74 °C fluid and generates ~400
kW of electric power.
4.3.2 Land Ownership
Identify potential land ownership issues, including whether site owners have agreed to the
project or how you intend to approach land ownership and access issues.
The Pilgrim Hot Springs site is patented ground with both the surface and subsurface owned by
Unataaq, LLC. Unataaq is a consortium of seven Native Alaskan organizations including: Bering
Straits Native Corporation (BSNC), Mary’s Igloo Native Corporation (MINC), Teller Native
Corporation, White Mountain Native Corporation, Sitnasuk Native Corporation, Norton Sound
Economic Development Corporation, and Kawerak. The property is a 320 acre in holding
surrounded by property owned by the Mary’s Igloo Native Corporation. Both owners own both
the surface and subsurface resources.
4.3.3 Permits
Provide the following information as it may relate to permitting and how you intend to address
outstanding permit issues.
List of applicable permits
Anticipated permitting timeline
Identify and discussion of potential barriers
Site Related Permitting
Pilgrim Hot Springs was listed on the National Register of Historic Places in 1977 due to its
association with mining, agriculture, and the fact that the site was formerly a mission and
orphanage associated with the Fairbanks Diocese of Northern Alaska (Catholic church). In
addition, there are two known cemeteries in the areas surrounding the springs (exact location
unknown). The area is considered to be culturally significant. We are closely working with the
State Historic Preservation Office (SHPO) to comply with Section 106. BSNC (Matt Ganley) is
providing assistance in fulfilling requirements for the Section 106 process as mandated by the
National Historic Preservation Act.
Existing buildings and structures around the hot springs will not be influenced by the drilling
program and the overall footprint of this project will be kept to a minimum. No identified historic
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 15 of 20 7/21/2010
or culturally significant locations will be adversely affected.
Access
This site is accessed via an unmaintained 7 mile spur road off the Taylor Highway. UAF has
written permission from the land owners whose properties this spur road crosses (MINC &
BSNC) to use this access for the purposes of this project. In addition, BLM manages a 1.5 mile
section that crosses federal lands and in coordinating with the BLM field office in Nome (Tom
Sparks), it has been agreed that our use of this stretch falls under general “casual use”
definitions.
Unaatuq LLC and its entities support the project. We have a license to access the parcel for the
purposes of this research program, including the drilling phase. The property is a 320 acre
inholding including both surface and subsurface rights, surrounded by property owned by the
Mary’s Igloo Native Corporation (MINC). MINC also holds surface and subsurface rights to their
property. We have permission to cross MINC land, however will need additional permission from
MINC if we are planning to drill holes on their land.
Drilling (general)
There is some ambiguity about low temperature (below 120C) geothermal jurisdiction in the
State of Alaska, and whether the Pilgrim site will be permitted as geothermal. We have been in
regular communication with The Alaska Oil and Gas Conservation Commission (AOGCC), and
assuming the drilling phases associated with this proposal are permitted as geothermal, this will
require a bond prior to drilling. A bond over $100,000 would be required to cover a single “well” a
blanket bond, covering all of the “wells” would be $200,000. If a bond is required, we will work
closely with the property owners on this issue.
Drilling (TG holes)
We have completed the CPQ process (included a pre-application meeting) for the temperature
gradient holes, and will continue with the permitting process for the TG holes after the 2010 field
season. The first step is to create a viable drilling plan. This plan will outline specific site
locations, access, pad size, pump size, daily water withdrawal rates etc. The following permits
are required:
Temporary Water Use Permit - We are in contact with DNR, Division of Mining,
Land and Water (Gary Prokosch) and don’t expect any complications.
ADF&G requires information about exact locations for water withdrawal, such as a
drawing of the screened intake and a description of our methods to prevent fish
impingement. This information will be included in our drilling plan. We don’t
expect any complications. We are in contact with Laura Jacobs from the Division
of Habitat.
Corps of Engineers - The Corps (contact: Allan Skinner) signaled that we are
eligible for their Nationwide Permit. We don’t expect any complications.
Drilling (confirmation holes)
We will start a separate CPQ process for the confirmation hole drilling program next year, and
will apply for separate permits for this part of the project that will mirror most of those required for
the TG holes.
4.3.4 Environmental
Address whether the following environmental and land use issues apply, and if so how they will
be addressed:
Threatened or Endangered species
Habitat issues
Wetlands and other protected areas
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 16 of 20 7/21/2010
Archaeological and historical resources
Land development constraints
Telecommunications interference
Aviation considerations
Visual, aesthetics impacts
Identify and discuss other potential barriers
It is not anticipated that this project will have significant environmental impact. We have been
working closely with the Department of Energy to meet National Environmental Protection Act
(NEPA) requirements for all project phases, as well as state agencies (SHPO), permitting
agencies, and land owners to ensure there are no impacts resulting from this project.
4.4 Proposed New System Costs and Projected Revenues
(Total Estimated Costs and Projected Revenues)
The level of cost information provided will vary according to the phase of funding requested and
any previous work the applicant may have done on the project. Applicants must reference the
source of their cost data. For example: Applicants Records or Analysis, Industry Standards,
Consultant or Manufacturer’s estimates.
4.4.1 Project Development Cost
Provide detailed project cost information based on your current knowledge and understanding of
the project. Cost information should include the following:
Total anticipated project cost, and cost for this phase
Requested grant funding
Applicant matching funds – loans, capital contributions, in-kind
Identification of other funding sources
Projected capital cost of proposed renewable energy system
Projected development cost of proposed renewable energy system
As part of the 2007 Pilgrim Preliminary Resource Report, Hattenburg, Dilley & Linnell, LLC
estimated 5 MW at Pilgrim could be developed for $29-51 million. This included $3.2-7 million
for an exploration program, which is covered under the proposed work plan for this project.
4.4.2 Project Operating and Maintenance Costs
Include anticipated O&M costs for new facilities constructed and how these would be funded by
the applicant.
(Note: Operational costs are not eligible for grant funds however grantees are required to meet
ongoing reporting requirements for the purpose of reporting impacts of projects on the
communities they serve.)
N/A
4.4.3 Power Purchase/Sale
The power purchase/sale information should include the following:
Identification of potential power buyer(s)/customer(s)
Potential power purchase/sales price - at a minimum indicate a price range
Proposed rate of return from grant-funded project
At this time, there are no power purchase agreements in place for this project. A letter from
Nome Joint Utilities is included in the attachments, which supports this project.
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 17 of 20 7/21/2010
4.4.4 Project Cost Worksheet
Complete the cost worksheet form which provides summary information that will be considered
in evaluating the project.
Download the form, complete it, and submit it as an attachment. Document any conditions or
sources your numbers are based on here.
Please see attached worksheet.
SECTION 5– PROJECT BENEFIT
Explain the economic and public benefits of your project. Include direct cost savings,
and how the people of Alaska will benefit from the project.
The benefits information should include the following:
Potential annual fuel displacement (gal and $) over the lifetime of the evaluated
renewable energy project
Anticipated annual revenue (based on i.e. a Proposed Power Purchase Agreement price,
RCA tariff, or cost based rate)
Potential additional annual incentives (i.e. tax credits)
Potential additional annual revenue streams (i.e. green tag sales or other renewable
energy subsidies or programs that might be available)
Discuss the non-economic public benefits to Alaskans over the lifetime of the project
The potential benefit/cost ratio of this project is very high despite the cost. This project will build
on several prior assessments of the site, and if a significant resource is indentified the possible
benefits to the entire region are substantial. According to the Alaska Energy Authority Energy
Pathway Database, the projected annual fuel cost for power generation in Nome is $7,255,696
over the next 20 years. In 2007, Nome Joint Utilities alone spent $2,566,000 in fuel, and this
number could double if the Rock Creek Gold Mine is brought back online. If some or all of this
fuel can be offset through the development of a geothermal power plant at Pilgrim, the benefits
may warrant construction of the facility despite transmission distances. This project represents
the first step toward this goal by quantifying how much potential energy is available for
sustainable development at the site.
SECTION 6– SUSTAINABILITY
Discuss your plan for operating the completed project so that it will be sustainable.
Include at a minimum:
Proposed business structure(s) and concepts that may be considered.
How you propose to finance the maintenance and operations for the life of the project
Identification of operational issues that could arise.
A description of operational costs including on-going support for any back-up or existing
systems that may be require to continue operation
Commitment to reporting the savings and benefits
N/A
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 18 of 20 7/21/2010
SECTION 7 – READINESS & COMPLIANCE WITH OTHER GRANTS
Discuss what you have done to prepare for this award and how quickly you intend to proceed
with work once your grant is approved.
Tell us what you may have already accomplished on the project to date and identify other grants
that may have been previously awarded for this project and the degree you have been able to
meet the requirements of previous grants.
Organizational work on this project has been ongoing for nearly 3 years. In addition, numerous
site visits have been made to collect current data to use for this proposal and others. A similar
proposal was submitted under Round II of the Renewable Energy Grant Fund, but was not
awarded due to limited available funding. The proposal was re-submitted under Round III, and
recommended for full funding but ultimately only partially funded.
A Department of Energy grant was recently awarded that overlaps this proposal with concurrent
Phases and tasks. Based on Round III funding, we have been able to move forward with Phase
I of the DOE project. This proposal, if funded, will provide the match necessary to move forward
with Phase II and III of the DOE award.
SECTION 8– LOCAL SUPORT
Discuss what local support or possible opposition there may be regarding your project. Include
letters of support from the community that would benefit from this project.
There is significant local support for this project. The three most critical local entities, Unataaq,
LLC, Mary’s Igloo Native Council and Nome Joint Utilities, have both written strong letters of
support for this project and are included with this proposal. In addition, we have been working
with Kawerak, LLC, and the other members of Unatuuq including: Teller Native Corporation,
White Mountain Native Corporation, Sitnasuk Native Corporation, and Bering Straits Native
Corporation. We have also included funding for local hire of personnel and equipment for the
field and drilling portions of this project. In March, 2010, we held a community meeting in Nome
about this project, and had good participation and positive feedback from everyone who
attended.
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 19 of 20 7/21/2010
SECTION 9 – GRANT BUDGET
Tell us how much you want in grant funds Include any investments to date and funding sources,
how much is being requested in grant funds, and additional investments you will make as an
applicant.
Include an estimate of budget costs by milestones using the form – GrantBudget3.doc
Provide a narrative summary regarding funding sources and your financial commitment to the
project.
Funding for this project in the amount of $2,385,153 is pending through the Department of
Energy, depending on the ability of our project team to procure state or private match in the
amount of $1,330,467. This proposal was originally developed after our Round II proposal was
recommended for funding. Unfortunately, that project was not funded when available program
funding was cut to $25M for Round II. The same situation occurred under Round III, but this
project was partially funded in the amount of $613,174. This project has been in development
for 3 years, and the program has been well thought out over that time. Due to differences in
start and end dates on these two projects, this current proposal lists $2,000,000 as pending
matching funds.
I Renewable Energy Fund ALASKA
ENERGY AUTHORITY Grant Application Round IV
SECTION 9 -ADDITIONAL DOCUMENTATION AND CERTIFICATION
SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION:
A. Contact information, resumes of Applicant's Project Manager, key staff, partners,
consultants, and suppliers per application form Section 3.1 and 3.4.
B. Cost Worksheet per application form Section 4.4.4.
C. Grant Budget Form per application form Section 9.
D. Letters demonstrating local support per application form Section 8.
E. An electronic version of the entire application on CD per RFA Section 1.6.
F. Authorized Signers Form.
G. Governing Body Resolution or other formal action taken by the applicant's
governing body or management per RFA Section 1.4 that:
Commits the organization to provide the matching resources for project at the
match amounts indicated in the application.
Authorizes the individual who signs the application has the authority to
commit the organization to the obligations under the grant.
Provides as point of contact to represent the applicant for purposes of this
application.
Certifies the applicant is in compliance with applicable federal, state, and local,
laws including existing credit and federal tax obligations.
H. CERTIFICATION
The undersigned certifies that this application for a renewable energy grant is truthful
and correct, and that the applicant is in compliance with, and will continue to comply
with, all federal and state laws including existing credit and federal tax obligations.
Print Name Andrew Parkerson-Gray
Signature ~
Title
I
Director , UAF Office of Sponsored Programs
Date 01/13/10
AEA 11-005 Grant Application Page 18 of 18 7/21/2010
Contact Information
Project PI and Technical Lead:
Gwen Holdmann
Alaska Center for Energy and Power
University of Alaska
Physical Address: 814 Alumni Drive
Mailing Address: PO Box 755910
Fairbanks, AK 99775-5910
gholdmann@alaska.edu
907-590-4577
Contracting Official:
Maggie Griscavage
Director, The Office of Grants and Contracts Administration
University of Alaska Fairbanks
PO Box 757880
109 Administrative Services Center
Fairbanks AK 99775-7880
E-mail: fygrcon@uaf.edu
Phone: (907) 474-7301
Fax: (907) 474-5506
Authorized Organizational Representative (AOR):
Andrew Parkerson-Gray
Director, Office of Sponsored Programs
University of Alaska Fairbanks
PO Box 757270
Fairbanks AK 99775-7270
E-mail: fyosp@uaf.edu
Phone: (907) 474-6000
Fax: (907) 474-5444
Renewable Energy Fund Round 4
Project Cost/Benefit Worksheet
RFA AEA11-005 Application Cost Worksheet Page 1 7-21-10
Please note that some fields might not be applicable for all technologies or all project
phases. The level of information detail varies according to phase requirements.
1. Renewable Energy Source
The Applicant should demonstrate that the renewable energy resource is available on a
sustainable basis.
Annual average resource availability. Unknown, this project is intended to determine this
value.
Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel)
Geothermal energy
2. Existing Energy Generation and Usage
a) Basic configuration (if system is part of the Railbelt1 grid, leave this section blank)
i. Number of generators/boilers/other N/A
ii. Rated capacity of generators/boilers/other
iii. Generator/boilers/other type
iv. Age of generators/boilers/other
v. Efficiency of generators/boilers/other
b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank)
i. Annual O&M cost for labor N/A
ii. Annual O&M cost for non-labor
c) Annual electricity production and fuel usage (fill in as applicable) (if system is part of the
Railbelt grid, leave this section blank)
i. Electricity [kWh] N/A
ii. Fuel usage
Diesel [gal]
Other
iii. Peak Load
iv. Average Load
v. Minimum Load
vi. Efficiency
vii. Future trends
d) Annual heating fuel usage (fill in as applicable)
i. Diesel [gal or MMBtu] N/A
ii. Electricity [kWh]
iii. Propane [gal or MMBtu]
iv. Coal [tons or MMBtu]
v. Wood [cords, green tons, dry tons]
vi. Other
1 The Railbelt grid connects all customers of Chugach Electric Association, Homer Electric Association, Golden Valley Electric
Association, the City of Seward Electric Department, Matanuska Electric Association and Anchorage Municipal Light and Power.
Renewable Energy Fund Round 4
Project Cost/Benefit Worksheet
RFA AEA11-005 Application Cost Worksheet Page 2 7-21-10
3. Proposed System Design Capacity and Fuel Usage
(Include any projections for continued use of non-renewable fuels)
a) Proposed renewable capacity
(Wind, Hydro, Biomass, other)
[kW or MMBtu/hr]
This project is intended to determine the potential
developable size of a geothermal project at the site.
Preliminary estimates indicate about 5 MW is likely.
b) Proposed annual electricity or heat production (fill in as applicable)
i. Electricity [kWh] unknown
ii. Heat [MMBtu] unknown
c) Proposed annual fuel usage (fill in as applicable)
i. Propane [gal or MMBtu] none
ii. Coal [tons or MMBtu]
iii. Wood [cords, green tons, dry tons]
iv. Other
4. Project Cost
a) Total capital cost of new system This project is intended to provide data necessary for
determining project costs and an optimal development
plan. Approximately $5-$10,0000 per kW can be
expected for capital costs of a low-temperature
geothermal powerplant; transmission lines (assuming
power would be exported to Nome) would be a significant
additional cost.
b) Development cost Included above.
c) Annual O&M cost of new system 2-3¢ per kW-hr is typical for a binary power plant.
d) Annual fuel cost None, possible lease fee for site development (AOGCC).
5. Project Benefits
a) Amount of fuel displaced for
i. Electricity Up to 1,955,713 gallons per year (based on Energy Pathway)
ii. Heat
iii. Transportation
b) Current price of displaced fuel Up to $7,255,696 in diesel fuel for NJUS annually (over
$145M for 20 year project life assuming constant diesel fuel
cost). Based on Energy Pathway database.
c) Other economic benefits Potential for local food production.
d) Alaska public benefits An additional benefit is that this project will help verify an
inexpensive airborne remote sensing exploration technique
developed by the University of Alaska that, if successfully
demonstrated at this site, could be applied to numerous
other geothermal sites around the state.
6. Power Purchase/Sales Price
Renewable Energy Fund Round 4
Project Cost/Benefit Worksheet
RFA AEA11-005 Application Cost Worksheet Page 3 7-21-10
a) Price for power purchase/sale N/A. We have attached a letter of support from Nome
Joint Utility Services.
7. Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio This project will determine this value based on the available resource.
Payback (years) This project will determine this value based on the available resource.
Renewable Energy Fund Grant Round IV Grant Budget Form 7-21-10 Milestone or Task Anticipated Completion Date RE- Fund Grant Funds Grantee Matching Funds Source of Matching Funds: Cash/In-kind/Federal Grants/Other State Grants/Other TOTALS (List milestones based on phase and type of project. See Attached Milestone list. ) $ $ $ Task 2: Conceptual model completed December, 2011 $10,228 $ 135,486 DOE $145,714 Task 2: Economic model completed December, 2011 $no cost $ no cost DOE $no cost Task 2: Permitting for Phase II activities completed July, 2011 $15,000 $ 10,000 DOE $25,000 Task 2: Final Task 2 Report December, 2011 $no cost $ 22,581 DOE $22,581 Task 3: Gradient hole drilling program July, 2012 $68,581 $ 774,000 DOE $842,581 Task 3: Confirmation hole drilling program August, 2012 $1,193,303 $ 990,190 DOE $2,183,493 Task 4: Completed Reservoir Model March 2013 $ 43,355 $ 67,743 DOE $111,098 $ $ $ $ $ TOTALS $1,330,467 $2,000,000 $3,330,467 Budget Categories: Direct Labor & Benefits $117,474 $200,000 $317,474 Travel & Per Diem $0 $25,000 $25,000 Equipment $0 $0 $0 Materials & Supplies $12,500 $10,810 $23,310 Contractual Services $1,186,111 $1,764,190 $2,950,301 Construction Services $0 $0 $0 Other $14,382 $0 $14,382 TOTALS $1,330,467 $2,000,000 $3,330,467 Applications should include a separate worksheet for each project phase (Reconnaissance, Feasibility, Design and Permitting, and Construction)- Add additional pages as needed
UAF Budget Narrative
Pilgrim Hot Springs Geothermal Assessment
Senior Personnel. Funding to Holdmann, the technical lead and PI for UAF, is requested. Per
UAF policy, senior personnel receive leave benefits at a rate of 18.8% (Holdmann calculated on
salary.
Other Personnel. Funding is requested to support faculty member Jo Mongrain, a research
engineer, and an energy analyst for technical assistance and data interpretation on the project.
Per UAF policy, faculty (Mongrain) receive leave benefits at a rate of 1.2%, calculated on salary;
staff (all others) receive leave benefits at a rate of 20.1%.
Funding is requested to support one Graduate Student research assistant. Students work 20
hours per week during the academic year over two terms (760) and 40 hours per week during
the summer (560).
Fringe Benefits. Staff benefits for UAF are negotiated annually with the Office of Naval
Research. Rates are 30.4% for executive salaries, 30.6% for faculty, 46.2% for staff, and 8.4%
for graduate students in summer only. UAF requires that graduate students receive health
insurance for the duration of the project.
Student Services. UAF requires that graduate students receive tuition support for the duration
of the project.
Travel. (Domestic) None.
Travel. (Foreign) None..
Contractual Services. Funding is requested to support outreach and report costs, drilling
consultant, drilling contractual services, local hires in the field, and project communication and
documentation.
Permanent Equipment. None.
Materials and Supplies. Funds are requested for field supplies, primarily reel and line, well
repair supplies, batteries and cables, etc.
Matching Funds. Matching funds of $2,000,000 have been identified. These funds represent
part of a related and complementary research award from the US Department of Energy (“Topic
Area 1: Validation of Innovative Exploration Techniques: Pilgrim Hot Springs Alaska,” Phases 2
and 3. Please see the attached Intent to Award Letter from DOE below.
UAF’s Cognizant Agency for our federally negotiated rates is the Office of Naval Research,
Indirect Cost Branch, Code BD0242, Rm. 371, 875 North Randolph Street
Arlington, VA 22203, Contact: Mr. Brian Kehoe, Government Negotiator, Phone: (703) 696-
7742, Fax: (703) 696-2870, E-mail: kehoeb@onr.navy.mil . Our current rate agreements and
audit information are available at http://www.uaf.edu/apache/osp/reference/boilerplate.html
Arctic Drilling Inc.
Fairbanks Alaska
Pilgrim Springs 2010 summer drilling, (2) 500 foot cored temperature gradient holes proposal
Available rigs:
Longyear LF70 Fly drill
Maximum depth with NQ is 2,000 feet.
Heaviest fly load is 1300 pounds, breaks down to 7 loads; total rig weight is 6,500 pounds.
Acker Soil Max tracked carrier mounted rig.
Maximum dept with NQ is 1500 feet.
Complete rig weighs 20,000 pounds and will fit inside a C130 aircraft.
** Initial mobe cost will be higher but does not need helicopter transport and support.
TG borehole design proposal:
Cement in minimum of 20 feet of 6”conductor pipe with 300 psi flange.
Drill and core HQ hole to est 100 feet and case and cement hole with NW casing back to surface
Drill and core NQ to depth through non rotating control head threaded to cemented NW casing.
Drilling mud and cuttings disposal: left on drill sites in hand dug pits
Assuming drill sites will be located within 1500 feet of a suitable water source for drilling
All water discharge from well will be allowed to flow where it will
Control head will be bolted to flange and well shut in if flowing
Mobilization:
Our Intention is to mobe all of the following to Nome by C130 and operate out of Nome airport
with helicopter and drilling crews housed in Nome
Core rig, with all components including mud pump and drill rod
All anticipated casing and drilling fluids,
Mud mixing tanks and equipment
FMC triplex water supply pumps with 1,500 feet of hosing
All rigging for rig transport
All anticipated bits and tooling for drilling and coring
Non rotating control head and 6” bolt flanges and valves
Welding truck, toolboxes and pipe trailer
Transport of rig, all supplies and drilling crew to drill site from Nome airport by helicopter,
drilling materials and supplies may also be staged at Pilgrim Hot Springs and shuttled to drill
sites with helicopter.
If it is found to be feasible, crews may be moved from Nome to the Hot Springs.
Total anticipated weight for all machinery and materials is 75,000 pounds.
Drilling Schedule:
Drilling the 500 ft TG wells will be done in daytime 7 day 12 hour shifts, anticipated drilling time
is 10 days per well
Rig set and tear down time, including water pumps and pipelines estimated at 5 days per well
Total drilling project time after mobe to Nome expected to be no more than 30 days
Project cost breakdown:
Cost estimates are based on normal and expected drilling conditions with a reasonable
percentage of unanticipated problems and unexpected events.
Drilling costs normally borne by client such as drill bits, drilling fluids, standby time, stuck and
lost drill pipe have been included in this proposal in order to provide the client with a complete
projected job cost.
Mobe/De‐mobe, helicopter support, crew housing, support and logistics costs have also been
estimated on a reasonable drilling performance basis including estimated costs for
unanticipated problems such as inclement weather and drilling and support complications in
order to provide the client with a complete project cost.
These cost items all could be taken over and provided by the client to us as vendor items.
Mobe: Fairbanks to Nome and return, drill rig, all materials and crew
C130 air cargo rig and materials‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $160,000
Rig Crew flights‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $7,500
Misc. freight flights‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $20,000
Drill crew and supervisor room and board in Nome at 30 days‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$36,000
Total Mobe‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $214,000
Drilling: Two (2) 500 ft t.g. holes:
Footage rate of $60 per foot up to 500 ft per hole for 1,000 feet ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $60,000
Rig drilling day rate: $2,000 per day at 20 days ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $40,000
Casing and cementing costs, 240 feet NW,40 feet of 6”‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$16,000
Estimated total standby time: 40 hours at $250 per hour ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $10,000
Drilling fluids –‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$10,000
Drill bits ‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$7,000
Estimated stuck or lost pipe and tooling ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $20,000
Rig moves, set ups and teardowns, water supply pumps, lines, mud pits, etc. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $25,000
Drilling project supervision and management ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$30,000
Total drilling cost‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $208,000
Helicopter support costs estimate from ERA
Helicopter support has been estimated based upon day rate of $3,000 per day plus $1,000 per
hour of flight time 30 total days with appropriate number of hours to include rig moves , drill
support and crew transport.
Mobe cost and pilot room and board added in and anticipated fuel costs in Nome with chopper
using 50 gallons per hour. Estimate has been adjusted upwards to cover unanticipated delays,
weather issues, breakdowns etc.
Decision to base chopper and flight crew in Nome was on the advice of the vendors; they felt
that given the short distance from Nome to Pilgrim that this would be more cost effective.
Mobe chopper, supplies and crew from Anchorage and return. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐52,000
Daily rate for helicopter $3,000 @ 30 days‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$90,000
Hourly fly rate of $1,000 @ 150 hrs est. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$150,000
Fuel use of 50 gph @ 150 hrs @ $6 per gallon‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$45,000
Pilot room and board for 30 days @ 400 per day‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $12,000
Total estimated helicopter support costs‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $352,000
All costs:
*Mobilization‐‐‐‐‐‐‐‐‐‐‐‐$214,000
*Drilling‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$208,000
*Air support‐‐‐‐‐‐‐‐‐‐‐‐‐‐$352,000
Total project estimated cost‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$774,000
Costs have been figured for this project without consideration of performance or payment
bonding and are based upon the above proposed well design.
Dan Brotherton,
President, Arctic Drilling Inc.
Arctic Drilling Inc.
Fairbanks Alaska
May 1 2010
Proposal to drill (2) 2,500 foot test wells at Pilgrim hot Springs
Available drill rig:
Longyear LF 90 fly rig
Maximum depth with NQ is 3,500 feet
Heaviest fly load is 1500 lbs. total rig weight is 16,000 pounds, breaks down to 9 loads
Proposed well design and drill plan:
Cement in minimum of 20 feet of 6” conductor pipe with 600 lb. bolt flange in 8.75” hole
Drill PQ to 150 feet , cement in HW casing to surface
Drill HQ to 1,000 feet, cement in NW casing to surface
Drill open hole to 2,500 feet through BOP fitted to casing
Install well control head after flow testing well and shut in well if flowing.
Mobe :
Our intention is to mobe all men and machinery to Nome by C130 aircraft, then truck to Pilgrim and set
up camp there as well as an office in Nome. Several smaller shipments throughout the project will be by
Alaska Air.
All rig, drill pipe, well casing, drilling mud, cement and related machinery including support
equipment is estimated to weigh in at 150,000 pounds.
Barge shipping of these materials is not feasible due to the changeable nature of the project
and expected short lead time and short drilling season.
Drilling procedure:
Drilling the 2,500 foot wells will be done with two 12 hour, 7 day work shifts to allow
continuous drilling operations.
Drilling to known depths to 1,000 feet will be through standard non rotating diverter.
Drilling past 1,000 feet after cementing in intermediate casing string will be through BOP
Continuous cores will be taken, transported and stored according to client preference.
Discharge of cuttings and drilling fluids from hole will be dumped into pits on site.
Discharge of geothermal water will be directed away from rig and let flow where nature takes
it.
Drill crews and materials will be moved to and from drill sites by helicopter
Rig will be set up and disassembled and moved to and from drill sites by helicopter
Projected cost breakdown:
Mobe from Fairbanks to Nome and return, all drilling machinery and crew.
C130 air cargo rig, machinery and materials‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $310,000
All drilling company personnel flights ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐$30,000
Supplemental air freight material costs‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$80,000
All drilling company personnel lodging at Nome‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$22,000
Camp services at Pilgrim for drilling company person from Taiga ventures‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$140,000
Fuel and maintenance costs‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$63,000
Total mobe costs‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $515,000
Drilling costs:
Footage rates:
0 to 500 feet, $60 per foot‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$30,000
500 to 1,000 feet, $70 per foot‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$35,000
1,000 to 1500 feet, $80 per foot‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$40,000
1,500 to 2,000 feet, $90 per foot‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$45,000
2,000 to 2,500 feet, $110 per foot‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$55,000
Total footage cost, 2500 ft‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$205,000
(2) wells Total footage cost, 5,000 ft ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$410,000
Casing and cementing rate:
20 ft conductor @ $500 per foot ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$10,000
HW casing @ $200 per foot to 150 feet ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$30,000
NW casing @ $150 per foot to 1,000 feet ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$150,000
Total casing cost each well‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ $190,000
(2) wells total casing and cementing cost‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$380,000
Misc. drilling costs:
Rig drilling day rate: $3,000 per day at 90 days‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$270,000
Estimated total standby time: 100 hours at $500 per hour‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$50,000
Rig moves, set up, teardown, water supply pumps and lines‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$50,000
Drilling project supervision and management‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$190,000
Drilling fluids and bits cost for both wells‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$140,000
Total misc. drilling costs‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$700,000
Helicopter support:
Helicopter support is based on quotes from vendors and adjusted to account for unforeseen
delays and based upon our projected drilling time of 90 days and corresponding hours of flight
time.
Quote includes all transportation costs for equipment, supplies and flight crew from Anchorage
to Nome and return.
Quote includes all fuel, supplies and room and board for flight crew.
Mobe chopper and crew to Nome and back‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$68,000
Daily chopper rate of $3,000 @ 90 days‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$270,000
Hourly fly rate of $1,000 per hour @ 350 hrs estimated‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$350,000
Fuel @ 50 gph for 350 hours @ $6 per gallon‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$105,000
Room and board for pilot and mechanic at 600 per day at 90 days‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$45,000
Total estimated helicopter support costs for both 2,500 foot wells‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$838,000
Estimate totals:
Mobe‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$515,000
Footage‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$410,000
Casing and cementing‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$380,000
Misc. drilling costs‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$700,000
Helicopter support‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$838,000
Total estimated project cost ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐$2,878,000
Dan Brotherton,
Arctic Drilling Inc.
Fairbanks Alaska 451‐8706
NOME JOINT UTILITY SYSTEM
a component unit of
P.O.Box 70 •Name,Alaska 99762 •(907)443-NJUS •Fax (907)443-6336
November 9,2009
Mr.Steve Haagenson
Alaska Energy Authority
813 W Northern Lights Blvd
Anchorage,AK 99503
RE:Pilgrim Hot Springs Geothermal
Dear Mr.Haagenson:
The City of Nome/Nome Joint Utility System is most interested in alternatives to reduce our
reliance on high cost diesel fuel for power generation.DOE/NETL funded a Nome Region
Energy Assessment that included participation and input from numerous parties,including AEA
and the City/NJUS.The final report dated March 2008 assessed technologies available to Name
for electric power generation including,coal,wind,geothermal and natural gas.
One of the Assessment’s conclusions was a significant portion of Nome’s power demands could
potentially be met,and electricity costs significantly reduced,if the geothermal resource at
Pilgrim Hot Springs could be utilized,but to determine viability would require further analysis to
fully prove the capacity.
The Alaska Center for Energy and Power,University of Alaska,has been successful in obtaining
federal funding to further investigate the Pilgrim resource using some innovative techniques in
a couple of core holes on the property.Over the course of two summers,ACEP will validate
testing technique,which when proved reliable,can be of great benefit in identifying additional
potential geothermal sources in the state.We are thrilled ACEP has chosen the Pilgrim location
as the initial location for their exploration.With additional information gleaned,the resource
can be further delineated and valuable requisite information will be available to allow an
economic feasibility assessment to be conducted to determine if a power generation project for
Nome based on the Pilgrim resource is viable.Anecdotally,based on some limited information
available from drilling 30 years ago,the community does perceive the Hot Springs as a possible
energy source and this Project would determine definitively if the resource is large enough and
has the potential to provide us much needed relief from our extremely high energy costs.
There are substantial potential benefits if this project can move forward.We urge your
favorable consideration of ACEP’s application for state funding to leverage federal dollars
already committed,and which will allow this project to go forward in summer 2010.Thank you
for your consideration.
K.Hanq(elahd \?neral Manager/Chief Operating Officer
JOINT UTILITY SYSTEM
Providing reliable utility services to system rate payers efficiently and economically by
prudently operating and maintaining system assets in a fiscally responsible manner
Andrew Parkerson-Gray, eRA
Director
Office of Sponsored Programs
(907 ) 474 -1851 • (907)474-5444 fax
fnamg@uaf .edu • WW"N.uaf.edulosp
September 10, 2010
Alaska Energy Authority
813 West Northern lights Blvd.
Anchorage, AI< 99503
Re: Proposal to AEA Renewable Energy Fund, Round 4: "Pilgrim Hot Springs Geothermal
Resource Assessmen t"
Dear Sir or Madam:
The University of Alaska Fairbanks is pleased to submit the attached proposal, "Pilgrim Hot
Springs Geothermal Resource Assessment." The Principal Investigator from UAF is Dr.
Gwen Holdmann, Director for the Alaska Center for Energy and Power, INE.
As ARO for the UAF Office of Sponsored Programs, I affirm that UAF, as a division of the
Alaska State government, is eligible to apply for this funding.
UAF is committed to supporting this project as outlined in the statement of work and budget,
and UAF has the necessary infrastructure to manage and support this project.
This proposal formally commits $2,000,000 in matching funds, a portion of the funding
included in a pending research award from the US Department of Energy (Tasks 1 and 2,
"Topic Area 1: Validation of Innovative Exploration Techniques: Pilgrim Hot Springs
Alaska").
UAF is in compliance with applicable federal, state, and local laws, including existing federal
credit and federal tax obligations.
If you need additional information, please feel free to call my office at (907) 474-1851.
Sincerely,
A~On-Gray. Director
Office of Sponsored Programs
University of Alaska Fairbanks
University of Alaska Fairbanks • Center for Research Services • West RiQge Research BUIlding, suite: 212 · P.O. Box 757270 Fairbanks, AK 99775-7270
09 / 09/2010 09:47 ~AX 9074745444 CRS 141 00 2
Grant Documents Authorized Signers
Please clearly print or type all sections of this form.
Community/Grantee Name:
University of Alaska Fairbanks
Regular Election is held : I Date:
N/A
Authorized Grant Si
Printed Name Title Term Signature
Andrew Parkerson-Gray Director, Office of nla
Maggie Griscavage
S onsored Pro rams
Director, Office of Grant n/a
& Contract
Pat Pitney
Administration
Vice Chancellor for
Administrative Services
nla
I author ize the above person(s) to sign Grant Documents :
(Highest ranking organization/community/municipal official)
Printed Name ntle Term
Brian Rogers UAF Chancellor n/a
Grantee Contact Information:
Mailing Address: University of Alaska Fairbanks, PO Box 757880, 109 Administrabve Services
Center, Fairbanks AK 99775-7880
Phone Number:
(907) 474-7301
Fax Number:
(907) 474-5506
E-mail Address:
fvercon@uaf.edu
Federal Tax ID #: 92-6000147
Please submit an updated fonn whenever there is a change to the above infonnation.
Please return the original completed form to:
Alaska Energy Authority
I -=?) ALASKA813 W. Northern Lights Blvd .
__, -01) ENERGY AUTHOR ITYAnchorage, AK 99503
Attn: Butch White, Grants Administrator
C :IDOCUME-1IJ'ngmg1\LOCAlS-1\Te~\Grant_Authorized_Signers4-2 .doc