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HomeMy WebLinkAboutDRAFT Preliminary Summary of Findings - AGP TG Drilling 2010DRAFT Preliminary Summary of Findings Akutan Exploratory Drilling Program, September 2010 Commissioned by City of Akutan, Alaska For the purpose of evaluating the geothermal resource in Akutan’s Hot Springs Bay Valley Investigators: Amanda Kolker, AK Geothermal Alan Bailey and W.T. Howard, Geothermal Resource Group Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 2 Contents Introduction ............................................................................................................................................ 3 Planned drilling program ......................................................................................................................... 4 Summary of preliminary drilling results ................................................................................................... 6 A. Hot Springs Well 2 (TG-2) ............................................................................................................ 6 Overview ......................................................................................................................................... 6 PT data ............................................................................................................................................ 9 Geology ......................................................................................................................................... 15 Fluid sampling ............................................................................................................................... 18 Discussion and summary of preliminary drilling results................................................................... 18 B. South Elbow Well 4 (TG4) .......................................................................................................... 19 Overview ....................................................................................................................................... 19 PT data .......................................................................................................................................... 21 Geology ......................................................................................................................................... 26 Fluid sampling ............................................................................................................................... 28 Discussion and summary of preliminary drilling results................................................................... 28 Preliminary analysis of drilling results .................................................................................................... 29 Concurrent activity: fumarole sampling ................................................................................................. 30 Conclusions ........................................................................................................................................... 31 Next Steps: Resource Analysis ............................................................................................................... 31 List of Appendices ................................................................................................................................. 32 Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 3 Introduction The feasibility of geothermal development at Akutan, and the type of development, is dependent on the results of the exploratory drilling program. Exploration drilling provides necessary resource parameters that can otherwise only be estimated from surface data. Since the Akutan Geothermal area is roadless, the 2010 drilling operations were supported by helicopter. The 2010 program included the drilling of up to four small-diameter core holes, at locations given in Fig. 1. Due to budget constraints, only two of the four planned holes were actually be drilled; these are marked with black arrows in Fig. 1. Figure 1. Map of the Akutan Geothermal area, showing four original planned exploration well locations. The two holes drilled in 2010 are marked with black arro ws. The core holes are intended to be temperature gradient (“TG”) wells. TG data are the most important technical information available prior to production of a geothermal resource. The drilling plan was designed so that if geothermal fluids are encountered in the TG wells, they could be sampled and tested. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 4 Planned drilling program Hot Springs well (TG2) was to be drilled first. This well is sited directly above the outflow aquifer(s). The plan was to drill the Hot Springs to TD of 1500 ft., OR to a depth where TG data was sufficient to constrain resource capacity. The goal for the Elbow well (TG4) is to conceptualize the size of the outflow resource. This well was to be drilled second, also to TD of 1500 ft., OR to a depth where TG data was sufficient to constrain resource capacity. A diagram of the planned well design and wellhead assembly for both wells is shown in Figs 2-3. 2.98" NQ Core to ~ 1500' 1.66" Tubing hung down from surface 5-½” Oversize PQ Core to 150' 4-½” HWT 11.2#/ft 4130 Butt Casing to 150' 3.78" HQ Core to 600' 3-½” HQ 7.67 #/ft 4130 Butt Casing to 600' Figure 2. Well design for Hot Springs Well (TG2), with a planned TD of 1500 ft. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 5 Figure 3. Wellhead assembly design for Hot Springs Well (TG2). Since temperatures upward of 250 F were anticipated, a BOP was required for the wellhead. The 2010 exploratory drilling plan was designed for long-term monitoring and possible testing of the Akutan geothermal field. The hole(s) were completed as temperature gradient wells and available for future monitoring. Additionally, detailed analysis of the core will be conducted at participating universities and, if the budget permits, modeling of the Akutan geothermal reservoir. These studies will be combined into a resource model that will be used to determine the locations and depths of production holes, and in planning geothermal development. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 6 Summary of preliminary drilling results A. Hot Springs Well 2 (TG-2) Overview In general, the drilling of TG-2 proceeded more slowly than anticipated. Drilling commenced on July 16, seven days after the planned start date on July 9. The holdup was due mostly to bad weather (low fog) prohibiting sling loading by heli copter, which delayed rigging up. Once drilling commenced, it was halted again at 37’ due to the delayed arrival of an essential part (9 7/8” bit that was stuck in Dutch Harbor). Figure 4. Photograph showing Hot Springs Well site and helicopter support. Photo by Neil McMahon, AEA. The hole was then drilled, cased and cemented to 157’. At 157’, blow-out prevention equipment (BOPE) was installed and several tests were run, including a BOP test, formation integrity test, and other tests (accumulator, etc.). Beyond that, drilling proceeded in fits and starts as various problems arose and were mitigated (high torque necessitating bit changeouts, mud caking on sides of core barrel, stuck tubes, etc.). According to the drillers, many of these problems were due to the extreme heat and permeability of the formation at relatively shallow depths. Barite-weighted drilling mud (9.0 lb) or CaCl Brine (9.6 lb) was used throughout the drilling, and the hole required constant circulation because in most instances where circulation was stopped or slowed, the well flowed. The well showed a particular propensity to flow when the core rod was being pulled from the well due to changes in the annular pressure differential and the fact that it is not possible to run inside blowout protection (such as a float) inside of the core rod. While this makes drilling challenging, it is excellent from a resource perspective as it indicates high permeability. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 7 Throughout the drilling, downhole temperatures were recorded at 30’ intervals with a maximum registered thermometer (MRT). These temperatures are not accurate records of the true geothermal temperatures due to the cooling effect of drilling fluids. However, the MRT readings do give a ball park idea of where hot zones are located. Between 585 and 587 ft., a fracture zone was encountered into which all drilling fluids were lost (“lost circulation.”) The MRT reading at the fractured interval was 302 °F, then the well began flowing and another MRT was recorded at 359 °F. This was the maximum temperature recorded by MRT for the entire well. The fluid flow is shown in Fig. 5. Figure 5. Flow of 360 °F fluids from fracture zone at 585’-587’. Photo by David Griggs, Major Drilling. At 603’, another string of casing was cemented in and BOP and leak-off tests were performed. The leak-off test did not conform to state regulations, so a large amount of cement was squeezed around the shoe and into the surrounding formation. This cement job likely “sealed off” the productive fracture. From 603’, equipment problems continued, with numerous bit replacements and tool-fishing jobs, until the hole was declared TD at 833’. After retrieving the core at TD, the hole was circulated for over two hours, and the pressure/temperature (P/T) logs were commenced. Fig. 6 shows a diagram of the final wellbore configuration for TG2. Fig. 7 shows graphical representations of drilling progress while on location for TG2. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 8 Figure 6. Schematic of the final wellbore configuration for TG2. Note 4 ½” casing to 157’, 3 ½” casing to 603’, and open hole until TD of 833’ with diameter of 3.032”. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 9 Figure 7. Graphical representations of drilling progress for TG2. Graph on left shows days on location vs. drilling depth, note the difference between planned and actual. Chart on right shows the hours spent on various drilling - related activities. PT data A Pressure/Temperature (PT) tool, or “memory” tool, was rented from Pacific Process Systems and used for the end-of-well PT surveys. Three runs were recorded. The first run was commenced 12 hours after circulation ended. The second run was recorded 12 hours after the first; and the third run was recorded 12 hours after the second. For every run, stops were made at 20 foot stations. Results are shown in Figures 8-10, below. Because these surveys were taken so soon after the well was drilled, the temperature readings are still influenced by the cooling effects of fluid circulation. Therefore these are “unequilibrated” downhole temperatures. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 10 Figure 8. First of three end-of-well P/T surveys at TG2, with unequilibrated downhole temperatures shown in red; pressures shown in blue. Maximum T was 312 °F at 833’. The drop off in pressure shortly after hitting bottom is a result of the column lightening up as the well started to flow and the fluid started to flash to steam. The dramatic spike in the pressure and a corresponding decrease in temperature is from pumping CaCl solution down the hole to keep it from flowing. Note a drop in temperature at ~4 am, corresponding to 603’ which is where the casing shoe was set. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 11 Figure 9. Second of three end-of-well P/T surveys at TG2, with unequilibrated downhole temperatures shown in red; pressures shown in blue. Max T was 325 °F at 833’. Note a drop in temperature at ~10 pm, corresponding to 603’ which is where the casing shoe was set. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 12 Figure 10. Third of three end-of-well P/T surveys at TG2, with unequilibrated downhole temperatures shown in red; pressures shown in blue. Max T was 331 °F at 833’. Note a drop in temperature at ~10 pm, corresponding to 603’ which is where the casing shoe was set. All three surveys show a drop in temperature occurring near the casing shoe at 603' and corresponding with the hot fracture zone between 585 and 587' that was cemented in. The apparent cooling is likely the result of cement injected across that entire area for the leak off test. Again, the surveys in Figs. 8-10 show “unequilibrated” downhole temperatures. In order to predict the equilibrated downhole temperature, we used the Horner method to extrapolate ultimate values for the reservoir temperature based on curves generated from the three survey points from each depth. An example of an extrapolation is shown in Fig. 11. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 13 Figure 11. Graphic showing method for extrapolating the equilibrated reservoir temperature based on three temperature readings over time at a fixed depth interval at TG2 (here, 243.8 m or 800 ft). The final depth vs. temperature plot generated from extrapolated values is shown in Fig. 12. Figure 12. Equilibrated Temp v. depth plot for TG2, based on Horner extrapolations of dowhole survey data (see Fig. 11 and text for details). Although the downhole surveys show a drop in temperature between 590’ and 620’, we know that the downhole temperature was actually 359 °F between 585 and 587 ft. from the MRT 0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 900.0 0 50 100 150 200 250 300 350 400 Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 14 reading. Therefore a “hybrid” log was generated based on the MRT reading from the flowing zone and the extrapolated log. While this is not wholly systematic, it is a more reasonable conclusion about the actual temperature gradient . This plot is shown in Fig. 13. Figure 13. Hybrid TG graph of TG2, based on Horner extrapolations of dowhole survey data (see Fig. 10 and text for details) and a single MRT reading at productive interval 585’-587’ prior to cementing. Maximum temperature was 359 °F at 585 ft. Figure 14. Flow pressure test at the bottom of TG2. Pressure recorded at 10 second intervals & increments of 5 psi. An injection test was not performed on the Hot Springs Well due to time constraints and helicopter engine problems. However, the Hot Springs Well gave every indication of being highly permeable. 0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 900.0 0 50 100 150 200 250 300 350 400 0 5 10 15 20 25 30 35 40 8/8/2010 0:418/8/2010 1:058/8/2010 1:298/8/2010 1:538/8/2010 2:178/8/2010 2:418/8/2010 3:058/8/2010 3:298/8/2010 3:538/8/2010 4:178/8/2010 4:418/8/2010 5:058/8/2010 5:298/8/2010 5:538/8/2010 6:178/8/2010 6:418/8/2010 7:058/8/2010 7:298/8/2010 7:538/8/2010 8:178/8/2010 8:418/8/2010 9:058/8/2010 9:298/8/2010 9:538/8/2010 10:178/8/2010 10:41AGP TG2 Flow Pressure Test Data points are every 10 seconds Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 15 Geology Core logs for TG2 commenced at 5’ from the bottom of the cellar. Complete well logs are provided in Appendix A. In general, the formations encountered by well TG2 are generally homogeneous volcanic flows of andesite, basaltic andesite, and basalt. While he avy oxidation (Fe oxides) was observed between flow layers, hydrothermal mineralization was confined to small (<1’) fractures within the flows. Fig. 15 gives an example of a typical core box for well TG2. Figure 15. Example of a typical 10’ core box from well TG2 containing andesite (sections #1-11 in photo) and andesitic tuff (sections #11-15 in photo). Summary descriptions of the geology of TG2 are as follows: An unconsolidated till/clay layer was encountered from 4’ to 23.’ That layer was comprised of gray-brown pebbly silt and clay (quartz and mafics), containing abundant andesite and scoria clasts. A lahar/breccia layer was encountered between 23’ and 52,’ with angular andesite and andesitic basalt clasts in a gray, slightly indurated clayey matrix. The top of bedrock was encountered at 52’, with fractured andesite flows interbedded with thin (<1’) tuff layers. The andesite was dark gray, mesocratic, porphyritic , and often vesicular, especially near the top or bottom of a flow. Phenocrysts were a ltered plagioclase and pyroxenes. Rare quartz as well as olivine were observed. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 16 Between 52’ and 290’, the bedrock was andesite, andesitic basalt, and basalt, with one small tuff layer at 220-221’. Andesitic basalt was dark grey, melanocratic, aphanitic, and locally chloritized. It contained microcrystals of altered plagioclase and mafics, and mineralized vugs near the tops and bottoms of flows. The basalt was described as dark greenish blue gray, aphanitic to mycroporphyritic, with small plagioclase and py roxene phenocrysts, and rare olivine. Vein and vug fill continued to be anhydrite. Fig. 16 shows an example of a vesicular flow margin. Figure 16. Example of a vessicular top of a basaltic andesite lava flow in well TG2. From ~292’ to 390’, a new layer was encountered that is henceforth described as “lithic basalt.” This basalt flow is moderate gray to greenish gray overall, and contains multicolored clasts of grayish red purple, red, pink, and black/brown lithic fragments (mostly basalt/an desite). Clasts range from angular to subangular to rounded, porphyritic to aphanitic, and range in size from <1 to >20 cm (ave. size 10 mm). The lithic basalt formation is very well-indurated and does not contain abundant fractures in comparison to the non-lithic flows. From 390’ to TD (833’), the formation consists of interlayered lithic basalt, andesite and basaltic andesite, and small tuff layers. The 585’-587’ productive interval was a highly vesicular and fractured layer within a dark gray, aphanitic basalt (Figure 17). The productive fracture was part of a larger set spanning ~583’ – 590’. In the basalt and andesite flows, fractures were oriented in 2 distinct directions: 1) generally subhorizontal (25 degrees off vertical) and 2) subvertical. The subhorizontal fractures were larger and more open, and often mineralized with sulfides (mostly pyrite and arsenopyrite) and a fine-grained white mineral. The subvertical fractures were very small (1-2 mm) and almost always mineralized with calcite or anhydrite. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 17 Figure 17. Core box showing the productive interval from TG2 (dark sections). Hot water at 359°F issued from a fractured and highly vesicular top of a basalt flow (sections #11-15 in photo). Note the darker color of the productive interval is because the rock remained wet for hours after core was pulled. Also note the mineralized subvertical vein in the rock just above the productive interval. Secondary minerals in TG2 included abundant calcite, anhydrite, chlorite, unidentified clays and zeolites, selenite, laumontite, and sulfides (pyrite and arsenopyrite, rare cinnabar). Rare silica deposits were observed. Hairline suvbertical fractures were filled with anhydrite or calcite. Above ~581’, the vugs in vesicular portions of the flows were filled with a combination of calcite and chlorite. Between ~581’ and ~710’, the vugs in vesicular portions of the flows were filled with a combination of calcite, chlorite, epidote, and rare laumontite. The productive fracture at 585’-587’ had calcite, laumontite, chlorite, epidote, arsenopyrite, and cinnabar. Within the productive fracture and some vesicles below 581’, epidote displayed an interesting morphology, with radiating euhedral crystals nucleating on top of chlorite vein fill. Cinnabar was observed in trace amounts below 581’. Additional mineralized zones occurred at 690’ and 705’, though the fractures in these zones did not appear to support large -volume fluid flow. Epidote was not observed below ~710, though pyrite and other sulfides, and chlorit e, continued below this zone. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 18 Fluid sampling Two fluid samples were collected from TG2. A sample was collected while the productive interval (585’ – 587’) was flowing. The fluid temperature for that sample was 359 °F. A second sample was collected from the bottom of the well. The fluid temperature for that sample was 212 °F at the surface. Since fluid samples were taken at the flowline at sea level pressures, the temperature cannot exceed 212 °F. All samples were sent to ThermoChem for chemical analysis. Analytic results should be available from in late 2010. Discussion and summary of preliminary drilling results The drilling of TG2 was completed on August 8, 2010. At the time of writing, partial TG data were available for the well, with the full datas et available in December, 2010. The full dataset includes: equilibrated regional temperature gradient data, plus temperature, depth, and chemical composition of the shallow geothermal aquifer. With the drilling of TG2, we have successfully proved that th e geothermal resource at Akutan can support planned development. TG2 encountered a shallow aquifer of 359 °F (182 °C) at 585 ft. (178 m). This is extremely shallow for a geothermal resource and is good news as it could mean substantially reduced capital costs of development if it means that only shallow production wells need be drilled. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 19 B. South Elbow Well 4 (TG4) Overview In contrast to TG2, drilling proceeded more rapidly than anticipated at “South Elbow well” or “TG4.” The drilling progress went very smoothly, with relatively few mechanical or equipment problems. There was very little lost circulation in TG4, and all formation integrity tests (i.e., leak-off tests) were successful. While this was positive in terms of the pace of the drilling, it suggests that TG4 has lower permeability than TG2. TG4 was “opened” with 9 7/8” bit to 38’, and 33’ of conductor was set from 5’ to 38’ (conductor has inner diameter of 6 5/8”). Before the upper casing was installed at 186’, a small amount of fluid was lost (5 bbls/hr) at 143,’ and more between 168’ and 188’ (7 -10 bbls/hr). This was in a zone of fractured tuff (relatively permeable layer) and a small temperature increase was registered at 150 - 156' and again at another fracture zone 185'. These are probably not substantial hot aquifers as temperatures only rose slightly after considerable halt in circulation, and regular circulation temperatures were still recording low (<100 °C). A cement plug was installed across the lost circulation zone (spanning 120-172’), and the hole was cased and cemented with HWT (4.5”). Equipment tests were run at 188’, including BOP, annular preventer, diverter valve and other valve tests – all were successful. After several hours with no circulation, an MRT was run that read 180 °F (188’). The well was then drilled rather uneventfully to 510’, when the crew had to pull out for a new bit, and then had a stuck core barrel @ 527' At 596’, the second string of casing was installed (HQ, with an inner diameter of 3.5”). Formation integrity tests and equipment tests were run at 600’, including BOP, annular preventer, diverter valve and other valve tests – all were successful. After several hours with no circulation, an MRT was run that read 265 °F (600’). From 600’ to 1500’, drilling proceeded very rapidly with little to no communication between the drillsite and management due to lack of internet and cell phone coverage at the drillsite. Fig. 18 shows the final wellbore configuration for TG4, and Fig. 19 shows graphical representations of drilling progress while on location for TG4. Compare these with those for TG2 (Figs. 6 and 7). Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 20 Figure 18. Schematic of the final wellbore configuration for TG4. Note 4 ½” casing from 38’ to 186’, 3 ½” casing to 596’, and open hole until TD of 1500’ with diameter of 3.032”. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 21 Figure 19. Graphical representations of drilling progress on TG4. Graph on left shows days on location vs. drilling depth, note the difference between planned and actual. Chart on right shows the hours spent on various drilling- related activities. PT data PT logs were run following the same method as for TG2, with three runs were recorded at 12, 24, and 36 hours after circulation ended (Figs. 20-22). Like at TG2, these are “unequilibrated” downhole temperatures because these surveys were taken so soon after the well was drilled (and therefore the temperature readings are still influenced by the cooling effects of fluid circulation). Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 22 Figure 20. First of three end-of-well P/T surveys for TG4, with unequilibrated downhole temperatures shown in red; pressures shown in blue. Maximum T was 327.1 °F at 1500’. Annotations highlight minor fracture zones that did not exhibit substantial permeability. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 23 Figure 21. Second of three end-of-well P/T surveys, for TG4 with unequilibrated downhole temperatures shown in red; pressures shown in blue. Max T was 327.5 °F at 1500’. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 24 Figure 22. Third of three end-of-well P/T surveys, with unequilibrated downhole temperatures shown in red; pressures shown in blue. Max T was 327.8 °F at 1500’. As with TG2, the Horner method was used to predict the equilibrated downhole temperature based on curves generated from the three survey points from each depth (see Fig. 11). The final depth vs. temperature plot generated from extrapolated values is shown in Fig. 23. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 25 Figure 23. Equilibrated Temp vs. depth plot for TG4, based on Horner extrapolations of dowhole survey data (see Fig. 11 and text for details). The plot of the extrapolated Temp. v. Depth for Well TG4 shows a relatively rapidly increasing temperature gradient until ~900’, transitioning to a slowly increasing temperature gradient from 900’-1500’. The minor temperature fluctuations from 900 -1500’ are probably a product of minor flow from small fracture sets. The facts that there was no temperature reversal and that the gradient continues to increase suggest there could be a deeper, hotter aquifer below 1500’ that was not penetrated by drilling. An injection test was performed on well TG4 to determine its permeability (Fig. 24). This test suggests that the well has generally poor permeability. However, there is presumably better permeability below 1500’ if a deeper, hotter aquifer exists. 0 200 400 600 800 1000 1200 1400 1600 0 50 100 150 200 250 300 350 Temp (F) vs. Depth (Ft.) Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 26 Figure 24. Results from an injection test performed on well TG4. Geology Core logs for TG4 commenced at 5’ from the bottom of the cellar. Complete well logs are provided in Appendix A. In general, formation encountered was largely the lithic basalt flow, as described in the TG2 geology description. Summary descriptions of the geology of TG4 are as follows: Between 5’ and 57’, the formation encountered was a sandy and pebbly unconsolidated glacial till deposit. The till was described as olive gray silicic groundmass with oxidized andesite clasts. Bedrock was encountered at 57’ – a heavily oxidized top of an andesite flow. From 57’ to 316’ the formation consisted of interbedded andesite, basaltic andesite, and basalt flows, with the bulk of the formation being lithic basalt. These flows were olivine- and pyroxene-bearing, with abundant plagioclase phenocrysts, and exhibited a high degree of chloritization throughout. From 316’ to 425’ a thick bed of “lithic tuff” was encountered. This tuff was a dark grey, aphanitic groundmass with plagioclase and magnetite phenocrysts and small scoria clasts. The tuff showed chlorite alteration in vesicles and contained sulfide (possibly arsenopyrite) aggregates in fractures, but no calcite. 0 50 100 150 200 8/24/2010 9:258/24/2010 9:308/24/2010 9:368/24/2010 9:418/24/2010 9:478/24/2010 9:528/24/2010 9:588/24/2010 10:038/24/2010 10:098/24/2010 10:148/24/2010 10:208/24/2010 10:258/24/2010 10:318/24/2010 10:368/24/2010 10:428/24/2010 10:478/24/2010 10:538/24/2010 10:588/24/2010 11:048/24/2010 11:098/24/2010 11:158/24/2010 11:208/24/2010 11:268/24/2010 11:318/24/2010 11:378/24/2010 11:428/24/2010 11:488/24/2010 11:538/24/2010 11:598/24/2010 12:048/24/2010 12:10AGP TG4 Injection Test August 24, 2010 Current(PSI) Pretest volume rates 80 PSI Stable 35 PSI +/-165 PSI Prepared by Prospet Geotech Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 27 Interbedded basalt, basaltic andesite, and andesite flows resumed from 425’ to TD of 1500’. Several textural/compositional changes were noted within flows, typically accompanied by a minor amount of hydrothermal mineralization. Slickensides were noted in small, near-vertical fractures in andesite at 447’, along with minor FeO staining. Fractured zones were observed from 468’-470’ with a minor amount of fluid flow (fractures were “wet”) and flowline temperatures increased slightly after that. Other notable fracture zones were observed at 542- 545’ (with calcite, laumontite and chlorite), 627.5’-628.5’ (brecciated with calcite and arsenopyrite), 764’ (with laumontite, calcite, and clays), 787’ (with calcite, cinnabar, arsenopyrite, and quartz), 977’-979’ (with chlorite and quartz). From 979’ to TD at 1500’, only very minor fracture zones were observed. Secondary alteration minerals included chlorite, epidote, sulfides (pyrite, arsenopyrite, and rare cinnabar), laumontite and other unidentified zeolites, calcite, and quartz below 787’. It is interesting to note that compared with TG2, well TG4 contained very little secondary anhydrite; most of the carbonates observed were calcite. Alteration minerals occurred interstitially, in fractures, in vesscles, and in contact zones and the tops of new flows. Fig. 25 shows an example of a relatively shallow fracture zone that has been sealed by hydrotherma l mineralization. Fig 25. Fractured zone from 185’-186’ in well TG4. Fractures are filled with amorphous calcite, epidote, and sulfides (pyrite, arsenopyrite, and possibly cinnabar). Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 28 Geologically, the formations encountered in well TG4 were fairly impermeable. The basalt, and andesite flows contained relatively few fractures, almost all of which were “sealed” with mineral deposits. The tuffs and lithic tuffs were not particularly permeable either. However, there are abundant high-temperature hydrothermal alteration minerals present in the rocks, even at very shallow depths. For example, the hydrothermal mineral e pidote, which is an index mineral indicating hydrothermal temperatures upward of 350 °C, was observed at very shallow depths – this is surprising and does not correspond to observed downhole temperatures. Slickensides observed in well rocks could be related to a possible range front fault on the SW side of the valley near well 4. This fault was identified from observations of terrace faulting up the hill to the SW, and lineations downvalley to the SW through the alluvial fans, noted by wellsite geologist Jim Hill. According to Mr. Hill, the faulting looks fairly recent since vegetation has not grown back over the disturbed area. A number of brecciated zones were observed in TG4 (Fig. 26), but most were “sealed” with secondary mineral deposits and therefore probably do not represent active faults. Figure 26. Brecciated fracture zone with secondary calcite deposit from a depth of 213’ in TG4. Fluid sampling Only one sample was collected from TG4; a sample from the bottom of the well. The well did not flow so the sample had to be air-lifted out of the hole. The fluid temperature of the sample was 212 °F with air assist at the surface. The fluid samples were taken at the flowline at sea level pressures, therefore the temperature cannot exceed 212 °F. All samples were sent to ThermoChem for chemical analysis. Analytic results should be available in late 2010. Discussion and summary of preliminary drilling results The drilling of TG4 was completed on August 24, 2010. At the time of writing, partial TG data were available for the well, with the full dataset available in December, 2010. The full dataset includes: equilibrated regional temperature gradient data, plus temperature, depth, and chemical composition of the shallow geothermal aquifer. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 29 Well TG4 did not encounter much fluid flow, and there was no real permeability (no notable fractures) beyond ~1100’, corresponding to a slowing of the temperature gradient at ~1000’. However, the overall temperature gradient in TG4 is anomalously high, indicating regional favorability for a developable resource, and suggesting a deeper, hotter, aquifer is present. Indeed, it is possible that the impermeable formations encountered between ~900’ and TD at 1500’ in TG4 represent a “clay cap” that sits above a deeper, hotter system, perhaps the “upflow” resource. This interpretation correlates well with the 2009 MT resistivity data. That data shows TG4 just barely penetrating a zone of increased resistivit y that could represent the top of a geothermal aquifer (see “Akutan Geothermal Project Preliminary Technical Feasibility Study,” 2010, by Kolker, Cumming, and Stelling). The upflow resource is estimated to be >220 °C (>430 °F). Alternatively or additionally, the presence of high-temperature hydrothermal alteration minerals that do not correspond to downhole temperatures may suggest that there was a prior hot alteration period that has come and gone. This is not atypical of large-scale, active hydrothermal reservoirs which often “self -seal” as the fluids fill all available fractures with mineral deposits. The earlier episode of hydrothermal activity could have produced hot springs reaching the surface, because amethyst-filled vugs were observed as shallow as 20’ in TG4. This interpretation would also account for the mercury and boron anomalies in the soil that were measured near TG4 during the 2009 geochemical survey. Preliminary analysis of drilling results A prediction of productivity of production well drilled and completed to a similar depth as TG -2 can be made based on the preliminary results from drilling. Calculations were made concerning the possible productivity of Akutan TG -2, with the following assumptions based on observations at the wellhead: 1. The well is making two-phase flow. 2. 50 gpm was measured at the surface. 3. A column of water from surface to the production zone at 585 -587 feet. 4. Only water was being produced from the fracture at 585 -587 feet where the fluid enters the 4.50 inch hole. The standard enthalpy formula was used to obtain the total mass flow at the surface. Prittchett’s formula , an empirical calculation based on several geothermal field observations, predicts the deliverability of a full sized production well completed to a similar depth as TG-2 (See Appendix B for calculations). The outcome of these calculations was an extrapolated volume (in gallons per minute, or “GPM”) for a production well. That number can be used to convert the GPM of the full sized well into MW using Ormat conversion tables at 3600 F (see Appendix B for conversion tables). These conversion factors are for ORC units manufactured by Ormat, Inc. There are other manufacturers of ORC turbo generators but all conversion factors are similar. In all probability a production well similar to TG -2 would be a well completed with 13 3/8”, 54.5 ppf, K-55 buttress casing so that a 12” downhole pump could be run in the casing Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 30 and the well would be pumped. Water (brine) would be pumped to the surface and run through a Rankine cycle (“ORC”) turbo-generator. Pritchett’s forumula calculations yielded an extrapolated pumped capacity of the TG2 resource ranging from 465 to 820 gallons per minute. Based on the Ormat conversion tables and above assumptions, it is estimated that a production well with the same flow charac teristics as TG2 would produce 1.34 MW if completed near to TG 2 up to a maximum of 2.38 MW. Concurrent activity: fumarole sampling On Thursday 8/26/10, Pete Stelling and Rich Gunderson were helicoptered to the Akutan hillside fumaroles site at about 10:00 am to sample the fumaroles. The following is taken from notes provided by Mr. Gunderson about the effort: “Upon arrival we reconnoitered the approximately 100m x 80m area for steam vents appropriate to sample… Since we carried only a funnel for fumaroles sampling, we looked for relatively weak or “frying pan” type vents. The area had four high-volume/velocity steam vents more-or-less aligned at even elevation across the hillside (one large and very vigorous mudpot and three high velocity steam vents) but we weren’t prepared/able to sample any of these. We did sample three moderately active “frying pan” vents with the funnel set -up, and apparently got good quality samples. At each of these vents we collected duplicate non-condensible gas (NCG) samples and single samples of steam condensate, steam condensate for isotopic analysis, and acid sulfate water (filtered, unacidified) for checking Cl and F contents. Based on the timing and appearance of the NCG samples (about 20 minutes/sample, bottles 1/3 full of liquid, deep yellow-orange color), the steam appears to have low-moderate NCG and moderate H2S content. Our H2S monitors only sounded one time, and that was when we were about 1m in front of a vigorous steam vent trying (unsuccessfully) to capture its flow with the funnel. Temperatures of the sampled vents were 100oC, 99oC, and 99oC for samples AGP-8-26-10-10, - 20, and -30, respectively at about 5” below the ground surface… “My overall impression of the thermal area was quite positive from a geothermal exploration point of view. The overall heat flow was impressive wit h the four large vents and the hundreds of smaller ones dispersed around the area. The alteration was intensive throughout and around the thermal area (white alteration was also noted but not visited in a drainage several hundred meters SE of the fumaroles). The alteration primarily consisted of (smectite?) clay (mostly medium gray, but locally beige, white, and other colors), but little time was spent characterizing it. No obvious sulfides were observed, and native sulfur was only observed in a few places. There was a normal (or moderate) smell of H2S throughout the area. The NCG samples all appeared to yield similar, moderate gas/steam ratios, and based on the rate at which the sample s changed color during sampling, did not appear to be excessively r ich in H2S, Overall this thermal area appeared to be a typical geothermal-related (not magmatic) fumaroles area from a strictly sensory evaluation … Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 31 “The geochemical samples we took were intended t o A) characterize the steam as either geothermal or magmatic in origin; and B) if geothermal, estimate an equilibrium temperature at which the gases equilibrated (presumably the reservoir temperature underlying the fumaroles). The former (magmatic v. geothermal) can be evaluated by the Cl and F levels in steam condensate and in the acid sulfate waters as well as by the gas ratios within the NCG samples. The latter (equilibrium temperature) can be evaluated through various combinations of dry gas ratios using gas geothermometry grids…” Conclusions The 2010 exploratory drilling program was successful in identifying a geothermal resource that would support the proposed development at Akutan. A resource of 359 °F was discovered at depths of less than 600 ft. This is extremely shallow for a geothermal resource and is good news as it could mean substantially reduced capital costs of development if it means that only shallow production wells need be drilled. Since volume could not be measured, calculations based on empirical geothermal field observations were used to predict the deliverability of a full sized production well completed to a similar depth as TG2. These calculations yielded an extrapolated pumped capacity of the TG2 resource ranging from 465 to 820 gallons per minute for a single larger-diameter production well. This means that a single production well with the same flow characteristics as TG2 would produce 1.34 MW up to a maximum of 2.38 MW. While the size of the outflow is not reliably constrained, the minimum size of outflow system appears to be about ~1000 x 500 m and may be as large as ~3500 x 1000 m based on magneto -telluric (MT) data. This suggests that the resource could support the drilling of multiple production wells, if necessary. Based on these assumptions, anywhere from 1 to 6 production wells will be required, depending on the size of the energy demand. One or more injection wells will also be required by the project. Data from TG4 present some evidence for the possibility that even higher-temperature fluids exist at accessible depths in Hot Springs Bay Valley; this possibility will be explored by thorough analysis of existing data, and during the drilling of the larger-diameter wells. Next Steps: Resource Analysis Several activities need to be completed before our drilling dataset is complete and a thorough reservoir analysis can be completed. These activities are: 1. Chemical analyses of well fluids. All fluid samples collected from Akutan TG wells were or will be sent ThermoChem, a laboratory in Santa Rosa, CA for chemical analysis. Those samples are: a. A fluid sample collected from the productive interval (fracture) at 585’ from HS - 2. The sample was sent to the lab on August 3. Analyt ical results should be available within the next month. Preliminary Summary of Findings: Akutan Exploratory Drilling Program , August 2010 32 b. A fluid sample collected from the bottom of HS-2 at 833’. This sample is still on Akutan at the time of writing but will be sent to the lab along with the fumarole samples. Analytical results should be available by late 2010. c. A fluid sample collected from the bottom of E-4 at 1500’. This sample is still on Akutan at the time of writing but will be sent to the lab along with the fumarole samples. Analytical results should be available by late 2010. 2. Chemical analyses of fumarole gasses. Gas samples were collected from the fumaroles and will be sent to ThermoChem for chemical analysis along with the well fluid samples. 3. Chemical geothermometry. Once the full set of analytic results is available from Thermochem in September/ October, geothermometer calculations will be applied. This work will be carried out by AK Geothermal (Amanda Kolker). These calculations will give us indications of true reservoir temperatures of the Akutan geothermal resource. 4. Additional PT monitoring of TG wells. The TG wells have been suspended for at least a year after drilling. This Matt Bereskin will be in charge of the long -term monitoring effort. Alan Bailey at GRG is designing the instrumentation and equipment that Matt will need. Initially, I will ask Matt to take monthly measurements. When the temperatures start looking as if they have reached equilibration, measurements will be taken less frequently. 5. Core analysis. Rock cores collected in 10’ intervals will be sent to Western Washington University and examined under the supervision of Dr. Pete Stelling. The following information will be collected: o Rock chemistry. o Rock mechanical properties (permeability, resistivity, etc.) o Hydrothermal alteration and mineralization. o Other information to support reservoir modeling as needed. 6. Reservoir Modeling. Once the above activities are complete, the data needs to be synthesized into a reservoir model for the Akutan geothermal system. This work will be conducted either by commercial contractors (such as the Geothermal Resources Group) or by participating University researchers (such as Dr. Pete Stelling, WWU or Dr. Joanna Mongrain, UAF), in collaboration with AK Geothermal (Amanda Kolker). This resource model will be used to determine the locations and depths of production holes, and in planning geothermal development. List of Appendices A. Well logs for TG2 and TG4 B. Excel spreadsheet containing well productivity calculations and power conversion tables