HomeMy WebLinkAboutAkutan Geothermal AppRenewal Energy Fund
Grant Application
AEA-10-015
City of Akutan
Grant Application
Akutan Geothermal
Development Project
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 2 of 97 10/7/2009
SECTION 1 – APPLICANT INFORMATION
Name (Name of utility, IPP, or government entity submitting proposal)
City of Akutan
Type of Entity:
Municipal Government – Second Class City
Mailing Address
3830 C Street, Suite 205 Anchorage, Alaska 99503
Physical Address
100 Windy Way, Akutan, Alaska 99553
Telephone
907.274.7565
Fax
907.274.1813
Email
jbereskin@gci.net and akutanadmin@gci.net
1.1 APPLICANT POINT OF CONTACT
Name
Joseph Bereskin
Title
Mayor
Mailing Address
3830 C Street Suite 205
Anchorage Alaska 99503
Telephone
907.274.7565
Fax
907.274.1813
Email
jbereskin@gci.net and akutanadmin@gci.net
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
x A local government, or
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.
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SECTION 2 – PROJECT SUMMARY
This is intended to be no more than a 1-2 page overview of your project.
SECTION 2 – PROJECT SUMMARY
This is intended to be no more than a 1-2 page overview of your project.
Project Background
The City of Akutan is pursuing the development of a known geothermal resource
located in Hot Springs Bay Valley, on Akutan Island. In 2008, the City submitted Alaska
Renewable Energy Fund, Round 2 application #246 for the “Hot Springs Bay Valley
Geothermal Reconnaissance”. AEA recommended funding of the grant request of
$2,595,000, and the Legislature appropriated full funding for the following
tasks/milestones:
Prospecting: $485,000
Exploratory Drilling: $1,750,000
Well Testing: $200,000
Preliminary Feasibility Study: $125,000
Economic Assessment: $35,000
Total Request: $2,595,000
Table 1: AEA Recommended/Legislature Appropriated Funding Grant #246
Execution of an AEA grant agreement for the project is anticipated to occur in
November 2009. The City is now seeking additional funding for the test well drilling
phase of the project, expected to commence in June 2010.
City Funded Project Startup
Knowing that Round 2 grant funds would not be available for project startup until late
2009, and to avoid a delay of the 2009 fieldwork schedule, the City began self -funding
project startup in the fall of 2008. The City’s Program Manager, RMA Consulting Group
(RMA), was tasked with identifying a project manager and project team capable of
designing and implementing the reconnaissance effort described in the Round 2 grant.
Dr. Amanda Kolker (AK Geothermal) was engaged by the City as geothermal
development Project Manager for the Hot Springs Bay Valley project. Dr. Pete Stelling
was subsequently engaged as Assistant Geologist for the project. This allowed the
project team (City, RMA, AK Geothermal) to plan and conduct the prospecting program
described in the Round 2 grant, and to begin the feasibility study and economic
assessment tasks defined in the grant.
During this startup period, September 2008 – June 2009, the City contributed an
estimated $85,000 to the project.
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Grant Application Round 3
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Substantial Progress
Through the City’s commitment to the project, the project team was able to take full
advantage of the 2009 field season and effectively complete the following tasks:
1. Soil and soil gas geochemical survey and geologic reconnaissance (AK
Geothermal, Stelling, ThermoChem)
2. Remote Sensing study using thermal infrared (TIR) data from satellite
imagery (University of Alaska Geophysical Institute, Anupma Prakash,
Principal Investigator)
3. Deep geophysical surveys using magneto-telluric testing (WesternGeco -
Slumberger, Stelling)
4. Data synthesis and conceptual model – preliminary only (AK Geothermal,
Stelling, Cumming, Benoit)
A variety of non-field related tasks were also completed or are currently in progress:
1. The City applied for and received Power Project Fund Loan #40901109 in
the amount of $797,481, to provide working capital for the project, pending
Round 2 grant execution. (City of Akutan, RMA, AK Geothermal)
2. Negotiated and executed exploration and development agreements with
Akutan Corporation and The Aleut Corporation (RMA, City of Akutan)
3. Negotiated and executed Memorandum of Understanding with Trident
Seafoods Corporation (RMA, City of Akutan)
4. Instituted permit processing for test drilling through State of Alaska
Coastal Program Questionnaire and project review – ongoing (RMA)
5. Added Dr. William Cumming and Mr. Dick Benoit to the project technical
team to support data analysis/synthesis, conceptual model building, and
test drilling (City of Akutan)
6. Prepared geothermal project Economic and Stakeholder Assessment
preliminary draft (Information Insights, RMA)
As of this writing, expenses billable to the PPF loan total approximately $485,000. It is
anticipated that loan expenditures will be reimbursed to the City from the Round 2 grant.
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Current Status
Fortunately, the City’s approach to immediate project startup produced maximum
results for the field investigation conducted throughout the 2009 field season.
Unfortunately, the final results of data synthesis and conceptual model development are
not yet available for the Round 3 grant application. However, the preliminary
assessment is sufficient to support continuation of exploration and test well drilling for
the project. Significant findings are presented in detail in appendix G, and are
summarized here:
1. Strong chemical anomalies in both soil and soil gas composition indicative
of a thermal anomaly present below the upper portion of Hot Springs Bay
Valley (HSBV), another above the saddle and the central portion of HSBV,
and a third, smaller, anomaly near the mouth of HSBV.
2. Persistent surface thermal anomalies present in the upper portion of
HSBV. These anomalies overlap the chemical anomalies discussed
above.
3. Geophysical surveys highlight the presence of a deep (>3,000 ft) highly
resistive region, which may indicate a substantial thermal source below
the upper portion of HSBV and the ridge to the northeast of the fumaroles.
4. Geophysical surveys further show a shallow (near surface) highly
conductive layer, suggesting clay alteration resulting from hydrothermal
activity.
5. Geophysical surveys also show a pattern consistent with the vertical and
lateral migration of water between the proposed heat source and the
surface where the hot springs are observed. This suggests an
encouraging level of permeability in the region.
The City’s Round 3 funding request is based on the above-listed findings and a
unanimous consensus of the technical team that test well drilling is warranted.
Continuation of the Project
AEA recommended full funding for the “Hot Springs Bay Valley Geothermal
Reconnaissance” Round 2 grant, which included $1,750,000 for test well drilling and
$200,000 for well testing. These funds have been appropriated by the Legislature and
are expected to be available for the project. However, technical surveys and
preliminary data analysis have provided new information regarding the location, number
and depth of test wells. This naturally impacts the project budget. Consequently, the
City is requesting Round 3 grant funds in the amount of $2,870,000 to allow for
completion of test well drilling, well testing, well monitoring and related activities during
the 2010 field season (June – October). This will raise the state’s investment in the
project to $5,429,000.
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Grant Application Round 3
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Approval of the City’s Round 3 funding request will allow the test drilling phase of the
project to proceed, while the City pursues additional funding opportunities and identifies
development partners. The data collection activitie s that were carried out in 2009 and
are proposed for 2010 will minimize the risk to potential investors and, therefore,
increase the likelihood of private investment. Based on the completed feasibility report
and business plan, and the results of test drilling, the City hopes to acquire private
funding for the production drilling and development phase of the project.
Summary
The City has confirmed its commitment to the project financially and through continued
efforts to create a development partnership and identify private equity funding.
Moreover, the City has demonstrated its willingness and capacity to manage the project
on behalf of the land owners and the “consortium” of stakeholders, while, at the same
time, meeting or exceeding the tasks and commitments of the Round 2 grant. It should
also be noted that the City is concurrently involved in the development of airport, harbor
and road projects totaling more than $120 million dollars, which speaks to the capacity
to plan, manage and implement large capital improvement projects.
The city and all major stakeholders in the project believe that additional state funding for
the project is warranted for reasons of local, regional and statewide benefit and public
purpose.
2.1 Project Title – (Provide a 4 to 5 word title for your project)
Type in your answer here and follow same format for rest of the application.
Akutan Geothermal Development Project
2.2 Project Location –
Include the physical location of your project and name(s) of the community or communiti es that will
benefit from your project.
Answer here.
The project is located on Akutan Island in the eastern Aleutian chain, approximately 790
miles southwest of Anchorage and 40 miles north of Unalaska/Dutch Harbor. The
communities on Akutan Island include the City of Akutan and the Native Village of
Akutan, both of which will directly benefit from the power and heat generated by the
project. Power and district heat will also be supplied to Trident Seafood’s Akutan Shore
Plant, a major industrial activity located on the island.
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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
X 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)
Reconnaissance Design and Permitting
X Feasibility Construction and Commissioning
X Conceptual Design
2.4 PROJECT DESCRIPTION
Provide a brief one paragraph description of your proposed project.
This project is the continuation of the Hot Springs Bay Valley Geothermal
Reconnaissance Project, previously funded under Alaska Energy Authority (AEA)
Renewable Energy Grant Fund application #246. A surface investigation, detailed
analysis of geological data, an economic analysis and project permitting are being
completed under the existing grant authorization. The purpose of this request for
funding is to provide the supplemental funds necessary for test well drilling during the
2010 field season (June – October). A heliportable coring drill rig will be employed to
drill four (4) slimholes, three at 1500 feet in depth and one at 3,500 feet. A baseline
comprehensive well testing program will be conducted shortly after well completion,
followed by long-term well monitoring. The project will result in confirmation of the
geothermal resource sufficient for final design and permitti ng as described in the Phase
III requirements listed in Section 2.5 of RFA AEA 10-015.
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.)
There are three primary benefits to this project that support the use of Renewable
Energy Fund grant funds for continued exploration of the Akutan geothermal resource:
1. The project will provide a sustainable resource that eliminates diesel fuel
dependence and reduces the cost of energy by as much as 67 percent.
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2. The project provides low-cost energy and heat needed to promote
economic stability and local/regional economic expansion.
3. The project will serve to eliminate more than 50,000 tons of annual carbon
emissions.
There are a significant number of indirect benefits for the project, which are discussed in
detail in Section 5 of this application.
2.6 PROJECT BUDGET OVERVIEW
Briefly discuss the amount of funds needed, the anticipated sources of funds, and the n ature and source
of other contributions to the project.
The Alaska Legislature appropriated $2,595,000 for the project pursuant to Alaska
Renewable Energy Fund, Round 2 application #246. The budget breakdown for the
approved grant is as follows:
Prospecting: $485,000
Exploratory drilling: $1,750,000
Well Testing: $200.000
Preliminary Feasibility Study: $125,000
Economic Assessment: $35,000
Total Budget $2,595,000
Table 2: Funds Appropriated for Round 2 Grant
In anticipation of executing a Round 2 grant agreement for the project, the City applied
for and received a State of Alaska Power Project Fund (PPF) Loan under AS 42.45.010.
The $797,481 loan allowed the city to proceed with the Prospecting, Preliminary
Feasibility Study and Economic Assessment tasks described in the City’s Round 2
grant. It is anticipated that funds expended under the PPF loan will be reimbursed
through the Round 2 grant, leaving an estimated $1,700,000 for the 2010 test well
drilling program. A budget analysis is provid ed in Tables 3 and 4, below:
Task/Activity
Round II Energy
Fund Grant Budget
Allocation
Expensed/
Committed as
of 10/31/2009
Remaining
Funds
10/31/2009
Prospecting $485,000 $485,000 -0-
Exploratory Drilling 1,750,000 -0- 1,750,000
Well Testing 200,000 -0- 200,000
Preliminary
Feasibility Study
125,000 -0- 125,000
Economic
Assessment
35,000 17,500 17,500
Total $2,595,000 $502,500 $2,092,500
Table 3: Akutan Geothermal Development Project Round 2 Energy Fund Grant Expenses to
Date and Funds Remaining
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Task/Activity
Round 2 Energy
Grant Funds
Remaining as of
10/31/2009
Estimated
Expenditures
11/1/2009 –
6/30/1020
Estimate of Funds
Remaining on
6/30/2010
Prospecting -0- -0- -0-
Exploratory Drilling 1,750,000 250,000* 1,500,000
Well Testing 200,000 -0- 200,000
Preliminary
Feasibility Study
125,000 125,000 -0-
Economic
Assessment
17,500 17,500 -0-
Total: $2,092,500 $392,500 $1,700,000
*Final permitting, pad layout, site preparation, camp setup, procurement
Table 4: Akutan Geothermal Development Project Round 2 Energy Fund Grant Expenses to
Date and Funds Remaining
Results from 2009 prospecting work suggest that the cost of a thorough exploratory
drilling program will be well in excess of the original proposed budget of $1.75 million.
This is due to three factors; 1) 2009 data indicates that at least 4 exploratory wells
should be drilled, three to depths of 1500 ft., and one well drilled to 3500 ft. or deeper;
2) All drilling activities will need to be supported by helicopter, thus ramping up projec t
costs; 3) A thorough exploratory drilling program must include well testing and reservoir
evaluation activities that will take place during and after the exploratory drilling phase,
which were not included in the previous grant application.
Assuming the availability of Round 2 funds as described above, the City is requesting
Round 3 funding in the amount of $2,870,000.
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. $2,870,000
2.7.2 Other Funds to be provided (Project match) $250,000
2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $3,120,000
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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)
$45,000,000
2.7.5 Estimated Direct Financial Benefit (Savings) $*
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.)
$*
*As indicated throughout this application, the work necessary to determine costs and
benefits will be performed under the City’s Round 2 grant. Sections 4.2.2 and 4.2.3
below, provide very preliminary demand data for power and heat utilization. This work
is continuing, a part of the project feasibility study, economic assessment and business
plan milestones of the Round 2 grant. Final results and conclusions regarding cost -
benefit will be available in early 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 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.
Type in your answer here and follow same format for rest of the application.
Dr. Amanda Kolker has been managing the Akutan Geothermal Development Project
since the fall of 2008. Her services are provided under a contract between the City of
Akutan and Ms. Kolker’s consulting company, AK Geothermal. Ms. Kolker is a highly
qualified and well-known geothermal geologist who has studied and surveyed
geothermal resources in Alaska, and who contributed to the development of the State’s
Renewable Energy Atlas and Assessment. A résumé for Ms. Kolker is provided in
Section 9A of this application.
Under Ms. Kolker’s guidance, the City has also created a technical advisory and support
team which includes:
Dr. Peter Stelling
Dr. William Cumming
Mr. Dick Benoit
Complete résumés are provided in Section 9A of this application.
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This highly qualified panel will support the completion of prospecting activities, including
interpretation of geochemical and geologic reconnaissance data, review and
interpretation of magneto-telluric (MT) deep geophysical survey data, and data
synthesis and conceptual model development. Ms. Kolker and her technical support
team will be available throughout the project period described in Section 3.2, below.
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.)
The schedule for this phase of the project is separated into three sections: activities to
be conducted in preparation for drilling, the actual drilling, and post-drilling testing and
monitoring. The drilling process is inherently complicated and can be less predictable
than organizing contracts, which is reflected in the schedule presented below.
Project Phase Milestones/Tasks Schedule
Preparation Stage
Prepare Helicopter RFP 15 December 2009
Prepare Drilling RFP 15 December 2009
Award helicopter Contract 15 January 2010
Award Drilling Contract 15 January 2010
Initiate Transportation of Drilling
equipment, etc.
1 April 2010
Begin Camp Preparation 1 May 2010
Drilling Stage
Initiate drilling 1 June 2010
Complete drilling 30 October 2010
Testing and Monitoring
Stage
Initiate Well Testing 1 November 2010
Complete Well Testing 30 November 2010
Initiate Long-Term Monitoring 1 November 2010
Complete Monitoring 1 August 2010
Table 5: Project Schedule
This schedule is highly dependent on the availability of funds from a variety of sources,
including the Round 2 grant, the PPF loan and additional contributions from the City of
Akutan. In addition, the City is continuing efforts to obtain additional grant funds and to
examine cost sharing opportunities (see Section 4.4.1, below). It is recognized that the
Round 3 grant finds will not be available prior to 1 July 2010. Therefore, any of
actions/activities listed in the above project schedule will be subject to appropriation.
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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
manage the project cash flow. (See Section 2 of the RFA or the Budget Form.)
There are seven milestones identified for this phase of the Akutan Geothermal Project.
These are reflected in the Budget Worksheet, presented in Appendix C of this
application and further defined below:
1. Project scoping and contractor solicitation – This is a continuation of
tasks and activities being accomplished under the Round 2 grant.
Analysis of data and conceptual modeling of the geothermal resource will
provide the information needed to design the test well drilling program for
2010. The project presents a long logistical lead time that requires a
significant amount of backward planning to meet field operation
schedules. This includes the preparation of a detailed work breakdown,
schedule and budget sufficient for procurement of required services,
materials and equipment. The procurement cycle will be initiated in
December 2009; however, final solicitation cannot occur until
appropriation of the funds requested in this application.
2. Detailed energy resource analysis (exploratory drilling) – This is the
bulk of the work to be performed under this funding request. Work duri ng
Milestone 1 will identify and procure the resources necessary for a June –
October drilling program on Akutan Island. Procurement must be
completed by May 2010, subject to appropriation of funds and the 1 July
2011 effective date of the grant. Services, materials and equipment will
be procured for helicopter and barge transportation, drilling camp
operations, wellside services and supplies, and well testing and
monitoring.
3. Conceptual design analysis and cost estimate (access road and site
analysis for production drilling) – The results of test well drilling will
indicate the site(s) required for drilling of production and reinjection wells.
The project design for production drilling will identify pad sites and road
access requirements. This information will be used for a conceptual
design analysis and cost estimates for road and site construction.
4. Permitting and environmental analysis (access road and site
analysis for production drilling) – Permitting will be initiated for the road
access and development site(s) required for the production phase of the
project.
5. Detailed economic and financial analysis (post-drilling feasibility
report) – This milestone requires an update of the feasibility reports to be
completed under the Round II grant. The work will incorporate the
technical results of test well drilling in a revised economic analysis. The
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report should address the economic and financial factors effecting the
continuation of the project.
6. Conceptual business and operations plans (post-drilling business
plan) – This milestone requires an update of the preliminary business plan
to be completed under the Round II grant. The plan should identify the
funding and business requirements for continuation of the project.
7. Final report and recommendations – This report will summarize the
results of the test well drilling and well monitoring phase of the project and
provide conclusions and recommendations regarding project development
and continuation of the project to the production drilling phase.
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.
The City of Akutan has limited staff resources for the management of large
infrastructure projects and programs such as renewable energy development.
Therefore, the City has engaged the services of RMA Consulting Group (RMA) as its
Program Management team. RMA has been working with the City since mid-2008 to
support a variety of infrastructure projects, including a regional airport, small boat
harbor, harbor access road, hydroelectric generation and electrical distribution, as well
as the Akutan Geothermal Development Project. These projects have a combined
projected cost of development in excess of $160 million. The City’s planning and
management of these projects has provided the team with the development experience
and capacity needed to manage and administer the Akutan Geoth ermal Development
Project.
The RMA Program Management team has provided Dr. Kolker and the technical
support team with the resources and project support needed for completing the
prospecting and technical analysis tasks of the project. RMA assists the te am with the
development of detailed scoping documents, project plans, schedules and
specifications necessary for issuing bids and requests for proposal. RMA also supports
the procurement process, including proposal review, assistance with contractor
selection and preparation of contract documents, and acts as the owner’s
representative and contract manager to ensure effective performance of all contractors
and consultants.
Mr. Raymond Mann, President and Senior Consultant of RMA, is the City’s Program
Manager. He is assisted by Mr. Robert Kirkman, Vice President of Technical Support,
who is responsible for permitting and procurement support. Mr. Mann and the RMA
Program Management team will be available to support the Akutan Geothermal
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Development Project throughout the project period described in Section 3.2 of this
application. Résumés for key personnel are provided in Section 9A of this application.
In compliance with the City of Akutan purchasing code, the City has procured services
for the Akutan Geothermal Development Project through Professional Services
Agreements and other service contracts approved by the Akutan City Council. All funds
expended on the project are appropriated by City Ordinance as approved by the City
Council.
Approved contracts for the Reconnaissance Phase (Round 2) are:
AK Geothermal: Amanda Kolker, Project Manager
RMA Consulting Group: Ray Mann, Program Manager
Stelco Magma Consultants: Pete Stelling, Assistant Geologist
Cumming Geoscience: William Cumming, Technical Advisor
Sustainable Solutions: Dick Benoit, Technical Advisor
These contracts will be extended to provide for performance of the work described in
Section 4 of this application. Résumés are provided in Section 9A. A team organization
chart is provided, below:
Services, equipment and supplies required for work to be performed under the Round 3
grant will be procured consistent with the requirements of Section 26 and Appendix B of
the Standard Alaska Energy Authority Grant Agreement which is included with
Requests for Grant Applications AEA 10-015, dated 7 October 2009. The grant budget
proposal included with this application includes funds to procure the following:
Drilling services, including labor, equipment and materials.
Specialized tools and equipment, including tool and equipment maintenance.
Transportation services, including freight, helicopter and barge services.
City of Akutan
Ray Mann
Program Manager
Amanda Kolker
Project Manager
Robert Kirkman
Permitting and
Technical Support
Professional Services
Contractors
Subject Matter Experts
Technical Team Technical Contractors
Subject Matter Experts Pete Stelling
William Cumming
Dick Benoit
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Production/data recording equipment, including pumps and gauges.
Well testing services, including labor, software, instrumentation and equipment.
Specific requirements are:
Personnel
Personnel on site during the drilling of test wells will vary depending on need but will
likely include a geologist, drill crew of 10-15 people, cook, paramedic, and a helicopter
pilot. Personnel directly associated with test well drilling will be contracted through the
drilling vendor. Additional key personnel to be on site during the drilling operation
include Dr. Pete Stelling, Dr. Amanda Kolker, and Dick Benoit (see Appendix A –
Resumes). Drilling requires a mixture of skilled and unskilled labor. As in past phases
of this project we will require vendors to hire at least some of their unskilled labor from
the City of Akutan labor pool.
Drilling
Drilling vendors will be determined through an RFP process. Because a subcontractor
has not yet been identified, a preliminary budget and drilling plan was determined
following discussions with potential subcontractors including ThermaSource and
CH2MHILL. The RFP process will be initiated immediately following notice of this
award. Selection criteria for drilling vendors will be based primarily on overall cost,
availability of appropriate equipment, experience and record of success of the applicant.
Helicopter
Helicopter equipment and services will be contracted through an RFP process as well,
which will begin immediately after notice of this award. Helicopter models likely to be
available are a Bell 206, Bell 407 or A -Star 350 through Era Helicopters, Maritime
Helicopters, Egli Air Haul or similar vendors. Important selection criteria for the review
process include Alaska (specifically Aleutian) experience, hourly rate, fuel consumption,
cost of downtime, ferry cost, and the availability of suitable aircraft.
Camp logistics
In preliminary studies of the Akutan geothermal field, the remote camp was coordinated
and established by Taiga Ventures of Fairbanks, Alaska and we anticipate continuing
this relationship in the test well phase. Taiga will be able to provide all the n ecessary
tents, heating, cooking equipment and personnel, fresh and waste water
treatment/filtration and miscellaneous camp supplies for the duration of the project.
Trident Seafoods has been and will continue to be an important partner in this project.
As part of the City’s Memorandum of Understanding with Trident Seafoods we
anticipate in-kind logistical support including use of their dock facilities to offload drilling
equipment and supplies and stage our airlift operation of materials out to the dril l site.
Ancillary services, equipment and commodities to support the project will be procured
on an as needed basis through City purchase orders or other means consistent with the
grant requirements referenced above.
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3.5 Project Communications
Discuss how you plan to monitor the project and keep the Authority informed of the status.
In anticipation of negotiating a grant agreement for the City’s Round 2 approved
application #246, the geothermal development project team has maintained regular
communications with the AEA grant management team and geothermal technologies
manager. This communication has been bolstered through the Power Project Fund
loan process which required a direct interface among AIEDA, AEA and City team
members and the direct flow of technical and financial information.
Both Dr. Kolker and Mr. Mann confer with their AEA counterparts and have provided
ongoing status reviews and project briefings. The City also worked closely with AEA on
the development of a Memorandum of Understanding with Trident Seafoods
Corporation to comply with a special provision of the City’s Round 2 grant. These
efforts will continue throughout the project period described in this application, along
with a structured approach to project reporting and financial review.
The City conducts a weekly Program Management review meeting for all projects.
Participants include the Mayor, City Administrator, City staff, Program Manager and
Project Manager. A list of priorities and action items is maintained, to in clude
unresolved issues. This approach allows the entire city project team to monitor project
deliverables, milestones, financial control and contractor performance, and helps to
create a detailed record of actions taken. These meetings will be held thro ughout the
course of the project and the results will be made available to the AEA grant manager,
as requested.
The City project team employs a full range of electronic reporting systems to include
financial, administrative and technical databases, timecard tracking and payroll, project
management and communications networks. The City is very familiar with the budget
expense and reimbursement requirements for AEA and other grants, and will fully
comply with the reporting and reimbursement requirements set forth in Appendices D
and E of the AEA standard grant agreement, which is included with Requests for Grant
Applications AEA 10-015, dated 7 October 2009.
In addition to the reporting and communication efforts described above, we highly
recommend that the AEA grant manager for this project and/or other appropriate
officials visit the project site during the active drilling period. This will serve to enhance
individual and collective knowledge about the project, provide a unique view of field
conditions and present an opportunity to view the community and potential power
applications.
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3.6 Project Risk
Discuss potential problems and how you would address them.
The remoteness and harsh climate of Akutan Island make the location a challenging
place to conduct drilling activities. Little infrastructure exists on the island, and the
geothermal area is roadless, posing problems for transportation and access. Our
solution to these access issues is to use heli-portable drill rigs and establish fly camps
onsite for the duration of the drilling. This has substantially increased anticipated drilling
costs, and is one of the primary reasons for the project’s additional funding needs.
Geothermal exploration, development, and operations are subject to uncertainties which
are similar to those typically associated with oil and gas exploration and development.
The risks include project site control, permits/regulatory approvals, environmental
aspects and mitigations, and cultural and archaeological mitigations. Other risks are
associated with financing, construction, and project completion. Financing is highly
dependent on power purchase agreements and a so-called “bankable” geothermal
reservoir report. Project completion will require long-term commitment of public and
private partners and stakeholders.
The City project team has taken a variety of steps to address both the general and
specific risks to the project. These include:
Completed an extensive and thorough investigation of the resource as
described in the Report on Preliminary Results from 2009 Resource
Evaluation, including a geochemical survey and geologic reconnaissance,
a remote sensing study, and a magneto-telluric deep geophysical survey
(Appendix G).
Engaged a number of geothermal technical and industry experts to
conceptualize and locate sites for test well drilling.
Continued cooperative efforts with Akutan Corporation, Akutan Tribal
Council and The Aleut Corporation with regard to joint development and
funding options.
Executed a memorandum of Understanding with Trident Seafoods
Corporation for cooperation on project development and future negotiation
of a power purchase agreement (Appendix D).
Began efforts to identify potential development partners and equity
investors to participate in the project and assume long-term operations
management.
The City believes the above-listed efforts, combined with the strong management and
technical team resources already in place have substantially mitigated the inherent risks
of geothermal exploration. However, our team is uniquely aware of the need to remain
pro-active in identifying potential problems and implementing an effective risk
management plan. In addition, all prime contractors and sub -contractors selected for
drilling and well testing operations and support services will be required to establish a
risk mitigation/risk management plan.
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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.
Akutan’s geothermal system is considered one of the most promising high -temperature
sites in Alaska for geothermal resource development (Motyka et al., 1993). Several thermal
springs and fumaroles are located ~6 km (4 mi) from Akutan village (see Fig ure 1). A state-
funded exploration program, carried out at the Akutan geothermal area in the early 1980s,
concluded that an extensive hydrothermal reservoir is likely present at shallow crustal
depths beneath Akutan volcano, extending east towards Hot Springs Bay Valley. Chemical
geothermometry on Akutan hot springs fluids predicts reservoir temperatures of up to
211°C.
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More recent seismic and geodetic studies have delineated a large -scale rifting structure on
the island. Synthesizing the results from the 1988 geothermal stu dy with this new geologic
understanding of Akutan’s magmatic plumbing system and observations from a recent
geologic reconnaissance of the island, has led to a new conceptualization of the Akutan
hydrothermal system. All of these factors suggest that Akut an’s geothermal resource is
likely to be high-grade and capable of providing far more energy than will probably be
needed by users.
In spring and summer 2009, the City of Akutan executed and managed an extensive series
of surveys in the Hot Springs Bay Valley area, including geochemical, thermal infrared and
a geothermal prospecting program. Field investigations included two stages of
geochemical (soil and soil gas) sampling, thermal infrared remote sensing, and a magento -
telluric geophysical survey (see Appendix G). Although we are continuing to compile and
interpret the data gathered during these surveys, preliminary results indicate a substantial
geothermal resource present below Hot Springs Bay Valley.
In addition to power generation, geothermal development can address a variety of other
energy needs. The use of geothermal fluids for space heating will further reduce diesel
City of Akutan
Map 1: Project Proximity to Akutan
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fuel consumption and the cost of energy for village residents. The Akutan Geothermal
Development Project is envisioned as a combined heat-and-power project. Dr. Kolker
(2008) found that if cost-benefit analyses of geothermal vs. diesel generation projects in
rural Alaska included direct use of the geothermal fluids, the outcome was substantially
more favorable towards geothermal development. This is because heating fuel costs are
even higher than the costs of fue l for power generation. Other applications include cold
storage for fish processing, and greenhouse agriculture.
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 are three primary components of the energy system at Akutan:
Diesel produced energy for power and heating of the village and public
facilities.
Diesel produced energy for power and heating of the Trident Seafoods’
Akutan Shore Plant
Hydroelectric power to augment power production for the village and public
facilities.
Diesel and hydroelectric power for the village and public facilities is provided by Akutan
Electric Utility. Space heating for individual homes, businesses and public facilities is
provided by each owner through on-site delivery of diesel heating fuel.
Trident Seafoods provides its own power and heat using diesel fuel, heating fuel and some
fish oil. The Trident system also includes power generation heat recovery. There is no
distribution or power sharing connection between the City and Trident.
The power generation system operated by Akutan Electric Utility is configured as follows:
A. Diesel Plant Facility
Akutan Electric Utility Inc. operates a diesel power generating facility which
can provide electricity to the entire community. The power plant is located at
the west end of the City. It houses two diesel generators: 70 kW Caterpillar
engine, 150 kW Perkins engine and associated switchgear. The switchgear
includes a Direct Logic 205 PLC and equipment for a third generator. The
205 PLC was set up for an I/O interface with the hydro plant via radio
communications, although no communication link has been installed.
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B. Hydroelectric Facility
The City also operates a hydroelectric powerhouse at the east end of the city.
It is a stand-alone generation facility consisting of a self-contained 175 kVA
(105 kW peak capacity) Canyon Industries hydro generator, backed by a 125
kW Perkins diesel generator in the same module. The facility features a 4 -
inch plastic penstock, which provides water to a Pelton wheel turbine from a
reservoir 800 feet above the powerhouse. The hydro plant has a PLC based
control system that allows for the hydro generator to be paralleled with the
diesel. The controls also provide remote monitoring and control of the
powerhouse. The main control workstation is located in the Akutan City Hall.
These two facilities have a total power generation capacity as shown in Table 6, below.
Power Plant Generator Capacity
Main Plant Caterpillar 70 kw
Main Plant Perkins 150 kw
Hydroelectric Plant Canyon Industries 105 kw
Hydroelectric Plant Perkins 125 kw
TOTAL: 450 kw
Table 6: Akutan Electric Utility Power Generation Capacity
There are two power-related projects currently underway in Akutan that effect the energy
system. A field survey and conceptual design for the hydroelectric system (“Town creek”)
is being funded by AEA Renewable Energy Grant #240. The purpose of this work is to
design a repair and upgrade for the hydroelectric system that will optimize the production
of hydro produced power and reduce the consumption of diesel fuel. AEA is also
managing a Denali Commission funded distribution system upgrade. This project will
include replacement or upgrade of the existing system to improve distribution and long -
term safety and efficiency.
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.
As detailed in Section 4.2, above, with the exception of intermittent power provided by the
Town Creek hydroelectric plant, both the City and Trident are entirely dependent on diesel
fuel for power and heating. Table 7 summarizes fuel utilization for 2008.
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Fuel Usage Gallons Per Year Estimated Annual Cost
City of Akutan Power 45,000 $179,925
City of Akutan Heat 37,500* $157,500
Trident Power 2,495,172 $7,610,375
Trident Heat 2,063,064 $6,292,425
Total: 4,640,736 $14,240,225
*Assumes 750 gallons per household
Table 7: Fuel Utilization 2008
As a combined power and heat system, the Akutan Geothermal Development Project
will eliminate diesel fuel dependence for the City, its residents and Trident. In addition,
more than 50,000 tons of carbon emissions from existing and planned facilities will be
eliminated.
Other anticipated impacts include:
Power and heat to support the Akutan small boat harbor (to be
constructed in 2010-11), and resulting fishing fleet activities.
Power and heat to support the Akutan airport marine link system facilities
(to be constructed 2011-12) on Akutan Island.
Power and heat to support economic and business activity, including
greenhouse agriculture, industrial applications such as the production of
ice, and recreation/tourism.
Stimulation of regional and local economic development and jobs
creation.
Expansion of Bering Sea fishery activities, including Trident Seafoods.
Without the renewable energy resource available from the Akutan Geothermal
Development project, all of the above activities must be supported by additional diesel
power generation, adding to the already high cost of diesel dependence, and
contributing to an expanded carbon emissions footprint
. 4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
In the small community of Akutan there are two distinct energy users and energy
producers; the City of Akutan and the Trident Seafoods processing plant. Despite the fact
that these two entities exist very close to each other on Akutan Island, they have
completely separate energy systems. Trident operates as an industrial enclave, producing
all of the energy it needs for its operations. The City has a local utility that serves local
residents and businesses (with the exception of Trident). The local utility does not have the
capacity to meet Trident’s energy needs so there has been little reason to engage the
processor in conversations about purchasing energy before now.
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The City of Akutan burns an estimated 45,000 gallons of diesel per year generating
electricity. At an average cost of $4.00 per gallon, the utility spends as much as $180,000
per year for fuel. The cost to residential users is offset by Power Cost Equalization (PCE)
funds and a city subsidy so the majority of potential savings from geothermal development
would accrue to the State of Alaska through a reduction in the PCE subsidy, the City, and
to local businesses that are not eligible for PCE. The City of Akutan generates electricity at
a rate of $0.32 per kWh.
Sales Revenue
Class Customers Revenue
Residential 37 $70,441
Commercial 17 $67,775
Community Facilities 12 $41,709
Total: $179,925
Table 8: Sales Revenue, 2008
Trident Seafoods uses considerably more electricity, burning an estimated 2.5 million
gallons per year to meet the plants’ electric energy needs. Total estimated cost for fuel
associated with electricity generation is roughly $7.6 million per year. At $3.05 per gallon of
fuel, we estimate Trident is effectively paying $0.21 per kWh for electricity.
Gallons Per Year $/kWh (Estimated
for Trident)
Estimated Total
Costs
Trident Plant
(Electric)
2,495,172 0.21 $7,610,373
Akutan (Electric) 45,000 0.32 $179,925
Total: 2,540,172 $7,790,298
* Based on FY08 PCE report for Akutan and assumes an average 13 kWh per gallon
Table 9: Fuel Use - Electricity Generation
Cost estimates are always a snapshot; the cost of fuel is a moving target. The last few
years have seen wild variation in price in relative ly short periods of time. The costs
associated with fuel presented in the table above are based on EIA 2009 base case with
cost increments associated with refining, barging from Seattle to Akutan, and carbon tax on
refining, going into the future. This model produces fuel prices of between $3.05 and $4.00
for electric generation depending on the buyer.
Space heating is the other significant piece of the energy equation in Akutan. The City of
Akutan uses around 37,500 gallons of fuel for space heat per year . At an estimated cost of
$4.20 per gallon. The average homeowner pays a little over $3,000 per year to heat their
home. The community as a whole spends approximately $157,000 per year on space
heating at today’s rates
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The Trident plant consumes 2.1 million gallons of fuel per year for heat energy at an
estimated cost of $6.3 million dollars. Fuel use is based on conversations with Trident
personnel. Cost estimates are produced through review of Trident’s energy production
inventory and independent analysis.
Gallons Per Year Cost Per Gallon Estimated Total
Costs
Trident Plant
(Heat)
2,063,064 3.05 $6.292,426
Akutan (Heat) 37,500* 4.20 $157,501
Total 2,100,564 $6,449,927
*Assumes an average 750 gallons of heating fuel per residential household
Table 10: Fuel Use – Heat Generation
The tables below estimate the value of energy required on Akutan Island in 2012 and the
net present value of energy consumed between 2012 and 2030. Total net present value of
energy in Akutan is more than $200 million, with just over half of that value consumed in
electric energy.
$/Year Electric ($/Year) Heat ($/Year)
Akutan $3,12,580 $155,079 $157,501
Trident $13,902,798 $7,610,373 $6,292,426
Total $14,215,379 $7,765,452 $6,449,927
Table 11: Annual Cost of Energy in Akutan – 2012
$ Electric ($) Heat ($)
Akutan $4,520,313 $2,263,948 $2,256,364
Trident $207,749,254 $113,721,659 $94,027,595
Total $212,269,566 $115,984,608 $96,283,959
Note: assumes a 5% discount rate
Table 12: NPV Akutan Energy Market - 2012 To 2030
Estimates of the value of the local energy market assume a modest increase in the price of
diesel as well as a future and increasing cost associated with carbon emissions. We
assume no population growth or contraction in the community. Likewise we a ssume a
steady rate of activity at the Trident plant
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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.
This project is subject to Consistency Evaluation and Certification under the Alaska Coastal
Management Program (ACMP). A Coastal Project Questionnaire (CPQ) was completed in
August 2009 and filed with the State of Alaska, Department of Natural Resources, Division of
Coastal and Ocean Management. The CPQ process will identify federal, state and local
permitting requirements for the project, and provide coordination of permitting by identified
agencies. It is anticipated that all necessary permits for the project will be approved and in hand
by first quarter, 2010. A copy of the Coastal Project Questionnaire and Certification Statement is
attached to this application. Site preparation, including pad layout and camp setup, may begin as
early as spring 2010.
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 Akutan Geothermal Development Project is envisioned as a combined heat -and-
power project. Geothermal heating will provide substantial cost savings for both the City
of Akutan and Trident Seafoods. Because the Akutan geothermal project is viewed as a
multi-component system, with electricity generation not necessarily prioritized over other
applications, there is no one clear approach to development. Hence, we present three
project development scenarios presently under consideration.
The proposed power generation system would have an installed capacity of
approximately 10 MW, based on the current understanding of the resource and
projected load. The precise power generation technology must be customized for the
temperature, pressure, and chemical composition of the geothermal fluid encountered,
and hence cannot be specified at this time (that is, prior to obtaining results from well
testing). The power plant will either utilize “flash” or “binary” technology, with binary
technology being slightly more likely. Most modern geothermal power plants are binary -
cycle plants. Flash steam plants use water at temperatures greater than 360°F (182°C)
that is pumped under high pressure to the generation equipment at the surface. Binary
cycle geothermal power generation plants do not use the geothermal fluid directly but
rather utilize a secondary fluid with a lower boiling point than water (the geothermal fluid
is passed through a heat exchanger, causing the secondary fluid to flash to vapor, which
then drives the turbines). Whatever the technology, the Akutan geothermal project will
use standard power generation equipment purchased from a vendor that will be
identified by RFP. In general, the capacity fac tor for geothermal power systems is often
quite large – up to 96% – but again, this cannot be estimated until the exploratory drilling
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is complete.
All development scenarios involve reinjection of fluids back into the geothermal reservoir
to ensure the renewability of the energy supply. Most likely, piping will be installed to run
spent thermal fluids back from the village for reinjection into the geothermal reservoir.
Alternatively, cold creek water or even seawater could be used as a reinjection fluid if the
system allows (that is, if the available amount of heat and the rate of heat transfer is
sufficient to recharge the system on the same time scale as production). The heat sink
for the power plant would be an infiltration gallery utilizing cold water f rom nearby
creek(s).
System design scenario 1.
Scenario 1 represents a conventional, ‘cascaded-use’ approach to geothermal
development at Akutan. In this scenario, fluids pumped to the surface via production
wells are first utilized onsite for power production. Spent fluids from the power plant are
then piped to the village for direct use, and piped back to the ‘reservoir’ area for
reinjection (Fig. 1). Alternatively, cold creek water or seawater could be used as a
reinjection fluid, if this is found to be technically feasible.
Figure 1. System design for geothermal development at Akutan, Scenario 1.
While Scenario 1 is conventional, it is very capital intensive. Its feasibility will depend
entirely on where the geothermal ‘reservoir’ is located. If exploration drilling suggests
that production wells must be located some significant distance from the village, this
scenario will present substantial technical and economic challenges. Additionally, this
scenario requires a large degree of coordination between the different projects and
stakeholders. This could preclude the desired multi-component-project approach. This
approach also necessitates the building of an onsite power plant before any other project
components can be considered, which prioritizes power generation over other equally
important project components.
System design scenario 2.
Scenario 2 represents a somewhat unconventional approach to geothermal
development. In this scenario, production fluids are immediately piped to the village for
direct use and power production. Spent fluids are then piped back to the ‘reservoir’ area
for reinjection. Alternatively, cold creek water or seawater could be used as a reinjection
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fluid if this is found to be technically feasible (Fig. 2).
Figure 2. System design for geothermal development at Akutan, Scenario 2.
This scenario is unconventional because there would inevitably be some heat loss from
piping fluids to the village; because corrosion and/or scaling of pipes could be
problematic; and other reasons. However, in the case of Akutan, these drawbacks may
be outweighed by the benefits of having the entire system located in the village. Such
benefits include better management of the entire system, better coordination among
components and stakeholders, and most importantly, the development can be broken
into pieces. While all the project components depend on production wells and piping to
the village, they do not depend on one another. Once the wells and piping system are in
place, each project component can be developed separately by different stakeholders
through different funding sources, in staged development and with discrete business
plans. This scenario is most conducive to a multitude of industrial applications, such as
refrigeration (for cold storage of fish and/or processing), the production of alternative
fuels, and other applications.
System design scenario 3.
Scenario 3 represents a simpler approach to geothermal development at Akutan. In this
scenario, production fluids are simply used onsite for power production, and piped back
to the ‘reservoir’ area for reinjection. The only direct use application of geothermal fluids
in this scenario is onsite greenhouses, and perhaps resort development.
Figure 3. System design for geothermal development at Akutan, Scenario 3.
This scenario is clearly simpler than the other two; however the multitude of direct use
benefits would be sacrificed. Other, more marginal opportunities, such as the production
of alternative fuels, would be complicated but not necessarily impossible in this scenario.
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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.
As identified in the City’s existing Round 2 Grant, surface rights to the geothermal
resource exploration site are owned by Akutan Village Corporation, including access to
the site, rights of way for ancillary facilities and transmission lines. Land required for the
project within City boundaries is owned by the City of Akutan. Subsurface rights are
owned by The Aleut Corporation. The City has executed Exploration and Development
agreements with both Native Corporation land owners. These agreements provide for
the exclusive rights of the City of Akutan to access, explore and develop the geothermal
resources of Hot Springs Bay Valley.
The City has prepared an annexation request that will expand the area of the City by 133
square miles, to include all lands necessary for t he geothermal development project.
The application has been reviewed by staff of the State of Alaska Local Boundary
Commission and a formal submission of the request is expected in early 2010.
In addition to having control and development rights granted by the land owners, the City
is continuing discussions with Akutan Corporation and The Aleut Corporation to establish
a geothermal development consortium. Details of this effort are provided in Section
4.4.5 Business Plan, of this application.
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
The City has filed a draft Coastal Project Questionnaire and Certification Statement (CP)
with the Alaska Department of Natural resources (DNR), Project Review Office. A pre -
application meeting with all concerned agencies was conducted by DNR in October
2009. At this writing, the City is preparing the following permit applications:
Temporary Water Permit – DNR, Division of Mining, Land and Water
Geothermal Permit to Drill – DNR, Division of Oil and Gas
The schedule for acquiring necessary permits for test well drilling is as shown below:
Submit CPQ Draft Application September 2009
Pre-Application Meeting October 2009
Submit Permit Applications November 2009
Statutory Review Process December 2009
Permits Issued (not later than) March 2010
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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
Archaeological and historical resources
Land development constraints
Telecommunications interference
Aviation considerations
Visual, aesthetics impacts
Identify and discuss other potential barriers
Through extensive field observations during the reconnaissance phase of the project,
and communication with federal, State and local agencies as part of the CPQ permitting
process, the project team has determined:
There are no threatened or endangered species that will be impacted by
the development of the geothermal test wells.
The area identified for the placement of the test wells is currently
uninhabited. It includes the upper Hot Springs Bay Valley area and a
saddle adjoining the upper end of the valley above Akutan Bay. Access to
the site is planned via portable drill rigs transported by helicopter. The
area consists of remote terrain covered by mixed grass alpine tundra,
heath meadows, and barrens.
There are no known archaeological or historical resources which will be
affected by the test well drilling.
Less than one acre of surface land area will be disturbed by t he test well
drilling process. There is no land development planned during the test
drilling operations.
There is no known impact or interference to telecommunications.
There are no aviation considerations required for this project other than
helicopter access to the project site. Helicopter support will be provided
from Dutch Harbor.
There will be no impact on regional visual aesthetics.
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.
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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
This project will occur in four phases, which include prospecting, exploratory well drilling,
production well drilling, and construction of the power generating facility. We have
completed the initial exploratory phase, at a cost of $485,000. Exploratory well drilling,
including well testing well monitoring and related activities, will cost an estimated $4.8
million. The costs of the remaining phases of the project are less precise, as geologic
variables may greatly affect the expense of production well drilling and the cost of the
power generating facility. Industry guidelines suggest that each production and injection
well could cost $2 million or more, and we may need to drill as many as four of these
wells. Construction of the power generating facility is loosely estimated to cost $15 -$25
million, again based on industry standard estimates. With transmission costs and other
variables, we estimate that the Hot Springs Bay Valley Geothermal Project will requi re
$45 million to bring to completion.
We are requesting funds to support the drilling, testing and monitoring of test wells in Hot
Springs Bay Valley. As mentioned above, we estimate the cost of this phase to be $4.8
million. We have already secured grant funding from AEA for $1.75 million of this
amount. Additionally, the City of Akutan has agreed to pay matching funds equal to
~10% of the awarded amount. Hence, the total requested funds for this grant application
is $2.87 million.
The high cost of exploratory drilling can potentially be offset in several ways: One way is
to share drilling mobilization/demobilization costs among two or more projects; for
example between Makushin and Akutan. This potential may exist in summer 2010, if
Unalaska proceeds with its proposed drilling of the Makushin resource. The City is
exploring this and other opportunities for cost sharing.
a. Drilling equipment and support are available from a variety of federal
agencies, including BLM, USGS, BIA and others. AEA is coordinating with
BLM/USGS for the potential use of their resources for Alaska projects. The
City has been talking with BIA for the same purpose. The City will continue
to explore this option.
b. AEA is proposing to establish a drilling program that could be made
available to selected geothermal resource projects. This program could be
in concert with BLM/USGS or a State funded effort.
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c. Renewable energy project funds are available through federal agencies
such as DOE. It is likely this funding will be increased o ver the next several
years and may become available to projects like Hot Springs Bay Valley.
Although timing is an issue when requesting this type of funding, the City
intends to pursue this option.
d. The City is exploring the potential for establishing a joint development
agreement or other business relationship with a qualified development
company capable of providing technical, professional, financial and
operational support for the development of the Hot Springs Bay Valley
geothermal project. The City has brief contact with GeothermEx,
Richmond, California; Ormat Technology, Reno, Nevada; Magma Energy
Corporation, Vancouver, B.C., Canada; US Geothermal, Boise, Idaho; and
LandGas Technology, Chicago, Illinois. The City will continue to examine
this option as a potential source of funding for field exploration and drilling.
Although it is impractical at this time to determine any exact amount of offset or
contribution these options will provide for test well drilling, the City believes this is a very
likely source of matching funds and in-kind support for the 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.)
An industry standard rate for estimating operational and maintenance costs is
$0.03/kWh. Given the remote location of the facility and the difficulty in delivering
replacement equipment and personnel, we have increased this estimate to $0.08/kWh.
Given the average electrical demand on Akutan of 4.3 MW, and assuming 8,000 working
hours annually (~30 days downtime), this calculates to ~$3.0M annual O&M cost. These
expenses will be covered by the cost of the electricity to the users. Assuming a cost of
$0.12/kWh (37% of the current cost of electricity on Akutan), the net revenue gen erated
(after O&M) is ~$1.5M annually.
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
The City’s Round 2 grant provides for the preparation of the studies necessary to
determine the location and characterization of the resource, conceptual system design,
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energy market assessment and a detailed estimate of overall project cost. The following
deliverables are currently in progress:
Preliminary Feasibility study
Economic Assessment
Preliminary Business Plan
In meetings with AEA staff, it was agreed that the above-referenced work should include
development of a geothermal power economic model to assist in the determination of
energy pricing. This is particularly important since the Akutan Geothermal Development
Project is a combined heat and power project and very little data exists for establishing
cost-benefit. In addition, the analysis must account for financial variables, including
grants, third-party financing/equity investment, loans/bonds, government incentives, tax
credits, carbon credits and renewable energy credits. To better determine the true cost
of power for the project, the City will proceed with developing an appropriate economic
model and will work closely with AEA during the process.
The Preliminary Feasibility Study and Economic Assessment tasks of the Round 2 gra nt
are addressing the cost of power issue, and some preliminary results are provided in
Sections 4.2.2 and 4.2.3 of this application. In addition, the City and AEA recognize the
importance of Trident Seafoods to the project. This was reinforced by the Sp ecial
Provision attached to the Round 2 grant requiring that “Trident enter into an agreement
that states its intent to participate in the reconnaissance project and make use of energy
produced by development of the geothermal resources”. The City and Tri dent executed
the agreement (see Appendix D), which was reviewed by AEA and found to be in
compliance with the special Provision.
The City is continuing to work with Trident, as well as other potential power and heat
users to address the issue of power pu rchase and sale. The results of these efforts will
be reflected in the city’s business plan to be delivered in early 2010. See Section 6,
below.
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.
The Project Cost Worksheet is provided in Appendix B. The data reflects only the City’s
costs. Detailed cost information for Trident Seafoods is not yet available.
As noted in Section 2.6, Cost and Benefit Summary, data to support a cost -benefit
analysis and other information needed to complete the Cost Worksheet is presently
being developed under the Round 2 grant. Results of this effort will be available in early
2010.
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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 Akutan Geothermal Development Project provides substantial public and financial
benefit for :
a. Achieving national and state goals for the development of renewable
energy resources.
b. Developing State and regional strategies for remotely located renewable
energy resources particularly the Aleutian Arc of geothermal resources.
c. Eliminate the local dependence on diesel fuel for power and heating –
currently 4.6 million gallons annually - and the associated carbon
emissions of 50,000 tons per year.
d. Substantially reduce the cost of power and eliminate State power cost
equalization (PCE) and City of Akutan subsidies.
e. Support local and regional economic expansion related to the Bering Sea
fishery; resource development, including oil and gas; energy dependent
industries, including agriculture; and tourism.
f. Provide a sustainable energy resource that eliminates the uncertainties of
rising fuel costs and a corresponding rise in the cost of goods and services.
The sustainable nature of the project not only protects community and tribal values, but
helps to maintain an important tax base of the City, Aleutians East Borough and the
State of Alaska through the collection of a raw fish tax.
It is important to note that the Akutan Geothermal Development Project is based on a
multi-component model that would provide power and heat for a variety of purposes,
including economic expansion, jobs creation, enhanced tax revenues, and the promotion
of new industries, such as greenhouse agriculture and alternative fuel development.
When viewed in this way, as opposed to a single purpose power project, the potential
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long-term benefits of this project certainly warrant the investment of State funds to
determine the location, size and viability of the resource through test well drilling.
Finally, the Akutan Geothermal Development Project provides the added benefits of a
public-private partnership. The geothermal resource is located on private land owned by
the Akutan Village Corporation and Aleut Regional Native Corporation. The City of
Akutan has executed exploration and development agreements with both owners. It is
anticipated that these agreements will evolve into a consortium approach to resource
development and future funding. In addition, the City intends to seek private equity
investment and development funding for the project, particularly beyond production well
drilling. Creating a development partnership with private investors will both enhance an d
protect the State’s investment in the project. However, this future funding is highly
dependent on the test well drilling and resource confirmation tasks identified in this
funding request.
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
The City of Akutan is committed to the development of this project as a sustainable
resource of the community, the region, and the State of Alaska, as discussed in Section
5, above. This will require a public-private partnership, where the City, State and federal
governments should invest in identifying and capturing the resource, and private sector
partners should build, operate and maintain a “geothermal utility”. This makes additional
renewable energy grant funding requested in this application extremely important. It also
means that the City must continue to invest in the project through matching funds, loan
commitments, in-kind support, and targeted requests for federal funding. As a minimum,
these efforts and resources must be combined to produce the estimated $5.7 million
needed to explore, characterize and identify the resource.
At the same time, the City’s business model addresses the need for private sector
participation. The following opportunities are actively being pursued by the City:
Participation and equity investment by property owners and power/heat
users, including the City, Trident Seafoods, Akutan Corporation, Akutan
Native Village, and The Aleut Corporation.
Execution of a development agreement with a qualified geothermal
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development partner for the design, build, operate and maintain elements of
the project.
Identification of government and industrial power/heat users to locate at
Akutan, including resource extraction, Coast Guard operations, alternative
fuel production and recreation/tourism.
As indicated in Section 4.4.3, above, the variables of project cost, equity participation,
power purchase/sales, and operation and maintenance costs are being evaluated in the
economic assessment and economic modeling tasks of the project which will be
presented to AEA in early 2010. The evaluation will also examine tax credits, subsidies,
carbon trading and other incentives that will benefit the long-term sustainability of the
project.
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.
This application is a request for continuation funding of the project approved in the City’s
round 2 grant #246. It is critical that the tasks, milestones and budget allocations of the
existing grant be coordinated and consistent with this Round 3 funding request. In that
regard, Section 2.4 of this application provides a detailed summary of completed
milestones and general progress related to the existing (Round 2) grant. In ad dition,
Section 2.6 provides a budget analysis of existing grant expenditures and funds
available for 2010 test well drilling.
With the completion of the technical feasibility study in early 2010, to include data
synthesis from field exploration, and conceptual model development, the City can
proceed immediately to the test well drilling phase of the project. In the meantime, the
project team is continuing preparation for the 2010 drilling program, to include:
Establishing an ongoing resource evaluation program (see Appendix G).
Consultation with Unalaska’s Makushin project team to pursue cost -sharing
for 2010 test drilling.
Establishing industry/supplier contacts for drilling, transportation/helicopter
services, camp logistics and other logistical requirements.
Coordination with Trident Seafoods to obtain logistical support for 2010
drilling operations.
Permit processing and regulatory compliance.
Initial activities for the test drilling phase can commence as soon as spring 2010. Drilling
is anticipated to commence in early summer, 2010, with long-term well monitoring
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through 2011.
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 strong local support for this project. As identified in the City’s Round 2 grant
and this Round 3 application, the Akutan Corporation and The Aleut Corporation have
executed exploration and development agreements in support of the project. The City
feels strongly that these cooperative agreements will evolve into a consortium approach
to development as discussed in Section 6, above. This idea is bolstered by a recent
resolution of support from the Akutan Traditional Tribal Council regarding Department of
Energy grant funding, provided in Appendix D.
Trident Seafoods is an integral part of the Akutan Community. Several employees of the
company are members of City Council and Aleutians East Borough Assembly. Trident
continues to provide logistical support for the geothermal project in the form of
transportation, shipping and docking facilities. A letter of support from the Round 2 grant
application is provided in Appendix D, along with the City of Akutan – Trident Seafoods
Memorandum of Understanding. For further understanding of Trident’s commitment to
the geothermal project, representatives of Trident plan to meet with AEA management
and staff in early December, 2009.
The ongoing economic assessment for the project in cludes an evaluation of stakeholder
interest in and support for the project. A series of interviews has been conducted and a
town meeting was held in Akutan in September, 2009. Industries and organizations
interviewed are:
Stephen Arber, Chief Engineer, Trident Seafoods
Joe Bereskin, Mayor, City of Akutan
Chris Hladick, City Manager, Unalaska
Ted Meyer, Community Development Coordinator, Aleutians East Borough
Amanda Kolker, Geologist and Project Manager, AK Geothermal
Joe Kyle, COO/CFO, APICDA
Dave Lockard, Alaska Energy Authority
Neil McMahon, Alaska Energy Authority’
Peter Crimp, Alaska Energy Authority
Tuna Scanlan, City Administrator, City of Akutan
Eric Waterman, Operations Director, The Aleut Corporation
Zenia Borenin, President, Native Village of Akutan
Jacob Stepetin, Tribal Administrator, Native Village of Akutan
Town Meeting: Community members, City Council members, Tribal
members, City staff
Robert Carroll Dose, Texas A&M, Greenhouse Specialist
John Fulton, Assistant City Manager, City of Unalaska
Dan Winters, Director of Public Works, City of Unalaska
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Although there are differing viewpoints about the feasibility and potential of the project,
support is nearly unanimous for continuing to explore and identify Akutan’s geothermal
resources in order to determine the viability of the project. Issues and concerns were
raised by some residents and leaders regarding the effect of the project on village and
community life. However, these did not rise to the level of objection to the project.
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.
Total project development cost for the Akutan Geothermal Development Project is
estimated at $45 million. However, this estimate cannot be validated, nor a definitive
business plan developed, without a comprehensive exploration of the potential
geothermal resource, including test well drilling.
The City of Akutan self-funded the startup of the project in 2008 and has expended
more than $85,000 of City funds and in-kind support to date. In addition, the City
executed a PPF loan for nearly $800,000 to allow exploration to proceed during the
2009 field season. Expenditures under the PPF loan total approximately $485,000 to
date. Finally, the City has received a $2.595 million Round 2 renewable energy grant
from the State of Alaska to support exploration and test well drilling.
The project team has estimated the cost of test well drilling, well testing, well mon itoring
and related activities to be $5.8 million. The purpose of this funding request is to obtain
additional funds needed to conduct the test well drilling program in 2010 (June –
October). As detailed in Section 2 of this application, the City is requ esting an
additional $2,870,000 of renewable energy grant funds for continuation of the project
The Grant Budget Form in Appendix C of this application provides a listing of project
milestones, funds requested and the City’s proposed matching funds.
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SECTION 9 – ADDITIONAL DOCUMENTATION AND CERTIFICATION
SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION:
A. 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. 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.
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Appendix A: Resumes of Applicant’s Project Manager, key staff, partners,
consultants, and suppliers per application form Section 3.1 and 3.4.
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Appendix B: Cost Worksheet per application form Section 4.4.4.
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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. Continuous for estimated 30-year project life.
Unit depends on project type (e.g. windspeed, hydropower output, bio-mass fuel)
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 1 hydropower; 3 diesel
ii. Rated capacity of generators/boilers/other Hydro: 105 kW; Diesel; 70 kW, 125 kW, 150 kW
iii. Generator/boilers/other type Hydro Plant: 1 Canon Industries hydro, 1 Perkins
Diesel
Diesel Plant: 1 Caterpillar diesel, 1 John Deere
diesel
iv. Age of generators/boilers/other 1 Canyon hydro, 15 years; 2 Perkins diesel, 10
years; 1 John Deere diesel, 2 years.
v. Efficiency of generators/boilers/other 70% - 80%
b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank)
i. Annual O&M cost for labor FY 08 - $79,697
ii. Annual O&M cost for non-labor FY 08 - $281,118 (including fuel)
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] 692,000 kWh generated; 560,000 kWh sold
ii. Fuel usage
Diesel [gal] FY 08: 48,000 gallons #2 diesel
Other
iii. Peak Load 108 kW
iv. Average Load 84 kW
v. Minimum Load 50 kW
vi. Efficiency 14.14 kWh/gallon
vii. Future trends Significant 5-10 year growth to support new infrastructure, Trident Seafoods
and economic expansion.
d) Annual heating fuel usage (fill in as applicable)
i. Diesel [gal or MMBtu]
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.
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ii. Electricity [kWh]
iii. Propane [gal or MMBtu]
iv. Coal [tons or MMBtu]
v. Wood [cords, green tons, dry tons]
vi. Other
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)
[kWh or MMBtu/hr]
b) Proposed Annual electricity or heat production (fill in as applicable)
i. Electricity [kWh]
ii. Heat [MMBtu]
c) Proposed Annual fuel Usage (fill in as applicable)
i. Propane [gal or MMBtu]
ii. Coal [tons or MMBtu]
iii. Wood [cords, green tons, dry tons]
iv. Other
4. Project Cost
a) Total capital cost of new system
b) Development cost $45,000,000
c) Annual O&M cost of new system
d) Annual fuel cost
5. Project Benefits
a) Amount of fuel displaced for
i. Electricity 40,000 gallons #2 diesel
ii. Heat
iii. Transportation
b) Price of displaced fuel FY 08: $3.26/gallon FY 09: $4.00/gallon (estimated)
c) Other economic benefits
d) Amount of Alaska public benefits $2.5 million estimated reduction of State PCE and City
subsidies over 10-year life of project
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6. Power Purchase/Sales Price
a) Price for power purchase/sale
7. Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio
Payback
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Appendix C: Grant Budget Form per application form Section 9.
Renewable Energy Fund Grant Round III Grant Budget Form 10-7-09
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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. ) $ $ $
1. Project scoping and contractor
solicitation $90,000 $20,000 In-kind $110,000
2. Detailed energy resource analysis
(exploratory drilling) $2,650,000 $120,000 $2,770,000
3. Conceptual design analysis and cost
estimate (access road and site
analysis for production drilling)
$75,000 $ $75,000
4. Permitting and environmental analysis
(access road and site analysis for
production drilling)
$25,000 $ $25,000
5. Detailed economic and financial
analysis (post-drilling feasibility report) $ $65,000 Cash/In-kind $65,000
6. Conceptual business and operations
plans (post-drilling business plan) $ $45,000 Cash/In-kind $45,000
7. Final report and recommendations $30,000 $ $30,000
$ $ $
$
$
TOTALS 2,870,000 250,000 $3,120,000
Budget Categories:
Direct Labor & Benefits $ $96,000 In-kind $96,000
Travel & Per Diem $ $36,000 Cash $36,000
Equipment $ $30,000 In-kind $30,000
Materials & Supplies $ $6,000 Cash/In-kind $6,000
Contractual Services $2,870,000 $82,000 Cash $2,952,000
Construction Services $ $ $
Other $ $ $
TOTALS $2,870,000 $250,000 $3,120,000
Applications should include a separate worksheet for each project phase (Reconnaissance, Feasibility, Design and Permitting, and
Construction)-
Add additional pages as needed
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Appendix D: Letters demonstrating local support per application form Section 8.
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Appendix E: An electronic version of the entire application on CD per RFA
Section 1.6.
(Disc provided separately)
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Appendix F: Governing Body Resolution or other formal action taken by the applicant’s
governing body or management per RFA Section 1.4
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Grant Application
F. 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 Joe Bereskin
Signature
Title Mayor, City of Akutan
Date 10 November 2009
*The City of Akutan is currently resolving its compliance obligations with the State of Alaska
Public Employees Retirement System (PERS) with respect to certain employee enrollment
dates and classifications. To the best of my knowledge, the City is in compliance with all other
federal and State laws.
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Appendix G: Akutan Geothermal Development Project 2009 Resource
Evaluation (Preliminary Results)
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Report on preliminary results from 2009 resource evaluation, Akutan Geothermal Project
Task 2009-1. Soil and soil gas geochemical survey and geologic reconnaissance.
In May 2009, soil and vegetation samples were collected from the Akutan geothermal area with a hand
trowel from depths up to 6.” Gas samples were collected Akutan geothermal area using a 3 ft. hand probe,
tygon tubing, and evacuated metal cylinders. All samples were submitted to ThermoChem, Inc. for
analysis. Gas samples were analyzed for CO2, He, Ne, Ar, N2 and CH4. Soil and soil vegetation samples
were analyzed for As, B, and Hg.
Mercury (Hg) content in soils is probably the most commonly used geothermal resource indicator.
Mercury is a highly volatile and mobile element that occurs naturally in rocks in very small
concentrations. Geothermal heat volatilizes the Hg in rocks and carries it upward and outward from the
geothermal source, usually in association with CO2. Soil arsenic (As) and Boron (B) are two other
geothermal resource indicators. As and B are carried by geothermal fluids, not gasses, so are commonly
used as a complement to Hg in geothermal exploration studies. Preliminary results fro m the soil
geochemistry survey are shown in Fig. 1.
Figure 1. Soil geochemistry results (As, B, Hg) for the Akutan area. Units are in mg/kg.
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Soil geochemistry surveys for the purpose of locating geothermal resources have many limitations. The
unique geophysical properties of Akutan’s subsurface (muskeg conditions, poorly documented
subsurface microbial processes, complex but poorly mapped structural features, etc.) pose substantial
challenges in streamlining sample collection and in interpretation of soi l geochemical data. Because
geothermal volatilizaton of Hg in rocks usually occurs in association with carbon dioxide (CO2), and
because CO2 has also been used as a geothermal tracer, we chose to collect soil gases from sample sites
on Akutan as well. Helium was also included in this survey due to its well-documented association with
geothermal activity, especially magmatic geothermal activity. Preliminary results are shown in Fig. 2.
Figure 2. Soil gas geochemistry results (CO2 and He) for the Akutan area. Units are in ppm.
Overlaying soil anomalies and soil gas anomalies yields an interesting pattern (Fig 3). This pattern could
be interpreted to reflect two parallel NW-SE trending structures, one of which correlates well with a
mapped fault. This could imply that large-scale NW-trending structures are controlling fluid upwelling on
Akutan.
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Figure 3. Maps showing patterns revealed by overlapping geochemistry anomalies (soil and soil gas) for
the Akutan area, overlaid on the regional geologic map (Richter et al., 1998). Map also shows pertinent
geothermal features.
An additional 48 soil and eight soil gas samples were collected in August and September, 2009 to provide
a greater sample density in the areas of interest outlined in Fig. 3 (above). We a re anticipating the return
of these chemical data in November, 2009.
Task 2009-2. Remote sensing study using thermal infrared (TIR) data from satellite imagery.
For the Akutan geothermal area we searched the entire archive of Landsat 4, Landsat 5 and Landsat 7
images to find available Landsat imagery. The search resulted in about 190 scenes over the study area.
The oldest image was from October 1982 and the most recent image being from June 2009. We went
through the quick look of each of the 190 images to identify which ones were potentially cloud-free over
the study area. The percent cloud cover given in the image metadata file was not a very useful indicator
because some scenes had overall high percent cloud cover but the target area of interest was cloud free.
On the other hand some scenes had overall low percent cloud cover, but the patch of cloud was right over
the study area (Fig. 4).
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Figure 4. Landsat browse image product. (a.) shows an image that has a metadata denoting 65% overall
cloud cover and would typically qualify for ‘unacceptable’ in automated filtered search. However the
Akutan area is clearly cloud free. (b.) shows an image that that has a metadata denoting 14% cloud cover
qualifying for an ‘acceptable’ image. However, the cloud is right on top of target area. Manual check is
therefore merited.
Based on the visual analysis of the quick look product, we identified 36 potentially acceptable scenes
which were amenable to further testing. All the 36 scenes were ordered, downloaded, import ed and
visualized. Excluding the winter images that were completely covered with snow, we finally found 10
scenes that were snow free and cloud free over the target area of interest, which was the Akutan
geothermal area, the valley east of the Akutan volcano.
We first created a spatial subset the entire Landsat scene to extract a smaller scene centered around the
Akutan region. We used the same spatial subset on all 10 images. We then extracted a spectral subset
from each of the images, pulling out only band/channel 6, which is the thermal infrared channel. The
thermal infrared channel on Landsat is a single broad spectral band, spanning a wavelength range of 10.4
to 12.5 m, which is well suited to map thermal anomalies associate with Earth’s land surface
temperatures. The spatial resolution of the Thematic Mapper thermal band on Landsat 5 is 120 meters,
and that on the Enhanced Thematic Mapper on Landsat 7 is 60 meters. The temperature saturation limit
for pixel-integrated temperature for these sensors is about 68 degrees Celsius and the NE T is about 0.2
degrees.
Of the 10 selected images, 4 were from the more recent acquisitions of Landsat 7, where the thermal
infrared channel shows distinct striping due to sensor malfunctioning (Fig. 5). Though these da tasets are
not ideal for processing, they still have some utility in thermal anomaly detection because the missing
lines are not always at the same spot during repeat data acquisition over the same area. Therefore, areas
that may not be scanned in one pass of the satellite, may get scanned in the consecutive passes.
a. b.
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Figure 5. Four relatively snow free and cloud free thermal infrared images of the study area acquired
recently by Landsat 7 thermal infrared sensor. Distinct striping is a result of sensor malfunctioning
causing line drop-outs in the data.
The remaining 6 scenes were either from Landsat 5 or from Landsat 7 at the time when the thermal
sensor was still functioning well. These scenes are shown in Fig. 6.
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Figure 6. Six relatively snow free and cloud free thermal infrared images of the study area acquired by
Landsat 5 and 7 thermal infrared sensors. Brighter tones depict warmer surfaces and lighter tones depict
relatively cooler surfaces. The edifice of the Akutan volcano is clearly visible a s a bright spot on the
middle left of the images.
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Figure 6 was helpful to see the regional thermal setting of the area. The hot crater of the Akutan volcano,
the land water interface, and the geomorphological controls causing differential solar heating in the area
clearly stood out. Hilly areas were particularly affected as the south facing slopes showed up brighter
(higher surface temperatures) than the north facing slopes.
We then digitized a study area master boundary shape file from information provided by the City of
Akutan. Using the extreme extents of this shape file we further subsetted the area to focus only on the
area demarcated as the project area by the City of Akutan. Again, the differential heating on north and
south facing slopes is clearly seen. The valley area, which is mapped as thermally active and containing
several hot springs, showed up on most of these images in a relatively monotonous gray tone, implying
minimal visible thermal contrast, either due to the coarse spatial scale of th e satellite image, or due to the
surface thermal signature being marred by the alluvial/surficial soil cover and tundra tussock vegetation in
the valley area, or due to all the above reasons.
At first we carried out a manually controlled classification of the thermal gray scale image dividing the
image into discrete temperature classes based on thresholds selected by trial-and-error. This simple
processing, also known as density-slicing and color coding, gave reasonable results and a first order
interpretation on where to focus for detail analysis (Fig. 7). We then carried out a high pass filtering on
the thermal infrared images to enhance the high frequency variations, which reflect areas of sudden
changes in temperature values. The filtered product helped to identify the nucleus or the central point of
interest for thermal anomaly detection.
Figure 7. Density-sliced color-coded Landsat Thermal Infrared Image. Gold, yellow, orange and red
denote successively warmer temperatures in the area. Grey tones denote moderate temperatures
associated with valley regions. Green and blue tones correlate largely with lower temperatures
associated primarily with wet coastal areas and water bodies, respectively.
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Using the combined information from the density sliced-color coded image and the filtered image as
input, we selected every point that showed a nucleus of high frequency variation, and isolated at least a
900 meter by 900 meter window around it. These small windows were extracted from all 6 thermal
images of different dates available the area. The advantage of extracting such localized small windows
was that they restricted each subset to a single lithological, geomorphological and topographic class,
which was important to exclude any error arising due to either differential heating or emissivity variations
amongst adjacent land cover classes.
The 900 * 900 meter windows were then stacked (overlaid) and their digital values were summed and
averaged. This mathematical operation on the image stacked helped to further enhance the actual thermal
anomaly from the background area. Two areas that consistently showed up as anomalous on the six image
layer stack are shown in Fig. 8. Incidentally, these two areas have not been reported to have any unusual
thermal activity in the past reports, and therefore, make interesting targets for further investigation. These
areas are definitely amenable to further field tests, such as field based thermal imaging, transect thermal
profiling, point temperature measurements over a longer time at the identified anomaly area and
background area, etc.
Figure 8. Two areas that consistently showed a warmer surface acquired by Landsat 5 and 7 thermal
signature compared to the background on all six thermal images from Landsat are shown in yellow
rectangles on this map.
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Task 2009-3. Deep geophysical surveys of the upper HSBV.
In August and September 2009, a field crew from Western Geosystems, a subsidiary of Slumberger,
conducted a deep geophysical survey of the project area using magneto-telluric (MT) techniques. Telluric
currents are naturally occurring electrical currents within the earth caused by charged particles in the
ionosphere. Variations in local rock type, fluid content, and other subsurface characteristics can alter the
recorded magnetic and telluric patterns; interpretation of the telluric and magnetic variations can therefore
depict subsurface characteristics. Each MT station consists of two pairs of electrodes arranged at right
angles to each other. Approximately 1/3 of the stations included two magnetometers also placed at right
angles to each other. These components were attached to a central receiving station that included a GPS,
an MT unit that recorded the data and a 12-volt battery. Each station collected data overnight and was
moved to a new location the following day. There were always five MT stations running at any given
time, and the 51-station survey took eight people three weeks to complete. A map of the station locations
is presented in Fig. 9.
Figure 9. Map of magneto-telluric (MT) stations deployed during the geophysical survey conducted in
August and September, 2009. Triangles represent station locations, red circles indicate the locations of
hot springs, and the dark red circle indicates the location of the fumarole area. The two small red circles
labeled “Thermal1” and “Thermal2” represent the geographic center of thermal anomalies identified
through thermal infra-red remote sensing surveys (task 2009-2). The black lines (A-1 – A-7) indicate
vertical profile lines (see below)
Magneto-telluric surveys yield 1-D, 2-D and 3-D images of the conductivity (or resistivity) of the
subsurface. The figures below show resistivity, with colder colors indicating more resistive (less
conductive) rocks. Many factors can affect subsurface resistivity, including rock type, temperature, fluid
AEA10-015 Grant Application Page 95 of 97 10/7/2009
content, and the like. Therefore, specific conclusions from MT data require highly trained personnel and
drilling is the only way to absolutely know what is present underground. With that caveat, certain
features of a geothermal field are expected. Hot rock often has high resistivity (blue in the figures below),
and clay commonly has a low resistivity signature (yellows and reds in the figures). A shallow layer of
low resistivity often indicates hydrothermal alteration of bedrock into clay. This not only suggests a
persistent hot water system, but a shallow clay layer can serve as a “cap” for the geothermal system,
trapping hot water below the surface.
Figure 10 is a lengthwise cross section of Hot Springs Bay Valley along the northwestern valley wall.
This shows a concentrated region of high resistivity (blue) below the upper portion of Hot Springs Bay
Valley, with a well-developed low-resistivity layer above and down-valley (green, yellow and red).
Although geological structures associated with these signatures are non-unique, these features could
represent a concentrated zone of hot rock with a capping clay layer. Additionally, a tongue of high
resistivity extends toward the surface below the several of the furthest up -valley hot springs. This could
represent a zone of hot water upwelling toward the surface, with a downwelling zone of colder water just
downstream of that area. That the proposed zone of upwelling occurs below several hot springs further
supports this interpretation. These features can be seen in horizontal slices of the results as well (Figure
11).
Figure 10 – Profile A-1 of electrical resistance along the length of Hot Springs Bay Valley (see inset for
location). Cool colors represent higher resistivity (higher conductivity), warmer colors represent lower
resistivity. The large blue area may represent a heat source, and the green-yellow-red areas may
represent clay alteration.
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Figure 11. Horizontal
slices of the resistivity
measurements at Hot
Springs Bay Valley area
at depths of -100, -500
and -1500 meters below
sea level.
100 meters below sea level
1500 meters below sea
level
500 meters below sea level
AEA10-015 Grant Application Page 97 of 97 10/7/2009
F. 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.
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