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Home My WebLink AboutPilgrim Hot Springs Assessment App Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 1 of 24 9/2/2008 Application Forms and Instructions The following forms and instructions are provided for preparing your application for a Renewable Energy Fund Grant. An electronic version of the Request for Applications (RFA) and the forms are available online at http://www.akenergyauthority.org/RE_Fund.html The following application forms are required to be submitted for a grant recommendation: Grant Application Form GrantApp.doc Application form in MS Word that includes an outline of information required to submit a complete application. Applicants should use the form to assure all information is provided and attach additional information as required. Application Cost Worksheet Costworksheet.doc Summary of Cost information that should be addressed by applicants in preparing their application. Grant Budget Form GrantBudget.xls A detailed grant budget that includes a breakdown of costs by task and a summary of funds available and requested to complete the work for which funds are being requested. Grant Budget Form Instructions GrantBudgetInstr.pdf Instructions for completing the above grant budget form. • If you are applying for grants for more than one project, provide separate application forms for each project. • Multiple phases for the same project may be submitted as one application. • If you are applying for grant funding for more than one phase of a project, provide a plan and grant budget for completion of each phase. • If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are satisfied and funding for an advanced phase is warranted. • If you have additional information or reports you would like the Authority to consider in reviewing your application, either provide an electronic version of the document with your submission or reference a web link where it can be downloaded or reviewed. REMINDER: • Alaska Energy Authority is subject to the Public Records Act, AS 40.25 and materials submitted to the Authority may be subject to disclosure requirements under the act if no statutory exemptions apply. • All applications received will be posted on the Authority web site after final recommendations are made to the legislature. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 2 of 24 9/3/2008 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) University of Alaska, Institute of Northern Engineering, Alaska Center for Energy and Power Type of Entity: Government Entity (University Research Center) Mailing Address P.O. Box 755910, Fairbanks, AK 99775-5910 Physical Address 525 Duckering Building, 309 Tanana Loop Telephone 907-474-5402 Fax 907-474-6686 Email ffjcm1@uaf.edu 1.1 APPLICANT POINT OF CONTACT Name Maggie Griscavage Title Director, UAF Office of Contract & Grant Administration Mailing Address University of Alaska Fairbanks PO Box 757880 109 Administrative Services Center Fairbanks, AK 99775-7880 Telephone 907-474-7301 Fax 907-474-5506 Email fygrcon@uaf.edu 1.2 APPLICANT MINIMUM REQUIREMENTS Please check as appropriate. If you do not to meet the minimum applicant requirements, your application will be rejected. 1.2.1 As an Applicant, we are: (put an X in the appropriate box) An electric utility holding a certificate of public convenience and necessity under AS 42.05, or An independent power producer, or A local government, or XX A governmental entity (which includes tribal councils and housing authorities); Yes 1.2.2. Attached to this application is formal approval and endorsement for its project by its board of directors, executive management, or other governing authority. If 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.) Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 3 of 24 9/3/2008 SECTION 2 – PROJECT SUMMARY Provide a brief 1-2 page overview of your project. 2.1 PROJECT TYPE Describe the type of project you are proposing, (Reconnaissance; Resource Assessment/ Feasibility Analysis/Conceptual Design; Final Design and Permitting; and/or Construction) as well as the kind of renewable energy you intend to use. Refer to Section 1.5 of RFA. The Alaska Center for Energy and Power (ACEP) is proposing to perform an updated Resource Assessment of the Pilgrim Hot Springs geothermal resource for potential power generation and space heating. 2.2 PROJECT DESCRIPTION Provide a one paragraph description of your project. At a minimum include the project location, communities to be served, and who will be involved in the grant project. The Pilgrim Hot Springs geothermal system was extensively studied in the late 1970s and early 1980s with a variety of geological, geochemical, and geophysical studies. Unfortunately the execution of these surveys and interpretation of the data from these earlier studies did not result in a thorough understanding of the area. By example, 6 very closely spaced holes were drilled ranging from depths of 150 ft to 1001ft, passing through a very shallow plume of thermal water that may be flowing in a southerly direction. Chemical analyses from this earlier work are incomplete. It is proposed that the existing Pilgrim wellheads will be reconditioned so that static and flowing temperature logs can be rerun in the existing wells and new water samples collected. Additionally, a Controlled Source Audio Magnetotellurics (CSMAT) survey will be combined with new shallow (+ 200’) temperature-gradient holes drilled away from the cluster of existing wells to try to identify the location of the hotter upflow zone supplying thermal fluid to the shallow aquifer. The goal of this project will ultimately be to drill a deeper hole into the upflow zone to determine its temperature and water chemistry. The deeper hole, and perhaps some of the other holes will also be flowed to obtain water samples for chemical analysis and possibly collect some pressure interference data between the wells. These data, combined with an airborne thermal imaging survey to determine total heat flow to the surface should be adequate to determine total potential output of the system for sustainable long term development. The proposed project is a joint effort between the following partners: • Alaska Center for Energy and Power (ACEP) • US Department of the Interior (USGS/BLM) • The Alaska Energy Authority • The Catholic Bishop of Northern Alaska, (owner of Pilgrim Hot Springs) The project will be led by ACEP. In addition to the project partners, letters of support have been provided by: • Mary’s Igloo Native Council (owners of property adjacent to Pilgrim) • Nome Joint Utilities The project has the potential to affect communities throughout the Seward Peninsula, including Nome, Teller, Brevig Mission, and, if the resource is substantial, Kotzebue. This project, in conjunction with a sister investigation of the greater Seward Peninsula led by the Alaska Village Electric Cooperative (AVEC), is intended as a first leg of a broader geothermal drilling and exploration program. For this reason, this project will include recommendations for next steps in terms of this larger reconnaissance study. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 4 of 24 9/3/2008 2.3 PROJECT BUDGET OVERVIEW Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source of other contributions to the project. Include a project cost summary that includes an estimated total cost through construction. The project budget will support a geophysical assessment of the site, including surveys and conceptual modeling of the geothermal system, and gradient and confirmation drilling of the resources using a slim hole rig owned and operated by the BLM/USGS. Specific surveys to be funded include aerial infrared imaging, resistivity surveys, a soil CO2 survey, water chemistry analysis, well logging and flow tests of existing wells at Pilgrim, and the drilling of four to six 200 ft temperature gradient holes and one 2000 ft confirmation hole. Additionally, an economic feasibility assessment of direct use applications of the resource such as a commercial greenhouse operation will be completed. 2.4 PROJECT BENEFIT Briefly discuss the financial benefits that will result from this project, including an estimate of economic benefits(such as reduced fuel costs) and a description of other benefits to the Alaskan public. In 2007, the Alaska Energy Authority funded a preliminary feasibility analysis of Pilgrim Hot Springs as a potential energy option for Nome. The study was completed by Hattenburg Dilley & Linnell, LLC, a consulting firm specializing in civil, geotechnical, and transportation engineering and the report concluded geothermal power produced at Pilgrim Hot Springs could potentially be an economically viable alternative energy resource for the city. Currently, Nome requires 12 MW of power, which includes 7 MW for a new gold mine currently under development. While there are indications that the Pilgrim geothermal resource could supply 5MW or more to Nome and the region (Teller, Brevig Mission, and even Kotzebue could potentially benefit from development of the Pilgrim Hot Springs site) the actual source of geothermal fluids was never identified. The proposed program is designed to better characterize the resource to encourage private development of the site. The owners of the Pilgrim resource plan to develop a RFP to develop the site if results from this program are encouraging. In addition, the Mary’s Igloo Native Corporation (MINC), a federally recognized Alaska Native Corporation, may be interested in relocating their community to their traditional land adjacent to the Pilgrim site if the resource is developed. This project is also occurring in conjunction with a larger regional geothermal assessment of the Seward Peninsula conducted through the Alaska Village Electric Cooperative (AVEC). If both projects are funded, significant savings will be realized as equipment and personnel can be shared between them. In addition, ACEP views this as the first of a series of statewide geothermal assessments as part of a statewide drilling program conducted in conjunction with the Alaska Energy Authority and the Division of Geologic and Geophysical Surveys (DGGS). The potential benefit/cost ratio of this project is very high despite the cost. This project will build on several prior assessments of the site, and if a significant resource is indentified the possible benefits to the entire region are substantial. In 2007, the Nome Joint Utilities alone spent $2,566,000 in fuel. This number could double as the Rock Creek Gold Mine ramps up production. In addition, Teller and Brevig Mission spent $121,000 in fuel combined, and Kotzebue $2,000,000. If some or all of this fuel can be offset through the development of a geothermal power plant at Pilgrim, the benefits may warrant construction of the facility despite transmission distances. This project represents the first step toward this goal by quantifying how much potential energy is available for sustainable development at the site. 2.5 PROJECT COST AND BENEFIT SUMARY Include a summary of your project’s total costs and benefits below. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 5 of 24 9/3/2008 2.5.1 Total Project Cost (Including estimates through construction.) $ 2,349.751 2.5.2 Grant Funds Requested in this application. $ 2,349,751 2.5.3 Other Funds to be provided (Project match) $ 0 2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3) $ 2,349,751 2.5.5 Estimated Benefit (Savings) $ 0 2.5.6 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.) $2,687,000 potential annual fuel savings in Teller, Brevig, and Nome Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 6 of 24 9/3/2008 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. The PI for this program will be ACEP Director Gwen Holdmann. Ms. Holdmann previously served as PI for the geothermal exploration and development project at Chena Hot Springs Resort. The Chena and Pilgrim geothermal resources are both considered to be part of the Central Alaska Hot Springs Belt and are expected to contain similar hydrothermal systems. Additional co-PIs of the project include Dr. Anupma Prakash, Dr. Roy Mink, and Dr. Jo Mongrain. Dr. Mongrain is a professor in the Petroleum Engineering Department at UAF. Dr. Mongrain has a strong background in petroleum reservoir engineering, specializing in the development of numerical models and will assist with modeling the geothermal system. Dr. Mink formerly headed the U.S. DOE Geothermal Technologies Program, and is currently research faculty for ACEP. He will be responsible for working with Dr. Mongrain on developing a model of the system, and analyzing data. Dr. Prakash is an associate professor at the Geophysical Institute, University of Alaska Fairbanks. Her research expertise is in using remote sensing and geographic information systems techniques for characterizing land surface composition and change in high latitude regions, and she has worked extensively with thermal infrared data (including on the Chena Hot Springs project). Resumes for Ms. Holdmann, Dr. Prakash, Dr. Mink, and Dr. Mongrain are included as attachments. In addition, Tom Buzek will serve as senior representative of the property owner in matters relating to this project. Mr. Buzek is the Business Office and Social Justice Ministry Director for Diocese of Fairbanks. His duties include grant writing, major gifts and dealing with acquisitions, leases and sales of real & personal properties. In addition, Mr. Buzek has12 years experience in mineral, soils & seismic exploration as an oilfield service company representative. 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 project is expected to take 1 year to complete and will occur in 5 phases as outlined below: Phase 1: Geologic, Geochemical and Geophysical Survey to assess the potential of the geothermal system at Pilgrim Hot Springs and site wells prior to drilling program. This Phase will consist of the bulk of the program, and includes the following 6 tasks: Task 1 – Repair wellheads and collect new static and flowing temperature logs on the existing wells (completed in July, 2009) The existing wells are in exceeding poor condition as no maintenance has been performed on them since the drilling program took place. Nonetheless, the existing wells are obvious sources of new data to help better pinpoint the upflow zone, particularly through the use of modern modeling techniques. Before any logs can be run, basic repair work must be completed to the wellheads, and even then it is likely that several are not salvageable and should be plugged and abandoned. All of the wellheads will need to be pulled, and some replaced. At a minimum, valve gates and stems need to be greased and repacked and general maintenance performed. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 7 of 24 9/3/2008 This may not require any welding, as all wellheads are currently flanged and bolted. If it is determined some of the wellheads need to be replaced, new wellheads will be assembled ahead of time, including a gate valve and a removable stand pipe for instrumentation, considering the artesian environment. Extension casing may be required for the wells which are sinking into the ground. According to the original reports, none of the wells flow at greater than 100gpm artesian, so it is possible the wells may not even need to be pumped down to rework the wellheads. However, a portable gas pump has been included in the budget for this task. Figure 1. Well PS-1 at Pilgrim Hot Springs Figure 2. Well PS-3 at Pilgrim Hot Springs After the wellheads are repaired, temperature logs will be completed on the wells. K10 Kuster high resolution pressure and temperature memory tools will be used if the wellheads can be opened; alternatively, preliminary surveys can be made with a small 8in long 1/2in diameter RTD temperature measuring device. It would also be desirable to run pressure surveys (such as a pressure transient and flow test) on the wells using the Kuster gauges, once the wellheads are reworked for safe and easy access. In addition to the two gauges included in this budget, 3 additional ones may be borrowed from the Chena Hot Springs project. PS-1, PS-2, and PS-3 are of particular interest as they are the hottest wells based on the original reports. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 8 of 24 9/3/2008 Task 2 – Conduct a soil CO2 study (completed in July, 2009) The unique geophysical properties of Alaska’s subsurface (permafrost conditions, complex but poorly mapped structural features, etc.) pose substantial challenges in interpretation of geophysical data. Geochemical data is therefore a necessary complement to geophysical investigations. Deposits of geothermal ‘tracer’ elements in soils and/or emissions of moderate to low solubility gases may be one of the few near-surface signals from geothermal systems in Alaska. For this study, detailed geochemical surveys will be conducted within the 2 km2 “thaw zone” surrounding the hot springs area. Approximately 200 soil samples will be collected in a grid pattern using a soil and/or ice auger. Additionally or alternatively, evacuated metal cylinders will be installed in a grid pattern to collect soil gas samples from the area of interest. All samples will be submitted to ThermoChem, Inc. for geothermal ‘tracer’ element analysis (e.g., As, CO2, He, Rn222, CH4). Task 3 – Conduct a CSAMT survey (completed in July, 2009) A ground-based Controlled Source Audio Frequency Magnetotelluric (CSAMT) survey will be conducted for the purpose of imaging the subsurface in the Pilgrim area to identify permeable features below the valley fill in the proximity of the hot springs. These data will be interpreted using 2- and 3-dimensional inversion algorithms to image the subsurface and will be used to identify potential drilling targets. A geothermal reservoir typically has a high level of porosity and permeability and exhibits relatively high internal temperatures. These properties lower the electrical resistivity of the reservoir, which is therefore detectable using electromagnetic geophysics methods. The primary purpose of the CSAMT survey will be to pinpoint the upflow zone of the thermal fluids in conjunction with the other survey techniques included as part of this Phase. This will be accomplished using a V8 Wireless Data Acquisition System SSEM from Phoenix Geophysics. The survey will require 3 individuals and 2 weeks field time at the site, plus data processing. An example of a planar image from a CS and NSAMT survey conducted during the geothermal reconnaissance program at Chena Hot Springs is included below. Figure 3. Planar AMT image of Chena Hot Springs Resort Task 4 – Conduct a shallow temperature probe survey A shallow temperature probe survey will be conducted to complement other ground-based Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 9 of 24 9/3/2008 survey techniques, and a shallow temperature map of the area completed. This will be combined with the ground-truthing planned for Task 5. We will assemble materials and tools needed for the temperature survey based on a design from the University of Nevada. These include 2.2 meter long sections (approximately 7 foot) of ¼” steel pipe for probes and RTD (Resistance Temperature Detector) temperature measuring devices. The probes will be installed 1 to 2 meters into the ground and temperature recorded after time is allowed for equilibration. Task 5 – Thermal Infrared Mapping and Analysis around Pilgrim Hot Springs For any geothermal development in this area, a systematic survey and analysis on the extent, nature, magnitude of the thermal anomaly, and a quantitative estimate of the heat flux beyond the natural radiative heat of the Earth and Sun is required and is particularly useful in determining the extent to which the resource can be exploited for sustainable power generation or direct use. To achieve this goal, specific objectives and subtasks that will be carried out include: 1. Use available thermal infrared images from moderate resolution Earth Observing Satellites, such as Landsat and ASTER to generate a land surface temperature and emissivity map of the study area at a regional 1:50,000 scale. (Note: Archived Landsat data are available at no cost from US Geological Survey. Investigators Prakash, Dehn and Dean have contacts with the ASTER science team and will make all efforts to get archived and potentially new ASTER data over the study area at no additional cost to the project). 2. Use available optical data from archived Landsat images, potentially new ASTER and ALOS images, and available archived CIR air photos to create a landcover classification map at a regional 1:50,000 scale and in parts at 1:10,000 scale. This landcover map will serve as the base map to understand the landuse practice in the study area. ALOS is a Japanese satellite and data from this mission are acquired and distributed by the Alaska Satellite Facility at UAF. The investigators are approved ALOS data users and may be able to acquire new ALOS imagery over the study area at no additional cost to the project. The investigators will also use old U2 color infrared airborne images from the late 70s over the study area (Figure 1) to characterize the landscape at a better spatial scale. Figure 4. Color Infrared (CIR) image from late 70s showing part of the Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 10 of 24 9/3/2008 proposed study area. Pilgrim thermal springs are in the center, and an old air strip is in the lower part of the figure. Various tones of red are indicative of different vegetation types that show a pattern reflective of underlying geology. 3. Acquire airborne thermal infrared images in springtime and in late summer/early fall at local reconnaissance and detail survey scale. The local reconnaissance scale survey will be carried out to provide thermal infrared images at approximately 4m spatial resolution and will cover an area of about 3km*5km centered around the hot spring. The detail survey will be carried out by flying a lower height of about 750m to provide thermal infrared images at approximately 1m spatial resolution. Acquiring the data at two different times will help to reduce uncertainties in analysis introduced due to seasonal effects. The thermal infrared data will be acquired using a FLIR® Systems Automation Series ThermaCam A320 mounted on a Cessna Skywagon 185, flown by Tom George of Terra Terpret, Inc. Along with the thermal images, a small optical camera will be mounted on the plane to acquire concurrent optical images that will help to further characterize the terrain and help with thermal image interpretation. A similar setup used in for a thermal survey over Chena Hot Springs, Alaska in 2004-2005 gave excellent results (see Figure 5 below). Figure 5. Left: Air photo mosaic of the Chena Hotsprings area. The pools are in the foreground, and are centered on where the greatest surface expression of heat is visible in the thermal infrared images. Right: Thermal infrared image of approximately corresponding area. The roofs of buildings and snowfall reflect sunlight in the 15-20C range. Differing vegetation shows different temperatures due to the difference in emissivity of various plants and the bare ground. 4. Process airborne thermal infrared images. The airborne campaign will result in acquisition of hundreds of thermal infrared images, with each image frame containing 320 x 240 pixels. The individual image frames will be georectified and mosaiced to create a near seamless thermal mosaic of the study area. Again, the mosaic will be created for both the local reconnaissance scale and the detail survey scale images. Pixel integrated temperatures over a broad 7.5-13 μm range (spectral range of the thermal instrument) will be calculated for each image pixel, after correcting for atmospheric conditions (humidity and temperature) and range (distance to the target). A similar mosaic will be created for the airborne optical images to facilitate direct comparison of thermal data with the optical data. The image Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 11 of 24 9/3/2008 mosaics from spring will be compared with image mosaics from late summer/early Fall to account for seasonal affects in the data. Thermally anomalous pixels will be identified using statistical analysis and thresholding to separate anomalous pixels from the background pixels. For each thermally anomalous pixel the relative heat loss in watts will be calculated after correcting for the background temperature, measuring only flux beyond the natural radiative heat of the Earth and Sun. An error analysis will be carried out to account for errors introduced by the instrument, atmosphere, aircraft orientation, and the general terrain. 5. Field data will be collected concurrent to the airborne data acquisition. Field data collection will involve (a) taking differential GPS measurements of specific targets to serve as ground control points for georectifying airborne data (b) laying out new calibrated ground control points, such as mounted space blankets (already available to the investigators, and have been tested to give excellent results in studies) if sufficient identifiable natural targets are not available in the field (c) field mapping of typical landcover classes to assist in creating a training set for carrying out landcover classification of airborne and satellite borne optical data (d) field based temperature and humidity measurements at selected locations and times (e) field based thermal imagery collection using a FLIR® Systems ThermaCam S40 (also available with the investigators). Field data will also help in error analysis and validation of results. Task 6 – Synthesis of new and old datasets and development of a conceptual model of the geothermal system based on Tasks 1-5 in order to site gradient and confirmation holes in Phase 2 (Completed in August, 2009) Both investigators Ken Dean and Roy Mink were involved with the initial study of the Pilgrim thermal spring area in the early 80s. Along with other researchers, they will try to resurrect old archived data from this study, both published and unpublished, and apply this information to new geologic, geochemical, and geophysical interpretation techniques. Where possible, our team will compare the new findings to the earlier findings. This task has the potential to show if the thermal system has been active or not and if there are radical changes of significance. All data will ultimately be used to develop a conceptual model for the site in order to site the gradient and confirmation holes planned for Phase 2. Phase 2: Conduct gradient and confirmation hole drilling program (completed in October, 2009) Ultimately, in order to determine total energy (for heat and power generation) which can be sustainably extracted from the reservoir and create an optimal plan for long-term development of the resource, the upflow zone will need to be definitively identified and flow tests conducted. This can only be accomplished through a new drilling program, however we believe the chances of success are very high. To conduct the drilling portion of this project, we have contracted with the United States Department of the Interior (DOI) through their Alaska Rural Energy Project (AREP). AREP is a collaborative effort between the Bureau of Land Management (BLM) and the United States Geological Survey (USGS) that provides the scientific and technical expertise required to identify and assess shallow subsurface resources, such as coalbed methane and geothermal, with the potential to serve as sources of alternative energy for rural communities in Alaska. The project, by design, partners with other federal, state, local, and private agencies to optimize the available resources required to efficiently and effectively conduct Alaska rural energy investigations. In 2004, the AREP purchased a portable Christensen CS-1000 drilling and coring rig to conduct shallow (<2500 ft) exploratory drilling operations in remote locations. The rig was used to conduct coalbed methane (CBM) drilling and testing procedures in Fort Yukon (2004), Franklin Bluffs (2005) and Wainwright, Alaska (2007). In 2008, the project transported a larger truck- Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 12 of 24 9/3/2008 mounted drilling rig to Wainwright to conduct CBM reservoir characterization and production testing. This allowed the Christensen rig and associated equipment to be transported to Anchorage where it is currently stored at the BLM Campbell Tract ware yard. The rig is therefore available for other rural energy project use starting in 2009. The AREP strongly supports the efforts of the state of Alaska to identify and assess alternative sources of energy for rural communities through the Alaska Renewable Energy Fund, and their letter of interest in participating in this project is included as an attachment. The primary AREP contribution would be to make available the equipment and technical expertise required to conduct exploratory drilling operations at the site, as per their quote (included as an attachment). The drilling program will be developed from results obtained during Phase 1. It will likely include drilling four to six 200 ft temperature gradient holes to try and delineate the upflow zone, and drilling one 2000 ft confirmation hole based on the results from the slim hole drilling program to try to verify the conceptual model developed in Phase 1. After the drilling program is complete, water samples will be collected for chemical analysis and flow and pressure interference testing between the wells will be conducted (see Phase 1 Task 1 for more explanation). Phase 3: Development of a numerical reservoir model of the geothermal system for potential power production (completed in December, 2009) A numerical reservoir model of the Pilgrim geothermal system will be created. This model is required to truly understand the reservoir dynamics and adopt an appropriate long-term production scenario. Data from all prior drilling programs and testing will be needed to characterize this model to effectively predict future performance, temperature, pressure and flow data relating to the deeper system. This phase will be led by Dr. Jo Mongrain, a professor in the Petroleum Engineering Department at the University of Alaska Fairbanks. Dr. Mongrain has a strong background in petroleum reservoir engineering, specializing in the development of numerical models and has worked frequently within multi-disciplinary geoscience teams. Phase 4: Direct use economic assessment (completed in December, 2009) The options for direct use applications including space heating and greenhouse food production will be assessed. In particular, the technical and economic criteria for a commercial greenhouse growing operation will be studied. The geothermal greenhouse operation at Chena Hot Springs will be used as a model for potential development at Pilgrim Hot Springs. This work will be completed by Energy Economist Markus Mager from ACEP, who completed the analysis of the Chena project. Phase 5: Develop Plan for State Drilling Program (completed in December, 2009) This project has the potential to affect communities throughout the region, including Nome, Teller, Brevig Mission, and, if the resource is substantial, Kotzebue. For this reason, this project, in conjunction with a sister investigation of the greater Seward Peninsula led by the Alaska Village Electric Cooperative (AVEC), is intended as a first leg of a broader geothermal drilling and exploration program. Phase 5 will be conducted in partnership with the Alaska Energy Authority (see attached letter of commitment) and will develop recommendations for next steps in terms of this larger statewide reconnaissance study. 3.3 Project Milestones Define key tasks and decision points in your project and a schedule for achieving them. Project milestones include completion of each of the five proposed phases of the project. A report with preliminary findings on the Pilgrim site will be released at the end of September 2009, and the final project report including interpretation of results in relation to other Central Alaskan Hot Springs Belt sites will be completed in the first Quarter of 2010. A separate paper analyzing options for direct use at the site will be completed in December, 2009. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 13 of 24 9/3/2008 3.4 Project Resources Describe the personnel, contractors, equipment, and services you will use to accomplish the project. Include any partnerships or commitments with other entities you have or anticipate will be needed to complete your project. Describe any existing contracts and the selection process you may use for major equipment purchases or contracts. Include brief resumes and references for known, key personnel, contractors, and suppliers as an attachment to your application. Project personnel – In addition to the project managers listed in section 3.1, the program will retain the services of contractor Dick Benoit of Sustainable Solutions as drilling program manager, and contractor Amanda Kolker to assist with geologic site assessment. A team of researchers from the University of Alaska Geophysical Institute under the direction of co-PI Anupma Prakash will also conduct a remote sensing study as part of Phase I, Task 1. This includes Dr. Jon Dehn and Dr. Ken Dean. Both participated in the survey at Chena Hot Springs, and their CV’s are included as attachments. Two graduate students are included in the budget, one to participate in the geophysical studies (through the Geophysical Institute) and one who will work with Dr. Mongrain on the numerical modeling. An engineering technician will lead the CSAMT, and an engineer from Phoenix Geophysics will also be employed for a period of 1 week to set up equipment. Local hire will be used for both the CSAMT survey and the drilling program. Markus Mager, an Energy Economist at ACEP who has completed an assessment of the Chena Hot Springs Greenhouse project, is responsible for Phase 4. A drilling crew from DOI will be used to perform Phase 2. Project equipment – The project will use a CS1000 P6 core rig jointly owned by USGS and BLM. An information sheet on the rig is attached. The rig is trailer mounted and can be flown into Nome via a commercial flight and trucked to Pilgrim. CSAMT equipment will be purchased for this project, as it will be used at other resource assessment sites around the state. Specifically, 2 broadband MT instruments capable of making shallow measurements to depths of 0-20 km such as the Phoenix V5-2000 system will be used. The thermal infrared data will be acquired using a FLIR® Systems Automation Series ThermaCam A320 mounted on a Cessna Skywagon 185, flown by Tom George of Terra Terpret, Inc. An Infrared gas analyzer (IGRA) will be required for the soil geochemical surveys, and shallow temperature probes will be built as part of Phase 1. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Quarterly reports will be prepared and submitted to the Alaska Energy Authority. An interim report will be completed in September, 2009, and a final report will be completed in March, 2010. 3.6 Project Risk Discuss potential problems and how you would address them. The project involves standard assessment and exploration techniques minimizing any perceived risk. Project delays may occur related to weather conditions during field activities including the aerial infrared and CSAMT geophysical surveys, and the drilling program. Scheduling field activities during the summer months will mitigate most expected problems related to field work. The precise cost for drilling operations is also unknown; however it will not exceed the budget proposed here. If cost overruns occur, the total footage may be reduced. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 14 of 24 9/3/2008 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 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 for completion of each phase. • If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are satisfied and funding for an advanced phase is warranted. 4.1 Proposed Energy Resource Describe the potential extent/amount of the energy resource that is available. Discuss the pros and cons of your proposed energy resource vs. other alternatives that may be available for the market to be served by your project. As a resource assessment, the objective of this project is to determine the potential extent and amount of the energy resource that is available. Specifically, the Pilgrim project is designed to provide information on the documented geothermal resource for potential future development of the resource for power generation and/or greenhouse food production. Geothermal resource development has been demonstrated at other sites in Alaska (Chena Hot Springs), and new technology has resulted in power production from lower temperature resources such as expected to exist at Pilgrim Hot Springs. Unlike most renewable energy systems, geothermal energy can supply baseload power and therefore is available 24 hours a day and 365 days a year. In addition to power generation, it is also a viable resource to replace conventional fossil fuel for space heating. 4.2 Existing Energy System 4.2.1 Basic configuration of Existing Energy System Briefly discuss the basic configuration of the existing energy system. Include information about the number, size, age, efficiency, and type of generation. There is no existing energy system at Pilgrim Hot Springs. All communities on the Seward Peninsula use diesel gen-sets for primary power generation and fuel oil for heating. 4.2.2 Existing Energy Resources Used Briefly discuss your understanding of the existing energy resources. Include a brief discussion of any impact the project may have on existing energy infrastructure and resources. The existing energy resource is geothermal produced from a moderate temperature geothermal reservoir. This project will not have any direct impact on the existing energy infrastructure, but information learned as part of this program will serve to make the geothermal power plant at Chena more sustainable. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. If developed, the existing energy market for the geothermal power plant would be the community of Nome, and possibly other communities on the Seward Peninsula. In 2007, the Nome Joint Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 15 of 24 9/3/2008 Utilities alone spent $2,566,000 in fuel. This number could double as the Rock Creek gold mine ramps up production. In addition, Teller and Brevig Mission spent $121,000 in fuel combined, and Kotzebue $2,000,000. In order to supply power to Nome, 37 miles of power lines would be required along the existing road system. Two alternate routes through Grand Central and Mosquito Pass would reduce the distance by approximately 10 miles, but the route is not road accessible. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 16 of 24 9/3/2008 4.3 Proposed System Include information necessary to describe the system you are intending to develop and address potential system design, land ownership, permits, and environmental issues. 4.3.1 System Design Provide the following information for the proposed renewable energy system: • A description of renewable energy technology specific to project location • Optimum installed capacity • Anticipated capacity factor • Anticipated annual generation • Anticipated barriers • Basic integration concept • Delivery methods The Pilgrim geothermal system is classified as a moderate temperature resource, with maximum temperatures from geothermometers estimated at ~150 °C. Steam is not expected to be produced in the system, and as such a binary power plant such as the one installed at Chena Hot Springs will be required. The plant at Chena operates off 74 °C fluid and generates ~400 kW of electric power. 4.3.2 Land Ownership Identify potential land ownership issues, including whether site owners have agreed to the project or how you intend to approach land ownership and access issues. The Pilgrim Hot Springs site is patented ground with both the surface and subsurface owned by the Catholic Bishop of Northern Alaska. The property is a 320 acre in holding surrounded by property owned by the Mary’s Igloo Native Corporation. Both owners own both the surface and subsurface resources. 4.3.3 Permits Provide the following information as it may relate to permitting and how you intend to address outstanding permit issues. • List of applicable permits • Anticipated permitting timeline • Identify and discussion of potential barriers The following permit requirements may apply to the drilling portion of this project. $10,000 is included in the project budget for costs associated with permitting. The Alaskan Guidelines for Exploratory Operations is found in Article 3, Chapter 11 AAC 87.010 to AAC 87.290. This section outlines guidelines for the exploration of geothermal systems and the drilling of all geothermal wells in the state. It is important to note that resources with a temperature of less than 120 °C (such as what is expected at Pilgrim) are not defined as geothermal but rather permitted as a water resource under Alaska state statutes. • Application for geothermal exploration drilling. As per Alaska Statutes Sec. 41.06.050, ‘an operator shall file an application with the commissioner for permission to drill the well’. • Drilling Permit. As per Article 3, Chapter 11 AAC 87.070 ‘a drilling permit is required before the drilling, redrilling, or deepening of any well and before the reentry of an abandoned well’. This permit must include plans for well identification, casing, cementing, and blowout prevention. • Drilling Bond. As per Article 3, Chapter 11 AAC 87.080 ‘an applicant for a drilling permit shall file an indemnity bond for each well drilled, redrilled, or deepened, or a statewide Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 17 of 24 9/3/2008 bond for the drilling, redrilling, or deepening of one or more wells on the same lease or unit area. The bond must be in the amount the commissioner determines necessary to ensure compliance with applicable provisions of this chapter’. • Plan for abandonment of geothermal exploration well. As per Article 3, Chapter 11 AAC 87.030, the applicant must provide the state with a plan for exploration well abandonment done in ‘such a manner that will protect freshwater aquifers and prevent subsurface interzonal migration of fluids and surface leakage’. • Survey Monument Requirement. As per Article 3, Chapter 11 AAC 82.640, ‘a survey or monumentation of lease boundaries may be required by the commissioner to determine compliance with lease or to determine the extent of possible damage to adjacent properties from lease operations’. • Environmental Impact Assessment. It is not anticipated that this project would have significant environmental impact, however an Environmental Assessment for the drilling phase of this operation will be required (water discharge, total project footprint). The State of Alaska Environmental Statute pertaining to exploration is AS 46.15.010. Assessment must be approved by the Department of Environmental Conservation Permitting Office and/or the Commissioner’s Office. 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 It is not anticipated that this project would have significant environmental impact. 4.4 Proposed New System Costs (Total Estimated Costs and proposed Revenues) The level of cost information provided will vary according to the phase of funding requested and any previous work the applicant may have done on the project. Applicants must reference the source of their cost data. For example: Applicants Records or Analysis, Industry Standards, Consultant or Manufacturer’s estimates. 4.4.1 Project Development Cost Provide detailed project cost information based on your current knowledge and understanding of the project. Cost information should include the following: • Total anticipated project cost, and cost for this phase • Requested grant funding • Applicant matching funds – loans, capital contributions, in-kind • Identification of other funding sources • Projected capital cost of proposed renewable energy system • Projected development cost of proposed renewable energy system As part of the 2007 Pilgrim Preliminary Resource Report, Hattenburg, Dilley & Linnell, LLC estimated 5 MW at Pilgrim could be developed for $29-51 million. This included $3.2-7 million for an exploration program, a portion of which will be covered under this assessment. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 18 of 24 9/3/2008 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. • Total anticipated project cost for this phase • Requested grant funding N/A 4.4.3 Power Purchase/Sale The power purchase/sale information should include the following: • Identification of potential power buyer(s)/customer(s) • Potential power purchase/sales price - at a minimum indicate a price range • Proposed rate of return from grant-funded project At this time, there are no power purchase agreements in place for this project. A letter from Nome Joint Utilities is included in the attachments. 4.4.4 Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. N/A Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 19 of 24 9/3/2008 4.4.5 Business Plan 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. N/A 4.4.6 Analysis and Recommendations Provide information about the economic analysis and the proposed project. Discuss your recommendation for additional project development work. N/A 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 avoided cost of ownership) • Potential additional annual incentives (i.e. tax credits) • Potential additional annual revenue streams (i.e. green tag sales or other renewable energy subsidies or programs that might be available) • Discuss the non-economic public benefits to Alaskans over the lifetime of the project The potential benefit/cost ratio of this project is very high despite the cost. This project will build on several prior assessments of the site, and if a significant resource is indentified the possible benefits to the entire region are substantial. In 2007, the Nome Joint Utilities alone spent $2,566,000 in fuel. This number could double as the Rock Creek Gold Mine ramps up production. In addition, Teller and Brevig Mission spent $121,000 in fuel combined, and Kotzebue $2,000,000. If some or all of this fuel can be offset through the development of a geothermal power plant at Pilgrim, the benefits may warrant construction of the facility despite transmission distances. This project represents the first step toward this goal by quantifying how much potential energy is available for sustainable development at the site. SECTION 6 – GRANT BUDGET Tell us how much your total project costs. Include any investments to date and funding sources, how much is requested in grant funds, and additional investments you will make as an applicant. Include an estimate of budget costs by tasks using the form - GrantBudget.xls Provide a narrative summary regarding funding sources and your financial commitment to the project. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 20 of 24 9/3/2008 Costs below are estimated based on current pricing and the statement of work included with this proposal, “Pilgrim Hot Springs Geothermal Assessment and Confirmation Project.” Salaries Senior Personnel. Funding to support a total of 174 hours (roughly 1 month) is requested for the Principal Investigator, Gwen Holdmann, of this project. Per UAF policy, the PI receives leave benefits at a rate of 20.7%, calculated on salary, and salaries increase by 3% annually. Funding to support 347 hours (2 months) is requested for co-PI Mongrain. Per UAF policy, faculty receive leave benefits at a rate of 1.5%, calculated on salary, and salaries increase by 4.5% annually. Anupma Prakash is an associate professor at the Department of Geology and Geophysics; and the Geophysical Institute, University of Alaska Fairbanks. Her research expertise is in using remote sensing and geographic information systems (GIS) techniques for characterizing land surface composition and change in high latitude regions. She has worked extensively with thermal infrared data (acquisition, processing and analysis). She will be responsible for overall coordination of the thermal infrared survey task, liaison with the rest of the project team and for working with Dehn, Dean and the graduate student to ensure that the identified tasks are completed and reported in a timely manner. A one month time (173.3hrs) at $42.72/hr is budgeted for her involvement with the project. Jon Dehn is an associate research professor at the Geophysical Institute, University of Alaska Fairbanks. His expertise is in thermal infrared remote sensing, especially its application to investigating hot targets such as active volcanoes and thermal springs. Dehn led the thermal infrared campaign over the Chena Hot Springs Area in 2004-2005 and has worked with Tom George, the pilot identified to acquire the thermal images for the Pilgrim project. Dehn will work with Prakash and Dean to supervise the airborne data acquisition and processing and will also participate in the field work. A one month time (173.3hrs) at $39.74/hr is budgeted for his involvement with the project. Ken Dean is a senior research professor and the chair of the remote sensing group at the Geophysical Institute, University of Alaska Fairbanks. He brings extensive experience in use of thermal infrared data for geologic remote sensing. Dean carried out ground based thermal infrared monitoring of the Pilgrim hot springs in the early 80s and has access to archived data and knowledge that will be very useful for this project. Dean will work closely with Dehn, Prakash and the graduate student on data acquisition planning, data processing and interpretation, and generating the final report. A one month time (173.3hrs) at $51.46/hr is budgeted for his involvement with the project. A leave reserve of 1.5% and an inflation increase of 4.5% is included for senior personnel. Total cost to Project: $157,327. Other Personnel. Funding to support 120 hours of salary is requested for Roy Mink, who, as adjunct faculty, will contribute to project management tasks. Funds to support Schmid, a research associate, who will contribute to all field activities and instrumentation operation. Funds to support an energy economist (Marger), who will analyze all data with the aim of determining cost efficiency for a potential energy system, are requested. Per UAF policy, exempt staff receive leave benefits at a rate of 20.7% and classified staff at a rate of 21.4%, calculated on salary. Total cost to Project: $24,028. Support is requested for one Masters level Graduate Student Research Assistant for one year. Students work 20 hours per week during the academic year (760) and 40 hours per Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 21 of 24 9/3/2008 week during the summer (560), for a total of 1320 hours. A graduate student (a PhD student prior to advancement to candidacy) has been budgeted for 2009 (760 hrs academic year and 560hrs summer) at $17.23/hr, to carry out intense image processing and analysis required to handle the large volume of image data collected from the airborne campaigns, and to assist with the 2 planned field works. Salaries include a 3.0% inflation increase for students each year. Total cost to project: $51,996. Fringe Benefits Staff benefits are applied according to UAF’s benefit rates for FY08, which are negotiated with the Office of Naval Research (ONR) annually. Rates are 48.7% for staff salaries, 32.1% for faculty, 9.6% for adjunct faculty, and 7.9% for graduate students (summers only). Total cost to Project: $31,324. Permanent Equipment Funding is requested for equipment described below. The proposed research is based on use of this equipment, which is not available at UAF. Current price quotes are attached for all. 1 Phoenix V5 2000 unit, and set-up costs necessary for collecting ground data in the field sites $255,249 2 Kuster gauges, necessary for collecting temperature data from project boreholes $23,000 Travel Domestic. Travel funds are requested to support field activities, planning meetings, and conference participation for dissemination. All airfare costs are estimated based on current ticket pricing and round-trip fares. Per diem is estimated based on current US Government figures for each location and on UA Board of Regents policy. See the table below for detail. Total cost to Project: $39,052 Foreign. Travel funds are requested to support travel to Ontario, Canada, where research staff will be trained in the use of the Phoenix instrumentation. Costs are estimated based on current ticket pricing and round-trip fares. Per diem is estimated based on current US Government figures and UA Board of Regents policy. See the table below for detail. Total cost to Project: $3,609. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 22 of 24 9/3/2008 1. Domestic Travel Description Yr 1 Item Cost Airfare Fai to Nome/Pilgrim 8 600 Meals pilgrim meals -120 days 120 44 Meals pilgrim camping - no cost Car Rental truck - Nome to Pilgrim - 114/day/120 days 120 114 Airfare Fai to Nome/Teller 1 600 Meals Teller trip meals 1 44 Lodging one night in Nome 1130 Airfare RT to GRC 2009, Reno NZ 2 1600 Meals RT to GRC 2009, Reno NZ 10 49 Lodging RT to GRC 2009, Reno NZ 10 110 Airfare RT to Stanford, CA 2 1000 Meals RT to Stanford, CA 10 61 Lodging RT to Stanford, CA 10 185 Taxi all conf. travel 4 100 Airfare RT FAI/Nome 4 650 Meals Pilgrim Springs (Nome, AK)12 44 Lodging Pilgrim Springs (Nome, AK)12 120 Car Rental Pilgrim Springs (Nome, AK)6 50 $1,850 $610 $2,000 Domestic $39,052 $300 $1,440 $528 $2,600 $400 $490 $1,100 $3,200 $130 $600 $13,680 $0 $5,280 $4,800 $44 2. Foreign Travel Description Yr 1 Item Cost Airfare RT to Ontario, Canada 1 1400 Meals Ontario, CA 7 105 Lodging Ontario, CA 7 182 Car Rental Ontario, CA 1 200 $1,400 $735 $1,274 $200 Foreign $3,609 Other Direct Costs Materials & Supplies. A total of $116,307 is requested for supplies, estimated to the categories below. TOTAL COMMODITIES $116,307 2 shallow temp measurement probe $10,000 flow pump $2,942 honda generator (to run equipment) $1,865 soil gas sampling supplies $5,000 phoenix software (4014) $9,000 laptop for field work $2,500 modeling software (4014) $25,000 reel & line, well repair supplies, batteries & cables $60,000 Publication & Dissemination. A total of $2,600 is requested to fund publication and other costs associated with research results dissemination. Services. Funds of $10,000 are requested to cover the cost of permitting for field sites. Consultant Services. Funds of $10,000 are requested to support participation of the Fairbanks Diocese in the project planning process. Funds of $20,000 are requested to hire local Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 23 of 24 9/3/2008 personnel to assist with installing equipment at the field site. Funds of $15,740 are requested to support a consulting geologist, who will contribute to analyses and mapping efforts. Funds of $14,670 are requested to support work by a geothermal consultant, who will contribute to analyses and report preparation. Project Services. A modest amount of $100 is budgeted to cover communication costs; $300 to cover costs of digital data backup required for the project; $600 to cover publication costs; and $1500 to cover software annual license fees. 2 seats each (one for the grad student and one for the investigator) of three software packages required for georectification, image mosaicing, processing and data integration (ArcGIS; Erdas Imagine; Leica Photogrammetry Suite) are budgeted at the university prorated license rate of $250 each per license. Total cost to project: $116,700. Sample analysis. Funds of $10,000 are requested to support water sample analyses. Subawards. Funds of $1.5 million are requested to support drilling costs for this project. Drilling will be under the direction of Art Clark in the US Department of the Interior. A letter of commitmen description of work, and budget are attached in the appendix. Other. UAF requires that any graduate student supported by a research project over the course o the academic year also receive tuition support and health insurance costs for the life of the project Costs are $11,070 (tuition) and $1,188 (insurance) per year per student, and a total of $1,868 in student fees are requested. Total cost to project: $24,008. Indirect Costs Facilities and Administrative (F&A) Costs are negotiated with the Office of Naval Research and for research are calculated at 45.1% of the Modified Total Direct Costs (MTDC). MTDC includes Total Direct Costs minus tuition and other student support, subaward amounts over $25,000, participant support costs, and equipment. A copy of the agreement is available at: http://www.alaska.edu/controller/cost-analysis/negotiated_agreements.html This project, includes Facilities and Administrative costs, or institutional costs, calculated based on the rate set by the existing Memorandum of Agreement between UA and the State of Alaska, 25% of the MTDC. Total cost to project: $110,797. BUDGET INFORMATIONBUDGET SUMMARY:Milestone or Task Federal Funds State FundsLocal Match Funds (Cash)Local Match Funds (In‐Kind) Other Funds TOTALS1 instrumenting the shallow system $624,153.00 $624,153.002 collect data on deep system $1,549,702.50 $1,549,702.503 additional data collection $113,522.74 $113,522.744 Prelim report $8,455.00 $8,455.005 Final Report $53,917.50 $53,917.506 $2,349,750.74 $2,349,750.74Milestone # or Task #BUDGET CATAGORIES:123456TOTALSDirect Labor and Benefits $94,241.20 $9,232.25 $67,333.58 $8,455.00 $11,078.50 $190,340.53Travel, Meals, or Per Diem $46,166.20 $0.00 $0.00 $0.00 $13,244.50 $59,410.70Equipment $291,404.20 $0.00 $0.00 $0.00 $0.00 $291,404.20Supplies $104,462.20 $0.00 $32,102.58 $0.00 $0.00 $136,564.78Contractual Services $87,879.20 $1,540,470.25 $14,086.58 $0.00 $29,594.50 $1,672,030.53Construction Services $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Other Direct Costs $0.00 $0.00 $0.00 $0.00 $0.00 $0.00TOTAL DIRECT CHARGES $624,153.00 $1,549,702.50 $113,522.74 $8,455.00 $53,917.50 $0.00 $2,349,750.74 Kuster Co. 2900 E. 29th Street Long Beach, CA USA 90806 Telephone 562-595-0661 Fax 562-426-7897 E-Mail: johnjacobson@kusterco.com Page: 1 Quote Date: 10/22/08 QUOTATION Customer: C003549 G. HOLDMANN Quote Number: Q063747 UNIVERSITY OF ALASKA Customer Ref: K10 STRAIN 150C FAIRBANKS AK Payment Terms: WIRE TRANSFER Expiration Date: 12/30/08 Approx. Delivery: 30 DAYS Final Destination: Line Quantity Item Unit Price Ext Price 1 1.000 18600-100 7,735.00000 7,735.00 K10 STRAIN ELECTRONIC GAUGE 150C THE K10 "STRAIN" IS A SLICKLINE, E-LINE OR COILED TUBING COVEYED DOWNHOLE MEMORY GAUGE WITH SIGNIFICANTLY ENHANCED CAPABILITIES. INCLUDED ON MODELS WITH A DIAMETER OF 1.25" OR GREATER IS AN EXTERNAL RTD FOR RAPID TEMPERATURE RESONSE. IN THE BASIC CONFIGURATION IT IS A LOW-COST, HIGH RELIABILITY PRESSURE AND TEMPERATURE RECORDER. SPECIFICATIONS: OUTSIDE DIAMETER: 1.25" LENGTH: 25" TRANSDUCER TYPE: PIEZORESISTIVE POWER SOURCE: LITHIUM MATERIAL: K-500 MONEL PRESSURE: PRESSURE RANGE: 0-5,000 PSI PRESSURE ACCURACY: 0.024% F.S. PRESSURE RESOLUTION: 0.0003% F.S. PRESSURE DRIFT: <3 PSI/YEAR TEMPERATURE TEMPERATURE RANGE: 302F (150C) TEMPERATURE ACCURACY: 0.15% F.S. TEMPERATURE RESOLUTION: 0.002% F.S. TEMPERATURE RESPONSE: 1.5 SEC/10C MISCELLANEOUS MINIMUM SAMPLING RATE: 1 SEC NUMBER OF DATA POINTS: 1,400,000 SETS BATTERY LIFE: 1 "AA" LITHIUM CELL/YEAR INTERFACE: USB/RS232 Kuster Co. 2900 E. 29th Street Long Beach, CA USA 90806 Telephone 562-595-0661 Fax 562-426-7897 E-Mail: johnjacobson@kusterco.com Page: 2 Quote Date: 10/22/08 QUOTATION Customer: C003549 G. HOLDMANN Quote Number: Q063747 UNIVERSITY OF ALASKA Customer Ref: K10 STRAIN 150C FAIRBANKS AK Payment Terms: WIRE TRANSFER Expiration Date: 12/30/08 Approx. Delivery: 30 DAYS Final Destination: Line Quantity Item Unit Price Ext Price SOFTWARE: WINDOWS 98 AND HIGHER 2 1.000 18600-230 525.00000 525.00 K10 INTERFACE AND SOFTWARE INCLUDES: INTERFACE UNIT SOFTWARE "WINDOWS" OPERATION/SERVICE MANUAL CABLE CONNECTION: USB AND LEMO 8 PIN THIS IS THE MINIMUM THAT IS REQUIRED TO OPERATE THE K10 "STRAIN" OR "QUARTZ" IN MEMORY MODE. MINIMUM PLATFORM REQUIRED TO OPERATE THE K10 GAUGES: WINDOWS 98 AND HIGHER 128 RAM 400 KHz OR HIGHER USB 1024X768 RESOLUTION OR HIGHER 3 1.000 18600-102 315.00000 315.00 K10 STRAIN CARRYING CASE- 1"& 1-1/4" PELICAN CARRYING CASE DESIGNED TO CARRY TWO (2) COMPLETE K10 STRAIN MEMORY GAUGE, COMPLETE SET OF FIELD TOOLS, COMMUNICATION EQUIPMENT, BATTERY PACK AND SOFTWARE. 4 1.000 18600-103 350.00000 350.00 K10 STRAIN HANDLING TOOLS INCLUDES: 2 706-014 0-RINGS 90 DUROMETER Kuster Co. 2900 E. 29th Street Long Beach, CA USA 90806 Telephone 562-595-0661 Fax 562-426-7897 E-Mail: johnjacobson@kusterco.com Page: 3 Quote Date: 10/22/08 QUOTATION Customer: C003549 G. HOLDMANN Quote Number: Q063747 UNIVERSITY OF ALASKA Customer Ref: K10 STRAIN 150C FAIRBANKS AK Payment Terms: WIRE TRANSFER Expiration Date: 12/30/08 Approx. Delivery: 30 DAYS Final Destination: Line Quantity Item Unit Price Ext Price 25 706-077 O-RINGS 1 915-001 THREAD LUBE 1 959-005 END WRENCH 5/16 2 959-075 END WRENCH 1.075 1 18600-008 STRAIN LOAD TESTER/ DEPASSIVATOR 1 18500-035 TELESCOPE CLIP 1 18500-051 CONNECTOR WRENCH 1 18500-080 PUMP OILER AND ADAPTER 1 18730-025 DMM MULTIMETER 5 10.000 18600-012 252.00000 2,520.00 BATTERY PACK, "AA", 3.6V, LOCKING LEMO Sale Amount: 11,445.00 John Jacobson, Kuster Co. K10 Strain 2900 E. 29th Street, Long Beach, CA 90806-2315 U.S.A. Tel: +1.562.595.0661 Fax: +1.562.426.7897 E-mail: kuster@kusterco.com www.kusterco.com The K10 Strain is a slickline, E-line, or coiled tubing conveyed downhole memory gauge with significantly enhanced capabilities. Included on models with a diameter of 1.25” or greater, is an external RTD for rapid temperature response. In the basic configuration, it is a low-cost, high reliability pressure and temperature recorder. With enhanced features, it is a low-cost instrument producing pressure, temperature, and depth data for a more complete well survey. Applications: Static and flowing gradient tests Downhole leak detection Detecting flowing zones Injection testing Gas lift optimization Drillstem testing Features: Entirely designed, manufactured and assembled in the U.S.A. Robust electronics section Rugged, accurate, and independently compensated piezoresistive transducer Fast response external RTD temperature sensor Redundant memory Battery management system within software Built-in Surface Readout (SRO) mode Delta P/Delta T sampling options Depth data with serial encoder for Pressure/Time vs. Depth/Time Specifications Pressure Physical Miscellaneous Temperature Range up to 15,000 psi Accuracy 0.024% F.S. Resolution 0.0003% F.S. Drift <3 psi Outside Diameter 0.75”, 1.00", 1.25” Length (approx.) 18”, 26”, 29” Transducer Type Piezoresistive Material Inconel/Hastelloy (NACE Compliant) H2S/CO2 Resistant as per NACE Range 150°C Accuracy ± 0.25°C Resolution 0.001°C Response Time 1.5 sec./10°C Number of Data Points 1,400,000 sets Minimum Sample Rate 1 sec. Interface USB Software Windows 98 and higher Quotation 071808a_6 soundings with MT-YA CUSTOMER University of Alaska Attention:Jack Schmidt SYSTEM DESCRIPTION V8 CSAMT and MT QUOTATION DATE 4-Nov-08 DELIVERY SCHEDULE n-a QUOTE VALID UNTIL 4-Feb-08 PAYMENT TERMS TELEGRAPHIC TRANSFER , 100% pre-paid, negotiable Currency: US$ Item Model/Description Part No. Qty Unit Price Total Amount 1 Multi-purpose Electroprospecting Data Acquisition Station(6- channel); (with color display, keypad, GPS-sync high-precision stable clock,GPS Receiver, 512Mb Removable Flash Memory, 96kHz 24-bit ADC per channel, Wireless network function); Magnetic channel capability: 3-ch MT,AMT,CSAMT(10kHz), TEM; Telluric channel capability: 3-ch CSAMT,SIP,FDIP,TDIP or 2-ch MT,AMT; includes: GPS Receiving Antenna, Battery cable, radio antenna,3- way H-cable (Sensor Cables Adaptor),Carrying case V8-6R 2 50 000,00 $100 000 1,1 CSAMT Function Module CMT-DA 2 4 000,00 $8 000 1.4a MT/AMT Data Acquisition with Time Series Recording A/MT-DA 2 12 200,00 $24 400 Post Data Processing Softwares, Interpretation Software: (Single user non-transferable License) 5.1a AMT/MT software incl. time series, edit, plot, dump, calibrate EDI format, etc.SSMT2k-SW 1 12 200,00 $12 200 3,1 CSAMT Data Process Softwares:/Edit/Contour/Plotting CMT-Pro 1 3 000,00 $3 000 5.7c Surfer for Window Plot/Contour (colour) Software (Goldensoft)SURFER 1 630,00 $630 Sensors for MT 3 Magnetic Sensor Induction Coil - 140cm x 5.8cm @ 10.5 kg. MTC-50 5 6 750,00 $33 750 Sensors for CSAMT/AMT 5,1 Magnetic Sensor Induction Coil for (1 Hz ~ 10kHz) AMT/CSAMT AMTC-30 2 6 500,00 $13 000 5,3 Sensor Cable 20m SCL20 5 460,00 $2 300 Receiver Electrodes for CSAMT 3,8 Case of Six Porous Pot Electrode, (10cm. x 10cm. dia.)PE4/6c 3 1 400,00 $4 200 5,5 Telluric Cable, reel of 300m CX-300 2 980,00 $1 960 Signal Source (Transmitter) for CSAMT 8,1 T-3 Transmitter for Time/Frequency Domain IP/CSAMT 12 kg, 2.5KW DC-8192Hz, 800V, 10A. Powered by 50/60Hz MG T-3A 1 34 500,00 $34 500 10.1c Transmitter Driver / Current Monitor for FDEM, TDEM, CSAMT, SIP RXU-TMR 1 23 100,00 $23 100 7,2 PALM TOP Monitor PALM-1 1 1 350,00 $1 350 7,3 Transmitter Electrodes, set of 8 plates TE-8P 1 400,00 $400 7,4 Transmitter Output Cable, Gauge#12, 3000m TXW12-3k 1 4 600,00 $4 600 110408YA_UofAlaska-MT CSAMT.xls Page 1 of 2 Field Spare Parts & other accessories 4.5e Technician's Kit No.1 TK-1 1 1 050,00 $1 050 3 Magnetic Sensor Induction Coil - 140cm x 5.8cm @ 10.5 kg. MTC-50 1 6 750,00 $6 750 5,1 Magnetic Sensor Induction Coil for (1 Hz ~ 10kHz) AMT/CSAMT AMTC-30 1 6 750,00 $6 750 7.9b2 Front end board (with 24 bit ADC) (up to 10kHz)4369 1 6 000,00 $6 000 4.5d Phoenix Dual-channel White Noise Generator WN-2 1 1 100,00 $1 100 Subtotal Ex-works $287 940 15% discount for academic purpose -$43 191 Subtotal Ex-works with discount $244 749 Packing Details Export Packing, Handing & Inland Freight $1 000 Weight estimation: 390 Kg Number of pieces: 5 Total F.O.B. Toronto Airport, Canada $245 749 3 large utility plastic box STANLEY: 96 * 59 * 60 cm Estimated Air Freight & Insurance to Fairbanks, Alaska $2 000 1 Large BUCKHORN transmitter case: 124 * 114 * 91 cm 1 Wood Crate 175 * 23 * 19 cm Total C.I.P. Fairbanks (estimated) $247 749 Shipping fees will be adjusted based on freight forwarder's invoice TRAINING PROGRAM : Optional, to be further discussed 1) One Phoenix engineer - per 08 day period (travel days included)$9 000 Phoenix pays engineer's salary, return airfare, transfers, hotel, meals Training includes all operation from the acquisition to the processing 2) each client trainee 7 days in Canada $6 000 (client pays airfare, transfers, hotel) PLEASE REMIT PAYMENTS BY TELEGRAPHIC TRANSFER TO U.S. DOLLAR ACCOUNT : NAME OF ACCOUNT HOLDER : PHOENIX GEOPHYSICS LIMITED ACCOUNT No.: 2242 - 02 - 16712 BANK : CANADIAN IMPERIAL BANK OF COMMERCE (CIBC) BANK ADDRESS : 7125 WOODBINE AVENUE MARKHAM, ONTARIO, CANADA. L3R 1A3. SWIFT CODE:CIBCCATT 02242 - 010 ACCOUNT 02 - 16712 Per: Yann Avram Vice President Sales & Marketing North America, Western Europe Phoenix Geophysics Limited 110408YA_UofAlaska-MT CSAMT.xls Page 2 of 2 United States Department of the Interior U. S. GEOLOGICAL SURVEY Central Energy Resources Team Box 25046 M.S. 939 Denver Federal Center Denver, Colorado 80225 Gwen Holdmann Organizational Director Alaska Center for Energy and Power University of Alaska 451 Duckering Building Fairbanks AK 99775-5880 Dear Gwen, The United States Department of the Interior (DOI), Alaska Rural Energy Project (AREP) is a collaborative effort between the Bureau of Land Management (BLM) and the United States Geological Survey (USGS) that provides the scientific and technical expertise required to identify and assess shallow subsurface resources, such as coalbed methane and geothermal, with the potential to serve as sources of alternative energy for rural communities in Alaska. The project, by design, partners with other federal, state, local, and private agencies to optimize the available resources required to efficiently and effectively conduct Alaska rural energy investigations. In 2004, the AREP purchased a portable Christensen CS-1000 drilling and coring rig to conduct shallow (<2500 ft) exploratory drilling operations in remote locations. The rig was used to conduct coalbed methane (CBM) drilling and testing procedures in Fort Yukon (2004), Franklin Bluffs (2005) and Wainwright, Alaska (2007). In 2008, the project transported a larger truck- mounted drilling rig to Wainwright to conduct CBM reservoir characterization and production testing. This allowed the Christensen rig and associated equipment to be transported to Anchorage where it is currently stored at the BLM Campbell Tract ware yard. The rig is therefore available for other rural energy project use starting in 2009. The AREP strongly supports the efforts of the state of Alaska to identify and assess alternative sources of energy for rural communities through the Alaska Renewable Energy Fund. Accordingly, the AREP would be pleased to collaborate with the Alaska Center for Energy and Power (ACEP) in conducting an assessment and feasibility analysis of the geothermal resources at Pilgrim Hot Springs during the summer of 2009. Although the primary AREP contribution would be to make available the equipment and technical expertise required to conduct exploratory drilling operations at the site, additional geothermal expertise could be made available to ACEP through the USGS Energy Resources Program if requested. Best Regards, Art Clark Geologist - Project Chief Alaska Rural Energy Project U.S. Geological Survey Box 25046 MS 939 Denver Federal Center Denver, CO 80225 Biographical Sketch Arthur Clark Arthur Clark is an operational geologist for the U.S. Geological Survey (USGS) in Denver, Colorado. Art supervises the Central Region Research Drilling Project (CRRDP) which conducts research-oriented drilling programs throughout the United States for the USGS and other federal, state, and local governmental agencies. Art also serves as a geologist and project chief for the USGS, Energy Resources Program (ERP), Alaska Rural Energy Project and Petroleum Processes Methanogenesis Project. Art has over 30 years experience in supervising energy-related and other research drilling and testing activities for the USGS. Art holds a B.S. in geology from the University of Colorado at Denver. Amount Unit Unit Cost Total Cost Transportation of Equipment Barge rig and ancillary equipment from Anc-Nome 1 trip 50,000.00$ 50,000.00$ C-130 flight from Wainwright-Nome 2 trip 55,000.00$ 110,000.00$ Transport equipment Nome-Pilgrim 1 trip 9,600.00$ 9,600.00$ Helicopter equipment to/from site 2 sites 50,000.00$ 100,000.00$ Transport equipment Pilgrim-Nome 1 trip 9,600.00$ 9,600.00$ Air transport of equipment: Denver-Nome-Denver 1 trip 10,000.00$ 10,000.00$ Equipment and Supplies steel casing - 6" 1000 feet 20.00$ 20,000.00$ steel casing - 2" 3000 feet 10.00$ 30,000.00$ arctic-blend cement 300 bags 50.00$ 15,000.00$ drill mud and other additives 300 bags 20.00$ 6,000.00$ BOP/manifold system 1 each 25,000.00$ 25,000.00$ drill bits 10 each 1,000.00$ 10,000.00$ portable tanks (1000 gallon) 2 each 1,000.00$ 2,000.00$ antifreeze 5 drums 1,000.00$ 5,000.00$ fuel 5000 gallons 8.00$ 40,000.00$ Logistics Permitting 1 each 5,000.00$ 5,000.00$ Remote camp - 10 person, 45 days (Taiga Ventures) 1 each 400,000.00$ 400,000.00$ Fluid disposal 1 each 25,000.00$ 25,000.00$ Personnel Air travel Denver-Nome-Denver 10 person 2,500.00$ 25,000.00$ per-diem 10 person 1,000.00$ 10,000.00$ Drill Rig Services (1)45 9,600.00$ 432,000.00$ Estimate Sub-Total: 1,339,200.00$ USGS Headquarter's Assessment (12%): 160,704.00$ Estimate Total: 1,499,904.00$ Pilgrim Hotsprings Geothermal Drilling Cost Estimate - 2009 24-hour days Due to uncertainites regarding lithology, required drilling methodology, final site location etc., this is a best-estimate only and does not represent a guarantee regarding the amount of work that can be accomplished during any given time. Actual project charges will be based on the number of hours worked and the cost of reimbursable items. Final project cost will not exceed the amount allocated for drilling-related purposes. (1) Due to the numerous uncertainties involved in this project, decisions regarding optimal utilization of drilling-related services will be made on an ongoing basis as additional project data becomes available. Therefore, drilling services are quoted on an hourly ($400), rather than on a per-foot or other basis. USGS-Pilgrim Hot Springs Page 1 of 2 10/31/2008 2700 S. Cushman Street Fairbanks, AK 99701 Phone: (907) 452-6631 Fax: (907) 451-8632 taiga@taigaventures.com www.taigaventures.com Date: October 31, 2008 To: Art Clark Fr: Troy D Eck RE: Pilgrim Hot Springs Taiga Ventures is pleased to present USGS the following proposal for installation of camp shelters in the vicinity of Pilgrim Hot Springs. This proposal is valid for 30 days from above date. All outside service support is based on quotes received plus 10% Taiga markup, rates subject to change. Camp equipment rental rate for _day minimum: $28,805.00 • See attached for Equipment list Camp equipment daily rental rate after minimum: $875.00 One time Charges: $217,658.66 Field Labor: $75,000.00 Assumptions: A. Minimum 30 days notice prior to operational date required to start mobilizing equipment. Cost estimates reflect pricing as of October 30, 2008 and may be subject to change based on availability and actual cost during current camp season. B. Meals and lodging for crew during mob/de-mob, set-up and tear-down operations as necessary is the responsibility of USGS. C. Taiga Ventures assumes the responsibility to provide start up fuels for camp; USGS assumes the responsibility to provide fuels for the duration of camp operations. D. Setup, teardown and travel are estimated & dependent on weather; equipment and site preparation; will be billed at actual. E. Rental period begins when the equipment leaves Taiga Ventures dock and ends when equipment is returned to Taiga Ventures dock. F. Items lost or damaged due to negligence or abuse will be charged at cost of repair or replacement plus 15%, plus expediting time at $70/hour. Client has the option of repairing or replacing with identical equipment at their cost, subject to Taiga Ventures management approval. G. Taiga requires the contract be signed and returned signifying agreement to the terms. Troy Eck Agreed to on behalf of USGS By: Taiga Ventures, Operations Manager (Signature) 907-452-6631 office 907-978-8677 cell Print Name:_____________________________ Email: operations@taigaventures.com Title: Date:__ __________________ _____________ USGS-Pilgrim Hot Springs Page 2 of 2 10/31/2008 Equipment & Cost Breakout Camp inclusions: $28,805.00 • 5- 12’x12’ Sleepers • 12’x12’ Camp Manager Sleeper • 12’x12’ Cook Sleeper • 12’x12’ Spare Sleeper • 12’x20’ Rec. Shelter • 12x20’ Shower/Laundry • 16’x30’ Kitchen/Diner • 10kw Gen Set • 2-Pacto Toilets • Sat. System w/ Internet • Dish Network TV • Catering • 2- 3k Fuel Delivery Systems One time Charges: $217,658.66 This cost estimate includes one time charges for equipment prep, inspection, freight mob/in/out and food for camp residents for a minimum of 30 days for a resident load of 10. Shop & Warehouse: • Prep, clean and restock estimates four (4) crew member, four (4) days (8 hr day) @ $70/person/hr. • Includes equipment prep for transport, cleaning and restocking of equipment upon return. Taiga crew transportation: • Crew transportation between Fairbanks and Pilgrim Hot Springs. o Wright Air Service two round trips $27,280 • Any hotels, meals and associated travel expenses due to unforeseen delays i.e. weather or equipment delays will be billed at cost plus 10%. • Wages for unforeseen delays are $770/person/day based on a 10 hr day. Freight: • Transport between Taiga Ventures shop and Everts Air Cargo and return via Lynden Transport. o Lynden Transport quote dated October 31, 2008 $762.08 • Transport between Everts and FOB Nome and return via Everts. o Everts Air Cargo quote dated October 30, 2008 $137,231.60 • Transport between Nome and Pilgrim Hot Springs via Alaska Cab Garage o Alaska Cab Garage quote dated October 30, 2008 $4950.00 Subsistence: • Meals for a 30 day camp @ a rate of $60/person/day based on a resident load of 10 people. Field labor rate: $75,000.00 Setup and teardown are estimated & dependent on the weather; equipment and site preparation. Labor will be billed at actual. A. Field Travel Wages: Travel rate @ $770/person/day based on a 10 hr. day; 8hrs @ $70/person/hr and overtime for 2hrs @ $105/person/hr. • Travel wages for four (4) crew @ $770/person/day (10 hr. day) • Travel wages for one (1) cook @ $450/person/day (12hr. day) • Travel wages for one (1) camp manager @ $450/person/day (12hr. day); overtime is billable @ $105/hr. B. Set up & Tear down labor: Field rate @ $770/person/day based on a 10hr. day; 8hrs @ $70/person/hr. and overtime for 8hrs @ $105/person/hr. • Set up: On site estimate four (4) crew members; six (6) days. • Teardown: On-site estimate four (4) crew members, five (5) days. C. Camp Support Staff: • Cook: Camp cook salary @ $450/day based on a 12hr. day, overtime is billable @ $105/hr. • Camp Manager: Camp Manager salary @ $450/day based on a 12hr. day; overtime is billable @ $105/hr.