HomeMy WebLinkAboutMakushin Geothermal Resource Project App
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 1 of 29 10/8/2008
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 29 10/8/2008
SECTION 1 – APPLICANT INFORMATION
Name (Name of utility, IPP, or government entity submitting proposal)
Kiiguusi Suuluta Land Company, LLC
Type of Entity:
Alaska Limited Liability Company
Mailing Address
116 Delmar St., San Francisco, CA 94117
Physical Address
same
Telephone
415-515-9226
Fax
530-268-0110
Email
Efisch116@comcast.net
1.1 APPLICANT POINT OF CONTACT
Name
Jack Wood
Title
Member/Manager
Mailing Address
21859 Angelli Place, Grass Valley, CA 95949
Telephone
530-320-7200
Fax
530-268-0110
Email
jackwood@gv.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
XX An independent power producer, or
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 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 29 10/8/2008
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.
Kiiguusi Suuluta Land Company, LLC (KSLC) is proposing to complete a three part study of the
Makushin Geothermal Resource as follows:
1) Develop a Feasibility Analysis/Conceptual Design for the utilization of the renewable energy
resource located on or near the Makushin Geothermal Area. A comparative cost analysis will be
developed for access logistics and long-term infrastructure needs for the Makushin Geothermal-
electric project. By completing a Feasibility Analysis/Conceptual Design, the lowest cost
alternatives for constructing the project, providing long term access for its operation, multiple
energy uses and potential for substantial reductions in fuel/energy costs will be determined;
2) Analyze the optimum use for the resource. How the resource can be developed and how it
will be used as providing base load, use of hot water or electricity for space heating, provide
electrical power for other industries, or a combination of uses will be analyzed and evaluated
using both economic, social and political factors; and
3) Evaluate the appropriate development team for the project, including the City of Unalaska,
the State of Alaska or a private development team.
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.
Geothermal energy remains an underdeveloped renewable and sustainable energy resource
within the State of Alaska. Aside from Chena Hot Springs, which currently has an installed
capacity of 400 kW of power from a low temperature (about 73°C) geothermal source, there are
presently no other geothermal-electric energy producers in the State. The Makushin project’s
primary goal is to produce a minimum of 40 MW of power from the geothermal resource and
supply that power to the City of Unalaska, independent power producers and other energy users
in the vicinity. The current generating capacity within Unalaska consists of UniSea (Fairbanks-
Morris (12± MW)), Westward Seafood (9± MW Wartsila), Alyeska Seafood (5.5± MW), and the
City of Unalaska (currently 7.5 MW; in addition the City has purchased, but not installed, 10 MW
capacity Wartsila diesel gensets (and perhaps an additional 10 MW of diesel generation) for the
potential of 44+ MW, in the future which is contemplated to be utilized as emergency back-up
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 4 of 29 10/8/2008
generation. The base load of all Unalaska to be supplied by the Geothermal-electric Project is
estimated near 10 mW/hr. The combined base and peak loads are estimated to be near
32 mW/hr. The project could supply more than 50 percent of the electrical load for the City and
other power producers in Unalaska. Any unutilized electric energy available above any total
load requirements, and the Project’s installed electric capacity will be utilized in four ways:
1. For electric resistive heating within Unalaska to displace expensive fuel oil now used for
domestic space heat and man-camp heat systems or to augment or replace thermal
energy heat exchanged from some present diesel generation jacket heating loops.
2. To supply electric fuel/energy for Plug-in Hybrid Electric Vehicles (PHEV) to displace
higher and unstable priced gasoline and diesel, as an imported fuel. The PHEV
technology has the additional ability to feed electricity back in the grid for emergencies
from the PHEV batteries. This project will retrofit two local F-150 pickup fleet trucks to
PHEV to increase the fuel economy of these vehicles from 16 mpg to 41 mpg on roads
within the City of Unalaska. This will be an important step to demonstrate how
sustainable green transportation at reduced and stable costs for “fuel” will work in
Unalaska.
3. Electric energy conversion into other “manufactured and transportable” fuels, like
ammonia, methane, and hydrogen which could augment or displace costly diesel fuel
now used by the local fishing fleet. This utilization or transporting “stranded renewable
energy” could create new local business opportunities for diversification of local business
infrastructure.
4. Lower temperature “waste heat” from the geothermal-electric facility could be used for
heating greenhouses and other industries requiring stable energy values.
KSLC is the fee simple, surface and subsurface land owner of 7,200± acres known as the
Makushin geothermal resource area, and as such will be the lead grant recipient. KSLC
anticipates working closely with the City of Unalaska, the Ounalashka Village Corporation, the
Native Village Tribe and the group of noted civil and electrical engineers, geologists and other
scientists identified in this proposal to complete 16 tasks that include further assessing the
resource, developing facility siting plans, evaluating the electrical integration of the geothermal
power with the local power, evaluating the transmission lines required (including new and
reconducting), and developing 35 percent level cost estimates for each of three alternatives for
facility locations. The team members include Hattenburg Dilley & Linnell (HDL), RSA
Engineering (RSA), TDX Power, University of Manitoba, University of California Santa Cruz,
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 5 of 29 10/8/2008
Alaska Volcano Observatory, and specialty contractors to assist in select areas of the project.
As part of the assessment of the resource we will develop a searchable database for the
substantial existing literature and data gathered since 1978, and conduct geochemical studies
and spectral imaging in order to refine the existing model of the geothermal resource system.
Seismic data gathered from previous studies will be inputted into the refined model. In order to
develop 35 percent project cost estimates, a number of factors will have to be evaluated
including: conceptual design of facilities including a dock and other needed infrastructure, power
plant size and type, power transmission and electrical integration with existing electrical system,
and evaluation of permitting issues.
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 funds needed for this phase of the project is $3,225,500. KSLC is willing to contribute an
in-kind cost share as follows: Owners of geothermal resources are compensated in three ways.
First, resource owners are entitled to bonus payments from those who wish to acquire
development rights to the resource. Second, resource owners receive royalty payments once a
project is completed and on line. Third, the resource owner may receive land lease payments,
depending on where the plant, well field and gathering system are located. KSLC is anticipating
that AEA will provide the cost as indicated in the budget for this phase of the project with a
negotiation on the above items as a cost share. We understand that the cost share is a way to
indicate local support. By allowing these items as cost share there will be an ultimate benefit
which could be passed on as savings to the local power consumers. Based on the order of
magnitude cost estimate developed by the Alaska Energy Authority geothermal working group,
the entire project through final construction could require from $200 to $300 Million.
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.
The project will benefit the City of Unalaska, its residents and commercial enterprises by
potentially producing power at an estimated cost of between $0.19/kWhr and $0.22/kWhr, which
is less than the current rate of $0.52/kWhr which peaked to $0.54/kWhr when the price of oil
was more costly. This would result in a savings of between $0.30/kWhr to $0.33/kWhr., if fuel
costs remain at the current rate. As the cost estimates are developed, the actual costs of
producing power from Makushin will be tightened.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 6 of 29 10/8/2008
In the broader sense, for Alaska geothermal projects, the Makushin project will serve as a
model and template towards viable development of other Alaska Peninsula and Aleutian Island
“stranded” geothermal energy resources. Also, the resource modeling will likely be applicable to
other known Aleutian Island geothermal areas with “stranded energy.” In addition, civil,
electrical, transmission, and power plant design and cost estimates for Makushin can serve as a
basis for evaluating other geothermal prospects not only in the Aleutian Islands but throughout
the State.
The public will benefit from this project in at least five ways:
First, assuming an unescalated price of $4/gallon for diesel fuel, and based on the City’s most
recently reported efficiencies of 14.5 kWhr/gallon, the annual fuel savings will approximate
$2,400,000/mW of installed capacity. A 40 MW plant at full capacity would therefore displace
the energy equivalent of $96,000,000 for just the purchase of diesel fuel each year.
Second, electricity generated will be used for purposes of electric resistive space heating.
Third, electricity generated will be used for powering Plug-in Hybrid Electric Vehicles (PHEV).
Fourth, electricity generated will be used for the production of renewable transportable fuels
which would help to widen the City’s industrial base. Such fuels could be used by the fishing
fleet to lessen its dependence on diesel.
Fifth, waste heat from the plant could be used for green houses, to de-ice docks and provide
additional economic opportunities.
2.5 PROJECT COST AND BENEFIT SUMARY
Include a summary of your project’s total costs and benefits below.
2.5.1 Total Project Cost
(Including estimates through construction.)
$250,000,000
2.5.2 Grant Funds Requested in this application. $3,225,500
2.5.3 Other Funds to be provided (Project match) as set forth above
2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3) $3,225,500
2.5.5 Estimated Benefit (Savings) $500,000,000/5 years
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.)
$96,000,000/year of
displaced cost for 40
MW/hr of diesel fuel.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 7 of 29 10/8/2008
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 Project Manager’s resume is attached in the section titled “Resumes.”
KSLC project manager will be Jack Wood. Jack has over 28 years of experience in early phase
development of geothermal energy locations and uses and has been directly involved in the
Makushin project for over 18 years, 14 years as a Member/Manager of KSLC. KSLC will work
closely with Hattenburg Dilley & Linnell whose project manager will be Lorie M. Dilley, PE/CPG.
HDL’s structure is characterized as an energetic, professional, client-oriented, team approach.
The entire team has been specifically chosen with this approach in mind. A direct and effective
organizational structure has been chosen for managing this project as shown on the attached
organizational chart. Lorie will act as the HDL Project Manager for this project. Lorie will act as
liaison between KSLC and the project staff, plan and supervise the activities, be responsible for
determining resources needed to meet the project schedule, maintain cost controls to manage
budgets, and provide quality control review for the deliverables. HDL will assist KSLC in the
management of the various specialty sub-consultants on the project. The team members will be
kept informed through scheduled team meetings with team members participating either in
person or by conference calls and by email of project status. Problems with keeping to the
schedule will be identified and efforts will be made to bring the project back on schedule. Much
of the work will be conducted simultaneously by the various contractors, which will help keep the
project on schedule.
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 scheduled to be completed by October 2009. We propose to have the tasks
completed to a draft stage by the end of May 2009. An Interim Report will be completed by the
middle of June for review by AEA, and other parties. From June to September the team will
finalize project documents and prepare a final report. Our completion date is mid-September
2009. See attached Schedule.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 8 of 29 10/8/2008
3.3 Project Milestones
Define key tasks and decision points in your project and a schedule for achieving them.
The key tasks for the project are defined below. Many of these tasks will be conducted
simultaneously. The resource assessment, Tasks 1 through 4, will be a major decision point if
the assessment indicates problems with the resource. This is unlikely due to the extensive
research conducted by the State in the 1980’s but this assessment refining the model could
indicate conditions other than previously determined or understood. The remaining tasks are to
develop a number of decision points but none that will stop the project. The decisions will be
more about how the project will eventually develop and will be based on engineering, social and
cost factors. Task 13, the environmental issues, may also potentially identify a decision point
for moving forward with the overall project but this is not anticipated at this point either. From
this Feasibility Analysis/Conceptual Design we will determine if the entire project should move
forward.
Key Tasks:
1) Database development
2) Fluid Inclusion Stratigraphy/Geochemical Studies
3) LiDAR and Hyperspectral Imaging
4) Geochemical modeling of reservoir and identification of target sites for future drilling
5) Conceptual Civil Design of 3 alternatives
6) Well Location/Drill Plan
7) Electrical Integration to Unalaska grid
8) Geothermal power plant location alternatives
9) Geothermal power plant energy conversion technology alternatives
10) Geothermal fluid pipeline
11) Transmission line and sub-sea electric transmission cable
12) Energy Conversion or production of “transportable fuels”: Conversion of two F-150 Ford
fleet trucks to PHEV and monitoring their performance in cold weather
13) Environmental issues
14) Business Planning/Negotiations/and Evaluation of Potential Development Teams
15) Cost Estimates
16) Reporting
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.
KSLC is an Alaska limited liability company. Its members, in addition to Mr. Wood, have
experience in a variety of legal matters directly related to geothermal energy as well as geology
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 9 of 29 10/8/2008
(one of its members was the chief geothermal geologist for Hunt Energy) and finance. The
KSLC team includes Hattenburg Dilley & Linnell, RSA Engineering, TDX Power Corporation,
UC-Santa Cruz (Dr. William Pickles – Hyperspectral analysis), Alaska Volcano Observatory (Dr.
Chris Nye) and University of Manitoba (Dr. Eric Bibeau on transportable fuels and PHEVs).
HDL, as a past and current term contractor for engineering services with Alaska Energy
Authority and Alaska Village Electric Cooperative understands the process that AEA uses in
developing projects and the necessary technical documents that are required. HDL has worked
closely with the project managers at AEA on a number of energy projects including the Middle
Kuskokwim Energy Project which required designing energy projects for 7 villages, and
developing order-of-magnitude costs for geothermal projects.
HDL maintains a seasoned full-time staff of 38, including 8 professional engineers, a licensed
surveyor, 13 geologists, engineers, and other scientists, several engineering technicians,
designers, and drafters as well as administrative support personnel. HDL resides in a modern
midtown Anchorage office with our geotechnical laboratory located about 5 blocks south. HDL
uses state-of-the-art, field-to-finish civil software and computer hardware. We operate Pentium
workstations and laptop computers, E-size HP800 design-jet plotter, color laser printers, and
scanners. Our workstations are equipped with a variety of the latest software including
AutoCAD Release 2008 and Rockware®.
RSA Engineering, Inc. is an Alaskan consulting firm specializing in mechanical and electrical
engineering in cold climates. RSA was founded in June 1983 as a sole proprietorship and was
incorporated as a Subchapter "S" Corporation in 1986. The firm has grown from one person to
39 staff members since inception. RSA’s staff includes 7 mechanical professional engineers, 6
staff mechanical engineers, 7 electrical professional engineers, 4 staff electrical engineers, 11
designers and drafters, and support staff. RSA has provided the full range of consulting services
for a wide variety of projects throughout Alaska for over 25 years. This experience includes
facilities for local governments, federal government agencies, and private industry. RSA’s
project engineers have experience in all types of facilities and systems in cold climates. Their
staff members are familiar with the time, planning, and coordination required for designing in
arctic, maritime, and seismic locations, as well as remote and inaccessible areas. RSA is
looked upon as an expert in arctic design. RSA Engineering’s design philosophy is to be
sensitive to budget constraint issues. As standard practice they employ designs that are
efficient and budget conscious with respect to the mechanical and electrical systems. RSA is
very familiar with the high cost of fuel and electricity in remote communities and strives to select
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 10 of 29 10/8/2008
equipment and systems that are not only energy efficient but also easy to service.
TDX Power is a leading energy generation and energy services provider. Deploying 21st
Century technology and fully focused on advanced efficiency, TDX owns and operates electric
utilities and renewable energy power projects. The company also distributes fuel oil products,
markets custom engineered generation systems and provides energy industry consulting
services. Well recognized as an innovative leader, and serving over thousands of customers 24
hours a day, power generation is what they know and what they do. The Company owns and
operates the electric utilities in Sand Point and Prudhoe Bay, and the fuel distribution company
in Sand Point. TDX Power is a wholly-owned subsidiary of Tanadgusix Corporation, an Aleut
shareholder owned Alaska Native Corporation based on Saint Paul Island and established in
1973 with surface land ownership and selections on the Island of Unalaska.
PHEV conversions will be carried out by Hybrid Electric Vehicle Technologies from Chicago and
managed by Dr. Eric Bibeau of the University of Manitoba. Hybrid Electric Vehicle Technologies
mission is to lead the way toward sustainable transportation by providing innovative adaptive
control units and integrated electro-mechanical drive trains. Located at the University Tech
Park on Illinois Institute of Technology’s campus in Chicago, they apply technology developed
by Professor Ali Emadi at the Illinois Institute of Technology, one of the world’s leading teams
specializing in power electronics and motor drives for automotive systems.
3.5 Project Communications
Discuss how you plan to monitor the project and keep the Authority informed of the status.
Communication is the key to a successful project. The attached organization chart shows the
responsibilities of each team member and the lines of communication. Team members will be
kept informed through scheduled team meetings with team members participating either in
person or by conference calls and by email of project status. Problems with keeping to the
schedule will be identified and efforts will be made to bring the project back on schedule. Much
of the work can be conducted simultaneously by the various contractors. AEA will be kept
informed through monthly progress reports submitted with the invoices. Individual monthly
progress reports will be compiled by the team members and submitted to KSLC with the
invoices. HDL’s project manager is located down the street from AEA and encourages clients to
stop by for informal discussions of the project.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 11 of 29 10/8/2008
3.6 Project Risk
Discuss potential problems and how you would address them.
Because of the diverse disciplines and locations of the team members, keeping to the schedule
and budget will pose a challenge. Team meetings will need to be carefully scheduled,
documented and copies forwarded to all team members. All of the team members have
completed projects of this type and are familiar with keeping to a schedule and budget. The
scheduled team meetings will allow for correcting problems before they become large.
A major structure of the overall project is a sub-sea cable which will be the link providing power
from the geothermal plant to the distribution area. If this cable were to be damaged then
existing installed diesel generation will be integrated to provide the necessary electric capacity
backup. Nevertheless, we will look at measures that can be taken to protect the cable.
Integration within the City will pose a challenge since there is a lack of a full city-wide grid.
During this proposed project we will study the City’s grid system, propose improvements to it
and propose ways to integrate the geothermal power with the City. The integration of the
geothermal power into the City’s system is not only a matter of engineering but also will involve
political and social decisions about where and how the City or the Project could upgrade the
existing grid.
A major challenge to the project is accessibility to the geothermal fields from the Makushin River
Valley. The geothermal field may also be accessed from Driftwood Bay. There is a gravel road
beginning at a series of steep, unmaintained switchbacks from the western head of Makushin
River Valley which could provide partial access to the geothermal field and access to the airport
and sea at Driftwood Bay. For some of the year the road is not normally passable without
special equipment. We will evaluate several alternatives to accessing the field. These will
include alternate routes, tramway transportation systems, and a narrow gage railroad system.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 12 of 29 10/8/2008
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.
Geothermal energy is best utilized as a continuous power supply providing base load. With the
proposed 40mW installed capacity, the Makushin resource can also provide load to meet peak
load demands, and more. Other alternative fuels presently being used in the area include fish-oil
byproduct as a bio-fuel during the fish processing periods. Fish-oil readily degrades and
therefore long-term storage is not feasible. Thus, fish-oil can only be used during the times it is
available. Wind power has been studied with the installation of one turbine in Unalaska some
years ago, however the City is unsure as to using wind power. Westward Seafoods is in the
process of deciding about installing wind turbines to supplement power coming into its facility.
Westward will collect data for another year and is also waiting for a field-ready model of a vertical
turbine to be developed before deciding whether to move forward with wind power. Geothermal
energy provides a continuous power supply whereas wind is, at best, intermittent and vulnerable
to extreme local wind speeds that have exceeded 180 mph. Geothermal energy from the
Makushin resource appears to remain the best and most sustainable fuel for supplying the City
of Unalaska with renewable energy.
The geological work conducted to date has shown that there is a significant and widespread
geothermal resource at Makushin. As part of the feasibility analysis, understanding and
modeling of the geothermal system is an essential step in evaluating areas for future exploration
and drilling, and for understanding the full potential of the field. The model developed indicates
that the system consists of a deep, boiling hot-water reservoir overlain by a shallow,
discontinuous vapor-dominated zone (Motyka et al 1983). Hottest fluid temperatures
encountered at Makushin during the drilling in the 1980’s were 196°C and were encountered at
depths of 600 meters. Fluid pressures were very stable during flow tests that lasted 32 days and
temperatures remained stable. A material balance calculation by Economides and others in
1985 for only the ST-1 well, estimated the reserves from a single production well were capable of
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 13 of 29 10/8/2008
maintaining a flow rate of 1.25 to 2 million lb/hour and could produce up to 12mW/hour of electric
energy for over 500 years.
Depths of the hot-water reservoir, thickness of the vapor-dominated zone, locations of boiling
zones, and location of major fracture zones (highly permeable areas) need to be determined.
The proposed studies together with geophysical data will provide additional details necessary to
pick locations for drill holes and siting of a well field. HDL will develop a geological model of the
Makushin geothermal field using fluid inclusion stratigraphy and existing literature. The current
model of the field was developed by the State of Alaska in the 1980’s. New technology and
advances in the understanding of geothermal systems will allow for a refined interpretation of the
1980’s model. The purpose of this assessment is to:
1) Compile the existing literature on the system and create a database of the work completed
to date.
2) Sample for fluid inclusion stratigraphy (see attachment) and analyze existing cores to
further refine the previous models.
3) Conduct Hyperspectral analysis of the area to support the modeling.
4) Review seismic data gathered on the volcano to identify magma/crust/mantle boundaries.
5) Refine the existing model to increase success of a future drilling program.
TASKS
In order to achieve the above objectives for this assessment, the following tasks will be
conducted by HDL: 1) literature review and database creation; 2) sampling of the existing cores;
3) fluid inclusion stratigraphy analysis; 4) UCSC will conduct hyperspectral analysis of the area;
and 5) modeling of the system.
Task 1 Literature Review and Database Creation
HDL and KSLC will conduct a literature review under this task. Geological studies conducted to
date will be reviewed and incorporated into the development of a new model. This literature
includes geochemical, geophysical, drill logs, and geotechnical information about the area.
Knowledge of the known geological conditions will aid in further refining the existing model. In
addition, drill logs, geophysical data, assessment data, economic data, conceptual designs, and
other literature about the project has been developed since the 1980’s. We will gather this
information into one area and create a searchable database using either Excel or Access.
Keywords about the literature will be developed for input into the database. Title, author, date,
and keywords will be searchable elements within the database. The searchable database will be
invaluable as the project develops to reference existing data.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 14 of 29 10/8/2008
Task 2 Sampling of Existing Cores
There is approximately 8,500 feet of existing core from 5 wells. We will sample the cores at 10
foot intervals and at locations that are of geological significance such as hydrothermal alteration,
mineral filled cavities, and fracture zones. The samples will consist of obtaining approximately 20
to 40 gram piece of the core at 10 foot intervals along the entire length of the core. No
preference is given to selecting wall rock from vein material. We will also collect specific
samples of vein material for additional analysis. The samples will be placed in a vial and
labeled. The rock sample will later be crushed to about a sand size before submittal to Fluid
Inclusion Technologies, Inc. (FIT) in Oklahoma for analysis. The cores will be supplied by the
Geologic Materials Center (GMC) of the Alaska Department of Geological and Geophysical
Survey located in Eagle River, Alaska.
Task 3 Fluid Inclusion Stratigraphy Analysis
We anticipate collecting approximately 850 to 1,000 samples for fluid inclusion analysis. The
samples collected from the cores will be packaged and shipped to FIT for analysis. FIT is a spin-
off company from AMACO and holds the AMACO patents for mass production of fluid inclusion
volatile analyses. The samples are placed in a vacuum at elevated temperatures and the
volatiles are released by crushing with an automated mechanical crusher. The volatiles released
are pumped into a quadropole mass spectrometer. By varying the magnetic field in the machine,
different mass/charge ion streams can be detected. The machine is calibrated to record current
against mass/charge ratio with the mass measured using 12C weighing 12 units. The output data
for each sample is the magnitude of mass peaks for masses 2 to 180. For instance a volatile like
CO2 has a gram formula weight of 44 and will be measured by a peak at mass 44. FIT returns
the raw data within about three to four weeks and the raw data is in the form of an Excel
spreadsheet.
We will take the raw data and plot it using our standard format for FIS. Rockware® program
Logger is used to plot the data for each well (Norman et al, 2005). The log displays mass peaks,
which provides information on the relative concentrations of a gaseous species downhole. (See
FIS attachment). The species of interest are the principal gaseous species in geothermal fluids
and trace hydrocarbon species, benzene, and toluene. By comparing the mass peaks across
the FIS logs, fluid horizons can be determined. Fluid horizons typically identified are magmatic
fluids, meteoric fluids, steam-heated fluids, background (no geothermal fluids moved through
rock) and mixed fluids. Additional interpretations that can be made are fluid processes including
boiling, mixing, and condensation; zones of high permeability; and whether a well has production
potential. Each geothermal system is somewhat unique and requires an understanding of the
geology prior to interpretation.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 15 of 29 10/8/2008
Task 4 LiDAR and Hyperspectral Analysis
The UCSC team will acquire LiDAR and hyperspectral (HyMap) coverage of potential
hydrothermal sites on the volcano. LiDAR uses its own source and thus can be flown whenever
the atmosphere is clear enough to fly. HyMap requires a clear day, so part of the funds
requested include sitting with the instrument waiting for a clear day to occur and pre-deployment
of the LiDAR ground transponders.
UCSC in conjunction with Aero-metric, Inc. will carry out detailed topographic mapping with
LiDAR, including mapping arrays of small phreatic and magmatic vents, fault systems, and
young flows around the source regions, each of which can be of significant usefulness in
geothermal evaluation. Using the HyMap we will identify the alteration minerals associated with
these vents and fault systems, in order to gain an estimate of the temperature of the fluids
responsible for the alteration. High temperature mineralogy in an area of young volcanic activity,
especially associated with high fracture permeability (as mapped by faults and other structures)
point to ideal locations for geothermal exploration. Plant health and ecologies will be examined
using the hyperspectral imagery. We have experience with these procedures in the geothermal
fields of Humboldt and Dixie Meadows regions of Nevada, and in Long Valley caldera in
California. We have also studied plant health at a CO2 sequestration test site in Bozeman
Montana. Regions of stressed or dying vegetation can imply high temperatures or high gas
emissions in geothermal regions. We will also produce maps that can aid in the planning and
execution of the civil engineering development of the sites.
Task 5 Modeling
After each well is evaluated and fluid horizons determined, a fluid stratigraphy of the five wells
together will be created using Rockware® modeling program. This program takes the position of
the wells, the fluid horizons identified, and other geological information obtained such as fracture
locations, chemical analysis from other samples, downhole temperatures, and other parameters
that are known and creates a three-dimensional model based on the location of the drill holes.
Figure 1 presents a model developed by HDL for a geothermal field in California. Each
parameter (chemical analysis, temperature, drill data) entered could potentially be modeled to
assist in understanding the system. Cross-sections through the model can be created for two-
dimensional display.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 16 of 29 10/8/2008
Figure 1. Cross-section and 3-D model of a geothermal field. Fluid horizons are shown
by the various colors with red/pink indicating hotter fluids, greens indicating mixed,
orange - steam-heated, and blues – meteoric.
Using the FIS model and the HyMap information as well as the existing literature we will refine
the existing model and determine areas for drilling. In addition we will work with the Alaska
Volcano Observatory and Chris Nye. Seismic data gathered from a previous study of the
Makushin Volcano will be used to potentially identify magma sources and the mantle/crust
boundary. By identifying these boundaries, a “bottom” to the system can be interpreted beyond
what was observed from the existing wells. This will aide in the evaluation of the reservoir
potential and in producing a refined model of the system. The techniques proposed were not
developed until recently. These new techniques will add to the knowledge of the reservoir.
Drilling is expensive. Development of a refined model will significantly reduce drilling costs by
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 17 of 29 10/8/2008
increasing the success rate. From this effort we will gain a better understanding of the resource
and will develop a preliminary plan for drilling and further exploration. This will be used in follow-
on phases of the project.
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.
The City of Unalaska generates power using two diesel-generating locations with a total installed
capacity of 7.5 megawatts. The Dutch Harbor Power Plant (Powerhouse) has an installed
capacity of 6.5 megawatts and the Unalaska Plant (Valley Genset) has an installed capacity of 1
megawatt. Average peak consumption is approximately 5.9 megawatts. Firm capacity is 5.9
megawatts. The City has purchased two Wärtsilä 12V32 generator sets, producing a total output
of more than 10 mW. The City Council has authorized the purchase of an additional 10 mW of
generating capacity. Each generator is scheduled to run about 5,000 hours per year.
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.
In addition to the City’s own generation discussed above, each fish processor produces its own
electricity, in each case utilizing diesel generation, except for Westward as mentioned in Section
4.1. The processors have a combined capacity of 26 mW. It is anticipated that development of
the Makushin geothermal resource will relegate all such capacity to a backup or standby status.
4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
See Above.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 18 of 29 10/8/2008
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 Makushin project will consist of developing a geothermal field at Mt. Makushin in an area
previously studied by the State of Alaska in the 1980’s and on land now owned by KSLC. (See
the attached map). During this feasibility study we will identify the power plant energy
conversion technology type and basic configuration of the conversion and electric generation
system. We will evaluate three potential sites:
1) near the geothermal resource well site;
2) at the extreme west head of the Makushin River Valley just at the bottom of the Driftwood
Bay access road switchbacks; and
3) near old Loran transmitter towers on Broad Bay on Ounalashka owned surface land. (See
attached map). Other sites could be noted during the process. We will also evaluate the
feasibility of using the existing road from Driftwood Bay to the Makushin Valley as the
equipment access route to the geothermal field.
The optimum installed capacity will have to be determined and will be based on power plant
configuration and geothermal temperatures, pressures and flow rates. Since drilling of the
geothermal field is not a part of this feasibility study, we will use the existing five wells to
determine the temperature, pressures and flow rates in order to estimate the optimum installed
capacity. The anticipated optimum installed capacity is 40 MW.
Anticipated capacity factor will also have to be determined and will be based on the optimum
installed capacity and the power plant configuration and geothermal temperatures, pressures
and flow rates. Anticipated barriers will be the existing grid system and its ability to deliver the
power to the fish processing plants and other currently independent producers. The basic
integration concept is to provide the geothermal power via a transmission line and sub-sea
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 19 of 29 10/8/2008
transmission across Broad Bay to a point located near an existing power plant. The exact
location of entrance into the City’s grid will be determined during the study.
By bringing energy-intensive industries and processes to the vicinity of a geothermal resource, it
may be possible to take greater advantage of Alaska's geothermal energy in the absence of
transmission infrastructure or high population density. Furthermore, geothermal energy can
serve as a renewable energy input to the production of ammonia, hydrogen, and other
alternative transportable fuels, thereby improving the economics of their production and
facilitating industrial opportunities for Alaska.
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 geothermal field is owned by KSLC as shown on the attached map. Ounalashka
Corporation (OC), an Alaskan Native Village Corporation has provided assurances and has
agreed to participate and support the project as per a letter submitted to AEA. Several Native
allotments at or near Site 3 have been identified which require special review and understanding.
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
As part of this study, the past permitting process and applications will be reviewed and current
requirements together with a permitting timeline will be created. HDL will work with RSA and
TDX to identify the necessary permits from both the environmental perspective and the power
plant and transmission line. The environmental issues are discussed in Section 4.3.4.
Requirements necessary for obtaining permits and a timeline for the permitting process will be
determined. There is an established marine easement corridor for the subsea cable in Broad
Bay. Geothermal power plants, unlike most thermal-electric generation facilities, emit almost
ZERO emissions thus air permitting should not be a large component and likely will not require
long lead times. In fact, the utilization of the Makushin geothermal resource will drastically
reduce the carbon footprint and greenhouse emission of the present diesel generation in the City
of Unalaska. However, for this feasibility study we will discuss the air permitting requirements
with the Alaska Department of Environmental Conservation and air permitting specialist to
evaluate the requirements of the permit and the timeline involved.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 20 of 29 10/8/2008
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
HDL will conduct a preliminary environmental analysis to evaluate the potential effects of the
project. Anticipated environmental issues to be addressed include floodplains, wetlands,
threatened and endangered species, fisheries, historical and cultural resources, land
development constraints, and construction impacts. Issues that are not anticipated to be of
major concern but will be fully addressed include socioeconomic issues, and rights-of-way
requirements. We will identify potential environmental impacts with each proposed siting
alternative and present mitigation measures as appropriate.
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
The total anticipated project cost will be developed through this feasibility study. Based on the
Alaska Energy Authority order of magnitude cost estimates for geothermal projects in Alaska the
anticipated total project cost is $200 to 300 Million, or between $5,000 and $7,500 per installed
net kW electric. This is in agreement with independent cost estimating conducted by KSLC.
The cost for this phase of the project is $3,225,500.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 21 of 29 10/8/2008
The projected capital and development cost of the proposed renewable energy system will be
developed through this project. Grant funds will be used to develop the capital and development
costs by conducting the following tasks:
1) Develop Conceptual Civil Design of 3 alternative site locations.
2) Develop well location/drilling plan for the geothermal field.
3) Evaluate the Electrical Integration of the system into the Unalaska system.
4) Evaluate Geothermal power plant energy conversion technology alternatives.
5) Develop the Geothermal fluid gathering pipeline, transport and return pipelines and
reinjection system.
6) Evaluate the Transmission line and subsea cable.
7) Evaluate the technology, costs and feasibility of Geothermal-electric Energy Conversion
8) Demonstrate and evaluate Energy Conversion to a “transportable renewable fuel”,
PHEV, and potential markets.
HDL will develop conceptual drawings for the project that describe the work necessary to
develop the infrastructure for the overall project. Drawings will be prepared using
AutoCAD® 2005 on 22” x 34” sheets with the ability to half-size to 11” x 17” drawings. The basis
of the drawings will be existing aerial photography and USGS topographic sheets. The
conceptual design and evaluations will be used to develop 35 percent cost estimates and identify
long-lead items.
Task 1) Develop Conceptual Civil Design
HDL will develop conceptual civil design of the three alternative power plant locations. The civil
design will lay out the infrastructure that is needed and determine site design for the various
components of the project: road alignments, power plant location and site design, pipeline
alignments, transmission line alignments, port location and configuration, and location and need
of utilities, housing facilities, and equipment facilities. As part of the conceptual civil design the
size of the facilities, the foundation elements and types, the configuration, and the necessary
construction components will be identified. Of particular concern to the foundation of structures
will be the nature of the river valley subsurface condition. Soft ground due to high water tables
will have impact on the foundations that can be used. Identification of potential material sources
and quality of the material will also be needed in order to determine costs of fill material. A site
visit will be conducted by our principal civil engineer and senior civil engineer so that they can
have a better understanding of the area. Once on site we will examine possible sites,
topography, vegetation, wetlands, flood elevation information, material sources, local equipment
and personnel.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 22 of 29 10/8/2008
During this task HDL will:
1) Identify options and costs for accessing ST-1 discovery well site area for purpose of
drilling production wells. Include option of leaving drill equipment on site after
construction to reduce long term site access costs.
2) Identify options and costs for delivering geothermal fluids from optional drill sites (ST-1
and valley floor sites) to optional powerhouse locations.
3) Identify design options and costs for the power plant site locations.
4) Identify design options and costs for port site locations.
5) Identify long term port use requirements including power plant operating materials.
6) Identify options and costs for roads and other access methods to access power plant and
drill site.
7) Examine feasibility of incorporating tramway system and/or narrow-gage rail system.
8) Identify utilities needed for geothermal plant and man-camp.
9) Identify foundation elements and types for the various structures.
10) Identify maintenance profile for production well site including equipment and access
requirements.
11) Identify material sources for use during construction.
12) Identify quality of material source by reconnaissance and literature review.
Task 2) Develop Well Location/Drilling Plan for Geothermal Field
Based upon the refined model and the hyperspectral analysis, HDL and KSLC will evaluate
potential locations for production and reinjection wells. The modeling will assist us in identifying
potential target areas. Fracture locations may be identified in the modeling and can be used as
potential reinjection well locations. A preliminary drilling plan will be developed and costs for
drilling will be identified. Cost savings will be evaluated based on a regional geothermal program
in which Akutan and possible other locations will be identified if ready for drilling at the same time
as Makushin. In this task we will:
1) Identify potential drill targets.
2) Identify potential large fracture zones that may be used for reinjection wells.
3) Develop a conceptual design on how to develop the resource.
4) Conduct a comparative cost analysis for different drilling programs.
Task 3) Evaluate the Electrical Integration of the System into the Unalaska System
RSA Engineering will work in conjunction with TDX Power to evaluate the electrical integration of
the geothermal project into the Unalaska system. Generation capacity and future load growth
will be estimated to evaluate cost savings of implementing the geothermal project into the
Unalaska Electrical Distribution System. The existing electrical generation systems in Unalaska
as described in Section 4.2 consist of a central power house located at Dutch Harbor and
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 23 of 29 10/8/2008
several independent power producers, mainly the fish processing facilities. RSA will contact the
City’s electrical engineers, EPS, and determine the feasibility of integrating the new geothermal
power source into the City’s system and what upgrades may be necessary.
During this task RSA and TDX will:
1) Identify electric users in Unalaska including the new cold storage facility and the required
generating capacity.
2) Evaluate the future load growth for the community.
3) Evaluate the nature of the existing electrical power demand, and provide load profiles of
the system base loads and peak loads and demand for resistive space heating to replace
fuel oil.
4) Evaluate the transmission line connection from the project site to the City of Unalaska.
5) Identify how the power from the geothermal plant/transmission line reaches the City of
Unalaska distribution system.
6) Determine how to integrate the new system with the City of Unalaska’s existing electrical
distribution system.
Task 4) Evaluate Geothermal Power Plant Alternatives
RSA in conjunction with TDX Power will evaluate the geothermal power source and power plant
alternatives. Geothermal power plants fortunate to have 200°C fluid temperatures, high resource
pressures, and under pressure, unpumped flow rates can be binary systems but the Makushin
project will likely utilize a hybrid flash plant using binary technology as a “bottoming cycle”. The
amount of energy that can be delivered to the plant will initially be estimated based upon
extensive testing performed by the State in the late 1980’s. Once this amount of energy is
estimated then a power plant design can be developed. The proposed project is to produce
40MW’s of power with a portion provided to Unalaska and a portion to remain on site to supply
the site with power and heat, and proposed usage for energy conversion into transportable
renewable fuels. Geothermal power plant suppliers will be contacted to evaluate their power
plant configurations and generation technology.
During this task we will:
1) Contact power plant suppliers to identify power plant type and output scenarios - binary
or flash/steam.
2) Develop a conceptual design to identify configuration of the plant – i.e. # of generators,
size, layout of main piping, repair/maintenance sections, size of crane needed in plant to
lift generators.
3) Identify long lead items and permits necessary for power plant - schedule for future
project.
4) Identify the optimum capacity of the proposed systems, identify anticipated barriers from
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 24 of 29 10/8/2008
reaching the optimum capacity, and developing a capacity factor for the system.
5) Conduct a comparative analysis of power plant options and costs at various output sizes.
6) Work with the City of Unalaska and evaluate the retirement schedule of existing electrical
equipment, and identify long term equipment replacement costs for geothermal and
diesel fired generating equipment.
7) Conduct a comparative analysis of power plant options and costs at various output sizes.
Task 5) Geothermal Fluids Pipelines
TDX Power will evaluate the geothermal fluids pipeline. Geothermal fluids pipeline and piping
system will be needed to gather the fluids from the wells into a single pipeline. The pipeline will
then transmit the fluids to the power plant. The ability to transmit the geothermal fluids with
limited loss of heat will allow for Sites 2 and 3 to be feasible. The rugged terrain coming down
from the geothermal field to Site 2 would make construction of a fully-developed road difficult.
This pipeline will eliminate the need for a fully-developed road to the geothermal field; the road
would be more for the pipeline alignment and to allow for 4-wheeler, and snow machine access.
The equipment road identified on the map in Driftwood Bay would be used with Sites 2 and 3 to
access the geothermal field with heavy equipment for repair and maintenance of the field. The
sizing of the pipeline will be dependent upon many factors including flow rates, temperatures,
pressures of the geothermal fluids and the flow required at the power plant. Design of the
gathering system and fluid pipes to the power plant must take into consideration the likely bi-
phase flow of both liquid and steam.
In this task TDX will:
1) Identify design options and costs for the alignment of the pipeline.
2) Identify potential pipe sizes based on energy input into the geothermal plant.
3) Identify insulation requirements for the pipeline.
4) Identify piping requirements for the geothermal field and for the other facilities.
5) Evaluate the foundation requirements for the pipeline and associated piping.
6) In addition to the main pipeline we will evaluate the use of hot water heating for the
facilities and energy for resistive heating to displace domestic and man-camp space
heating fuel oil.
Task 6) Evaluate the Transmission Line and Subsea Cable
The alignment of the proposed transmission line is shown on the attached map. TDX Power will
develop the transmission system layout and capacity. There will be a 3 to 3.5 mile submarine
transmission line needed in order to provide power to the City. The transmission line will exit
Makushin River valley and continue toward Hog Island. From there it would continue to
Margaret’s Bay and tie into the existing power grid. Based on the three sites that are being
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 25 of 29 10/8/2008
considered, the land portion of the transmission line will vary. The benefits of constructing a
transmission line versus the geothermal pipeline will be evaluated for the sites. Site 1 would
have limited geothermal pipelines but a longer transmission line; Site 2 would have both a
geothermal pipeline and a transmission line and Site 3 would have a long geothermal pipeline
and the shortest transmission line. Construction of the transmission line down the hillside and
through the river valley may pose more challenges than construction of the geothermal pipeline.
In this task we will:
1) Identify options and costs for transmission lines from power plant sites to buss on
Unalaska Island.
2) Identify size of transmission line needed.
3) Evaluate the foundation requirements for the transmission line.
4) Evaluate the constructability of the transmission line in each alternative to the
constructability of the pipeline.
5) Identify necessary permits and long lead items for the transmission line.
Task 7) Demonstration and Evaluate Energy Conversion to “Transportable Fuels” and
PHEV
Because of the disparity between base load and peak demand, there will be many times when
excess power will be available from the plant. Dr. Eric Bibeau of the University of Manitoba will
evaluate the feasibility of using excess power in support for electric mobility via the PHEV
platform. Two existing F-150 fleet pickup trucks supplied by the City or Corporation will be
converted to PHEV by Hybrid Electric Vehicle Technologies, Inc. These conversions will
demonstrate achievements, business opportunity, and energy security/emissions benefits from
petroleum displacement. The conversion will consist of adding an electric motor to the rear
differential, a 12 kWh battery pack and controllers to achieve (1) up to 15 miles all-electric range;
(2) up to 41 MPG for 30 miles/day mixed-speed driving; (3) 21 MPG as a hybrid (beyond all-
electric range); (4) up to 4,500 lb. of CO2 savings per year per vehicles; (5) increased low-speed
torque for better towing; (6) Vehicle-to-Grid (V2G) capability, and (7) on-board 120-volt power
availability. The two PHEV vehicles will be equipped with an on-board data acquisition system
and monitored over about six to eight months.
Cost Estimate
Using the conceptual designs developed in the tasks above we will provide 35 percent level
engineering cost estimates for the alternatives. This will involve estimating quantities of
construction materials needed for the development. The power plant estimates will be based on
the research conducted and may only be on an order-of-magnitude scale. Development of the
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 26 of 29 10/8/2008
actual field will be based on the assumed depths and temperatures estimated in geological
modeling of the project. The number of wells will be determined by the formula provided by
Hanse 2005 and assuming some success rate. We will identify in the cost estimates which
numbers are still order-of-magnitude numbers and which numbers are 35 percent level.
As part of the cost estimating we will:
1) Identify a range of cent per kilowatt production costs for the options identified above.
2) Identify potential avoided diesel fuel costs for Unalaska electrical utility and other
industrial producers.
3) Identify development, ownership and financing options for the project.
4) Identify options for producing other energy products.
5) Identify potential energy legislation impacts such as cap and trade carbon systems,
subsidies from state and federal sources, etc.
6) Identify opportunities for cost savings through a regional geothermal development effort,
potentially including Akutan and other Aleutian Islands.
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
The O&M costs will be developed during this phase of the project and will be further refined in the
actual design phase.
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
As part of this feasibility study we will identify potential power buyer/customers which will include
the City of Unalaska, commercial entities, cold storage, refrigerated sea going containers stored
on shore and the fish processing plants and perhaps Ounalashka Corporation as the plant is
developed near/on their property. The Corporation has expressed interest in using some of the
power and/or hot water to develop other facilities such as greenhouses.
The potential power purchase/sales price is estimated to be between $0.19 and $0.22 per kW
hour but will be based on some formula taking into account the capital costs and operating and
maintenance costs. During this project we will develop appropriate royalty payments for the
utilization of the Makushin geothermal resource. The price will not exceed the statutory royalty
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 27 of 29 10/8/2008
rates established by the State for geothermal power.
4.4.4 Cost Worksheet
Complete the cost worksheet form which provides summary information that will be considered
in evaluating the project.
See attached Cost Worksheet Form.
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.
Geothermal by its nature is a sustainable energy system. Partners for a development team for
the entire project will be required once the determination is made that the project is to move
forward. During this project the stakeholders, financial supporters, and potential team members
will be identified for a development team. We will also evaluate structures that do not preclude
different entities from using portions of the power or hot water such as supplying power to the
City but also supplying hot water to Ounalashka Corporation and supplying excess energy above
current electric load to other potential entities to ”manufacture transportable renewable fuels.”
As part of the business plan phase we will continue the negotiations with the City and other
power producers in Unalaska. We will also involve the Ounalashka Corporation, Aleut Tribe and
the Unalaska Native Tribe into a review process of the project so that potentially affected groups
in the area can be informed of the project and provide input as necessary.
4.4.6 Analysis and Recommendations
Provide information about the economic analysis and the proposed project. Discuss your
recommendation for additional project development work.
The proposed Feasibility Analysis/Conceptual Design is necessary and prudent in order to move
the Makushin project forward to finance and construction. Without realistic cost estimates and a
conceptual design, a project is just continued talk and ever increasing energy and fuel costs for
the people of Unalaska. By funding this project, AEA can take a major step in making a major
geothermal power production facility in Alaska a reality. Not only will this be of major importance
and benefit to the citizens of Unalaska, but will serve as a template for further geothermal energy
development at other locations in the Aleutian Islands and all of Alaska.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 28 of 29 10/8/2008
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
• Potential annual fuel displacement for diesel generation could be about $24 million per
year per each 10 MW of generation, or about $96 million per year based upon 40MW of
geothermal installed capacity.
• Said another way, it would take about 3.5 years worth of diesel fuel ($4/gallon) to pay for
a $300 million, 40MW geothermal facility resulting in stable and predictable future energy
prices for Unalaska.
• Annual gross revenues for 40mW/hour for 8,760 hours in a year selling for $0.20.kWh
with an availability factor of 90% is about $63 million per year.
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
The cost for this phase of the project is $3,225,500. As discussed in Section 2.3 KSLC is willing
to contribute based upon owner’s typical compensation that they receive during the
development of a project. KSLC is committed to seeing the overall project to completion. The
estimated total project cost is $250 million. See the attached Grant Budget for a detailed
breakdown of the costs for this phase of the project.
GOVERNING BODY RESOLUTION
RESUMES
ORGANIZATION CHART
Electrical/Mechanical Dick Armstrong, PE Mack Bergstedt, PE RSA Engineering Environmental Terri Mitchell HDL Transmission Nick Goodman TDX Power KSLC Jack Wood Project Manager Resource Assessment Lorie M. Dilley, PE/CPG Fluid Inclusion Technology HDL Dr. William Pickles Univ. of California Santa CruzPower Plant TDX Power RSA Engineering Civil Engineering/Cost Estimating Lorie M. Dilley, PE/CPG Project Manager HDL Scott Hattenburg PE HDLGeothermal Pipeline Nick Goodman TDX Power Energy Conversion/PHEV Dr. Eric Bibeau University of Manitoba
PROJECT SCHEDULE
IDTask NameDurationStartFinish1Notice to Proceed1 dayMon 12/22/08Mon 12/22/082Project Management215 daysMon 12/22/08Fri 10/16/093Literature Search45 daysMon 12/22/08Fri 2/20/094Compile Searchable Database41 daysMon 1/19/09Mon 3/16/095Geochemical Studies61 daysMon 12/22/08Mon 3/16/096LIDAR and Hy Spectra Analysis61 daysMon 12/22/08Mon 3/16/097Modeling of Geothermal System70 daysMon 2/16/09Fri 5/22/098Conceptual Design of 3 Alternatives110 daysMon 12/22/08Fri 5/22/099Evaluation of Well Locations/Drilling Plan35 daysMon 4/6/09Fri 5/22/0910Electrical Integration of systems61 daysMon 12/22/08Mon 3/16/0911Geothermal Power Plant Alternatives61 daysMon 12/22/08Mon 3/16/0912Geothermal Power Plant Energy ConversionTechnology70 daysMon 2/16/09Fri 5/22/0913Geothermal Fluid Pipeline70 daysMon 2/16/09Fri 5/22/0914Transmission Line and Sub-sea Cable70 daysMon 2/16/09Fri 5/22/0915Energy Conversion / Fuel Production70 daysMon 2/16/09Fri 5/22/0916Environmental Issues110 daysMon 12/22/08Fri 5/22/0917Business Planning50 daysMon 3/16/09Fri 5/22/0918Cost Estimates90 daysMon 3/16/09Fri 7/17/0919AEA Reporting174 daysFri 1/30/09Wed 9/30/0929Interm Report30 daysMon 5/4/09Fri 6/12/0930Review/Finalize Plans, Designs, Estimates55 daysMon 6/22/09Fri 9/4/0931Final Report65 daysMon 6/22/09Fri 9/18/0912/221/312/72/12/22/21/41/111/181/252/12/82/152/223/13/83/153/223/294/54/124/194/265/35/105/175/245/316/76/146/216/287/57/127/197/268/28/98/168/238/309/69/139/209/2710/40/10/10/2DecemberJanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberTaskSplitProgressMilestoneSummaryProject SummaryExternal TasksExternal MilestoneDeadlineMAKUSHIN GEOTHERMAL CONCEPTUAL DESIGN PROJECTPage 1Project: scheduleDate: Tue 10/7/08
FLUID INCLUSION STRATIGRAPHY BACKGROUND
Fluid Inclusion Stratigraphy Background
Geothermal systems are constantly generating fractures and fluids passing through
rocks in these systems leave small samples trapped in healed microfractures. These
are called fluid inclusions and are faithful records of pore fluid chemistry. They do not
evaporate during sample storage or are destroyed during sampling from depth. Fluid
inclusions trapped in the minerals as the fractures heal are characteristic of the fluids
that formed them, and this chemical signature can be seen in the fluid inclusion gas
analyses. Fluid Inclusion Stratigraphy (FIS) is a method of using bulk gas analysis of
fluids and gases trapped in rocks to assess geothermal reservoirs. Rock chips are
collected during the drilling of geothermal wells or from core samples. From these rock
chips the trapped fluids and gases are released and analyzed using a quadrupole mass
spectrometer. Fluid Inclusion Technologies (FIT) of Broken Arrow Oklahoma conducts
the bulk analysis using a proprietary system. FIS analyses are not quantitative but show
location of fractures in geothermal systems and indicate the general fluid inclusion gas
chemistry. It is possible to interpret FIS analyses for general fluid types including steam-
heated-waters, steam, recharging meteoric water, magmatic volatiles, and composite
fluids. Production fluids in volcanic-hosted geothermal systems generally have a
magmatic fluid component. Other interpretations are fluid processes including boiling,
mixing, and condensation; zones of high permeability; and whether a well has production
potential. Fast turn around of the analyses in days allows decisions about a well to be
made during drilling. Costs of analysis are low compared to other logging techniques.
Each geothermal system requires some tweaking of the plotting routines; we have tested
and can identify fluid types in basin and range, sediment-hosted, and volcanic-hosted
(Makushin type) geothermal system well cuttings. Fluid stratigraphy from multiple wells
can be combined in fence diagrams and 3-D models using Rockware software which is
exportable to a number of formats including AutoCAD and GIS systems.
Figure 1: Typical FIS log showing species analyzed, interpretative ratios, and
interpretation of fluid zones.
Fluid inclusion stratigraphy uses existing rock cores (no new drilling) to arrive at a better
model of the Makushin geothermal system. This will allow for better success rates in
future drilling programs thus saving time and money.
PROJECT AREA MAP
COST WORKSHEET
Renewable Energy Fund
Application Cost Worksheet
Please note that some fields might not be applicable for all technologies or all project
phases. 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. Geothermal Resource: Unknown, but one test well
is estimated at 12MW of electric power over 500
years. Anticipate 40 MW of power.
Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel)
2. Existing Energy Generation (From Power Cost Equalization Report, 2007)
a) Basic configuration (if system is part of the Railbelt 1 grid, leave this section blank)
i. Number of generators/boilers/other 2 perhaps a third
ii. Rated capacity of generators/boilers/other 7970 kW - just Unalaska Electric Utility
iii. Generator/boilers/other type Generators
iv. Age of generators/boilers/other
v. Efficiency of generators/boilers/other
b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank)
i. Annual O&M cost for labor
ii. Annual O&M cost for non-labor 3 M$ total (labor + non-labor)
c) Annual electricity production and fuel usage (fill in as applicable) (if system is part of the
Railbelt grid, leave this section blank)
i. Electricity [kWh] 34,819 MWh Unalaska Electric + 4252 MWh purchased. Capacity of city
plus independent is 44MW.
ii. Fuel usage
Diesel [gal] 2,441,910 gal for Unalaska Electric production.
Other
iii. Peak Load
iv. Average Load
v. Minimum Load
vi. Efficiency 14.5 kW/g
vii. Future trends Growth.
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.
RFA AEA 09-004 Application Cost Worksheet revised 9/26/08 Page 1
Renewable Energy Fund
d) Annual heating fuel usage (fill in as applicable)
i. Diesel [gal or MMBtu]
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
a) Installed capacity 40 MW
b) Annual renewable electricity generation
i. Diesel [gal or MMBtu] 0
ii. Electricity [kWh] 40 MW
iii. Propane [gal or MMBtu] 0
iv. Coal [tons or MMBtu] 0
v. Wood [cords, green tons, dry tons] 0
vi. Other 0
4. Project Cost
a) Total capital cost of new system Estimated 250 M$
b) Development cost TBD
c) Annual O&M cost of new system TBD
d) Annual fuel cost TBD
5. Project Benefits
a) Amount of fuel displaced for
i. Electricity 24.2 million gallons per year
ii. Heat Heating would be converted to electric and covered by above.
iii. Transportation Significant transportation would be electric and covered by above.
b) Price of displaced fuel 96 M$ if diesel is $4/gallon.
c) Other economic benefits Widened industrial base by production of transportable
fuels such as ammonia, hydrogen; and other industries
like greenhouses.
d) Amount of Alaska public benefits Unknown
RFA AEA 09-004 Application Cost Worksheet revised 9/26/08 Page 2
Renewable Energy Fund
RFA AEA 09-004 Application Cost Worksheet revised 9/26/08 Page 3
6. Power Purchase/Sales Price
a) Price for power purchase/sale TBD in this phase of the project.
7. Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio TBD
Payback TBD
GRANT BUDGET FORM
Alaska Energy Authority ‐ Renewable Energy FundBUDGET INFORMATIONBUDGET SUMMARY:Milestone or Task Federal Funds State FundsLocal Match Funds (Cash)Local Match Funds (In‐Kind)Other FundsTOTALS1) Database development$46,400.00 $46,400.002) Fluid Inclusion stratigraphy/Geochemical Studies$194,000.00$194,000.003) LiDAR and Hyperspectral Imaging$479,000.00$479,000.004) Geochemical Modeling of reservoir$97,100.00$97,100.005) Conceptual Civil Design of 3 alternatives$390,000.00 $390,000.006) Well Location/Drilling Plan$49,500.00 $49,500.007) Electrical Integration to grid$186,000.00 $186,000.008) Geothermal power plant location alternatives$75,000.00 $75,000.009) Geothermal power plant energy conversion technology $275,500.00 $275,500.0010) Geothermal fluid pipeline$155,000.00 $155,000.0011) Transmission line and sub‐sea cable$245,000.00 $245,000.0012) Energy Conversion to “transportable fuels”$197,000.00 $197,000.0013) Environmental issues$52,000.00 $52,000.0014) Business Plan / Legal/ Negotiations$395,000.00 $395,000.0015) Cost Estimates$85,000.00 $85,000.0016) Reporting$304,000.00 $304,000.00$3,225,500.00 SEE TEXT $3,225,500.00Milestone # or Task #BUDGET CATAGORIES:1) Database development2) Fluid Inclusion stratigraphy/Geochemical Studies3) LiDAR and Hyperspectral Imaging4) Geochemical Modeling5) Conceptual Civil Design6) Well Location/ Drilling Plan7) Electrical Integration to grid/ PHEV demandDirect Labor and Benefits $7,000.00$75,000.00 $25,000.00 $15,000.00Travel, Meals, or Per Diem $75,000.00 $95,000.00EquipmentSuppliesContractual Services Hattenburg Dilley & Linnell $39,400.00 $119,000.00 $47,100.00 $220,000.00 $24,500.00 Alaska Volcano Observatory ‐ Chris Nye$50,000.00 University of California ‐ Santa Cruz $479,000.00 RSA Engineering$151,000.00 TDX Corporation$20,000.00 University of Manitoba Paul Fuhs Independent Review (Unalaska, OC, Aleut Corp) Legal CounselConstruction ServicesOther Direct CostsTOTAL DIRECT CHARGES $46,400.00 $194,000.00 $479,000.00 $97,100.00 $390,000.00 $49,500.00 $186,000.00RFA AEA09-004 Budget Form
Alaska Energy Authority ‐ Renewable Energy FundBUDGET SUMMARY:Milestone or Task1) Database development2) Fluid Inclusion stratigraphy/Geochemical Studies3) LiDAR and Hyperspectral Imaging4) Geochemical Modeling of reservoir5) Conceptual Civil Design of 3 alternatives6) Well Location/Drilling Plan7) Electrical Integration to grid8) Geothermal power plant location alternatives9) Geothermal power plant energy conversion technology 10) Geothermal fluid pipeline11) Transmission line and sub‐sea cable12) Energy Conversion to “transportable fuels”13) Environmental issues14) Business Plan / Legal/ Negotiations15) Cost Estimates16) ReportingBUDGET CATAGORIES:Direct Labor and BenefitsTravel, Meals, or Per DiemEquipmentSuppliesContractual Services Hattenburg Dilley & Linnell Alaska Volcano Observatory ‐ Chris Nye University of California ‐ Santa Cruz RSA Engineering TDX Corporation University of Manitoba Paul Fuhs Independent Review (Unalaska, OC, Aleut Corp) Legal CounselConstruction ServicesOther Direct CostsTOTAL DIRECT CHARGES8) Geothermal power plant location alternatives9) Geothermal power plant energy conversion technology 10) Geothermal fluid pipeline11) Transmission line and sub‐sea cable12) Energy Conversion to “transportable fuels”13) Environmental issues14) Business Plan/ Legal/ Negotiations15) Cost Estimates 16) Reporting TOTAL$25,000.00 $10,000.00 $10,000.00 $15,000.00 $7,000.00 $7,000.00 $50,000.00 25,000.00$ 75,000.00$ $346,000.00$15,000.00 $185,000.00$0.00$0.00$0.00$50,000.00 $20,000.00 $20,000.00 $45,000.00 $60,000.00 $84,000.00 $729,000.00$50,000.00$479,000.00$230,500.00$381,500.00$35,000.00 $125,000.00 $210,000.00$390,000.00$190,000.00 20,000.00$ $210,000.00$105,000.00 $75,000.00 $180,000.00$100,000.00 $50,000.00 $150,000.00$125,000.00 $125,000.00$0.00$0.00$75,000.00 $275,500.00 $155,000.00 $245,000.00 $197,000.00 $52,000.00 $395,000.00 $85,000.00 $304,000.00 $3,225,500.00RFA AEA09-004 Budget Form