HomeMy WebLinkAboutHot Springs Bay Geothermal Project Feasibilty Report - Aug 2011 - REF Grant 2195475AKUTAN GEOTHERMAL PROJECT FEASIBILITY REPORT
Prepared For: City of Akutan
Prepared By: RMA Consulting Group
16 August 2011
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TABLE OF CONTENTS
EXECUTIVE SUMMARY .................................................................................................iv
SECTION 1: PURPOSE AND SCOPE ............................................................................ 1
1.0 Introduction ....................................................................................................... 1
1.1 Purpose of the Report ....................................................................................... 1
1.2 Scope of the Report .......................................................................................... 1
SECTION 2: PROJECT DESCRIPTION ......................................................................... 2
2.0 Introduction ....................................................................................................... 2
2.1 Background ....................................................................................................... 3
2.1.1 Exploration and Development Agreements ................................................... 4
2.1.2 Project Definition and Startup Funding .......................................................... 4
2.1.3 Project Phasing ............................................................................................. 5
2.2 Scope of Work and Milestones ......................................................................... 6
SECTION 3: DEMAND ANALYSIS ................................................................................ 8
3.0 Introduction ....................................................................................................... 8
3.1 Peak Load, Minimum Load and Future Trends ............................................... 10
SECTION 4: GEOTHERMAL RESOURCE ASSESSMENT .......................................... 11
4.0 Introduction ..................................................................................................... 11
4.1 Reconnaissance Activities .............................................................................. 11
4.2 Exploration Drilling and Resource Characterization ........................................ 12
4.2.1 Drilling Program ........................................................................................... 12
4.2.2 Amended Scope of Work and Revised Budget ........................................... 13
4.2.3 Results of 2010 Exploratory Drilling ............................................................ 13
4.2.4 Characterization of the Resource ................................................................ 14
4.3 Resource Assessment – Final Report and Addendum ................................... 16
4.3.1 Introduction .................................................................................................. 16
4.3.2 Findings and Conclusions ........................................................................... 16
4.3.2.1 Findings ....................................................................................................... 16
4.3.2.2 Conclusions ................................................................................................. 18
4.3.3 Recommendations ...................................................................................... 19
4.3.4 Addendum to Akutan Geothermal Resource Assessment .......................... 19
4.3.5 Final Recommendation ............................................................................... 21
SECTION 5: SCREENING STUDY: CONCEPTUAL EVALUATION OF COSTS AND
ECONOMICS ................................................................................................................ 22
5.0 Introduction ..................................................................................................... 22
5.1 Purpose and Scope ........................................................................................ 22
5.1.1 Purpose ....................................................................................................... 22
5.1.2 Scope .......................................................................................................... 23
5.2 Approach and Methodology ............................................................................ 23
5.3 Results of the Study ........................................................................................ 24
5.3.1 Plant Sizing ................................................................................................. 24
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5.3.2 Road Alignments ......................................................................................... 25
5.3.3 Preferred Alternative ................................................................................... 25
5.3.4 Recommendations ...................................................................................... 28
5.4 Continuation of Analysis ................................................................................. 28
SECTION 6: OPERATIONAL FRAMEWORK ............................................................... 30
6.0 Introduction ..................................................................................................... 30
6.1 Legal Authority and Governance ..................................................................... 30
6.2 Akutan Electric Utility ...................................................................................... 30
6.3 Operation and Maintenance ............................................................................ 30
6.4 Financing ........................................................................................................ 31
6.5 Risk Assessment ............................................................................................ 32
6.5.1 Continued Evaluation of Drilling and Access Requirements ........................ 32
6.5.2 Trident Seafood Corporation Project Evaluation and Risk Assessment ...... 33
6.5.3 Business Case Analysis .............................................................................. 33
SECTION 7: CONCLUSIONS ....................................................................................... 35
7.0 Introduction ..................................................................................................... 35
7.1 Completion of Phase II: Feasibility and Conceptual Design ........................... 35
7.1.1 Proposed Energy Resource ........................................................................ 35
7.1.2 Existing Energy System............................................................................... 36
7.1.3 Proposed System Design ............................................................................ 36
7.1.4 Project Costs ............................................................................................... 36
7.1.5 Project Benefits ........................................................................................... 36
7.1.6 Energy Purchase and Sale .......................................................................... 37
7.1.7 Land Ownership .......................................................................................... 37
7.1.8 Permits ........................................................................................................ 37
7.1.9 Environmental ............................................................................................. 37
7.1.10 Analysis and Recommendations ................................................................. 37
7.2 Transition to Phase III: Final Design and Permitting ...................................... 38
7.2.1 Confirmation of Resource ................................................................................. 38
7.2.2 System Design .................................................................................................. 38
7.2.3 Project Costs .................................................................................................... 38
7.2.4 Power Purchase/Sale ....................................................................................... 38
7.2.5 Land and Resource Ownership ........................................................................ 38
7.2.6 Permits and Environmental Review .................................................................. 39
7.2.7 Analysis and Recommendation ........................................................................ 39
7.2.8 Project Funding ................................................................................................. 39
TABLES
Table 1. Milestones for Akutan Feasibility Study ............................................................ 7
Table 2. Analysis of Power Demand for Akutan .............................................................. 9
Table 3. Option 2 – 2x5 Non-Condensing Geothermal Plant with Road Alignment 1 ... 26
Table 4. Cash Flow Analysis for Preferred Alternative ................................................. 27
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MAPS
Map 1. Akutan Island ...................................................................................................... 2
Map 2. Hot Springs Bay Valley Geothermal Site ............................................................ 3
Map 3. Exploratory Well Sites in Hot Springs Bay Valley ............................................. 12
Map 4. Potential Wellpad Locations to Access Upflow Resource as Identified in Akutan
Geothermal Resource Assessment ............................................................................... 17
Map 5. Proposed Wellpads for Upflow Drilling Sites as Identified in Addendum, Akutan
Geothermal Resource Assessment ............................................................................... 20
Map 6. Preferred Drilling Site and Access for Phase III Final Design and Permitting. .. 21
Map 7. Preferred Alternative Road Alignment 1 ........................................................... 25
TABS
TAB A City of Akutan AEA Grant Agreement #2195475
TAB B Akutan Geothermal Energy Demand and Stakeholder Assessment
TAB C Akutan Geothermal Resource Assessment and Addendum
TAB D Akutan Screening Study: Conceptual Level Evaluation of Costs and Economics
TAB E Analysis of Access Alternatives
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EXECUTIVE SUMMARY
The City of Akutan has completed a feasibility analysis for the proposed development of
a geothermal-based power utility on Akutan Island (“the project”). Over the course of
two and one-half years, the City, through a highly qualified team of consultants,
engineers and subject matter experts, has evaluated the technical, economic, financial
and operational viability of the project, and determined the project to be feasible for the
development of two 5 MW non-condensing steam plants in Hot Springs Bay Valley.
Assessment of the Hot Springs Bay Valley geothermal site determined that the resource
can be divided into an upflow zone and one or more outflow zones. Development of the
upflow zone is the recommended alternative. A screening study of development
alternatives, including a conceptual-level evaluation of costs and economics
recommends the development of two 5 MW plants and associated infrastructure at an
estimated cost of $61,000,000.
Financial viability was evaluated through a power demand study, business case
analysis, and consultation with Trident Seafoods Corporation (the largest power user on
Akutan with a peak demand in excess of seven megawatts ). The results, as presented
in this Feasibility Report, show that geothermal development can deliver power at a cost
as low as $0.13/kWh. The draft operational and business plan (currently under
development) will refine the financial requirements of the project, and develop a
recommended total cost of power. However, all power cost alternatives under
consideration are consistent with the market price needed to support power sales on
Akutan.
Other findings of the feasibility analysis are:
● Development of the Akutan project will require a minimum of $15 million of grants
and subsidies.
● It appears the upflow resource can be developed from the valley, or from a site
1,000 feet above the valley, near existing fumaroles. Final site selection will be
determined during (Phase III) final design and permitting.
● Access to the resource will require considerable road and infrastructure
construction, an estimated cost of $9.6 million at the conceptual level. Final
routing and refined cost estimates will be determined during (Phase III) final
design and permitting.
● The feasibility analysis determined that there are no known environmental, legal
or regulatory impediments to development of the project. These findings must be
confirmed during the next phase of development.
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The Feasibility Report concludes with an assessment of tasks performed during Phase
II (Feasibility and Conceptual Design) to ensure that the requirements and standards of
the Alaska Renewable Energy Grant Fund have been met.
In the City‟s view, project funding has been judiciously and economically applied to
achieve the milestones and tasks of Phase II. The results confirm the technical,
economic and operational viability of the project, and justify continued investment.
Therefore, the City is prepared for immediate startup of Phase I II Final Design and
Permitting.
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SECTION 1: PURPOSE AND SCOPE
1.0 Introduction
The City of Akutan, in cooperation with Akutan Village Corporation and Trident
Seafoods Corporation, is proposing to develop a geothermal-based power utility on
Akutan Island in the eastern Aleutians (“the project”). The reconnaissance and
feasibility phases of the project have been completed and the City intends to proceed
with final design and permitting required for production drilling of the resource.
1.1 Purpose of the Report
The purpose of this report is to describe the efforts undertaken by the City of Akutan to
evaluate the feasibility of the project from technical, economic and operational
perspectives, and to provide conclusions and recommendations for continuation of the
project.
1.2 Scope of the Report
Feasibility analysis of the Akutan geothermal project began in early 2009. Over the
course of two and one-half years, the City and its consulting team completed milestones
and tasks necessary to confirm the viability of the project prior to any further investment
in resource development. This Feasibility Report provides a compilation of the primary
sources of data and information (Tabs A -E), and an overview of findings and
recommendations of a significant number of studies and reports. Requirements of the
feasibility analysis are established by the Alaska Energy Authority (AEA) Renewable
Energy Fund. Therefore, the scope of this Feasibility Report is centered on determining
compliance with AEA guidelines and industry standards sufficient to proceed with the
next phase of the project.
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SECTION 2: PROJECT DESCRIPTION
2.0 Introduction
Akutan is a volcanic island in the Aleutian chain, 7 66 air miles southwest of Anchorage
and 30 miles east of Dutch Harbor. The City of Akutan, the Native village of Akutan and
Trident Seafoods Akutan Shore Plant are located on Akutan Island (Map 1), with a
combined population of 1,024, according to the 2010 U.S. Census. Trident‟s Shore
Plant is the largest in North America with a production capacity of 3.5 million pounds of
fish products per day. The City and the fishing industry have a combined peak power
demand of 7.2 MW, all supplied by diesel power.
The Akutan Geothermal Development project is being pursued as a long -term
renewable energy source that can eliminate the use of more than 4.6 million gallons of
diesel and heating fuel per year, provide low cost power and heat, and eliminate an
estimated 50,000 tons of carbon emissions per year.
Map 1. Akutan Island
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2.1 Background
Akutan is part of the Aleutian Volcanic Arc, which is Alaska‟s most promising setting for
geothermal energy. Hot Springs Bay Valley (“HSBV”), located six kilometers from the
City, contains accessible hot springs and has been the subject of a number of
geothermal resource studies, which concluded that HSBV presents a high degree of
development potential.1
Based on the proximity of the resource and the desire to eliminate dependence upon
fossil fuels, Akutan Village Corporation (“Akutan Corporation”), entered into an
exploration and development agreement with Alaska Renewable Energy Development
Corporation to determine the feasibility of geothermal power development. The
agreement expired in January 2008, without any additional identification of the size or
location of the resource. As a result, the Board of Directors of Akutan Corporation voted
to have the City of Akutan assume the lead role in exploration and development of the
Hot Springs Bay Valley geothermal resource. 2 (Map 2)
Map 2. Hot Springs Bay Valley Geothermal Site
1 Motyka, R., and C. Nye, eds., 1988. A Geological, Geochemical, and Geophysical Survey of the
Geothermal Resources at Hot Springs Bay Valley, Akutan Island, Alaska. Alaska Division of Geological
and Geophysical Surveys (ADGGS), Report of Investigations 88-3; and, Motyka, R., S. Liss, C. Nye, and
M. Moorman, 1993. “Geothermal Resources of the Aleutian Arc.” Alaska Division of Geological and
Geophysical Surveys (ADGGS) Professional Paper 114.
2 Pursuant to the Alaska Native Claims Settlement Act (ANCSA), Akutan Village Corporation owns the
surface estate for the entirety of Hot Springs Bay Valley, in addition to other major land holdings on
Akutan Island, Akun Island and several neighboring islands.
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2.1.1 Exploration and Development Agreements
In March 2009, the City executed exploration and development agreements with Akutan
Corporation, and The Aleut Corporation (TAC).3 The agreements give the City the
exclusive rights to access all property necessary for exploration and characterization of
the geothermal resource, including exploratory drilling. Any development of the
resource is subject to a mutually agreed upon development plan and, if applicable,
negotiated compensation for the use of corporation land and resources.
2.1.2 Project Definition and Startup Funding
The City engaged a program management team and technical team to begin project
planning and startup.4 Initial tasking included:
a. Development of a renewable energy strategy
b. Preparation of a project definition for the Akutan geothermal project
c. Preparation of funding requests for submission to the Alaska Renewable Energy
Grant Fund and other funding entities
d. Implementation of reconnaissance and exploration activities necessary for
project startup
The City appropriated $100,000 for startup of the project, including funds necessary to
prepare and submit a Round II grant application to the Alaska Renewable Energy Grant
Fund. The City‟s Round II grant request for $2,595,000 million was approved and funds
were appropriated for the project, effective 1 July 2009.
The City‟s Round II grant application provided the following project description of the
proposed feasibility analysis of the Hot Springs Bay Valley geothermal resource:
The City of Akutan intends to evaluate the feasibility of developing the Hot
Springs Bay Valley into an active geothermal resource for power
generation and related applications. The purposes and anticipated results
of this effort are those set forth in Section 2.3 Phase 1 - Reconnaissance
Requirements of the renewable energy grant application instruc tions. The
project will involve four primary tasks:
3 TAC is the Regional Corporation under ANCSA. It owns the subsurface estate underlying Akut an
Corporation lands. As such, TAC owns the majority of subsurface geothermal resources in Hot Springs
Bay Valley. A smaller portion of the subsurface is owned by Akutan Corporation.
4 RMA Consulting Group was the selected program management consultant f or all renewable energy and
infrastructure projects being pursued by the City. Dr. Amanda Kolker was engaged as a subcontractor to
RMA for support of the geothermal project, and assumed the role of geothermal project Technical Project
Manager. Subsequently, Dr. Kolker formed a separate company, AK Geothermal, LLC, and was hired by
the City as the geothermal project manager, a role that continues to the present. RMA continues to act
as Program Managers for City projects.
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1. Prospecting: Analysis of existing data and previous scientific studies.
Geological, geophysical and geochemical fieldwork sufficient to
support exploratory drilling.
2. Exploratory Drilling and Well Testing: Includes mobilization, drilling of
test wells, flow testing and demobilization based on the results of
prospecting.
3. Preliminary Feasibility Study: A comprehensive assessment of the
proposed geothermal development project, including technical
alternatives, land issues, environmental screening, financial and
operational viability.
4. Economic Assessment: Examines Akutan‟s growing infrastructure,
including airport construction, port expansion and growth of Trident
Seafoods. Assesses potential for coop erative development among the
City, Akutan Corporation, Aleut Corporation, Trident Seafoods and
other stakeholders. Identifies public and private financing alternatives.
Defines the key elements of the business plan for development and
operation of the resulting power system.
Completion of the Phase I: Reconnaissance project will allow all potential
stakeholders, including the State of Alaska, to determine the potential
technical and economic viability of the proposed geothermal development
before proceeding with feasibility and conceptual design tasks (Phase II).
2.1.3 Project Phasing
Alaska Energy Authority has established four phases for the development of renewable
energy projects5:
● Phase I: Reconnaissance
● Phase II: Feasibility Analysis, Resource Assessment, Conceptual Design
● Phase III: Final Design and Permitting
● Phase IV: Construction, Commissioning, Operation, and Reporting
Phase 1: Reconnaissance is defined as “a preliminary feasibility study designed to
ascertain whether a feasibility study is warranted.” The City and AEA agreed that some
requirements of the geothermal reconnaissance had been completed through prior
investigations and field surveys, which concluded that the Akutan resource is “one of
5 Alaska Energy Authority, Renewable Energy Grant Fund Application Requirements, Sections 2.3 – 2.6.
All references to project phases as used in this Feasibility Report refer to AEA phase definitions and
requirements.
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the most promising sites in Alaska for geothermal development.”6 Therefore, the City
proposed to complete any remaining requirements of the reconnaissance and p roceed
to Phase II. Phase II: Feasibility Analysis, Resource Assessment, Conceptual
Design is defined as “a detailed evaluation intended to further assess technical,
economic, financial and operational viability of a project to narrow the focus of final
design and construction.”
The City‟s Round II grant application addressed the need to complete several
requirements of Phase I: Reconnaissance before proceeding to Phase II. The grant
agreement between the City and AEA reflects this blending of phased requirements,
with the primary purpose of completing the feasibility analysis and business plan
needed to determine the viability of the project.
2.2 Scope of Work and Milestones
The City of Akutan and Alaska Energy Authority executed Renewable Energy Fund
Grant Agreement #2195475 on 22 December 2009, which established the scope of
work for the combined Phase I/Phase II fe asibility analysis (Tab A):
The City of Akutan will perform geothermal exploration at the Hot Springs
Bay Valley geothermal resource to determine suitable exploratory well
locations, drill exploratory wells, and analyze the information to determine
the economic feasibility of developing the geothermal resource and to
create a business plan to ensure the success of the development.
The Agreement specifies the milestones to be completed under the grant agreement
(Table 1). This Feasibility Report details the actions taken by the City of Akutan, its
consultants and contractors in fulfillment of the defined scope of work and milestones of
Grant Agreement #2195475 and Power Project Fund (PPF) loan #40901113.7
6 Motyka, R., S. Liss, C. Nye, and M. Moorman, 1993. “Geothermal Resources of the Aleutian Arc.”
Alaska Division of Geological and Geophysical Surveys (ADGGS) Professional Paper.
7 See Section 4.2.2. Note: A previous PPF Loan (#40901109) was used as bridge funding until the Round
II grant agreement was executed. These loan funds were reimbursed from grant funds and the loan was
closed.
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Milestone Tasks
1. Procurement Preparation of Request for Proposals (RFPs) and selection of
contractors/consultants required to perform the work: including
contractors for geological, geochemical, electromagnetic geophysical
and remote sensing prospecting.
2. Prospecting, logistics and field work Completion of remote sensing, geological, geophysical, and
geochemical testing and analysis.
3. Grant Execution Execution of grant and setup for grant management/administration.
Disbursement of grant funds will be made for allowable and
supported expenses incurred after July 1, 2009 that were funded by
the Power Project Fund (PPF) Loan #40901109. These expenses
include procurement and prospecting for milestones 1 and 2, above.
Reimbursement of these expenses by the Authority will be applied
directly to the PPF Loan as instructed in the attached letter from the
City of Akutan dated November 23, 2009.
4. Meeting A meeting at the Alaska Energy Authority offices with City of Akutan
and Trident Seafoods to discuss a preliminary power purchase
agreement. Funds for exploratory drilling will be available contingent
upon the participation of Trident Seafoods in the meeting.
5. Permit Acquisition Acquire permits from applicable state and federal agencies for drilling
activities.
6. Preliminary Economic Assessment A written report that addresses the economic requirements of the
feasibility analysis, as defined in Section 2.4 of the grant application
instructions. Includes recommendations for development of the
project business plan.
7. Preliminary Feasibility Study Preparation of a written report that addresses the feasibility analysis
and conceptual design requirements of Section 2.4 of the grant
application instructions. Contents will include the technical feasibility,
energy model for Akutan, and a business plan.
8. Procurement Preparation of RFPs for contractors/consultants for drilling activities,
including drilling contractor, helicopter transport, drilling consultant(s),
and well testing consultant(s).
9. Exploratory Drilling Drilling of 3 to 5 test wells and production well(s).
10. Well testing Completion of geothermal gradient testing, downhole geophysics and
flow testing for test wells and selected production well(s).
10(a) Short Term well testing Initial monitoring of well
10(b) Long Term well testing Monitor and test well for approximately 9 months
Table 1. Milestones for Akutan Feasibility Study
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SECTION 3: DEMAND ANALYSIS
3.0 Introduction
The potential demand for power produced from Akutan‟s geothermal resource was
evaluated in a 2010 study, Akutan Geothermal Energy Demand and Stakeholder
Assessment (Tab B). The report provides estimates of demand for power and heat
applications for three sources:
● City of Akutan, including residential, commercial and industrial use
● Trident Seafoods Shore Plant, including residential, industrial and cold storage
● Potential demand related to harbor and airport development, and other uses
such as greenhouse agriculture and tourism
Although the City is interested in direct use applications of the Hot Springs Bay Valley
geothermal resource, the resource assessment and feasibility analysis did not include
an independent study of direct use.8 Therefore, the demand analysis assumes that
heating applications will be supported by geo thermal generated electricity, which would
replace the current and future use of heating fuel.The demand analysis for known and
potential markets in Akutan is shown in Table 2, below.
Gallons per
year
Total cost
Low estimate
Total cost
Mid estimate
Total cost
High estimate
Current energy demand
Akutan
Electric
43,077 $123,631 $155,079 $182,216
Trident
Electric
2,495,172 $5,788,799 $7,610,373 $9,182,233
Akutan Heat 37,500 $130,125 $157,500 $181,125
Trident Heat 2,063,064 $4,786,309 $6,292,345 $7,592,076
Total Current 4,638,813 $10,828,864 $14,215,297 $17,137,649
Gallons per
year
Total cost
Low estimate
Total cost
Mid estimate
Total cost
High estimate
Planned energy demand
Harbor Electric9 79,377 $227,812 $285,760 $335,764
8 The City intends to initiate an independent study of direct use feasibility as part of Phase III Final Design
and Permitting.
9 Harbor estimates are based on the mid-range use estimates of 60 percent average capacity.
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Harbor Heat 2,810 $9,751 $11,802 $13,573
Hovercraft
Electric
730 $2,096 $2,629 $3,089
Hovercraft Heat 1,030 $3,574 $4,326 $4,975
Total planned 83,947 $243,233 $304,517 $357,401
Gallons per
year
Total cost
Low estimate
Total cost
Mid estimate
Total cost
High estimate
Potential energy demand
Cold Storage10 278,308 $645,674 $848,849 $1,024,172
Greenhouse
Electric
23,231 $66,673 $83,633 $98,267
Greenhouse Heat 8,749 $30,359 $36,746 $42,258
Tourism Electric 1,418 $4,070 $5,105 $5,998
Tourism Heat 3,000 $10,410 $12,600 $14,490
Total Potential 314,706 $757,186 $986,933 $1,185,185
Total current,
planned &
potential
5,037,466 $11,829,283 $15,506,747 $18,680,236
Table 2. Analysis of Power Demand for Akutan11
Key findings of the study are:
1. There is substantial energy demand on the island; the City and Trident together
currently use more than 4.6 million gallons of fuel every year to meet their electric
and heat energy needs. The large majority of this demand is generated by the
Trident Seafoods processing facility.
2. The value of energy currently used on Akutan Island has a mid range estimated
value of more than $14 million annually.
3. Current energy markets for both electric and heat energy relying on diesel energy
create more than 51,000 tons of carbon emissions annually.
4. Trident uses approximately 36.2 million kWh of electricity produced at an
estimated cost of $0.21 per kWh.
5. The City of Akutan uses approximately 560,000 kWh annually produced at a cost
of $0.32 per kWh (after PCE subsidy, actual cost is $0.66 kWh).
10 Estimates are based on a 20 percent increase in cold storage capacity.
11 Information Insights, January 2010, Akutan Geothermal Development Project: Akutan Geothermal
Energy Demand and Stakeholder Assessment, p. 7.
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6. Trident burns in excess of two million gallons of fuel each year, at an estimated
current cost of $3.05 per gallon, to meet its heat energy needs.
7. The City of Akutan burns around 37,500 gallons of fuel each year, at an
estimated current cost of $4.20 per gallon, to meet its heat energy needs.
8. Based on the estimated cost of current electric energy production, a geothermal
project would be viable if it can produce energy for less than $0.21 per kWh, the
estimated cost of electric energy generation at Trident. If a project can deliver
reliable energy for a cost that is less than what Trident currently pays, it is
anticipated that the processor would purchase geothermal generated power.
3.1 Peak Load, Minimum Load and Future Trends
Based on the Demand Analysis and Stakeholder Assessment, discussions with
representatives of Trident Seafoods, and continued investigation of power trends
associated with current and future development, the following load requiremen ts were
used in the feasibility analysis:
● Peak Load: 7.1 Megawatts
● Minimum Load: 4.3 Megawatts
● Future Load: 0.5 Megawatts
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SECTION 4: GEOTHERMAL RESOURCE ASSESSMENT
4.0 Introduction
Since 2008, the City of Akutan has led exploration and other assessment activities in an
effort to determine the feasibility of geothermal development on the island. The 2009
exploration program included practical access assessments, a geologic reconnaiss ance
field study, soil and soil gas geochemical surveys, a remote sensing study using
satellite data, a review of existing hot springs geochemistry data, a magnetotelluric (MT)
survey, and a conceptual model analysis. A 2010 exploratory drilling program included
the drilling of slim-hole temperature gradient (TG) wells, fumarole sampling, and
chemical analysis of well and fumarole fluids.
The Akutan Geothermal Resource Assessment was completed in June 2011. An
addendum to the report was completed in July 2011. This section of the Feasibility
Report summarizes the findings and recommendations of the assessment. For a
complete understanding of the datasets collected, the resulting resource models, and
the conclusions pertaining to project continuation, readers of this report are encouraged
to review the entire resource assessment and the addendum (Tab C).
4.1 Reconnaissance Activities
Completion of the Phase I reconnaissance included a variety of studies and surve ys
within the HSBV project area. Key among these were:
● Geological reconnaissance field study
● Soil and gas geochemical surveys
● Remote sensing study using satellite data
● Review of hot springs geochemistry
● Magnetotelluric survey
● Conceptual model analysis
A preliminary feasibility report was prepared to summarize the results of the
reconnaissance and to present a conceptual model of the resource in preparation for
exploratory drilling.12
12 See Kolker, Stelling and Cumming, 2010. “Akutan Geothermal Project: Preliminary Technical
Feasibility Report.” Unpublished report to City of Akutan and the Alaska Energy Authority.
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4.2 Exploration Drilling and Resource Characterization
The Preliminary Technical Feasibility Report included a conceptual model of the Hot
Springs Bay Valley geothermal resource and a recommended approach to exploratory
drilling. The project team proceeded with the design of a drilling program to be
implemented in summer-fall of 2010.
Map 3. Exploratory Well Sites in Hot Springs Bay Valley
4.2.1 Drilling Program
The exploratory drilling program planned for 2010 was based on the drilling of four slim -
hole temperature gradient wells (Map 3). Wells TG-2, TG-3 and TG-4 would be drilled
to a total depth of 1500 feet. TG -1 would be drilled to a depth of 3500 feet. The drilling
plan was designed to test whether the shallow resource identified during
reconnaissance was potentially commercial. The wells were designed for long-term
monitoring, as well as a test of the shallow, accessible targets at the Akutan geothermal
field.13
13 Ibid
Exploratory Wells Drilled
During Summer 2010
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Round II Grant Agreement #2195475 allocated $1.7 million for exploratory drilling. The
City submitted a Round III Renewable Energy Grant Fund application in November
2009, which included a request for an additional $2.65 million for exploratory drilling.
Combined with Round II funding, the new funding was to provide a total of $4.35 million
to carry out the drilling program for four thermal gradient wells.
Round III funds to support the Akutan geothermal drilling program were not
appropriated; therefore, the drilling plan was revised to support the drilling of two 1500-
foot thermal gradient wells (TG-2 and TG-4 shown with arrows on Map 3).
4.2.2 Amended Scope of Work and Revised Budget
The City‟s revised drilling plan and budget were presented to AEA in June 2010, with a
request that Grant Agreement #2195475 be amended as follows:
a. That all remaining Round II funds, including funds allocated to exploratory
drilling, procurement, well testing, preliminary feasibility plan and business plan
would be allocated to the 2010 exploratory drilling program.
b. The City would contribute $700,000 in cash to support the 2010 exploratory
drilling program.
c. Unfinished milestones and tasks for the feasibility study phase, i.e., final report,
business plan and well testing would be completed by the City, using PPF loan
funds.14
The grant amendment was approved and executed in July 2010. In addition, AEA
identified $173,000 of Round III funding to support exploratory drilling at Akutan. These
actions resulted in a revised project budget, which allocated $3.2 million to the 2010
drilling program.
4.2.3 Results of 2010 Exploratory Drilling
The 2010 drilling program at Akutan began on 6 July 2010. Since the Akutan
geothermal area (HSBV) is roadless, the drilling operations were supported by
helicopter and deployment of a remote work camp. Drilling operations were compl eted
on 25 August 2010, with the following results:
a. Well TG-2 was drilled to a total vertical depth (TVD) of 833 feet (254 meters). It
was sited to test the outflow aquifer(s). Between 585 and 587 feet (178 and 179
meters), a highly permeable zone was encountered that flowed geothermal fluid
at 182 °C (359 °F). This productive zone was cased and cemented, sealing it off,
14 PPF Loan #40901113 was executed by the City on 2 February 201 1 in the amount of $500,000.
Milestones and tasks to complete Phase II: Feasibility Analysis, Resource Assessment, Conceptual
Design, were included in the loan agreement.
Akutan Geothermal Project Feasibility Report Page 14
16 August 2011
at which point it cooled to about 329 °F (165 °C). The structure hosting the
flowing fluid appeared to be a fractured, highly vesicular, flow margin. Due to the
temperature and permeability of the formation at relatively shallow depths, drilling
this well was challenging. Although targeted to 1500 feet (457 m), the well was
terminated due to drilling problems and a bottom hole temperature reversal.
b. Well TG-4 was drilled the planned TVD of 1500 feet. It was sited at the southern
part of the junction between the two perpendicular valleys, to test the size and
extent of the outflow zone. Since well TG-4 did not encounter substantial fluid
flow, its location appears to be outside the margins of the outflow zone, vertically
or horizontally (or both). However, well TG-4 did encounter an anomalously high
shallow temperature gradient, implying close proximity to a geothermal source.
Complete results of the 2010 drilling program can be found at:15
● Kolker, Bailey, and Howard, 2010. Preliminary Summary of Findings: Akutan
Exploratory Drilling Program. Unpublished report to City of Akutan and Alaska
Energy Authority.
● Kolker et al, 2011. Akutan Geothermal Project Summary of Findings from the
2010 Drilling Program. Unpublished report to City of Akutan.
4.2.4 Characterization of the Resource
The March 2010 Preliminary Technical Feasibility Study,16 presents the general
characterization of the resource as follows:
The geothermal system at Akutan Island has not been drilled, but
exploration data indicate a viable resource that could feasibly support
planned development for power production and direct use applications.
The resource capacity, and the probability of exploration and development
success, are all dependent on the target. A shallow geothermal resource
of 155-180 °C (i.e., “outflow zone”) is likely to be accessible for
development at Akutan. A deeper, hotter resource of >220 °C (i.e.,
“upflow zone”) has a greater access risk but will be targeted because of its
potentially lower development cost. Two slim-hole exploratory wells are
targeted to verify the existence of these aquifers, and determine thei r
potential for development. Two follow-up wells would characterize the
potential for an outflow zone that has greater resource risk but a
potentially larger access area.
15 A detailed description and analysis of the results are contained in the Akutan Geothermal Resource
Assessment at Tab C. Therefore, full copies of the two exploratory drilling reports are not included in this
report.
16 Kolker, Stelling, and Cumming, 2010. Akutan Geothermal Project: Preliminary Technical Feasibility
Report. Unpublished report to City of Akutan and Alaska Energy Authority.
Akutan Geothermal Project Feasibility Report Page 15
16 August 2011
A more refined characterization was developed after exploratory drilling and completion
of post drilling activities.17 The Resource Assessment provides the following
summary:18
The Akutan geothermal resource can be conceptualized as containing two
major zones: an upflow zone and an outflow zone. While the outflow and
upflow zones likely represent one interconnected field, they are
distinguished here for the purposes of development. The upflow zone
temperatures could approach 572 °F (300 °C), and the reservoir probably
consists of a brine liquid overlain by a small steam cap. The outflow zone
temperatures are lower, decreasing as it flows and chemically equilibrating
in a range from 392-464 °F (200-240 °C) based on cation
geothermometry. The outflow fluids become extensively mixed with cooler
meteoric waters near the surface hot springs.
Alternation mineralogy in exploratory coreholes suggests two
disappointing conclusions about the outflow system: (1) the rocks in both
TG-2 and TG-4 were at temperatures greater than 469 °F (250 °C) in the
geological past and have cooled to present temperatures; and (2) the part
of the outflow encountered by the wells appears to lack sufficient
permeability to support commercial development. Additionally,
development of the shallow outflow would entail significant risk of rapid
cooling during exploitation as a result of either cold water influx from near-
surface aquifers or injection breakthrough. Exploratory corehole drilling
encountered the outflow zone with fluid temperatures of 359 °F (182 °C) at
shallow depths of 585‟ (187 m). Recent data suggests that the 359 °F
(182 °C) zone produced in TG-2 is drawn from a nearby fault zone not
located directly below the well. Although it is possible that a hotter
resource may exist slightly deeper than either of the current wells, this is
unlikely to be the lowest risk target for developm ent.
Although TG-2 encountered the outflow predicted near its location, the two
exploration coreholes did not demonstrate an outflow resource that would
be suitable for development. Given these drilling outcomes and results of
new gas geothermometry from the fumaroles, a well targeted to cross the
1500 ft2 (0.5 km2) fumarole field would have the highest probability of
encountering commercial production at Akutan. This target is likely to be
>428 °F (>220 °C) and could be as hot as 572 °F (300 °C). The depth to
the target will depend on the elevation of the drill pad but it is likely to be
greater than 4000‟ (1300 m). An important issue is the trade -off between
the cost and practicality of constructing a pad closer to the fumarole and
drilling further directionally. A 380-428 °F (180-200 °C) outflow resource
17 These included analysis of temperature gradient data, equilibrated temperature gradient logs, new fluid
chemistry, core data analysis and additional resource modeling.
18 Kolker, Cumming, Stelling, Rohrs, 2011. Akutan Geothermal Resource Assessment, unpublished
report to City of Akutan and Alaska Energy Authority.
Akutan Geothermal Project Feasibility Report Page 16
16 August 2011
target about 2200‟; (800 m) to the northwest of TG-2 might be preferred if
its higher targeting risk and lower generation per well were sufficiently
offset by lower drilling and access cost.
4.3 Resource Assessment – Final Report and Addendum
Analysis and modeling of the resource continued in early 2011 as addit ional data and
test results became available. The resource was conceptualized as two distinct
resource targets, upflow and outflow. Consequently, additional field investigation and
resource modeling were necessary.
4.3.1 Introduction
The resource assessment was substantially completed by April 2011, with two
exceptions:
● Completion of laboratory analysis of exploratory well core samples
● Post-drilling equilibrated temperature gradient logs
However, sufficient information was available to conduct a screening study of
development alternatives, including a conceptual level evaluation of costs and
economics. The scope and results of the screening study are presented in S ection 5 of
this report.
Upon receipt and analysis of core and equilibrated temperature data in May 2011, the
final resource assessment was completed and presented to the city for review on 30
June 2011. Subsequently, the City authorized a technical evaluation site visit to Akutan
to further examine drilling and access alternatives. As a result, an addendum to the
resource assessment was published on 22 July 2011 (see section 4.3.3.4, below).
4.3.2 Findings and Conclusions
As noted previously, readers of this Feasibility Report are encouraged to read the entire
Resource Assessment and Addendum to get a clear understanding of the findings and
conclusions. For convenience, portions of the report a re excerpted below.
4.3.2.1 Findings
There are two development options for the Akutan geothermal project:
● The upflow resource has a high exploration risk, but potentially low development
risk and high output capacity.
Akutan Geothermal Project Feasibility Report Page 17
16 August 2011
● The outflow resource has potentially easier access but higher exploration risk,
and presents several development risks, including a lower output capacity per
well.
The highest priority target for future drilling is at the upflow resource, due to the
following factors:
1. Evidence of commercial-grade permeability due to the presence of fumaroles
that are chemically connected to a neutral-chloride reservoir with a steam cap.
2. The fumarole gas geothermometry indicates that the source fluids are likely to be
equilibrated to a temperature of >572 °F (>270 °C). These temperatures could
exist directly beneath the fumaroles. Alternatively, if the upflow originates further
west, the fumaroles may mark the location where the outflow first e ncounters
boiling conditions. In this case, temperatures beneath the fumaroles could be in
the range of 428-464 °F (220-240 C).
3. As the highest-enthalpy target, the fumarole area could be expanded to meet
additional power demand if it should ever present itself (e.g., new industrial
capacity, larger scale secondary use, etc.).
Two alternative surface locations have been sited to target the high priority upflow zone
(Map 4). Regardless of the pad location, the well shoul d be targeted to at least 4500‟
(1350 m) MD and preferably to 6000‟ (1800 m) DM.
Map 4. Potential Wellpad Locations to Access Upflow Resource as Identified in Akutan Geothermal
Resource Assessment
Akutan Geothermal Project Feasibility Report Page 18
16 August 2011
The first, preferred alternative, “A”, is located near the fumarole field (Map 4). This is
closest to the high temperature upflow zone. Access to this location could be via a road
running east-west, which skirts the mountain to the north of HSBV. Such a road
appears to be buildable at less than 3 miles (5 km) from Hot Springs Bay access, but
would require dock facilities to be built at the beach. However, this access option raises
the question of transmission to Trident and Akutan Village. It also raises questions
about volcanic hazards.
The second, less preferable alternative, “B”, is located in the Fumarole Valley >2/3 mi
(~1 km) southeast of the fumarole field (Map 4). A directional well drilled from this
location beneath the fumarolic features or to the north beneath the local resistivity high
may intersect the upflow zone. From pad location “B”, margins of the upflow resource
would be targeted via directional drilling and the outflow resource could be targeted via
vertical drilling. However, limitations on directional drilling may not allow the target to be
reached from pad location “B”. Hence, this wellpad is riskier than alternative “A”. A
determination on this issue should be solicited from a qualified geothermal drilling
engineer before a final decision is made.
4.3.2.2 Conclusions
Significant conclusions of the Resource Assessment are:
a. The Akutan geothermal resource can be divided into an upflow zone and one or
more outflow zones.
b. The outflow resource is likely to have significant permeability limitations.
c. The outflow resource discovered during exploratory drilling appears to have
migrated and may not be commercially developable.
d. Estimated output capacity of the upflow resource (target) is 15 -100 MW by
analog analysis, with a minimum output of eight MW.
e. If developing the upflow resource is not possible, the hottest part of the lower-
grade outflow zone could be targeted, but with greater risk.
Akutan Geothermal Project Feasibility Report Page 19
16 August 2011
4.3.3 Recommendations
The Resource Assessment provides the following recommendations:
a. Continue characterization of the resource through a production drilling program.
b. Target the upflow resource below the fumaroles (Site B on Map 4) and continue
evaluation of access, drilling and financial issues associated with Site B.
c. Consider additional exploration work to mitigate risks associated with drilling the
upflow target from Site B.
d. Conduct additional evaluation of Site A (Map 4) as an alternative to Site B.
4.3.4 Addendum to Akutan Geothermal Resource Assessment
The Resource Assessment concludes that the outflow resource should receive
secondary consideration if, for any reason, or set of reasons, the upflow resource
cannot be developed. However, the report defines two upflow development options,
one near the fumaroles at ~1150‟ elevation, and the second in the valley below the
fumarole field (Map 4).
Clearly, more work must be done to assess both the technical and financial viability of
the two alternatives. In that regard, the City approved an Akutan site visit to investigate
the feasibility of drilling pads, access roads, base camp and power plant facilities for the
following areas:
a. Hot Springs Bay Valley - The main objective in the valley was to investigate how
close to the fumarole target a wellpad could be sited from the valley side. The
issue is a creek bed with banks that gradually steepen towards the target.
b. Fumarole Field - The team was to investigate whether there was sufficient flat
ground at high elevation (>900‟) near the fumarole field to site a wellpad, base
camp, and plant facilities. The team was also to investigate the best option for
road access to the fumarole field area.
For purposes of the field investigation, these sites were designated as VI (valley
location) and F-A (fumarole field), as shown on Map 5, below. Site F-B on Map 5 is a
redesignation of Site A from the Resource Assessment, which i s no longer under
consideration.
Akutan Geothermal Project Feasibility Report Page 20
16 August 2011
Map 5. Proposed Wellpads for Upflow Drilling Sites as Identified in Addendum, Akutan Geothermal Resource
Assessment
The results of the July 8-13 site visit are presented in Addendum, Akutan Geothermal
Resource Assessment, dated 22 July 2011 (Tab C). The Addendum report concludes
that access is reasonably available for both sites; however, additional economic
evaluation is warranted during the final design and permitting phase of the project.
Notwithstanding the need to continue examining both options, the next phase of drilling
will target the Hot Springs Bay Valley (Site VI, Map 5) with potential wellpad sites at the
top of the valley (Sites V1-C,B,A) and boreholes aimed directionally beneath the upflow
area.
There are caveats, however:
If the valley wellpad sites, upon further evaluation, are deemed unsuitable
or too expensive, or if the valley wells do not produce sufficiently for power
production, drilling should instead be staged at a high -elevation site just
west of the fumarole field. A 19+ acre site of relatively flat ridgeline near
the fumaroles (Site F-A, Map 5) has been identified and appears suitable
from the point of view of site development, as well as from a drilling and
Akutan Geothermal Project Feasibility Report Page 21
16 August 2011
resource perspective. Reaching the ridgeline may be challenging, but
increased road construction cost may be allayed by reduced pad
construction costs and, perhaps more significantly, decreased drilling
costs. This area merits further investigation as an alternative to the valley
sites.19
4.3.5 Final Recommendation
The July 2011 site visit helped to clarify the issues related to drilling pad locations and
road access. As shown in Map 6 below, Phase III Final Design and Permitting will focus
on production drilling from Hot Springs Bay Valley, Site VI, for targeting the upflow
resource. Access will be from Akutan Harbor, across the saddle to the northwest, and
from there to the valley floor. An alternative site above the valley near the fumaroles will
be evaluated as an alternative drilling site.
Map 6. Preferred Drilling Site and Access for Phase III Final Design and Permitting.
19 Kolker, A. and Bailey, A., Addendum, Akutan Geothermal Resource Assessment, p. 7.
Akutan Geothermal Project Feasibility Report Page 22
16 August 2011
SECTION 5: SCREENING STUDY: CONCEPTUAL EVALUATION OF
COSTS AND ECONOMICS
5.0 Introduction
The resource assessment and resulting characterization of the resource were sufficient
to support a screening level study of the costs and economics of the proposed
geothermal development in Hot Springs Bay Valley. The City engaged a highly
qualified team of consultants and industry experts to conduct the screening study.20
The completed study was presented to the City on 16 May 2011, (Tab D). Readers of
this Feasibility Report are encouraged to read the complete report in order to more fully
understand the findings and recommendations. For convenience, excerpts of the report
are provided, below.
5.1 Purpose and Scope
5.1.1 Purpose
The purpose of the study was to develop class 5 capital cost estimates21; O&M cost
estimates; and provide conceptual-level economic assessments for six geothermal
power plant configurations and three access road routes (alignments). The geothermal
power plant options would produce electricity from the geothermal resource on Akutan
and provide the electricity to the Trident Seafood plant and the Village of Akutan. The
intent of the analysis was to determine whether geothermal-based electricity could
potentially be produced at a cost lower t han would be incurred by the Trident Plant and
Village of Akutan with the existing form of power generation (oil -fired diesel engine
generators).
20 The project team included Geothermal Resource Group, Inc., Palm Desert, California; URS
Corporation, Denver, Colorado; and Geothermal Development Associates, Reno, Nevada. Also
participating in the study were RMA Consulting Group, Anchorage, Alaska and AK Geothermal, Portland,
Oregon.
21 Geothermal Resource Group, Inc., URS Corp, Geothermal Development Associates, May 2011, Akutan
Geothermal Study: Conceptual Level Evaluation of Costs and Economics, unpublished report to City of
Akutan, “All of these cost estimates are considere d Class 5/4 as defined by Standard 18R-97 from the
Association for the Advancement of Cost Engineering International (AACE International). The Class 5/4
is defined as the concept screening/feasibility study stage with the project definition in the range o f 1% to
15% (expressed as a percent complete definition). The cost accuracy is considered to be in the range of
-25% / +30% to -30% / +35%”. p. 21.
Akutan Geothermal Project Feasibility Report Page 23
16 August 2011
5.1.2 Scope
The scope of the screening study is identified on page four of the report:
a. The study provides an important and integral first step in the evaluation of the
Akutan geothermal project. It uses capital cost estimates, operating cost
estimates, and financial parameters to provide an initial assessment of the
economic viability of several geothermal power plant options to provide an
alternative form of electricity to the Trident Seafoods plant and the Village of
Akutan.
b. It is important to note that the case recommended as a result of this study is
based on initially defined parameters and conceptual cost. A more detailed
analysis is required to confirm the choices and recommendations made as a
result of this study.
The following items were included in the capital estimates required for the study:
● Environmental assessment
● Access roads, pads and support facilities
● Drilling and establishing of geothermal well heads
● Power plant configurations
● Above-ground transmission line
5.2 Approach and Methodology
The study evaluated three types of plant configurations at two sizes – 1 x 5 MW net and
2 x 5 MW net (six power plant options total). A pro forma spreadsheet was used to
calculate the economics of power plant options. Three road alignments were
considered for access to drilling sites, the proposed plant site and supporting facilities.22
The options were compared on the basis of net present value (NPV) and gauged with
the projects internal rate of return (IRR). The economic calculations included capital
costs, O&M costs, economic inputs, Trident‟s power demand profile, and construction
costs for roads, pads and support facilities.23
22 Ibid. Road alignment maps are at pp. 15-16.
23 Ibid. Appendix A – Cost inputs, pp. 32-36.
Akutan Geothermal Project Feasibility Report Page 24
16 August 2011
5.3 Results of the Study
5.3.1 Plant Sizing
Plant sizing was a critical element of the screening study. Load requ irements used in
the economic analysis were as follows:
● Trident: 7.0 MW for 180 days per year
4.0 MW for 65 days per year
2.3 MW for 120 days per year
● City of Akutan: 0.30 MW 365 days per year24
Comparison of the 1 x 5 MW options with the 2 x 5 MW options produced the following
results:
a. The power from the geothermal plant would be provided to the Trident Seafoods
plant and Village of Akutan. The Trident plant has an annual average peak
demand of 7 MW for 180 days of the year. The 1 x 5 MW geother mal plant
options are a disadvantage during the peak period because the difference
between 7 MW demand and the 5 MW output would need to come from Trident‟s
existing diesel generators. The NPV of fuel needed by the engine generators to
make up the 2 MW difference is very significant, representing half of the NPV of
revenues. The total of the NPV, of O&M and the NPV of fuel is more than 70%
of the NPV of the revenues. When debt service is included, the results are
negative annual cash flows over the entire plant life. As a consequence, none of
the 1 x 5 MW cases are economically feasible under the criteria established for
this study.
b. The NPV for the 2 x 5 MW non-condensing case shows improved economics
with positive cash flows over the plan t life. However, the geothermal plant
electricity price $0.13/kWh as initially established by the project , results in
revenues that are not sufficient to produce d esirable economics. W ith the
$0.13/kWh price, the IRR is only about 2%, well below the 12% hurdle rate
established for this study.
24 Commercial, industrial and residential users.
Akutan Geothermal Project Feasibility Report Page 25
16 August 2011
5.3.2 Road Alignments
Road alignments were considered for several drilling options – multiple sites in Hot
Springs Bay Valley (Alternative B of the resource assessment) and the upper fumarole
site (Alternative A of the resource assessment).25 Road alignment #1 was identified as
the shortest and least costly route to the geothermal well sites in the valley floor (Map
7).
Map 7. Preferred Alternative Road Alignment 1
5.3.3 Preferred Alternative
The evaluation identified the preferred alternative as two 5 MW non-condensing steam
plants with four production/injection wells (Option 2), and road/transmission routing over
road alignment 1, as shown in Map 7. The screening study concludes that the preferred
alternative should be explored in more detail in the next phase of the continuing
development of the Akutan Geothermal Project.26
Table 3 provides a summary of the potential savings in the cost of electricity of
geothermal Option 2 compared to the existing oil-fired diesel engine generators for low,
median, and high fuel price scenarios. The net present value and rates of return for the
other five options were not as desirable as the Option 2 configuration because of lower
revenue, higher capital cost, and/or higher operating costs.
25 A complete analysis of access alternatives, including information from the site visit of July 2011, is
provided at Tab E.
26 Akutan Screening Study, p. 6.
Akutan Geothermal Project Feasibility Report Page 26
16 August 2011
Option 2 – 2 x 5 Non-Condensing Geothermal Plant with Road Alignment 1
Fuel Price
Scenario
Price of Fuel,
$/gal
Levelized Cost
of Elec. from
existing
Engines, $/kWh
Price of Elec.
from
Geothermal @
12% IRR, $/kWh
Elec. Price
Savings of
Geothermal,
$/kWh
Low $3.25 $0.20 $0.20 $0.00
Median $3.90 $0.24 $0.20 $0.04
High $4.85 $0.29 $0.20 $0.09
Table 3. Option 2 – 2x5 Non-Condensing Geothermal Plant with Road Alignment 1
The net cash flow analysis for Option 2, the preferred alt ernative, is shown in Table 4,
below. The analysis concludes the following:
● Capital investment cost: $46,434,000 (assuming $15 million of grants and
subsidies)
● Total capital cost: $61,434,000
● Internal rate of return: 1.7%
● Cost of power: $0.13/kWh
Akutan Geothermal Project Feasibility Report Page 27
16 August 2011
Table 4. Cash Flow Analysis for Preferred Alternative
Operating & Maintenance Costs Supplemental Total
Revenues Total Diesel-Engine Capital Debt Net
End-of-Year O & M Fuel Cost Cost Service Cash Flow
Value at Jan-11 5,833 -208 -284 -155 -193 -110 -250 -1,199 0 -45,390
Esc Rate 3.2%2.3%2.5%2.3%2.3%1.7%2.3%2.6%2.3%
0 2011 Comm Op.-46,434 -46,434
1 2012 6,212 -217 -299 -162 -201 -114 -262 -1,254 0 -4,048 909
2 2013 6,411 -222 -306 -165 -206 -116 -268 -1,283 0 -4,048 1,079
3 2014 6,616 -227 -314 -169 -211 -118 -274 -1,313 0 -4,048 1,255
4 2015 6,828 -232 -322 -173 -216 -120 -280 -1,343 0 -4,048 1,437
5 2016 7,048 -238 -330 -177 -221 -122 -287 -1,374 0 -4,048 1,626
6 2017 7,274 -243 -338 -181 -226 -124 -293 -1,405 0 -4,048 1,820
7 2018 7,507 -249 -347 -185 -231 -126 -300 -1,438 0 -4,048 2,021
8 2019 7,747 -255 -355 -190 -236 -128 -307 -1,471 0 -4,048 2,228
9 2020 7,995 -261 -364 -194 -242 -130 -314 -1,504 0 -4,048 2,442
10 2021 8,251 -267 -373 -198 -247 -132 -321 -1,539 0 -4,048 2,663
11 2022 8,515 -273 -383 -203 -253 -135 -329 -1,574 0 -4,048 2,892
12 2023 8,787 -279 -392 -208 -259 -137 -336 -1,610 0 -4,048 3,128
13 2024 9,068 -285 -402 -212 -265 -139 -344 -1,648 0 -4,048 3,373
14 2025 9,359 -292 -412 -217 -271 -142 -352 -1,685 0 -4,048 3,625
15 2026 9,658 -299 -422 -222 -277 -144 -360 -1,724 0 -4,048 3,886
16 2027 9,967 -305 -433 -227 -283 -147 -368 -1,764 0 -4,048 4,155
17 2028 10,286 -313 -444 -233 -290 -149 -377 -1,804 0 -4,048 4,434
18 2029 10,615 -320 -455 -238 -297 -152 -385 -1,846 0 -4,048 4,721
19 2030 10,955 -327 -466 -244 -303 -154 -394 -1,888 0 -4,048 5,018
20 2031 11,306 -335 -478 -249 -310 -157 -403 -1,932 0 -4,048 5,326
21 2032 0 0 0 0 0 0 0 0 0 0 0
22 2033 0 0 0 0 0 0 0 0 0 0 0
23 2034 0 0 0 0 0 0 0 0 0 0 0
24 2035 0 0 0 0 0 0 0 0 0 0 0
25 2036 0 0 0 0 0 0 0 0 0 0 0
26 2037 0 0 0 0 0 0 0 0 0 0 0
27 2038 0 0 0 0 0 0 0 0 0 0 0
28 2039 0 0 0 0 0 0 0 0 0 0 0
29 2040 0 0 0 0 0 0 0 0 0 0 0
30 2041 0 0 0 0 0 0 0 0 0 0 0
Net present value 56,864 -1,873 -2,611 -1,395 -1,738 -944 -2,257 -10,818 0 -46,434 -30,239 -30,627
Notes:IRR --->1.7%
1 Capital cost at end-of-year 2011 = -$46,434 thousand
2 Discount rate = 12.0%, Life = 20 years, income tax rate = 0.0%
3 Equity proportion of total capital = 0.0%, Debt proportion total capital = 100.0%, Debt term = 20 years, debt interest rate = 6.0%
4 Present value of the after tax net cash flow represents the present value of profit.
5 Revenues based on electricity price of $0.130/kWh @ Jan-11.
6 Annual revenue from sale of electricity is based on 7.3 MW for 180 days/yr, 4.3 MW for 65 days/yr, and 2.3 MW for 120 days/yr
7 Supplemental power made up by Trident's diesel engine generation during peak season of 180 days per year = 0.0 MW
8 Costs are not included for maintaining and keeping Trident's existing diesel engine-generators available for backup power
9 IMPORTANT: Escalation rates shown on this table are predictions. Differing escalation rates will have a positive or negative impact on economics and IRR.
Akutan Geothermal Project Net Cash Flow Analysis ($1000)
2x5 MW Non- Condensing, Case 2
End-of-Year G&A
Plant
Staff
Routine
Maint.
Maint
Reserves Chemicals
Land/
Resource
Akutan Geothermal Project Feasibility Report Page 28
16 August 2011
5.3.4 Recommendations
Although the 2 x 5 MW non-condensing steam plant configuration is the preferred
alternative, along with road alignment #1, there are a number of economic factors that
require further evaluation by the City prior to preparation of the draft operational and
business plan. These include:
a. Determine if there are other uses for excess capacity, since only 51% of the
geothermal plant‟s 10 MW total production capability is contributing to revenue.
b. Consider a target range for the cost of geothermal power of $0.14 - $0.20/ kWh,
versus the $0.13 kWh used in the screening study.
c. Consider increasing the amount of grants and subsidies to the project from the
$15 million used in the screening study to $23 million in order to obtain a power
cost of $0.14/kWh and maintain a 12.1% internal rate of return.
5.4 Continuation of Analysis
The screening study evaluation was identified as the first step in evaluation of the
Akutan geothermal project. Since completion of the study, additional resource
modeling, field data collection and financial analysis have occurred. This new
information and the results and recommendations of the screening study support a
general finding that the Akutan geothermal project can be economically viable, if certain
conditions can be met.
These include:
a. Continued project development support through grants and subsidies sufficient to
encourage private investment.
b. Participation and/or power purchase commitment from Trident Seafoods
Corporation.
c. Aligning the cost of power and internal rate of return to improve economic
viability.
d. Confirmation of drilling sites and access and logistical requirements for resource
development
e. Refinement of economic parameters based on final design and permitting (Phase
III).
Akutan Geothermal Project Feasibility Report Page 29
16 August 2011
f. Determination of an appropriate internal rate of return for a publically-owned
power project.
For now, the City is incorporating the information gained from the screening study into
its decision-making and ultimately into the draft operational and business plan as the
culmination of Phase II of the project.
Akutan Geothermal Project Feasibility Report Page 30
16 August 2011
SECTION 6: OPERATIONAL FRAMEWORK
6.0 Introduction
Feasibility analysis for the Akutan geothermal project included examination of issues
related to construction, management and operation of the proposed power system. The
City has consulted with legal counsel, financial advisors, government a gencies, power
users, and elected officials to obtain input on operational issues. This section of the
Feasibility Report presents an overview of the efforts to define an operational
framework, and some preliminary findings of those efforts. However, final determination
of an overall approach to management and operations cannot be made without further
due diligence, negotiation and financial structuring. A more comprehensive evaluation
of these issues will be presented in the draft operational and busine ss plan for the
project.
6.1 Legal Authority and Governance
Akutan is a 2nd Class City and possesses the legal authority under AS 29.35.010 to
engage in the proposed development of the Hot Springs Bay Valley geothermal
resource. This authority is exercised under an adopted Municipal Code and an elected
City Council of seven members.
6.2 Akutan Electric Utility
The City of Akutan holds a certificate of Public Necessity and Convenience to operate
the electric utility for Akutan.27 Consistent with legal and regulatory requirements, the
Akutan geothermal project would be owned and operated by the City as part of the
Akutan Electric Utility.
6.3 Operation and Maintenance
The Akutan Screening Study identified the operation requirements for the 2 x 5 MW
preferred alternative as follows:
a. Plant staff of three personnel
b. Management services
c. Professional services
This approach recognizes that operation of a geothermal power plant, transmission
lines and support facilities requires specialized skills and expertise. The City assumes
27 Certificate # 293, Regulatory Commission of Alaska
Akutan Geothermal Project Feasibility Report Page 31
16 August 2011
that plant staffing will be a combination of local personnel and recruited technical staff,
augmented by maintenance and professional services contractors.28
Maintenance costs are also addressed in the screening study (p. 22), with annual
expenses for:
a. Maintenance contracts
b. Materials and supplies
c. Equipment and machinery
d. Major repair reserve fund
e. Well workover reserve fund
f. Specialized chemicals
The City finds that the recommendations of the screening study, and internal evaluation
of City resources, are consistent with the desire of the City to operate and maintain the
geothermal power system as the Akutan Electric Utility.29 This finding will be
incorporated in the draft operational and business plan.
6.4 Financing
Financing considerations for the Akutan geothermal project include the following:
a. Anticipated level of governmental co-investment through grants, subsidies, loans,
and other assistance.30
b. Trident Seafoods Corporation participation in the project, through direct
investment, power purchase, or both.
c. Private sector interest in equity participation or other funding arrangements,
including development partnerships.
d. The role of Akutan and Aleut Corporations in the project, including cost s
associated with land use and resource development, and the potential for direct
investment/participation in the project.31
28 Operating and maintenance costs for these categories are at page 22 of the Akutan Screening Study.
The City has begun a training program for local personnel. Matthew Bereskin has completed the eight
week National Geothermal Academy in Reno, Nevada, and will become the City‟s staff lead for the
project. Additional training programs are under consideration.
29 Subject to obtaining a Certificate of Public Convenience and Necessity and other applicable legal or
regulatory requirements.
30 Screening study evaluation assumed $15 million of government funding and $46 million of private
investment. However, the study suggests that increasing subsidies to $23 million could achieve
acceptable returns on investment and a power cost of $0.17/kWh, p. 7.
31 The City intends to form a Tribal Energy Resource Development Organization with Akutan Corporation
to take advantage of programs and funding opportunities for resource development and road construction
on Native/tribal lands.
Akutan Geothermal Project Feasibility Report Page 32
16 August 2011
e. Potential use of municipal bonding, industrial bonds, loan guarantees, or similar
financial instruments.
f. Revenue or offsets from tax credits, green credits, carbon reduction trades, or
similar incentives.
All of the above-referenced considerations, and a significant number of financing
options, are under ongoing evaluation by the City and its financial advisory team. To
the extent practicable, the preferred financing alternative(s) will be addressed in the
draft operational and business plan.
6.5 Risk Assessment
There are technical, economic and financial risks associated with the Akutan
geothermal project. Most of these have been thoroughly addressed by the Akutan
Geothermal Resource Assessment and the Akutan Screening Study. However, three
additional efforts are underway to further assess project risk, and to develop mitigation
strategies. These efforts are described below.
6.5.1 Continued Evaluation of Drilling and Access Requirements
Both the Resource Assessment and Addendum speak to the issue of further evaluating
drilling requirements for the valley site (Site VI), including drilling capabilities,
equipment, and cost for extensive directional drilling. In addition, access to the drilling
site will need further evaluation. Although this work will be performed in detail during
Phase III of the project, certain efforts will continue in order to better understand the
costs and risks associated with the selected development alternative. These efforts
include:
a. Revised drilling plan to incorporate findings of 8 - 13 July site visit.
b. Use of recently acquired aerial photography for additional resource assessment
and analysis of access and pad site alternatives.32
c. The City is currently considering a proposal for a Temperature Probe Survey to
be conducted by Alaska Center for Energy and Power and AK Geothermal.
d. Evaluation of alternative access techniques, including hoverbarge and Rolligon
solutions.33
32 Controlled aerial photography has been acquired for Hot Springs Bay Valley and proposed access
routes. Digital processing is underway for development of two foot contours and a digital terrain model
(DTM). These products will greatly assist the project team in refining drilling strategies,
access/transmission routes, and associated costs during Phase III of the project.
33 Trident Seafoods‟ consultants are currently evaluating these techniques and will provide the results to
the City of Akutan. See Section 6.5.2.
Akutan Geothermal Project Feasibility Report Page 33
16 August 2011
To the extent practicable, any new information gained from the above -referenced
activities will be incorporated in the draft operational and business plan.
6.5.2 Trident Seafood Corporation Project Evaluation and Risk Assessment
„
Trident Seafoods Corporation has expressed a high level of interest in the Akutan
geothermal project, both as a potential investor and primary user of geothermal power.
Consequently, the City and Trident have undertaken a cooperative effort to evaluate t he
project and associated risk.
Trident has engaged a consulting team to perform an independent evaluation of the
project and to perform a detailed risk assessment.34 The Mannvit/Technip team has
been provided with complete access to reports, records, da ta, maps and related
materials pertaining to reconnaissance, exploration and resource assessment. This
includes the recently published Resource Assessment, Addendum, Access Study and
aerial photography. In return, the City will receive any studies, report s, evaluations and
recommendations resulting from Mannvit/Technip‟s efforts.
Other than providing information and data to Trident‟s consulting team, neither the City
nor its geothermal project team have participated in the Mannvit/Technip evaluation.
When the evaluation effort is complete, the two project teams will meet to assess the
results and make appropriate findings and recommendations to the City and Trident.
This cooperative effort not only reinforces Trident‟s interest in the project, but has the
unique effect of providing the City, Trident, funding agencies and potential investors with
two “expert opinions” concerning the viability of the project and the mitigation of
identified and perceived risks.
The Trident study is expected to be completed in August 2011. It is not likely that the
results of the report can be incorporated in the draft operational and business plan;
however, it is assumed that the information will be available for review by AEA as part of
the negotiation of a Round IV grant agreement.
6.5.3 Business Case Analysis
The City is currently conducting a business case analysis of Akutan geothermal
development opportunities,35 the purpose of which is:
To conduct an independent analysis of the geothermal business case,
refine the assessment of opportunities and risks, and recommend risk
mitigation strategies to help advance the project.
An internal review outline with notes, dated 29 July 2011, present s some preliminary
observations:
34 The combined team of Mannvit, Reykjavik, Iceland, and Technip, USA, Claremont, California.
35 The study is being prepared by Mark A. Foster & Associates, Anchorage, Alaska.
Akutan Geothermal Project Feasibility Report Page 34
16 August 2011
a. Order of magnitude potential for development of the upflow resource is roughly
60%-70%. The potential can be increased through additional resource
assessment, refined cost projections and risk mitigation.36
b. The potential commercial opportunity for the project is roughly $240 million (2012
dollars) of avoided diesel fuel costs over the next 20 years.
c. Based on the current resource assessment (prior to publication of the
Addendum) the outflow opportunity represents a risk-adjusted benefit/cost ratio
for government funding sources below 0.6 in the base case. The upflow
resource presents a benefit/cost ratio on the order of 0.9 to 1.3 for State grant
funding.
The City and its financial consultants are continuing to refine the parameters for the
business case analysis, particularly those related to risk mit igation. In view of the City‟s
plans to continue the efforts described in Section 6.5.1, above, and pending receipt of
the Trident independent study, it is likely that the final business case analysis will be
completed as part of Phase III of the project. However, preliminary findings and
recommendations will be included in the draft operational and business plan.
36 Based on current information and the recommendations of the Resource Assessment, the outflow
resource has a rough order of magnitude opportunity of 40%.
Akutan Geothermal Project Feasibility Report Page 35
16 August 2011
SECTION 7: CONCLUSIONS
7.0 Introduction
This Feasibility Report summarizes the results of two and one-half years of technical,
economic and operational analysis of potential geothermal development in Akutan. A
combined City and State of Alaska investment of $4.1 million was devoted to field
reconnaissance, data collection, exploratory drilling, resource assessment, and
economic evaluation. In addition, feasibility analysis of the project included public input,
consultation with land owners, and collaboration with various stakeholders, including the
largest intended user of geothermal power, Trident Seafoods Corporation.
Throughout the process, AEA and the City of Akutan have also collaborated to ensure
that the project meets the requirements and standards of the Alaska Renewable Energy
Grant Fund and executed grant agreements, as well as protecting public investment in
the project.
In the City‟s view, project funding has been judiciously and economically applied to
achieve the milestones and tasks of Phase II. This Feasibility Report, in conjunction
with studies, reports and analysis previously provided to AEA, confirms the technical,
economic and operational viability of the project at the conceptual level, and justifies
continued investment in the project.
7.1 Completion of Phase II: Feasibility and Conceptual Design
With the exception of the draft operational and business plan, all milestones and tasks
of Phase II have been completed to the satisfaction of the City.37 Actions taken and
results achieved in conformance with the requirements identified in Section 2.4 of the
AEA grant guidelines are as follows:
7.1.1 Proposed Energy Resource
A site-specific assessment of the energy resource was conducted, including exploratory
drilling and resource modeling. Both a preliminary and final resource assessment (with
addendum) were completed.
Extensive discussions were held with land and resource owners and exclusive
exploration and development agreements were executed with Akutan and Aleut
Corporations. Discussions are continuing with regard to potential investment strategies,
and the formation of a Tribal Energy Resource Development Organization.
37 The City anticipates completion of the draft operational and business plan in August 2011.
Akutan Geothermal Project Feasibility Report Page 36
16 August 2011
7.1.2 Existing Energy System
Annual load profiles were developed for the City of Akutan and Trident Seafoods
Corporation. Peak and minimum loads we re evaluated in 2010 in the Akutan
Geothermal Energy Demand and Stakeholder Assessment and revised in the 2011
Akutan Screening Study. This information was applied to the sizing and conceptual
design tasks of the project, and will be incorporated in the d raft operational and
business plan.
Load growth projections were developed based on the City‟s harbor an d airport plans,
growth projections for population and economic development, and expansion of Trident
Seafoods facilities. This information has been integrated into conceptual design criteria.
A transmission system layout and capacity were developed as part of the screening
study. Interconnection of the geothermal system with existing power systems was not
evaluated during this phase of the project. This is more appropriately addressed during
the final design phase of the project.
7.1.3 Proposed System Design
The Akutan Screening Study identified six system alternatives. Each alternative was
tested against economic and logistical criteria. The preferred alternative is a 2 x 5 MW
non-condensing steam plant. Detailed design of the selected system will occur during
Phase III of the project.
7.1.4 Project Costs
Conceptual level costs were developed in the screening study, including cost of design,
construction, O&M, financing and other expenses. These cost projections are currently
being tested and refined through a business case analysis. Updated cost estimates will
be included in the draft operational and business plan.
7.1.5 Project Benefits
The Akutan geothermal project will save an estimated $240 million of diesel fuel over 20
years and eliminate more than 50,000 tons of carbon emissions annually. Power costs
will be substantially reduced for residential, commercial and industrial users. State of
Alaska PCE subsidies to Akutan electric utility will be eliminated. Cheaper power will
stimulate and sustain economic development, including Trident Seafoods, the sixth
largest employer in Alaska.
Akutan Geothermal Project Feasibility Report Page 37
16 August 2011
7.1.6 Energy Purchase and Sale
The City has not executed any preliminary power purchase or sales agreements.
Akutan Electric will purchase all power needed to serve the community and expansion
related to the new harbor. Trident Seafoods Corporation is currently conducting a
project evaluation risk assessment, which will help determine if the company will invest
in the project, or simply purchase power from Akutan Electric Utility. The draft
operational and business plan for the Akutan geothermal proj ect assumes Trident will
purchase power up to its peak load of 7.2 MW, as detailed in the Akutan Screening
Study.
7.1.7 Land Ownership
The City of Akutan has exclusive rights to explore and develop the geothermal resource
in Hot Springs Bay Valley through agreements executed with Akutan Corporation and
The Aleut Corporation. All Phase II reconnaissance and exploration activities were
conducted in accordance with these agreements.
Landowners will be consulted during Phase III of the project to determine their interest
in project participation, if any, and to determine costs for rights of way and resource
extraction.
As indicated above, the City of Akutan and Akutan Corporation intend to for m a Tribal
Energy Resource Development Organization under 25 USC Chapter 37.
7.1.8 Permits
All authorizations and permits for land use, exploration drilling and related field activities
were obtained. Development permits will be obtained under Phase III of the project.
7.1.9 Environmental
All potential environmental impacts of the feasibility phase of the project were
addressed during the permitting process. The City, its consultants and contractors were
in full compliance with environmental regulations and permit stipulations throughout t his
phase of the project. Additional environmental assessment will be completed under
Phase III of the project.
7.1.10 Analysis and Recommendations
A comprehensive economic analysis of alternatives was completed in the Akutan
Screening Study, as detailed throughout this Feasibility Report. The results are
currently being tested and refined through a business case analysis. The study also
identifies the recommended system design and construction activities needed for
resource development.
Akutan Geothermal Project Feasibility Report Page 38
16 August 2011
The draft operational and business plan is currently being drafted and will be made
available to AEA when completed.
7.2 Transition to Phase III: Final Design and Permitting
As concluded in this Feasibility Report, Phase II of the Akutan geothermal proj ect has
been completed (pending submission of the draft operational and business plan to
stakeholders and AEA), with the recommendation to proceed to Phase III of the project.
The City assumes that milestones and tasks for Phase III will be consistent with section
2.5 of standard AEA project requirements 38. With that in mind, the City is prepared to
negotiate a Round IV grant agreement to address the information and tasks required for
completion of Phase III. The general requirements are discussed below.
7.2.1 Confirmation of Resource
Continue refinement of the resource assessment through field data collection and
analysis. Focus on information and data needed for selection of final drilling site(s) and
revision of the production drilling plan, to include reinjection wells.
7.2.2 System Design
Prepare a final system design, to include the following:
a. Interconnection study
b. Selection of final access routes, transmission routing, rights of way, pad sites,
plant sites, and other sites necessary for final design
c. Engineered and approved integration design
d. Engineered and approved system design
e. Plans and specifications necessary for procurement of construction contractor(s)
7.2.3 Project Costs
Consistent with design elements listed above, prepare a final engi neers estimate of
project cost.
7.2.4 Power Purchase/Sale
Negotiate final agreement with Trident Seafoods Corporation, including direct
investment and/or power purchase.
7.2.5 Land and Resource Ownership
Negotiate final development agreements with Akutan Corporation and The Aleut
Corporation, to include potential project participation and/or investment, and costs for
rights of way and resource extraction.
38 Renewale Energy Fund, (RFA) AEA11 -005, issued 21 July 2010
Akutan Geothermal Project Feasibility Report Page 39
16 August 2011
7.2.6 Permits and Environmental Review
Prepare and submit all required permit applications for road access, drilling sites, camp
site, temporary construction and other required land use. Obta in multiple drilling permits
from Alaska Oil and Gas Conservation Commission, based on approved well site design
and drilling plan.
Prepare and submit any environm ental reviews or assessments that may be required by
permitting and regulatory agencies or authorities. Resolve all issues related to
environmental protection, mitigation and compliance.
7.2.7 Analysis and Recommendation
Consistent with final design and permitting for the project, conduct a detailed financial
analysis of the chosen business structure, and applicable costs, revenues, and
incentives. Prepare a final operational and business plan, including proposed funding
alternative(s).
7.2.8 Project Funding
Meet and confer with potential investors, partners, and developers to determine levels
of interest and to develop funding alternatives. Continue evaluation of additional funding
sources to include municipal bonds, industrial bonds, loans and loan guarantees, and
assess the potential for the use of revenue or offsets from tax credits, green credits,
carbon reduction trades, or similar incentives.
Akutan Geothermal Project Feasibility Report
16 August 2011
TAB A
City of Akutan
AEA Grant Agreement #2195475
Akutan Geothermal Project Feasibility Report
16 August 2011
TAB B
Akutan Geothermal Energy Demand
and
Stakeholder Assessment
Akutan Geothermal Development Project
Geothermal Energy Demand & Stakeholder Assessment
SUBMITTED JANUARY, 2010
SUBMITTED TO
City of Akutan
3380 C Street, Suite 205
Anchorage, Alaska 99503
SUBMITTED BY
Information Insights, Inc.
429 L Street
Anchorage, Alaska 99501
212 Front Street, Ste. 100
Fairbanks, Alaska 99701
907.450.2450
www.iialaska.com
2
Table of Contents
Introduction ............................................................................................................................................ 3
Key Findings ............................................................................................................................................ 5
Overview of the project ........................................................................................................................... 8
Overview of the local and regional economy ......................................................................................... 10
Current energy demand ........................................................................................................................ 13
Planned projects and energy demand .................................................................................................... 18
Potential projects and energy demand .................................................................................................. 21
Summary of stakeholder interviews....................................................................................................... 25
Next steps: Towards a business plan ...................................................................................................... 31
Works Cited ........................................................................................................................................... 33
3
Introduction
Alaska is rich in natural resources: oil and gas, mineral deposits, abundant fisheries and an
entrepreneurial and independent people. Renewable energy is a resource that has, until
recently, gone relatively unexploited despite the tremendous potential it represents for the
state.
“With some of the best renewable energy resources in the country, Alaska has an opportunity to
be a leader in their development and bring new revenue streams into the state’s economy.” –
Renewable Energy Atlas of Alaska1
There is substantial and growing interest in developing renewable resources at both the national
and the state level. Access to affordable energy is a key component in sustaining communities.
Inexpensive and stable energy prices can act as a catalyst for economic development; likewise,
unstable and unaffordable energy can have a crippling effect.
In summer of 2008 (June-August) the price of Alaska North Slope (ANS) West Coast oil averaged
$128.50 per barrel2. Subsequently, the impacts of high energy costs were felt in all parts of the
state, bringing an increased awareness of the vulnerability that many communities face when
relying solely on diesel to meet their energy needs. In numerous rural places, prolonged high
prices mean that households will be forced to make decisions about basic needs, choosing
between home energy and other basic necessities.
Even when oil prices are not soaring, fluctuating energy prices impact a community’s ability to
plan for the future. The State of Alaska has made it policy to promote both renewable energy
development3 and rural sustainability. These ideas go hand in hand; energy price stability is
essential to creating sustainability of rural Alaska communities.
The City of Akutan, Alaska (Akutan, City) is part of the Aleutians East Borough (AEB, Borough)
and lies 766 air miles southwest of Anchorage. The community is not connected by road and
does not have an airport; Akutan is only accessible via seaplane or boat. The nearest community
is Unalaska/Dutch Harbor, approximately 40 miles to the south. Akutan has a full-time
residential population of around 75-80 people, with a total population (including processor
workers) of approximately 796 in 20084. Akutan is home to Trident Seafoods Inc. (Trident), the
largest fish processing plant in North America with as many as 700 to 800 employees working
and living at the plant 250 days per year.
1 Published by the Renewable Energy Alaska Project (REAP) May 2009.
2 Summer 2008 Alaska North Slope (ANS) West Coast crude saw a low of $112.17 and a high of $144.59 per barrel.
3 HB 152 established an Alaska Renewable Energy Grant Fund.
4 Department of Commerce, Community and Economic Development certified population (DCCED), 2008.
4
The vision of developing geothermal energy in Akutan goes beyond building a utility that will
provide energy to the town and processor; it is an economic development engine that could
remove barriers to business development and create opportunities that do not currently exist.
The community of Akutan is well positioned to explore and develop its geothermal resource. It is
well established that there is a significant geothermal resource near the community of Akutan.
Survey work done decades ago documents the geothermal resource at Hot Springs Bay Valley
(HSBV) on Akutan Island. The objective of this report is to add to that knowledge set through
analysis of energy demand markets on Akutan Island and articulating stakeholder sentiment.
This report is not intended to be an assessment of the viability of the project, but rather to
present the current and future potential energy demand markets.
5
Key Findings
This report explores energy demand on Akutan Island and perceptions about the geothermal
energy project held by stakeholders in the community, business interests, government, and
neighboring entities. There is substantial energy demand on the island; the City and Trident
together currently use more than 4.6 million gallons of fuel every year to meet their electric and
heat energy needs. The large majority of this demand is generated by the Trident Seafoods
processing plant.
Electric
· Trident uses approximately 36.2 million kWh of electricity produced at an estimated
cost of $0.21 per kWh.
· The City of Akutan uses approximately 560,000 kWh annually produced at a cost of
$0.32 per kWh.
Heat
· Trident burns in excess of two million gallons of fuel each year, at an estimated current
cost of $3.05 per gallon, to meet its heat energy needs.
· The City of Akutan burns around 37,500 gallons of fuel each year, at an estimated
current cost of $4.20 per gallon, to meet its heat energy needs.
Based on the estimated cost of current electric energy production, a geothermal project would
be viable if it can produce energy for less than $0.21 per kWh, the estimated cost of electric
energy generation at Trident. If a project can deliver reliable energy for a cost that is less than
what Trident currently pays, it is anticipated that the processor would purchase it. At $0.21 per
kWh, the estimated cost of electricity is $0.11 less than City costs per kWh.
The value of energy currently used on Akutan Island has a mid range estimated value of more
than $14 million annually. Current energy markets for both electric and heat energy relying on
diesel energy create more than 51,000 tons of carbon emissions annually. In addition to current
energy demand, there are planned and potential projects that will substantially increase the
energy demand load.
· The planned small boat harbor will add a demand load equivalent to more than 82,000
gallons of fuel.
· The airport project includes a hovercraft maintenance shed facility based on Akutan
Island. The maintenance shed will have an estimated energy demand equivalent to
1,760 gallons of fuel for both electricity and heat needs.
· If Trident moves forward with plans to add cold storage capacity at or next to the
processing plant, the estimated increase in demand load is equivalent to between
200,000 to 300,000 gallons of fuel.
· Other potential projects that are favored by local residents of Akutan could create an
additional demand load equivalent to roughly 36,398 gallons of fuel.
Distributing electricity generated from a geothermal resource is widely practiced throughout the
world. The United States had more than 3,000 megawatts of geothermal installed capacity as of
6
September 20095. Heat energy needs can also be met by geothermal energy through either
district heat or electric heat applications, or some combination of the two, depending on the
location and design specifications of the project. Geothermal hot water can also be utilized for
cold storage, a direct use that is gaining in popularity where it is feasible due to the dramatic
costs associated with cold storage.
The vision of developing geothermal in Akutan goes beyond providing a cleaner, more price
stable energy source. It also creates the cornerstone for an economic development engine,
giving rise to opportunities that do not currently exist at the local and regional level. The City,
Tribe, and community are eager to explore the opportunities created by low cost energy. The
community has the funds and the infrastructure necessary to support entrepreneurial efforts,
including local food production and tourism operations, among others.
Land use issues related to development of the resource do not present a significant barrier as all
parties are in agreement that geothermal energy would have a positive impact on the
community.
· Akutan Corporation owns most of the land that would be impacted and is a strong
advocate of the project. In March 2009, the Akutan Corporation executed a Surface Use
and Exploration Agreement with the City.
· The Aleut Corporation (TAC) owns subsurface rights on the Island and has expressed a
desire to see those resources explored and developed for the benefit of both the
community and Aleut Corporation shareholders. In June 2009, TAC executed a
Subsurface Resources Exploration Agreement with the City.
Akutan has significant geothermal energy potential. The political climate at a national and state
level is ripe for exploring this asset. At the local level, the City government is enthused and
preparing the way for maximizing the benefits of natural resource development. Geothermal
technology has been tested around the world, including in the state of Alaska. There is little
question that a geothermal resource exists, but in order to determine if that resource can be
economically developed at this time, further information about the size and specifics of the
resource is needed.
Table 1 on the following page gives the estimated avoidable fuel in gallons and the value of that
fuel for current, planned, and potential energy consumption on Akutan Island. Avoidable fuel
represents the fuel used to meet current energy demand and the estimated fuel that would
become necessary to meet future energy demand. Low, mid, and high range estimated per unit
fuel costs vary depending on the buyer and the fuel end-use with a base price of:
· $65 per barrel crude oil prices for low cost estimates
· $94 per barrel crude oil prices for mid cost estimates
· $120 per barrel crude oil prices for high cost estimates
5 U.S. Geothermal Power Production and Development Update, September 2009, Geothermal Energy Association.
7
Table 1 Estimated Energy Demand Markets in Akutan
Gallons per
year
Total cost
Low estimate
Total cost
Mid estimate
Total cost
High estimate
Current energy demand
Akutan Electric 43,077 $123,631 $155,079 $182,216
Trident Electric 2,495,172 $5,788,799 $7,610,373 $9,182,233
Akutan Heat 37,500 $130,125 $157,500 $181,125
Trident Heat 2,063,064 $4,786,309 $6,292,345 $7,592,076
Total Current 4,638,813 $10,828,864 $14,215,297 $17,137,649
Gallons per
year
Total cost
Low estimate
Total cost
Mid estimate
Total cost
High estimate
Planned energy demand
Harbor Electric6 79,377 $227,812 $285,760 $335,764
Harbor Heat 2,810 $9,751 $11,802 $13,573
Hovercraft Electric 730 $2,096 $2,629 $3,089
Hovercraft Heat 1,030 $3,574 $4,326 $4,975
Total planned 83,947 $243,233 $304,517 $357,401
Gallons per
year
Total cost
Low estimate
Total cost
Mid estimate
Total cost
High estimate
Potential energy demand
Cold Storage7 278,308 $645,674 $848,849 $1,024,172
Greenhouse Electric 23,231 $66,673 $83,633 $98,267
Greenhouse Heat 8,749 $30,359 $36,746 $42,258
Tourism Electric 1,418 $4,070 $5,105 $5,998
Tourism Heat 3,000 $10,410 $12,600 $14,490
Total Potential 314,706 $757,186 $986,933 $1,185,185
Total current,
planned & potential 5,037,466 $11,829,283 $15,506,747 $18,680,236
6 Harbor estimates are based on the mid-range use estimates of 60 percent average capacity.
7 Estimates are based on a 20 percent increase in cold storage capacity.
8
Overview of the project
The City of Akutan, through RMA Consulting Group, contracted with Information Insights and
Mark Foster & Associates to conduct a preliminary energy demand and stakeholder assessment
related to developing geothermal resources on Akutan Island. The purpose of this project is to
provide an assessment of stakeholder interest, the current energy markets for the City and
Trident, and the potential increase in energy demand load that will result from the planned
infrastructure projects, as well as new projects that become viable with the availability of less
expensive and stable-priced energy. This energy demand/stakeholder assessment is intended to
provide a picture of current and future demand for energy and a summary of stakeholder input.
The project team conducted a series of stakeholder and key informant interviews during fall
2009 and travelled to Akutan in late September for a public meeting to discuss the project and
collect input from the community. The meeting was advertised locally and was open to the
public. Project staff also interviewed key individuals on site in Unalaska/Dutch Harbor. The team
reviewed available literature and studies related to the resource and conducted a review of
similar projects.
Geothermal energy from Hot Springs Bay Valley (HSBV) on Akutan Island has an estimated
capacity that exceeds the energy needs of both the City of Akutan and the Trident Seafoods
processing plant. This clean, renewable energy could displace close to a total of 4.6 million
gallons of fuel (total current use): 2.5 million gallons of fuel currently used in electric energy
generation and a substantial portion of the 2.1 million gallons burned for space heat and
industrial energy. The relative attractiveness of all renewable energy projects depends heavily
on the price of alternative energy sources. In the City of Akutan, energy needs are being met by
burning diesel. There is a hydro generation system currently offline, but under repair. Trident,
the primary energy user on the island, burns diesel fuel, and to an unknown extent fish oil, to
meet its energy needs.
A variety of geo-scientific surveys were conducted in Akutan in summer 2009 in order to better
pinpoint the location and characteristics of the geothermal resource. The team conducted an
Audio Magneto-Telluric survey in the Akutan geothermal area in order to identify conductive
zones at depth which might be representative of the clay cap overlying a geothermal reservoir,
amongst other features that will illuminate the subsurface flow regime feeding Akutan hot
springs. Analysis of the data collected is not yet finalized, but will provide necessary information
for resource evaluation and definition, and will guide exploratory drilling efforts that are
planned for summer 2010.
9
Exploratory drilling will provide concrete resource parameters that will facilitate the
development of a realistic cost estimate for the project. These parameters include:
· Geothermal fluid temperature
· Geothermal fluid flow rate (reservoir pressure)
· Geothermal fluid composition
· Cooling temperature (air or cold water sink)
· Extractable volume of fluid (pump capacity)
· Efficiency of energy conversion
· Size of power system / system technology
· Location of geothermal wells
· Size and configuration of gathering system
Phase II of the assessment of geothermal energy market potential in Akutan will include cost
estimates associated with supplying geothermal energy to the energy markets identified in this
report. Project economics and a determination of viability will be based on information gathered
through exploratory drilling. It is not possible at this time to engage in a detailed analysis of the
economic and financial feasibility of geothermal development at Akutan because not enough is
known about the resource.
This assessment estimates:
· Current energy demand for the City of Akutan and the Trident processing plant.
· Energy demand impacts associated with planned infrastructure projects.
· Energy demand created by potential business development projects that
become feasible if low cost and stable-priced energy is available.
10
Overview of the local and regional economy
Akutan, Alaska is a 2nd Class City incorporated in 1979. However, the history of Akutan, its
people, subsistence economy, and trade activities goes back for thousands of years.
Current day Akutan is a community of roughly 75 year-round residents. The City is economically
tied to Trident Seafoods Inc., a substantial fish processor in Alaska. Including the group quarters
at Trident, the 2008 estimated population of Akutan was 796 people.
As a 2nd Class City, Akutan has the authority to levy taxes. The City has no sales or property
taxes, relying on a one percent fish tax paid by the processor to support local government
functions. The Aleutians East Borough levies an additional borough-wide two percent fish tax.
Although few residents are employed directly by the processing plant, as the only tax payer in
the City, Trident is indirectly responsible for job creation in every sector.
Akutan is part of the Aleutians East Borough, a 2nd Class Borough with an estimated population
of 2,795. Including Akutan, the Borough has five incorporated cities: three 2nd Class Cities and
two 1st Class Cities. The Borough does not levy property or sales taxes, but in 2008 collected $4.2
million in fish tax and reported per capita revenue of $1,514. The Alaska State Assessor’s Office
reports that the full value determination (FVD) of the Aleutians East Borough in 2008 was $128.1
million, or $45,847 per capita. The City of Akutan’s FVD for the same period was $18.9 million,
or $22,051 per capita. However, it is important to note that the per capita FVD of Akutan is
calculated from a population figure of 8598, not the 75-80 full time residents.
Akutan’s economy has been primarily cash-based since its days as a whaling station. As in
neighboring communities, commercial fish processing is the mainstay of Akutan’s economy. The
remainder of the economy includes private sector, school district, and local, state and federal
government employment. Subsistence foods include seal, salmon, herring, halibut, clams, wild
cattle, and game birds.
Akutan residents participate in commercial fisheries in a number of ways, including:
• harvesting, with locally owned skiffs and small vessels,
• participating in the community development quota (CDQ) program,
• providing limited support services to the fishers and vessels in the community, and
• working on the Seattle-based fishing boats as crew members.
The Akutan Corporation, the City, and the Tribe are the key local drivers of the economy.
Residents of Akutan currently hold business licenses for eight distinct businesses. Though
commercial fisheries play an important role in the economy of Akutan, most full-time
employment for Akutan residents comes from the City of Akutan, Akutan Corporation, Akutan
Traditional Council, Eastern Aleutian Tribes, and Aleutian East Borough School District.
8 The Alaska Taxable population figures differ from the DCCED certified figures because they are based on Alaska
Department of Labor and Workforce Development estimates. Due to data availability at different points in time,
the Alaska Taxable population figures lag the DCCED certified figures.
11
Additionally, short-term employment is intermittently generated through community
infrastructure improvement projects, usually in the form of construction-related employment.
Unemployment and seasonality of employment
During the 2000 Census, 97 residents reported being employed and 505 residents reported
being unemployed. The unemployment rate at that time was 83.9 percent. By comparison, the
1990 Census reflected an unemployment rate of 0.4 percent. Though it may be numerically
correct, the 2000 Census does not present an accurate picture of unemployment in Akutan. The
community of Akutan consists of fewer than 100 persons, and not all of them are adults in the
labor pool. Thus, the vast majority of persons counted as unemployed were likely idled, itinerant
seafood processing workers, not unemployed Akutan residents. Under normal operating
conditions, there are no idle seafood processing workers in Akutan. Work crews are flown
between their home cities and Akutan, depending on workforce needs. While in Akutan,
nonresident workers are provided room and board by their employer. It is uneconomical for the
processor to have idle employees on site unless the plant’s downtime is anticipated to be short.
Akutan resident employment is for the most part year-round employment except for seasonal
fishing and construction employment. In contrast, Trident Seafoods employment, while year
round for many employees, is dictated by fishery seasons and correlating processing needs.
The following information from the City’s 2005 Community Plan has not changed. 2010 Census
information will provide current information in the near future.
According to Census data from 2000, the median household income in Akutan was $33,750. This
median income estimate is most representative of the Akutan resident population. In contrast,
the Census data from 2000 also reports the Akutan per capita income was $12,258. This data is
reflective of resident and non-resident incomes considered in aggregate and does not accurately
represent income levels for the permanent population.
Akutan faces barriers and challenges that are typical to rural Alaska. The City’s Community Plan
cites several barriers to economic development. One of the most significant is Akutan’s distance
from any substantial commercial market. While Akutan is relatively close to the hub community
of Unalaska, poor weather and other transportation issues have hindered Akutan’s ability to
develop projects that require reliable transport to or from outside markets. However, this
barrier will likely be ameliorated by the currently planned airport project.
Other typical barriers to development include lack of access to:
• capital, competitive financing and public investors,
• education and job-specific training, and
• adequate infrastructure, including affordable energy.
With a predominantly cash-based economy, Akutan will continue to rely on fisheries as an
important driver of the local economy. Other potential options for maintaining and expanding
the local economic base include the geothermal development project currently being explored
and potential development of non-resident “visitor” services. Retention of dollars within the
12
community can be maximized through local hire and additional training of local residents to take
advantage of opportunities as they arise.
On a regional level, the economic drivers are more diverse than in the local economy. In an
effort to begin to diversify the economy, Aleutians East Borough Mayor Stanley Mack signed a
formal agreement with the State of Alaska, the Bristol Bay Borough, and the Lake and Peninsula
Borough to support onshore oil and gas development around the Alaska Peninsula. The
agreement acted as a catalyst to the first Alaska Peninsula oil and gas lease sale in 22 years, held
in October 2009. Western Alaska is at the forefront of global climate change and subsequently
affected shipping routes and fish migration. These factors present both challenges and
opportunities. Communities, businesses, and government have started to look at these
opportunities and are developing strategies to maximize their potential.
13
Current energy demand
On the island of Akutan there are two distinct energy users and energy producers − the City of
Akutan and the Trident Seafoods processing plant. These two entities exist in close proximity to
one another but have completely separate energy generation systems. Trident operates as an
industrial enclave, producing all of the energy it needs for its operations. The City has a local
utility that serves local residents and businesses (with the exception of Trident).
Electricity:
The City of Akutan burns an estimated 43,077 gallons of diesel per year generating electricity. At
a cost of $3.60 per gallon, generation costs total more than $155,000 per year. The local utility
generates electricity at a rate of $0.32 per kWh. The cost paid by residential users is offset by
Power Cost Equalization (PCE) funds and a City subsidy. The majority of potential savings from
less expensive geothermal energy would be enjoyed by the State of Alaska through a reduction
in the PCE subsidy, the City, and local businesses that are not eligible for PCE.
The Trident Seafoods processing plant uses considerably more electricity than the City, burning
an estimated 2.5 million gallons per year to meet the plant’s electric energy needs. Total
estimated cost for fuel associated with Trident’s electricity generation is roughly $7.6 million per
year. At $3.05 per gallon of fuel, the authors estimate Trident is effectively paying $0.21 per
kWh for electricity.
Table 2 Current Markets - Electricity Generation
Gallons per year $/kWh (estimated
for Trident)
Estimated total costs
Trident Plant (Electric) 2,495,172 $0.21 $7,610,373
Akutan (Electric) 43,077 $0.32 $155,079
Total 2,538,249 $7,765,452
* Akutan electric energy use is based on FY08 PCE report for Akutan and assumes an average 13
kWh/gallon.
* Trident energy use is based on personal communications with Trident personnel.
Table 2 above uses mid-range current estimated fuel prices. Cost estimates are always a
snapshot as the price of fuel is a moving target. The last few years have seen wild variation in
fuel prices in relatively short periods of time. The cost of fuel used in the table above are based
on Energy Information Authority (EIA) 2009 reference case with cost increments associated with
refining, barging from Seattle to Akutan, and projected carbon tax going into the future. This
model produces fuel prices of between $3.05 and $3.60 for electric generation, depending on
the buyer. Most economists agree that it is highly unlikely the price of fossil fuels will decline
substantially or for sustained periods in the foreseeable future. Demand for oil continues to rise
as the world supply of relatively cheap and accessible oil continues to decline. Ironically, the
economic recession has created something of a reprieve for small fuel buyers in Alaska and
around the country. After dropping from a high of $140 in July 2008 to a low of $31.41 in
December 2008, prices are thought to be more accurately priced now at around $75 per barrel.
14
The Energy Information Authority makes the disclaimer about predicting fuel prices that “EIA’s
crude oil price forecast reflects all available data and our expert judgment, nonetheless there is a
substantial likelihood that prices will diverge significantly from the forecast.”9
Given the level of price volatility, low, mid, and high range estimates of total cost are provided in
Table 3 below, and again for heat energy in the section that follows.
Table 3 Current Electric Markets - Estimated Value
Gallons
Total cost
Low estimate
Total cost
Mid estimate
Total cost
High estimate
Trident (electric) 2,495,172 $5,788,799 $7,610,373 $9,182,233
Akutan (electric) 43,077 $123,631 $155,079 $182,216
Total (electric) 2,538,249 $5,912,430 $7,765,452 $9,364,449
* Low estimates are based on $65 per barrel crude oil prices.
* Mid estimates are based on $94 per barrel crude oil prices.
* High estimates are based on $120 per barrel crude oil prices.
Heat
Space heating is the other significant piece of the current use energy equation in Akutan. The
City of Akutan uses around 37,500 gallons of fuel for space heat per year. At a mid level
estimated cost of $4.20 per gallon, the average household pays a little over $3,000 per year to
heat a home – more than three times the national average. The community as a whole spends
approximately $157, 000 per year on space heating at current rates.
The Trident plant consumes 2.1 million gallons of fuel per year for heat energy at an estimated
cost of $6.3 million. Much of Trident’s heat energy is used for industrial processes, not for space
heat. Fuel use is based on personal communication with Trident personnel. Cost estimates were
produced through review of Trident’s energy production inventory and independent analysis.
Table 4 below shows the potential avoided fuel associated with heat energy use for both the
City of Akutan and the Trident processing plant.
Table 4 Current Heat Market
Gallons per year Cost per gallon Estimated total costs
Trident Plant (Heat) 2,063,064 $3.05 $6,292,426
Akutan (Heat) 37,500 $4.20 $157,501
Total 2,100,564 $6,449,927
9 http://www.eia.doe.gov/
15
Table 5 gives the estimated value of heat energy consumed in Akutan at low, mid and high
estimated fuel prices.
Table 5 Current Heat Market - Estimated Value
Gallons per
year
Total cost
Low estimate
Total cost
Mid estimate
Total cost
High estimate
Trident Plant (Heat) 2,063,064 $4,786,308 $6,292,426 $7,592,076
Akutan (Heat) 37,500 $130,125 $157,501 $181,125
Total 2,100,564 $4,916,433 $6,449,927 $7,773,201
There are two methods by which heat energy could potentially be provided by the geothermal
resource − electric heating and district heating.
Electric heating
Electric heating systems have generally been considered less efficient than other heat energy
sources in Alaska. However, with inexpensive energy they can provide an attractive alternative.
Electric heating systems require little maintenance and attention by the user, and the residential
system changeover costs are modest. It is assumed that Trident would not immediately replace
industrial equipment currently fueled by diesel with electric units. Depending on the cost of
replacement and the age of the equipment, the processor could plan to transition to electric
equipment as it becomes economical.
Table 6 Current Heat and Electric Market
Trident: electric
demand / year
Trident: heat
demand / year
Akutan: electric
demand / year
Akutan: heat
demand / year
MMBTU 123,482 268,198 1,911 4,875
kWh 36,180,000 78,581,401 560,000 1,428,362
Table 6 above shows total electric and heat demand for both Trident and the City of Akutan in
BTUs and kWhs. We can conservatively estimate that electric energy could replace 25 percent of
heat needs at the Trident plant, creating a potential 19.6 million (25% of total) kWh in new
electric demand. A simple break-even analysis reveals $/kWh price points for electricity of $0.08
for Trident and $0.11 for the City of Akutan. At these price points, electric heat becomes price
competitive at current estimated fuel prices.
Because Trident and the City have significantly different unit costs associated with energy
generation, it is worth noting that utilities regularly charge varying rates for different customers
and/or different end-uses. The geothermal developer in Akutan could charge a rate for heat
energy that is just above the incremental cost of that unit. Higher cost units of energy would be
sold at a higher cost – because current electric demand represents the demand that is more
consistent year- round, the first units of production would be sold for electric use. The result of
this rate structure is that the production costs for each unit of energy has a buyer, and the buyer
receives energy at a price that is less than what they currently pay. The non-monetary benefit of
16
incentivizing the use of a renewable resource for heat energy is reduction in greenhouse gas
emissions and price stabilization.
District heating
Geothermal district heat is successfully used in the United States and around the world. Many
Alaskans are familiar with geothermal development in Iceland where a significant percentage of
the population enjoys low-cost heat provided by geothermal resources. In Alaska, Chena Hot
Springs Resort has substantially lowered their cost of space heating through the utilization of
district heat.
District heat has several notable advantages. District heat systems typically use conventional
piping equipment that is readily available. The system utilizes the resource directly (i.e., “direct
use”) so there is no conversion cost and little energy loss, and district heat can use low
temperature as well as high temperature geothermal resources. The cost to convert buildings to
a district heat system can be a barrier for individual residences, but once the system is in place
the level of service is extremely reliable.
Estimating costs for district heating depends on a variety of factors, but most heavily on the
distance of the resource to the space(s) to be heated. District heating is most viable if the
resource is close to a densely packed group of users. The value of the current heat energy
markets in Akutan is nearly $6.5 million at current estimated fuel prices. The City of Akutan has
space heat needs valued at roughly $160,000, and Trident has heat energy needs totaling nearly
$6.3 million. For a district heating system to be economically viable, the cost of construction of
the needed infrastructure would likely need to fall within a financing schema based on current
avoidable costs.
Total estimated value of the current energy market in Akutan
The tables that follow estimate the total value of energy used on Akutan Island in 2012 and the
net present value of energy consumed between 2012 and 2030. Total net present value (NPV) of
energy in Akutan is more than $200 million, with just over half of that value consumed in
electric energy.
Table 7 Annual Value of Energy Consumed in Akutan
Total $/year Electric ($/yr) Heat ($/yr)
Akutan $312,580 $155,079 $157,501
Trident $13,902,798 $7,610,373 $6,292,426
Total $14,215,379 $7,765,452 $6,449,927
17
Table 8 Net Present Value Akutan Energy Market
Total $ Electric ($) Heat ($)
Akutan $4,520,312 $2,263,948 $2,256,364
Trident $207,749,254 $113,721,659 $94,027,595
Total $212,269,566 $115,985,608 $96,283,959
Note: assumes a 5% discount rate
Estimates of the value of the local energy market assume a modest increase in the price of
diesel as well as a future and increasing cost associated with carbon emissions. The authors
assume no population growth or contraction in the community, as making population trend
assumptions for a community of fewer than 100 people is extremely unreliable. Likewise, we
assume a steady rate of activity at the Trident plant.
Planned and potential projects will increase the energy demand load in Akutan and raise the
value of the energy market. There is no load growth estimated outside the parameters of the
planned and potential projects. Projections of population are not reliable in such a small
community and the fishing industry has too many unknown and uncontrollable variables to
make a reasonable prediction of future levels of production. Planned and potential projects that
impact energy demand are described in the sections that follow.
18
Planned projects and energy demand
Akutan is primarily dependent on sea transportation for access to import and export of goods.
The two planned capital projects in Akutan - construction of an Airport and a public small boat
harbor - both help create community sustainability through increased access to goods and
services. Ease of access also removes a significant barrier for individuals interested in marketing
tourism opportunities on the island, exploring niche seafood markets, and for residents who
need to travel out of the community for work and/or pleasure.
These projects will create long-term employment opportunities for residents, an essential
component in creating community sustainability. The airport and harbor projects combined
represent more than $100 million investment in the community. The projects are being
constructed by separate entities, and an assessment of their combined impact on the City has
not been studied at this point. It is therefore premature to assign any kind of multiplier effect
analysis, labor, or population impacts. However, with infrastructure investments of this
magnitude, economic activity will increase throughout the construction periods at minimum,
and activity should be monitored in order to quantify impacts on Akutan in the long term.
The harbor project will have significant impact on the energy demand load in Akutan, while the
Airport’s location on Akun Island necessitates a separate energy generation system.
Airport
The construction of an airport on Akun Island is an important project for the City of Akutan,
though not one that will increase energy consumption dramatically. Limited outdoor lighting
and a snow removal equipment building will be erected and powered to support airport activity,
but they will be located on Akun Island and energy generation will occur on site. The airport
location makes it difficult to imagine a feasible intertie for such a small load to a geothermal
project on Akutan Island. Akun Island is located seven miles across the water from the
community of Akutan. Even if it were economically feasible, running power lines under water
presents problems because of the large fishing vessels that come into the area and anchor to
offload fish at the Trident plant.
The Environmental Assessment (EA) for the proposed airport notes that energy would be
provided by an on-site diesel generator and estimates total consumption at 2,000 gallons per
year. Direct energy demand in the community of Akutan is limited to the hovercraft
maintenance shed. Energy consumption for the maintenance shed is estimated using PCE data
for community buildings in Akutan. Electric demand is estimated at 9,494 kWh per year, and
heat energy demand is estimated at 1,030 gallons per year.
The Airport EA also notes potential project benefit for small business ventures, including export
of local goods to market. Along with seafood goods, the airport could provide a transportation
option for a greenhouse food production venture, if the developer intended to sell fresh
produce to other communities on the Aleutian chain.
19
The most significant impact of the airport on the community of Akutan is increasing the ease
and safety of access. Increasing the reliability of flights in and out of the community will make
Akutan a more attractive place to live, potentially staving off outmigration, and removing a
significant barrier to small business development and community economic development.
Harbor Development
Akutan will soon be home to a public small boat harbor. Development of the harbor will provide
a naturally sheltered area, shore power, and services for up to 58 vessels primarily 60 feet in
length or smaller. The public small boat harbor project is being managed by the Aleutians East
Borough working with the Army Corp of Engineers. The project has moved through assessment
and design phases and has gone out to bid for construction in 2010. There is some regional
competition for small boats at harbors along the Aleutians, but Akutan’s proximity to rich fishing
grounds, the local on-shore processor, as well as proximity to Unalaska/Dutch Harbor, gives it a
competitive advantage.
The public small boat harbor operating at Unalaska/Dutch Harbor can accommodate 71 boats
up to 60 feet and often has a waitlist and conditions of overcrowding. Between 1998 and 2003,
the public small boat harbor operated at 78 to 98 percent capacity.10 There are additional small
boat slips available at private docks in Unalaska/Dutch Harbor, but there remains a persistent
condition of overcrowding at the public small boat harbor. In addition to offering an alternative
to the small boat harbor at Unalaska/Dutch Harbor, Akutan’s harbor will offer residents, who
are involved in or interested in becoming involved in commercial fishing, a local place to keep
their boats. There is currently only a handful of commercial fishing licenses held by residents of
Akutan. Creating opportunities for residents to work locally can keep people in their community
of choice and potentially attract new residents. In combination with the airport, the harbor
might also provide better access to boats when flights are suspended into Unalaska/Dutch
Harbor.
The energy demand load associated with the planned harbor development includes shore
power for vessels, laundry/shower facilities, garage/maintenance shed, and harbormaster
residence and office.
Table 9 on the following page estimates shore power energy demand load associated with the
harbor at 20, 40, and 60 percent capacity. Estimates assume boats are using 30 amps and
receiving 110 volt service. The estimate of gallons used to generate electricity assumes 13
gallons per kWh.
10 Technical Memorandum: Port and Harbor Ten-Year Development Plan, April 2004, Northern Economics.
20
Table 9 Small Boat Harbor Energy Demand – Shore Power
20% capacity 40% capacity 60% capacity
Boats 23.2 34.8 46.4
kWh per day 1,837 2,756 3,675
kWh per year 670,666 1,005,998 1,341,331
Gallons needed to
generate electricity 51,590 77,384 103,179
Table 10 estimates energy demand, other than shore power, associated with the operation of
a small boat harbor.
Table 10 Boat Harbor Energy Demand - Other Land Based Services
Other services Estimated annual electric
demand – kWh
Estimated annual heat
demand - gallons
Laundry/Shower/Bathrooms 9,494 1,030
Harbormaster Home/Office 6,913 750
Garage/Maintenance Shed 9,494 1,030
Total 25,902 2,810
The total energy demand created by the small boat harbor in Akutan is estimated to be
1,031,900 kWh of electricity and 2,810 gallons of heating fuel. If diesel is used to generate all of
this energy, more than 82,000 gallons of fuel will be needed: 79,377 gallons for electric energy
generation and 2,810 gallons for heat energy.
21
Potential projects and energy demand
The increase in demand for energy created by the potential projects outlined below –
greenhouses, tourism, and increased cold storage capacity – is large relative to current demand
for the City alone. Greenhouse and tourism operations would be efforts of a local entity or
entrepreneur, and would together generate demand for the equivalent of an additional 36,397
gallons of diesel (nearly half what the City currently uses) for space heat and electricity, with
most of the energy used in the greenhouse operation. The third project, cold storage, has a
much greater estimated energy demand load that is roughly equivalent to 278,300 gallons of
fuel, and is most likely to be developed by Trident to serve the needs of the processing plant.
The desire expressed by stakeholders and community members to engage in the activities
outlined in the following section is rooted in the clear financial, social, and cultural benefits of
local economic development and job creation opportunities. It is important to note that creating
even one good job in a remote community with limited employment opportunities can have an
impact on the community. Tourism and greenhouse farming have the potential to create a
handful of job opportunities for local residents and will help sustain the local economy.
Increasing cold storage capacity will allow Trident to process and store more fish, increasing the
tax base for both the City and the Aleutians East Borough.
Greenhouses
Greenhouse technology today is very advanced and has been tested worldwide. In combination
with geothermal power, greenhouses are an effective and potentially profitable use of energy.
There are many examples of large-scale greenhouse operations in Europe and Russia, and at the
state level, Chena Hot Springs Resort (CHSR) and the University of Alaska Fairbanks serve as
successful models for the implementation and monetization of greenhouses.
Robert Carroll Dose, at Texas A&M University, believes that hydroponics is the ‘way to go’, as
hydroponics technology has been well tested throughout the Lower 48 and Mexico. Successful
crops using hydroponics include tomatoes, cucumbers, squash, eggplant, lettuce, and other
greens. The estimated cost of building a commercial grade greenhouse is approximately $100 to
$150 per square foot, not including transportation costs or related support ventures such as
storage and packing facilities. At this point, the authors are not able to estimate real operating
costs of a greenhouse venture in Akutan because there are too many unknown variables:
· Is it possible to locate the greenhouse very close to the resource?
· What kinds of soluble and water supplements will be needed?
· What are the parameters of local light intensity?
· What is the local market like? Do local people use these products already? How would
they fit into the daily diet?
· What is the market potential and logistics for the area? What are the true capital
expenditures?
· What are the existing and potential labor components needed?
22
It is possible, however, to look to the CHSR experience to estimate energy needs. Energy
demand assumptions presented from this point forward are based on that experience.
· Electricity: Requirements for a 60’ x 70’ greenhouse are approximately 62kW, 16 hours
per day primarily for lighting. This works out to a little more than 300,000 kWh per year;
nearly $100,000 at today’s electric rates.
· Heating: Between 1971 and 2000 the mean heating degree days (HDD) with a base
temperature of 65° F in Dutch Harbor11 is 8,991 while the mean HDD is 13,980 in
Fairbanks.12 BTUs needed for space heat in Akutan are estimated to be 44.5 percent
lower than at Chena Hot Springs Resort. Thus, we can estimate space heat for a
greenhouse on Akutan Island at 46.7 million BTU per year, or approximately equivalent
to 8,749 gallons of fuel.
Table 11 Greenhouse Energy Demand and Cost Estimates
Diesel fuel scenario
Annual kWh electric Annual cost of
electricity at 32.3
cents/kWh
Heat fuel
gallons/year
Annual cost of
fuel at $3/gallon
302,000 $97,546 8,749 $26,246
Geothermal energy scenario
Annual kWh electric Annual cost of
electricity at 15
cents/kWh13
Heat fuel
gallons/year
Annual cost of
heat at equivalent
to $1.5/gallon14
302,000 $45,300 8,749 $13,123
Difference $52,246 $13,123
Total savings potential $65,369
In addition to providing fresh and local produce, a greenhouse operation would provide jobs for
local residents. Sizing of the greenhouse will be a decision of the developer after assessing
potential to sell fresh produce up the chain and/or to Trident. Because stakeholders expressed a
desire to enter into the greenhouse project as a business venture, the estimates provided are
for a greenhouse size that would provide more produce than the community of Akutan could
consume.
Tourism
Tourism is an important industry in many parts of the state but has yet to take off in earnest in
the Aleutians. It is estimated that six percent of Alaska visitors come to the Southwest region of
the state. Southwest Alaska visitors are characterized as wealthy, older men who are drawn to
11 The nearest community to Akutan for which HDD are reported.
12 The nearest community to CHSR for which HDD are collected.
13 The cost per kWh used to estimate the value of geothermal electricity used in greenhouse operations is based
on estimates of the capital cost for Akutan geothermal project development presented in the Geothermal Matrix
Memo prepared by Lorie Dilley for the Alaska Energy Authority (2009). These estimates are not accepted by all
parties and they are based on limited information. If actual project development costs are higher then savings will
decline, if they are lower then savings will increase.
14 The dollar value of this space heat is estimated using the $1.50 per gallon equivalent reported by Chena Hot
Springs Resort.
23
hunting and fishing lodge opportunities in the region. Niche markets that are opportunities for
growth in tourism in the region include high-end fishing lodges, birding, eco-tourists, and
generally, high margin/low volume tourism that targets upper income travelers who are
interested in paying more for a unique experience.
The Aleutian Pribilof Island Community Development Association (APICDA) has commissioned
several research projects related to tourism and has built lodges to promote the industry in the
region. APICDA research has identified wealthy travelers looking for a unique experience as the
target market for the region. Akutan has the benefit of both a hot springs and close proximity to
one of the most abundant fisheries in the world. A local entrepreneur could develop a lodge at
the hot springs, powered by geothermal energy, with the hot springs and proximity to fishing as
the primary attraction.
Outside of transportation, energy demand by the tourism industry is small relative to other
industries. A small lodge is estimated to consume four to five times the energy used by a typical
residential customer for both heat and electricity.
Table 12 Small Lodge Estimated Energy Demand
kWh/year Gallons/year space
heat
Total cost: electric and
heat
18,432 3,000 $18,554
If all energy demands of a small lodge were met through diesel generation, 3,000 gallons would
be needed for space heat and an additional 1,418 gallons for electricity generation for a total of
4,418 gallons. Providing for all energy demands of a small lodge using renewable geothermal
energy would require approximately 132,701 kWh of electricity. If a combination of geothermal
electricity and direct heat were utilized then the kWh requirements would be reduced.
24
Cold Storage
Trident has expressed its intent (currently on hold) to build new cold storage to support
processing activities. No specific information is available on the size, timing, or location of the
project. Estimates for new cold storage facilities are based on academic research of groups of
fish processors in the Pacific Northwest and in Asia. These studies report that 50 to as high as 85
percent of all electric use in fish processing plants is associated with freezing and cold storage
facilities.15 The table below estimates increased energy demand based on Trident’s current
estimated electric use and gives a range of potential increases in cold storage capacity.
Table 13 Cold Storage Estimated Energy Demand
15% increase in
cold storage
capacity
20% increase in
cold storage
capacity
25% increase in
cold storage
capacity
Electric demand – kWh 2,713,500 3,618,000 4,522,500
Diesel equivalent - gallons 208,731 278,308 347,885
Cold storage is both extremely energy intensive and absolutely essential to the fish processing
industry. Utilizing geothermal power to increase cold storage capacity, either through electric
generation or more likely through direct application, avoids the use of hundreds of thousands of
gallons of fuel per year, eliminating roughly 3,089 tons16 of potential carbon emissions.
15 Nguyen Phuoc Dan, C. V. (2004). Cleaner Production Potentials in Seafood Processing Industry: A Case Study from
Ho Chi Minh City, Vietnam.
Greg Kelleher, E. K. (2000). Improving Energy Use and Productivity in West Coast and Alaskan Seafood Processing
Plants.
16 Calculations of C02 emissions based on Environmental Protection Agency methodology.
http://www.epa.gov/oms/climate/420f05001.htm
25
Summary of stakeholder interviews
Information Insights staff conducted extensive stakeholder and key informant interviews.
Information was gathered about the proposed geothermal project, industry operations locally
and regionally, and perhaps most importantly, perceptions and hopes for the future of the
community. Residents of Akutan do not envision the city as the next Dutch Harbor, but they are
excited about the prospect of creating sustainability through reduced energy costs and the
potential for economic development opportunities that could bear fruit under a low energy cost
scenario.
Stakeholders and key informants included:
· Stephen Arbor, Chief Engineer, Trident Seafoods
· Joe Bereskin, Mayor, City of Akutan
· Chris Hladick, City Manager, City of Unalaska
· Ted Meyer, Community Development Coordinator, Aleutians East Borough
· Amanda Kolker, Geologist & Project Manager, Alaska Geothermal
· Joe Kyle, COO/CFO, APICDA
· Dave Lockard, Alaska Energy Authority
· Neal McMahon, Alaska Energy Authority
· Peter Crimp, Alaska Energy Authority
· Tuna Scanlon, City Administrator, City of Akutan
· Eric Waterman, Aleut Corporation
· Zenia Borenin, President, Native Village of Akutan
· Jacob Stepetin, Tribal Administrator, Native Village of Akutan
· Robert Carroll Dose, Texas A&M, Greenhouse Specialist
· John Fulton, Assistant City Manager, City of Unalaska/Dutch Harbor
· Dan Winter, Utility Director, City of Unalaska/ Dutch Harbor
· Town Meeting: Community members, City Council members, Tribal members, City Staff
present
The stakeholders and informants interviewed can be divided into three broad categories: State
and regional representatives/stakeholders, area experts, and community
representatives/stakeholders. Each of these unique stakeholder groups offer different and
valuable points of view regarding the feasibility, impact, and opportunity presented by a
geothermal energy resource at Akutan. We found that many of the people interviewed
expressed overlapping ideas and views. In order to best present the array of thoughts, ideas,
and opinions presented, we grouped the feedback received into three broad categories: 1)
Geothermal as a part of an energy strategy, 2) Geothermal as a feasible and promising
technology, and 3) Geothermal as a catalyst for economic development.
26
1. Geothermal as part of an energy strategy
Geothermal is a renewable resource that advances the goals and strategies of a national and
statewide energy policy of reducing fossil fuels and tempering the effects of climate change.
The State of Alaska has an interest in the project as a funder of exploration and as part of its
stated policy to encourage renewable resource development in Alaska. Interviews with
stakeholders at the government level indicate that although Akutan is one of the primary focus
areas for geothermal development in the state, its remote location, small population, and
uncertain market are cause for caution as the project moves forward. Nevertheless, the State is
supportive of the project as it recognizes the potential of the energy resource.
2. Geothermal as a feasible and promising technology
The success of renewable energy strategies often pivots on the feasibility of the technology
applied. Geothermal technology is a well-tested resource used worldwide. Experts in the area
of geothermal resources at Akutan were interviewed to confirm information contained in
written material about the proposed project and to gain as much detailed information as
possible about the potential development. Experts cited successful geothermal projects in
Klamath Falls Oregon, Iceland, and Russia. On a local level, experts cited the use of geothermal
at Chena Hot Springs Resort, noting however, that this model uses lower temperature water and
that the resource at Akutan is likely to be developed using much more conventional technology
for higher temperature water. Project geologists verified, through academic research and
personal communication, the high value of the geothermal resource at Akutan. Conversations
with the City of Unalaska/Dutch Harbor cited similar exploration technology applied in the
Makushin project.
Experts interviewed also talked about the importance of maintaining and sustaining the
geothermal resource once the project is complete. There is concern about the local capacity to
maintain a geothermal energy system. Questions were also raised about an adequate backup for
the geothermal system should it be needed.
3. Geothermal as a catalyst for economic development
Akutan has an unusual amount of infrastructure and capacity for a very small remote
community, due in large part to the presence of Trident and the one percent raw fish tax that
the City collects. The prospect of a reliable and renewable geothermal energy resource is at the
center of current discussions on economic development. We talked with a number of experts in
industry and economic development in the region, as well as with local entities, the public, and
community stakeholders, to assess their perceptions of economic development opportunities in
relation to the Akutan geothermal energy resource. The area of economic development
overlaps the interests of stakeholders across the board, from state and regional entities to local
governments and industry players. A summary is provided of the input received from
stakeholders.
27
The Aleut Corporation (TAC) is a stakeholder in the project as the subsurface rights owner in Hot
Springs Bay Valley. The Aleut Corporation is interested in maximizing profits for their
shareholders. TAC is interested in the project as a means to that end, and there are
shareholders in Akutan who might benefit from geothermal development, but few relative to
the universe of TAC shareholders. TAC is open to the idea of being a development partner, if it
makes economic sense to do so. TAC has a history of acting as both an owner and as a
development partner in projects in the Aleutians, and has indicated a level of interest in working
with the State in developing a quarry on Akun Island to support the airport project.
One of the topics that emerged in conversations with City staff and Akutan residents is the
convergence of opportunities that is visible when one looks at the planned projects and the
potential projects that could be realized with a stable, affordable energy resource. Stakeholders
see having geothermal energy as a cornerstone of business development and community
sustainability, with a focus towards maintaining their subsistence traditions while maximizing
new entrepreneurial possibilities. There is no doubt that stakeholders have ideas for diversifying
their economy and way of life, including expanding services and markets within the region, but a
great deal depends on the energy resource.
Trident Seafood, Corporation:
Trident Seafood Corporation has expressed support for the project and has signed a
Memorandum of Understanding agreeing to provide non-proprietary information necessary to
evaluate the economic feasibility of the project. Trident holds proprietary some information
about its operations and energy consumption. Trident has indicated that whenever feasible, it
will lend its infrastructure to the project through use of staging areas, equipment, logistics
coordination, and potentially transportation support for freight and personnel to and from
Akutan, as well as other in-kind services. The potential to cut transportation costs associated
with project development is potentially very valuable. The City and Trident have agreed that
upon completion of the project feasibility assessment, the two parties will immediately begin
work to determine if a power purchase agreement, including price, length, and amount of
energy to be purchased, can be negotiated.
In its initial requirements, the State of Alaska indicated that having Trident at the table was
optimal, especially since Trident creates the lion’s share of energy demand in Akutan. From a
State perspective, it is critical that Trident is on board with purchasing the power once it
becomes available.
Conversations with community members and leaders indicated that they believe it is in Trident’s
best interest to be at the table, as the project offers an opportunity to diversify energy
consumption practices and lower cost. Trident is perceived to be a part of the community and
could benefit from the combined impact of the new harbor, airport, and energy resource.
28
Fishing Industry:
There is moderate concern over the pollock fishery migrating North as well as concern about the
political forces that are lining up to fight the interests of the commercial pollock fishery.
Interests include subsistence, sport fishers, and environmentalists who see the pollock fishery as
a threat to the king salmon run.
Aleutian Pribilof Island Community Development Association (APICDA) is a non-profit entity
whose purpose is to create “stable local economies” in its member communities, of which
Akutan is one. APICDA has done very little in the community of Akutan, primarily because there
are communities with far fewer resources at their disposal, making them a higher priority. The
purpose of the Community Development Quota (CDQs) is to serve very small and very remote
communities that have limited resources. That said, APICDA has explored economic
development opportunities in the region, and much of what it has learned is applicable to
Akutan, as there are many shared variables that impact development.
Tourism:
The idea of using the hot springs as an attraction is not new. Conversations with community
members indicate that the springs have been in use throughout Akutan’s history. The potential
development of geothermal energy combined with the prospect of the new airport, has created
increased talk of tourism. Tourism in the area, however, still faces significant challenges
Chena Hot Springs Resort is able to attract large numbers of Japanese tourists to their resort
during the winter months. It seems unlikely that Akutan would be able to attract this subset of
hot springs travelers, since the primary attraction outside the hot springs in Chena is the ability
to view Northern Lights.
APICDA has explored tourism in the region and shared its market assessments with the project
team. For the most part, it appears that tourism in the Aleutians competes with sport fishing
opportunities in Homer and other parts of Alaska that have mature industries and well-
established support services available for visitors. Interviews indicated that likely Akutan tourists
are few, they are well off and well traveled, they are looking for something different/extreme,
and they expect high-quality service. In addition, marketing to this group is expensive, and the
number of visitors is still relatively small. On the other hand, contacts in Unalaska/Dutch Harbor
reported an unusually high number of cruise ships in the region this summer.
Akutan and Dutch Harbor:
Insights on the potential competition between the neighboring communities indicate that there
is more interest in a complementary relationship than an adversarial one. Members of the
Akutan community expressed that they do not want to become “the next Dutch” and instead
want to diversify their opportunities and maintain their community identity. Dutch Harbor
contacts indicated that they are keeping a close eye on the developments in Akutan and that
they would be interested in collaborating whenever possible in coordinating exploration efforts
to better manage costs.
29
Dutch Harbor is much bigger in every respect, including population, infrastructure and industry
development (deep water port). While some expressed the opinion that Akutan could possibly
be competition, it was qualified by “but not anytime soon,” since presently Dutch Harbor has
support services and fuel. It is unlikely that industry presently at Dutch would relocate to
Akutan. There is interest to see how industry will react to the projects at Akutan as they come to
fruition.
Other Opportunities:
Northern Route: The opening of the Northern Route brings a new element of opportunity to
Western Alaska and the Aleutian chain, but it is not clear what those opportunities are. Some
interviewees are skeptical of the benefit to Akutan despite the fact that the major thoroughfare
for ships going from Seattle to Asia (or vice versa) goes past the vicinity of Akutan. The
experience often cited relating to the Northern Route is that of small towns along major
highways; however, most people when questioned further recognize that the parallels are not
very strong. It is unclear at this point, what a commercial outpost opportunity would look like
for Akutan and the region.
Drilling: Stakeholders in Akutan and the region see positive impacts from future potential oil
drilling in the region, but no specifics were mentioned beyond increased rescue activity.
Cold Storage: Additional cold storage in Akutan is an attractive opportunity if cheap geothermal
energy is available. Storage would not only support existing Trident operations but could also
provide storage of produce if greenhouses are developed. Trident has plans (though they are
currently on hold) to develop additional cold storage for its plant operations.
Green houses: Informants interviewed believe that a geothermal-powered greenhouse is a
feasible opportunity. There is support from the community and the existing technology makes it
very probable. However, initial investments could be substantial depending on the specifications
of the greenhouse. An expert interviewed believes that the cost of a greenhouse is about $100
to $150 per square foot, not including transportation costs. Variables that need to be examined
prior to arriving at a business plan include: market data, distribution logistics, cost savings
offered by geothermal energy, capital expenditures, labor component, solubles in water, and
perhaps most important, distance from geothermal source.
Cattle: Potential development ideas include better utilization of cattle currently on the island.
There is a heard of roughly 300 head of cattle located on both Akun Island and Akutan Island.
The Akutan Corporation is interested in creating a place to slaughter cattle so that the meat can
be used for local consumption and potentially for sale to other Aleutian communities.
Community population: Stakeholders mentioned that while the population of Akutan has
remained stable, there are notable population gaps. Current population models for Alaska do
not forecast population at the community level, especially when the base numbers are so low,
because of the statistically volatile nature presented by such small numbers. However, some
residents believe that geothermal energy and its effect on opportunity would provide an
30
incentive for residents to come back or not leave in search of jobs. Job creation is key, according
to leaders of the community.
Buildable land: Stakeholders mentioned the challenges posed by the landscape in Akutan for
potential housing to accommodate an increase in population, even if it were temporary. The
City sits on a stretch of land with very little room for growth. Residents speculate that any
residential growth would either be on Akun Island, or would occur by leveling land at high
grades on Akutan Island.
31
Next steps: Towards a business plan
This report is a high-level view of the current energy demands of Akutan, Trident Seafoods Inc.,
and the proposed and potential projects on the contemplated geothermal energy resource. The
report provides what the authors have verified and deduced from available information,
research, and the stakeholder assessment. There are next steps necessary on all fronts,
including drilling, continued exploratory funding, funding beyond the exploration phase,
updating of the City’s Community Plan to incorporate the current challenges and opportunities,
and the development of a business plan.
There are many components and variables for which current information is insufficient to
complete a bankable business plan. The State of Alaska has made it its stated policy to support
renewable resource development, and to that end it is the appropriate funder of exploration
activities which are by their nature extremely uncertain, making them a high risk and
unattractive investment for private investors and traditional lenders. It is the intention of the
City of Akutan and its partners to develop a project that will be attractive to outside private
investors and traditional lenders and will not rely solely on state and other government funds.
The most important next step is clearly defining the resource so that a detailed analysis can be
conducted on the cost side of the equation. Once costs are fully understood, the developer will
be in a position to negotiate with potential buyers, attract funding, and create a rate structure
that best serves the needs of the new utility and the community in which it operates. Given the
scope of this report, the authors believe the following should be addressed as part of the
business plan or as a preliminary step to inform the business plan.
· Supply side analysis: the current report focuses on looking at the current and
foreseeable energy demands on the geothermal resource. The next step is to
research the supply side of the equation. While this next step requires more
information than is currently available, a plan and strategy for completing the supply
side analysis should be designed, including which data sources to be tapped and type
of expertise required.
· Workforce analysis: The business plan should look at the workforce/labor demands
of the geothermal project on Akutan. What is the necessary training to maximize
local hire?
· Infrastructure analysis: The business plan should look at the infrastructure
(transportation and communications) needs of the project and how these will be
met.
· Housing/accommodation opportunity and need: The business plan should have a
component addressing the buildable land issues for permanent opportunities as well
as accommodation opportunities for a temporary workforce. Is there a plan in place
by the planning commission?
· Funding sources: The business plan should articulate the City’s strategy for obtaining
funding for the geothermal project completion: private vs. public, examine the City’s
ability to afford the project given different funding scenarios, examine the feasibility
of public debt, and/or taxing or fees. The business plan should address potential
partnerships.
32
· Impact Analysis of planned projects: The business plan should address the known or
perceived impacts of the airport and harbor on the community on an economic,
workforce and social level. The plan should also look at developing a strategy to
measure the projects’ impact using a more traditional multiplier model to track the
leakage of the cash investments into the project.
· Sustainability of the project: The business plan should contain a plan for the
operational sustainability of the geothermal plant, addressing issues such as
maintenance, licensed operators, schedule for repair or replacement of components,
energy backup, and safety.
· Marketing/Outreach effort: The business plan should contain a plan for educating
the community on the benefits and potential challenges of the geothermal project,
including costs, safety, and potential usages of the generated power.
33
Works Cited
Alaska Department of Labor and Workforce Development. (2009, November). Retrieved from Alaska
Department of Labor and Workforce Development Quarterly Reports: http://almis.labor.state.ak.us/
Alaska Department of Transportation and Public Facilities. (2008). Geotechnical Report, Akutan Airport,
Project #51196, . State of Alaska.
Alaska Energy Authority. (Fiscal Year 2008). Statistical Report of the Power Cost Equalization Program.
State of Alaska.
Aleutian Pribilof Island Community Development Association. (2006). Nikolski Adventures at Ugludax
Lodge Business Plan.
Amanda Kolker, A. E. (2007). Alaska Geothermal Development: A Plan.
Amanda M. Kolker, B. (2008). Geologic Setting of the Central Alaskan Hot Springs Belt: Implications for
Geothermal Resource Capacity and Sustainable Energy Production, a Thesis presented to the Faculty of
the University of Alaska Fairbanks.
Boyd, T. (2008). Geothermal Greenhouse Information Package.
Daniel N. Chochet, V. P. (2004). A View from the Field: The Developers Approach to Geothermal
Projects.
Engineer Research and Development Center. (2001). Hydrology of Porposed Harbor Site at Head of
Akutan Bay, Akutan Island, Alaska. US Army Corp of Engineers.
Greg Kelleher, E. K. (2000). Improving Energy Use and Productivity in West Coast and Alaskan Seafood
Processing Plants.
Hamed M. El-Mashad, R. Z.-B. (2006). Biodiesel Production from Fish Oil. American Society of Agricultural
and Biological Engineers.
HDR Alaska, Inc. (2007). Akutan Airport Construction of Land-Based Airport Environmental Assessment
with Finding Of No Significant Impact (FONSI) and Record of Decision (ROD) Project 54008. State of
Alaska.
John Steigers, S. C. Demonstrating the Use of Fish Oil in Large Stationary Diesel Engines: Reliable and
Affordable Energy fro Rural Alaska.
John W. Lund, (2003). Direct Heat Utilization of Geothermal Energy. Klamath Falls: Oregon Institute of
Technology.
Lorie Dilley, P. (2009). Geothermal Matrix Memo. Alaska Energy Authority.
Mager, M. (2008). Economics of Greenhouse Production in Alaska Using the Greenhouse at Chena Hot
Springs Resort as a Model. Alaska Center for Energy and Power at the University of Alaska Fairbanks.
34
Mann, Kolker Heating Up the Economy with Geothermal Energy: A Multi-Component Sustainable
Development Project at Akutan, Alaska.
Nguyen Phuoc Dan, C. V. (2004). Cleaner Production Potentials in Seafood Processing Industry: A Case
Study from Ho Chi Minh City, Vietnam.
Nuka Research and Planning Group, LLC and Cape International, Inc. (2006). Vessel Traffic in the
Aleutians Subarea, Updated Report to Alaska Department of Environmental Conservation.
Paul J. Lienau, G. C. (1989). Klamath Falls Geothermal Field, Oregon, Case History of Assessment,
Development and Utilization. OIT Geo-Heat Center.
Regional Biomass Energy Program. Demonstrating the Value of a Fishy Biodiesel Blend in Alaska's
Aleutian Islands. Regional Biomass Energy Program.
UA Center for Economic Development. (2006). St. George Island Tourism Analysis.
US Center for Economic Development. (2006). Nikolski Lodge Adventures: Strategic Marketing Plan.
Akutan Geothermal Project Feasibility Report
16 August 2011
TAB C
Akutan Geothermal Resource
Assessment
and
Addendum
Akutan Geothermal Resource Assessment
Commissioned by
City of Akutan, Alaska
As part of its
Geothermal Development Project
June 2011
Principal Investigator:
Amanda Kolker, AK Geothermal
Other Investigators:
Bill Cumming, Cumming Geoscience
Pete Stelling, Western Washington University
David Rohrs, Rohrs Consulting
Akutan Geothermal Resource Assessment
2
Contents
Summary ........................................................................................................................................................................ 3
Objectives of Study ........................................................................................................................................................ 3
Introduction ................................................................................................................................................................... 4
Background and Previous Studies ................................................................................................................................. 4
Geologic Setting ........................................................................................................................................................ 5
Geothermics .............................................................................................................................................................. 7
MT Resistivity ............................................................................................................................................................ 7
New Data 2011 .............................................................................................................................................................. 8
1. Temperature Gradient Data ............................................................................................................................. 8
1a. Core Hole Drilling ............................................................................................................................................ 8
1b. End-of-Well Logs ............................................................................................................................................. 9
1c. Equilibrated TG Logs ...................................................................................................................................... 10
1d. P/T Data Analysis .......................................................................................................................................... 13
2. New fluid chemistry and geothermometry .................................................................................................... 15
2a. Sample Collection and Data Sources ............................................................................................................. 15
2b. Chemistry ...................................................................................................................................................... 15
2c. Geothermometry .......................................................................................................................................... 15
2d. Geochemical Model ...................................................................................................................................... 16
3. Core data ........................................................................................................................................................ 16
3a. Overview ....................................................................................................................................................... 16
3b. Rock Types and Primary Mineralogy ............................................................................................................. 17
3c. Secondary Mineralogy, Mineral Paragenesis, and Hydrothermal History .................................................... 17
3d. Permeability and Porosity of Well Rocks ...................................................................................................... 20
Resource Conceptual Models ...................................................................................................................................... 21
Future Drilling Targets ................................................................................................................................................. 25
Capacity Assessment ................................................................................................................................................... 27
Resource Existence and Size ................................................................................................................................... 27
Confidence in Resource Existence ........................................................................................................................... 27
Probable Resource Capacity .................................................................................................................................... 28
An alternative approach .......................................................................................................................................... 28
Monte Carlo Heat-in-Place Option .......................................................................................................................... 28
Resource Risks ............................................................................................................................................................. 29
Upflow Development Risks ..................................................................................................................................... 29
Outflow Development Risks .................................................................................................................................... 30
Conclusions .................................................................................................................................................................. 30
Recommendations ....................................................................................................................................................... 31
References and Bibliography ....................................................................................................................................... 32
Akutan Geothermal Resource Assessment
3
Summary
The Akutan geothermal resource can be conceptualized as containing two major zones: an upflow zone
and an outflow zone. While the outflow and upflow zones likely represent one interconnected field,
they are distinguished here for the purposes of development. The upflow zone temperatures could
approach 572 °F (300 °C), and the reservoir probably consists of a brine liquid overlain by a small steam
cap. The outflow zone temperatures are lower, decreasing as the brine flows eastward. Fluids produced
by corehole TG-2 show evidence of chemical re-equilibration to lower temperatures, with cation
geothermometry providing a range from 392-464 °F (200-240 °C). The outflow fluids become
extensively mixed with cooler meteoric waters near the surface hot springs.
Alteration mineralogy in exploratory coreholes suggests two disappointing conclusions about the
outflow system: (1) the rocks in both TG-2 and TG-4 were at temperatures greater than 469 °F (250 °C)
in the geological past and have cooled to present temperatures; and (2) the part of the outflow
encountered by the wells appears to lack sufficient thickness and permeability to support commercial
development. Additionally, development of the shallow outflow would entail significant risk of rapid
cooling during exploitation as a result of either cold water influx from near-surface aquifers or injection
breakthrough. Exploratory corehole drilling encountered the outflow zone with fluid temperatures of
359 °F (182 °C) at shallow depths of 585’ (187 m). Recent data suggests that the 359 °F (182 °C) zone
produced in TG-2 is drawn from a nearby fault zone not located directly below the well. Although it is
possible that a hotter resource may exist slightly deeper than either of the current wells, this is unlikely
to be the lowest risk target for development.
Although TG-2 encountered the outflow predicted near its location, the two exploration coreholes did
not demonstrate an outflow resource that would be suitable for development. Given these drilling
outcomes and results of new gas geothermometry from the fumaroles, a well targeted to cross the 1500
ft2 (0.5 km2) fumarole field would have the highest probability of encountering commercial production
at Akutan. This target is likely to be >428 °F(>220 °C) and could be as hot as 572 °F (300 C). The depth to
the target will depend on the elevation of the drill pad but it is likely to be greater than 4000’ (1300m).
An important issue is the trade-off between the cost and practicality of constructing a pad closer to the
fumarole and drilling further directionally. A 380-428 °F (180-200 °C) outflow resource target about
2200’ (800 m) to the northwest of TG-2 might be preferred if its higher targeting risk and lower
generation per well were sufficiently offset by lower drilling and access cost.
Objectives of Study
This study has three primary objectives: (1) to report on data collection efforts for the Akutan
geothermal resource to date; (2) to provide the technical parameters needed when assessing the
feasibility of developing the geothermal resource for a combined heat-and-power project envisioned by
the City of Akutan and other stakeholders; and (3) to provide well targets for future drilling efforts. This
report synthesizes all the datasets collected on the Akutan geothermal field to date (listed on p. 4), and
provides an updated assessment of the Akutan geothermal resource based on all available data. Well
targets and recommendations for mitigating resource risks are given.
Akutan Geothermal Resource Assessment
4
Introduction
Akutan Island is located 790 mi (1271 km) southwest of Anchorage and 30 mi (48 km) east of Dutch
Harbor. The Island is home to North America’s largest seafood processing plant. The City of Akutan and
the fishing industry have a combined peak demand of ~7-8 MWe which is currently supplied by diesel
fuel. In 2008, the base cost of power in the City of Akutan was $0.323/kWh (Kolker and Mann, 2009).
Since 2008, the City of Akutan has led exploration and other assessment activities in an effort to
determine the feasibility of geothermal development on the island. The 2009 exploration program
included practical access assessments, a geologic reconnaissance field study, soil and soil gas
geochemical surveys, a remote sensing study using satellite data, a review of existing hot springs
geochemistry data, a magnetotelluric (MT) survey, and a conceptual model analysis. The 2010
exploratory drilling program included the drilling of slim-hole temperature gradient (TG) wells, fumarole
sampling, and chemical analysis of well and fumarole fluids. Follow-up production-size wells are being
planned for the near future.
Background and Previous Studies
As a volcanic island with accessible hot springs, Akutan has been the subject of geothermal resource
studies since 1979. The original exploration effort was limited to the immediate hot springs area and
included geologic mapping, shallow (<500’ / 150m) geophysical surveys, and fluid geochemical studies.
In summer 2009, the COA executed a follow-on exploration program including a geologic
reconnaissance field study, soil and soil gas geochemical surveys, a remote sensing study using satellite
data, a review of existing hot springs geochemistry data, a magnetotelluric (MT) survey, and a
conceptual model analysis. In summer 2010, an exploration drilling program was carried out with two
temperature gradient (TG) wells drilled in Hot Springs Bay Valley (HSBV). The following reports have
been written on the Akutan geothermal resource, in chronologic order:
1. Motyka, R., and C. Nye, eds., 1988. A geological, geochemical, and geophysical survey of the
geothermal resources at Hot Springs Bay Valley, Akutan Island, Alaska. Alaska Division of
Geological and Geophysical Surveys (ADGGS), Report of Investigations 88-3.
2. Motyka, R.J., S. Liss, C. Nye, and M. Moorman, 1993. “Geothermal Resources of the Aleutian
Arc.” Alaska Division of Geological and Geophysical Surveys (ADGGS) Professional Paper 114.
3. Kolker and Mann, 2009. “Heating up the Economy with Geothermal Energy: A Multi-Component
Sustainable Development Project at Akutan, AK.” Transactions, Geothermal Resources Council
Annual Meeting 2009. *Both paper and poster format available.
4. Kolker, Cumming, Stelling, Prakash, and Kleinholtz, 2009. “Akutan Geothermal Project: Report
on 2009 Exploration Activities.” Unpublished report to City of Akutan and the Alaska Energy
Authority, 37p.
5. WesternGeco, 2009. Magnetotelluric Survey at HSBV, Akutan, Alaska: Final Report – 3D
Resistivity Inversion Modeling. Unpublished report prepared for the City of Akutan, Alaska,
GEOSYSTEM/WesternGeco EM, Milan, Italy, 27p.
Akutan Geothermal Resource Assessment
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6. Kolker, Stelling, and Cumming, 2010. “Akutan Geothermal Project: Preliminary Technical
Feasibility Report.” Unpublished report to City of Akutan and the Alaska Energy Authority, 31p.
7. Kolker, Bailey, and Howard, 2010. “ Preliminary Summary of Findings: Akutan Exploratory
Drilling Program.” Unpublished report to City of Akutan and the Alaska Energy Authority, 32p.
8. Kolker, Cumming, and Stelling, 2010. Geothermal Exploration at Akutan, AK: Favorable
Indications for a High-Enthalpy Hydrothermal Resource Near a Remote Market.” Transactions,
Geothermal Resources Council Annual Meeting 2010. *Both paper and poster format available.
9. Rohrs, 2011. “Geochemistry of the Akutan Geothermal Prospect, Alaska.” Unpublished report to
City of Akutan, 36p.
10. Stelling and Kent, 2011. “Akutan Geothermal Exploration Project: Geological Analysis of Drill
Core from Geothermal Gradient Wells TG-2 and TG-4.” Unpublished report to City of Akutan,
24p.
11. Kolker, Bailey, and Howard, 2011. “The 2010 Akutan Exploratory Drilling Program- Preliminary
Findings.” Draft paper submitted to the Geothermal Resources Council for
publication/presentation at the GRC Annual Meeting, October 2011.
12. Kolker et al, 2011. “Akutan Geothermal Project: Summary of Findings from the 2010 Drilling
Program.” Unpublished report to the City of Akutan, 33p.
Geologic Setting
Akutan volcano is part of the Aleutian Volcanic Arc, which is Alaska’s most promising setting for
geothermal energy. Akutan volcano is one of the most active volcanoes in the Aleutians, with 32 historic
eruptions (Simkin and Siebert, 1994). Akutan volcano is a composite stratovolcano with a summit
caldera ~1 ¼ mi (2 km) across and 200-1200’ deep (60-365 m; Newhall and Dzurisin, 1988; Miller et al.,
1998). Most of the reported eruptions included small-to-moderate explosions from the active
intracaldera cone. An initial volcanic hazard review indicated that the proposed geothermal
development area was unlikely to be directly impacted by eruption activity consistent with the previous
1500 years, excepting ash fall that might cause temporary closure.
The HSBV walls are composed of ~1.4 Ma lava flows, with the SE wall being slightly older and containing
numerous dikes. The valley was glacially carved, perhaps during the last major glaciation ending ~8,000
years ago, and potentially reworked during a minor glacial event ending ~3,000 BP (Black, 1975). The
HSBV is composed of two linear valleys (the SE-trending Fumarole Valley and the NE-trending valley that
contains the hot springs; Fig. 1) joined at right angles, suggesting structural control of glacial flow. Soil
geochemical anomalies (Arsenic (As), mercury (Hg), and carbon dioxide (CO2) at the junction of the
Fumarole Valley and the HSBV also suggest that the valley junction is structurally controlled and could
be an important fluid conduit (Kolker et al, 2010). Hg, As and CO2 occur in anomalously high
concentrations near the hot springs as well.
Akutan Geothermal Resource Assessment
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In March 1996, a swarm of volcano-tectonic earthquakes (>3000 felt by local residents, Mmax = 5.1)
beneath Akutan Island produced extensive ground cracks but no eruption of Akutan volcano. InSAR
images that span the time of the swarm reveal complex island-wide deformation, suggesting inflation of
the western part of the island and relative subsidence of the eastern part. The axis of the deformation
approximately aligns with new ground cracks on the western part of the island and with Holocene
normal faults that were reactivated during the swarm on the eastern part of the island. The deformation
is thought to result from the emplacement of a shallow, east-west-trending, north-dipping dike plus
inflation of a deep magma body beneath the volcano (Lu et al., 2000). Studies of 3He/4He ratios in
Akutan fumarole gasses indicate degassing of relatively fresh near-surface magma (>6 RC/RA; Symonds
et al., 2003). This implies that unlike many other composite stratovolcanoes, Akutan’s magmatic
plumbing system includes two lateral rift zones, similar to the classic rift zones at Hawaiian volcanoes
and elsewhere. These rift zones are aligned along the regional least-compressive-stress axis (John
Power, pers. comm.), and serve as active magmatic conduits at shallow crustal depths (Fig. 1). NW-
trending rifting appears to be providing the large-scale permeability as well as the magmatic heat source
- crucial for the development of an extensive hydrothermal reservoir beneath the volcano.
Figure 1. Topographic map of Akutan Island, showing the geothermal project area and pertinent geologic features.
Hot Springs Bay Valley (HSBV) is an L-shaped topographic low that lies at the center of the geothermal project area.
Akutan village
Akutan Geothermal Resource Assessment
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Geothermics
Several thermal springs are located in HSBV, about 6 km from Akutan village (Fig. 1). Five groups of hot
springs with about ten vents have been identified, including tidewater springs on Hot Springs Bay beach
that are only exposed at low tide. Temperatures range from 129 to 205 °F (54 to 96 °C); and some have
been reported as boiling. A fumarole complex (often called the “fumarole field”) exists at the head of
HSBV to the west of the hot springs and covers an area of approximately 1600 ft2 (500m2).
Motyka and Nye (1988) concluded that the fumaroles are likely fed directly by gases and steam boiling
off the deep hot reservoir and that these fluids then mix with cool groundwaters to produce the hot
spring waters further down the valley, forming a geothermal system that is at least 2.4 mi (4 km) long.
Recent studies of the chemical composition of the fluids confirm that they become extensively mixed
with cooler meteoric waters near the surface. Fumarole gas geothermometry indicates that the
reservoir fluids attained a temperature of at least 518 °F (270 °C). Cation chemistry from the hot springs
and produced fluids indicates that the fluids are re-equilibrating to lower temperatures along the
outflow path, with cation geothermometry from the fluids produced by corehole TG-2 providing
temperatures of 211-232 °C. The silica geothermometry of 320 °F (~160 °C) indicates that the resource
close to the hot springs (probably <1500’ / <500m distance and depth) is likely to be 320-358 °F (160 to
180 °C) (Rohrs, 2011). This is consistent with active silica sinter deposition at the hottest springs. Based
on the springs, well TG-2 was expected to encounter a permeable zone with 320-358 °F (160-180 °C)
fluid, which it did.
The structure(s) controlling upflow of hydrothermal fluids is probably one or more NW-trending normal
fault(s). One such mapped fault cuts near-perpendicularly across HSBV (Fig. 2). All of the hot springs are
topographically lower than the fault’s surface trace, consistent with geochemical indications that they
outflow from an upflow near the fumarole. The fumarole field lies along a parallel linear feature, but no
fault has been mapped there. A perpendicular NE-trending fault may control the linear shape of the hot
spring locations, but that fault has not been conclusively identified with available data.
MT Resistivity
The resistivity pattern of the Akutan geothermal prospect has an overall geometry similar to that of
most geothermal reservoirs where a low resistivity, low permeability smectite clay caps a higher
resistivity, higher temperature, permeable geothermal reservoir. However, the resistivity values of >20
ohm-m within the low resistivity zone at Akutan are much higher than in the smectite zone of most
developed geothermal fields. Several models can explain such a pattern, including an unusually high
fraction of dense lavas causing weak alteration, or relict alteration that formed at higher temperatures.
A localized pattern of alteration near the hot springs is more conventional, with a <600’ (<200 m) thick,
5-15 ohm-m zone that represents a smectite clay cap overlying a higher resistivity geothermal outflow
(Figs. 10-13). Therefore, the overall resistivity geometry is consistent with the geochemistry. A tongue of
high resistivity at -300 m elevation in Figs. 10-13 trends from the fumarole to the hot springs. This is
consistent with a relatively resistive flow path that originates from a >428 °F (>220 °C) upflow near the
fumarole to a 358–428 °F (180–220 °C) outflow extending to the hot springs.
Unfortunately, steep topography and high winds prevented the MT from accessing much of the
prospective area. There are no MT stations over the fumarole area and so a well that targets an
interpreted upflow in its vicinity might target only the surface extent of the altered ground and
Akutan Geothermal Resource Assessment
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fumaroles. There are also no MT stations over a large part of the likely outflow path, making it difficult
to assess the risk of targeting a well on the accessible part of the likely north flank of the outflow.
New Data 2011
1. Temperature Gradient Data
1a. Core Hole Drilling
In 2010, two small-diameter temperature gradient (“TG”) core holes were drilled at locations given in
Fig. 2. Since the Akutan Geothermal area is roadless, the drilling operations were supported by
helicopter. Due to budget constraints, only two of the four planned holes were actually drilled; these are
marked with black arrows in Fig. 2. The 2010 exploratory drilling plan was designed to test whether the
shallow resource was potentially commercial. Within narrow budget constraints, the wells were
designed for long-term monitoring as well as a test of the shallow, accessible targets at the Akutan
geothermal field. The hole(s) were completed as temperature gradient wells and available for future
monitoring. A detailed report on the drilling operations, P/T survey results, and other data is provided in
Kolker et al. (2011).
Well “TG-2” was drilled to a TVD (total vertical depth) of 833’ (254 m). It was sited to test the outflow
aquifer(s). Between 585 and 587’(178 and 179 m), a highly permeable zone was encountered that
flowed geothermal fluid at 182 °C (359 °F). This productive zone was cased and cemented, sealing it off,
at which point it cooled to about 329 °F (165 °C). The structure hosting the flowing fluid appeared to be
a fractured, highly vesicular, flow margin. Due to the temperature and permeability of the formation at
relatively shallow depths, drilling this well was challenging. Although targeted to 1500’ (457 m), the well
was terminated due to drilling problems.
Well “TG-4” was drilled to the planned TVD of 1500’. It was sited at the southern part of the junction
between the two perpendicular valleys, to test the size and extent of the outflow zone. Since well TG-4
did not encounter substantial fluid flow, its location appears to be outside the margins of the outflow
zone, vertically or horizontally (or both). However, well TG-4 did encounter an anomalously high shallow
temperature gradient, implying close proximity to a geothermal source.
Akutan Geothermal Resource Assessment
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Figure 2. Map of the Akutan Geothermal area, showing the four candidate exploration well locations that were
considered for the 2010 program. The two holes drilled in 2010 are marked with black arrows.
1b. End-of-Well Logs
After TD was reached, three P/T logs were recorded at 12, 24, and 36 hours after circulation ended for
each well. For every run, stops were made at 20 foot stations. Because these surveys were taken so
soon after the well was drilled, the temperature readings were still influenced by the cooling effects of
fluid circulation. Therefore these represent “unequilibrated” downhole temperatures. In order to
predict the equilibrated downhole reservoir temperature, we used the Horner method to extrapolate
the measured values to a longer period. The end-of-well elevation vs. temperature plot generated from
extrapolated Horner values is shown in Fig. 3. The MRT reading from the flowing zone is also shown as a
purple dot.
Akutan Geothermal Resource Assessment
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Figure 3. Estimated equilibrated Temp v. depth plot for TG-2, based on Horner extrapolations of downhole survey
data (see Fig. 11 and text for details).
Both wells show very high shallow temperature gradients, which is consistent with their proximity to the
shallow outflow zone. Following production, TG-2 shows a drop in temperature occurring just above the
casing shoe at 603’ (181 m), corresponding to the hot fracture zone between 585 and 587' (178 and 179
m) that was cemented in. The apparent cooling is likely the result of drilling fluid and cement injected
across that entire area. TG-4 shows a relatively rapidly increasing temperature gradient until ~900’ (274
m), transitioning to a slowly increasing temperature gradient from 900’-1500’. The fact that there was
no temperature reversal and that the gradient continues to increase suggest there could be a deeper,
hotter aquifer below 1500’ (457 m) that was not penetrated by drilling. An injection test performed on
well TG-4 suggested that the well has generally poor permeability.
1c. Equilibrated TG Logs
While the end-of-well surveys were conducted with a memory tool, it was not possible to use a memory
type tool for the post-completion logging due to the small inner diameter of the Akutan TG wells (inner
diameter > 1.5 inches / 3.81 cm). Due to this and other unique conditions of Akutan TG wells (high
-1600
-1400
-1200
-1000
-800
-600
-400
-200
0
200
0 100 200 300 400 500
Elevation (feet ASL)Akutan TG Well Temperatures (F)
TG2
TG4
Boiling Curve 0.1% NCG
Flowing MRT TG2
Akutan Geothermal Resource Assessment
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temperatures at shallow depths, remoteness of the wellsites, among others), thermistor-type
temperature logging equipment was used, and downhole pressures were not recorded.
The survey for TG-2 was completed on May 22, 2011. Results from the equilibrated survey are shown
with the three build-up surveys in Fig. 4.
Figure 4. Equilibrated temperature profile for TG-2, plotted with the three end-of-well heat-up surveys. The end-of-
well surveys were taken 12 hours. 24 hours, and 36 hours after circulation; the equilibrated profile was obtained 9
months later in May 2011.
The new temperature profile shows a distinctly different shape from the end-of-well temperature build-
up profiles. Among the new features to note are: (1) The well was bleeding while the log was run,
resulting in a minor steam or two-phase section in the upper 60-70’ (20-25 m). (2) Apparent cooling of
the well since shut-in is noticeable in the upper 400’ (122m). This probably reflects a trickle of water
downflowing from around 200’ (61m) MD and exiting into the formation at about 415’ (126m) MD. It
can only be a trickle of water because the water is heating up as it flows down behind the casing. (3)
The highest temperatures occur in the permeable zone near 585’ MD (415’ / 126m elevation), with a
temperature reversal of about 9 °F (5 °C) below the permeable zone to the bottom of the well.
0
100
200
300
400
500
600
700
800
900
0 50 100 150 200 250 300 350 400Elevation (feet ASL)Akutan TG2 Temperatures, oF
12h 08-2010
24h 08-2011
36h 08-2011
May-11
Akutan Geothermal Resource Assessment
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The new data also shows that the permeable zone at 585’ MD (415’/ 126 m elevation) has fully
recovered in temperature. Notably, the static temperatures measured in this permeable zone are about
338 °F (170 °C), which is lower than the 359 °F (182 °C) temperature measured in this zone when the
well was flowing. Since the MRT reading does appear to be correct based on silica geothermometry, this
implies that the well was drawing in higher temperature fluids when it was producing.
A temperature survey was run in TG-4 by the City of Akutan crew on May 10, 2011 (Fig. 5).
Figure 5. Equilibrated temperature profile for TG-4, plotted with the three end-of-well heat-up surveys.
The temperature profile from the equilibrated survey differs very slightly from the end-of-well
temperature profile. The new profile shows that the top 800’ (244 m) of well TG-4 heated up slightly,
but the bottom temperatures remained extremely close to those measured during the end-of-well
surveys. This is not surprising in light of the fact that that well was relatively impermeable and exhibits a
temperature profile that shows heating primarily from conduction for the upper 800’ (244 m). By
contrast, the bottom of the hole is approaching an isothermal gradient. This suggests that the
conductive heating is from the side (i.e., from a shallow outflow zone at some lateral distance), not from
a hot aquifer below.
-200
0
200
400
600
800
1000
1200
1400
1600
0 50 100 150 200 250 300 350Elevation (feet ASL)Akutan TG4 Temperatures, oF
12h 08-2011
24h 08-2011
36h 08-2011
May-11
Akutan Geothermal Resource Assessment
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1d. P/T Data Analysis
Although TG-2 flowed geothermal fluid at 359 °F (182 °C) during drilling, the equilibrated temperature
logs show a maximum temperature of 338 °F (165 °C) with a reversal at the bottom of the hole. This
implies that the 359 F fluid was not circulating in the immediate vicinity of TG-2 but rather was “pulled
in” from elsewhere due to the pressure drop caused by flowing the well. A likely scenario is that the
productive subhorizontal fracture at 585’ (178m) in TG-2 is connected to a subvertical fracture dipping
west (see Fig 11). When the subhorizontal fracture was produced, the subvertical one became a
temporary conduit for fluids in the outflow zone. It is unlikely that the source of the 359 °F (182 °C) fluid
is directly below Well TG-2 because of the temperature reversal recorded in the most recent log.
A comparison of the static temperature profiles in TG-2 and TG-4 shows the difference between the
shape of a convectively heated outflow profile in TG-2, and a conductively heated temperature profile in
TG-4 (Figure 6). Also, the temperatures in the upper 800’ (254 m) of TG-4 are generally lower than in TG-
2, indicating that TG-4 is further from the shallow outflow path. No strong conclusions can be drawn
from the temperature profiles as to whether additional high temperature permeable zones underlie
either well, but it appears unlikely based on the shape of the bottom of both well profiles.
Figure 6. Equilibrated well profiles for both Akutan TG wells, shown with a boiling point with depth curve for water
with 0.1% non-condensable gas content.
-200
0
200
400
600
800
1000
1200
1400
1600
150 200 250 300 350 400 450Elevation (feet ASL)Akutan TG Well Temperatures May 2011 (oF)
TG2-05-2011
TG4-05-2011
Boiling 0.1% NCG
Akutan Geothermal Resource Assessment
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The 359 °F (182 °C) temperature measurement during drilling of TG-2 does appear to be correct based
on silica geothermometry. If the well was drawing in higher temperature fluids when it was producing,
this suggests that TG-2 was drilled on the margins of a more permeable and hotter outflow path. The
higher temperature fluids drawn into TG-2 during the flow test suggest that the production zone is in
proximity to the higher temperature zone but that it has a relatively low permeability connection to this
zone. The slight temperature reversal of about 9 °F (5 °C) below the permeable zone is consistent with
the geologic model that the thermal features in HSBV represent a confined lateral outflow from a
geothermal reservoir located further west, or possibly north.
The temperature gradients for Akutan wells TG2 and TG4 vary widely, but compared to the continental
average of 1.65 °F/ft (30 °C / km; Fig. 7) they are very high above 600’ (244 m). This suggests that both
are within proximity of a very shallow outflowing resource.
Figure 7. Temperature gradients, in degrees Fahrenheit per foot, for both Akutan TG wells. The average continental
geothermal gradient of 1.65 °F/ ft is shown for comparison. The outlier data point at ~410’ depth can be ignored as
it reflects a transition between the part of the well affected by a small amount of downflowing water and the part
unaffected, and thus does not represent an accurate temperature gradient.
0
200
400
600
800
1000
1200
1400
1600
0 2 4 6 8 10 12 14 16 18Elevation (feet ASL)Akutan Well Temperature Gradients (T2-T1, oF)
TG2
TG4
Average continental
Akutan Geothermal Resource Assessment
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2. New fluid chemistry and geothermometry
2a. Sample Collection and Data Sources
Two fluid samples were obtained from well TG-2, with the first obtained from the entry zone at 585’-
587’ (178-189m) measured depth (MD) during a well discharge. This production zone was subsequently
cased off. A second flow test of the well obtained samples from production zones between 603’ (184m)
and 833’ (245m) MD, which was the completion depth of the core hole. Because TG-4 encountered
poor permeability conditions, a sample of the fluids in the wellbore was obtained by flowing with an air
assist. The MD of TG-4 was 1500’ (457m) and had a cemented casing at 596’ (182m) MD. Therefore the
data obtained during the discharge of the wells vary in quality.
New gas chemical data are from samples obtained from the fumaroles in 2010. All other analyses used
in geothermometry calculations and chemical modeling were obtained from past reports (fluid analyses
from the hot springs, non-condensable gas analyses from the summit fumarole and from the hot springs
– see p. 4 for sources).
2b. Chemistry
Geochemical data were interpreted using a combination of binary and ternary diagrams and
geothermometry gas plots. The data set used to interpret the reservoir conditions consists of all of the
data obtained at Akutan. Data and interpretations are provided in full in Rohrs (2011).
The chemical analyses of the hot springs water shows that they are derived from a dilute, near-neutral
Na-Cl reservoir brine. The Akutan hot springs show slightly elevated HCO3- and SO4 concentrations,
suggesting mixing along the outflow path with dilute, steam-heated near-surface waters. Hydrogen and
oxygen isotopic data shows that the hot spring waters are derived from local meteoric water.
The chemistry of the fumarole gasses demonstrates a strong magmatic affiliation. There is no evidence
from the gasses that the reservoir water has mixed with air-saturated fluids along an outflow path.
Compared to many geothermal systems, Akutan displays enriched N2 concentrations, which in some
cases would raise concerns with regards to acid or vapor-cored conditions in the reservoir. However, the
other gas plots show that the gases are well-equilibrated and likely to be derived from a high
temperature neutral chloride reservoir. In addition, the gas concentrations in the flank fumaroles imply
that some fraction of gas is derived from equilibrated steam, indicating the presence of a localized
steam cap in the reservoir. The chemistry of the fumaroles are consistent with an equilibrated
geothermal system associated with an andesitic stratovolcano (Giggenbach, 1991). In comparison, the
gas from the summit fumarole originates from a more oxidizing environment and exhibits high H2S
concentrations. These all suggest a magmatic affiliation for the summit fumarole steam.
2c. Geothermometry
The hot spring and well discharge samples are well suited to chemical geothermometry using the silica
and Na, K, Ca, and Mg concentrations of the fluids. The estimated temperature of last equilibration
along the outflow path suggests that the fluids have equilibrated at ~338 °F (~170 °C) and ~392 °F (200
Akutan Geothermal Resource Assessment
16
°C) for the two samples from TG-2. This temperature is similar to the estimated entry temperature of
359 °F (182 °C) at 585-587’ (178-179m) MD in well TG-2 (Kolker et al, 2010). Cation concentrations in hot
spring and well discharge analyses show that the springs and well fluids are mixed or partially
equilibrated fluids. This is commonly observed along outflow paths where the fluids are re-equilibrating
to lower temperatures and mixing with near surface waters with elevated Mg concentrations (Rohrs,
2011).
The data from hot spring HS-A3 and the entry at 585’ (178 m) MD in core hole TG-2 suggest that the
fluids originate in a deeper reservoir with temperatures in the range of 428-464 °F (220-240 °C). This
compares to a temperature of 412 °F (211 °C) estimated from the Na-K-Ca geothermometer for the well
discharge. Geothermometers that apply Na, K, Ca, and Mg concentrations tend to partially re-equilibrate
to lower temperatures in the outflow zone, and so the deep reservoir temperature is likely to exceed
464 °F (240 °C; Rohrs, 2011).
Geothermometry estimates from flank fumarole gasses exhibits very good consistency, indicating an
origin from a mature, equilibrated neutral chloride reservoir. The gas geothermometry consistently
suggests reservoir temperatures of 518-572 °F (270-300 °C; Rohrs, 2011).
2d. Geochemical Model
The new geochemical data set confirms the previous interpretations of the resource distribution in
HSBV. The hot springs represent a shallow outflow from a high temperature neutral chloride reservoir
that exists further west. The chemistry of the hot springs indicates that they have experienced
significant mixing with cooler, dilute near surface meteoric waters. Because the fumarole gases show
little evidence of mixing with air-saturated waters, the upflow zone is likely to lie near the fumaroles.
Also, gas grid plots indicate that the fumaroles contain a component of equilibrated steam, suggesting
the possibility that a localized steam cap overlies the deeper geothermal reservoir. Geothermometry of
the well discharges and the fumarole gases indicate a likely deep reservoir temperature of at least 464
°F (240 °C) based on Na/K geothermometry, with temperatures possibly as high as 572 °F (300 °C) in the
upflow based on gas geothermometry. The geochemical data do not provide any constraints on the
reservoir boundaries to the west nor on the reservoir volume within the outflow area (Rohrs, 2011).
The non-condensable gas data from the fumaroles suggest that a steam cap may overlie the deep brine
reservoir. The chloride hot springs in HSBV represent shallow outflow from the reservoir. The outflow
becomes diluted by mixing with cool meteoric waters, especially in the near surface environment
(Rohrs, 2011). Thus, the geochemical data are very consistent with the geochemical outflow models
suggested by Kolker et al. (2009).
3. Core data
3a. Overview
Composite logs from Akutan TG wells TG-2 and TG-4 of the bulk lithologies, alteration mineralogy, and
temperature data are provided in Appendix A. Full lithologic logs were recorded at the wellsite during
drilling and are provided as an Appendix in the Summary of Drilling Findings (Kolker et al., 2011). The
core was then sent to Western Washington University (Bellingham, WA) for detailed laboratory analysis.
Akutan Geothermal Resource Assessment
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The goal of the laboratory analysis was to determine the hydrothermal history of the HSBV. Core
samples were selected based on zones of interest from drilling records, core photographs, and complete
coverage of the depth of core. Determination of specific mineral species was conducted through X-ray
Diffraction (XRD) analysis, Scanning Electron Microscopy (SEM), and petrographic observations.
Quantitative permeability studies of the core were not conducted, however qualitative observations
about the permeability of the field by visual observations of the core were recorded. Finally,
compositional analysis of 19 bulk rock samples were conducted by X-ray Fluorescence (XRF) at the
Geoanalytical lab at Washington State University in Pullman, WA. Methodologies for above studies,
detailed results, and discussions are provided in Stelling and Kent (2011).
3b. Rock Types and Primary Mineralogy
There are four main lithologies present in the Akutan core: basalt, andesite, ash tuff, and “lithic basalt.”
The most common lithology in the core is basalt lava. These flows appear to be subareal in nature and
contain plagioclase, clinopyroxene, rare olivine and primary apatite. The ash tuffs are fine grained rocks
lacking phenocrysts. Groundmass phases are plagioclase microlites, glass, and alteration minerals (see
below). In TG-2, these units are <3’ (1 m) thick. In TG-4, which is ~2 miles (3.2 km) closer to Akutan
Volcano, similar units are as thick as 60’ (18 m).
The rocks provisionally named “lithic basalt” were a puzzle during the on-site evaluation, and remain
enigmatic. The lithic basalt is composed of multiple different rock types, suggestive of some sort of
debris flow deposit, yet the matrix between the clasts is crystalline, indicating a magmatic origin. At this
time, the origin of this lithology is unknown.
3c. Secondary Mineralogy, Mineral Paragenesis, and Hydrothermal History
A graphical representation of secondary mineralization and clay replacement is presented in Stelling and
Kent (2011). The rocks in general appear to be only weakly altered. As a result of the increased porosity
near lava flow tops, these regions tend to be more altered and more readily brecciated than the main
body of the lava. Heavy Fe-oxidation was observed between flow layers. Alteration minerals occurred
interstitially, in fractures, in vesicles, and in contact zones.
Alteration assemblages in both wells are dominated by chlorite, zeolites, epidote, prehnite and calcite,
and this alteration appears to have happened multiple times in both wells. The presence of adularia in
specific locations in both wells indicates higher temperature and permeability conditions existed at
some point in the past. The presence of kaolinite in TG-2 indicates argillic alteration with lesser extent
and intensity. Illite was identified in both wells, although much more sparsely in TG-2.
Within the most recent propylitic alteration event in TG-2, the sequence of zeolite formation shows a
classic trend toward higher temperatures with depth. It is likely that this trend will continue below the
base of the well (833’ / 254 m). Figure 8 shows that some higher-temperature minerals (illite, epidote,
prehnite, wairakite and adularia) occur in regions that are currently much colder than expected for
these minerals. This suggests that the TG-2 region underwent higher temperature alteration in the past.
The presence of these higher-temperature minerals at unexpectedly shallow depths further suggests
that a significant portion of this older alteration sequence has been removed through erosion, possibly
Akutan Geothermal Resource Assessment
18
glacial. Overprinting of these minerals by lower-temperature alteration assemblages indicates the
sampled region has since returned to a lower-temperature alteration regime with reduced permeability.
Figure 8. First occurrence of indicator minerals with depth in core from Akutan well TG-2. Horizontal arrows
indicate formation temperature ranges for each mineral. Dashed lines indicate published values; solid lines indicate
the most commonly reported minimum temperatures.
The pattern of alteration in TG-4 is more complex than TG-2 (Fig. 9). That the depositional history of TG-
4 includes multiple alteration events does not necessarily mean that the two wells have had significantly
different thermal histories; rather, the most recent alteration event may have been stronger in the TG-2
region, overprinting more completely the alteration sequence observed in TG-4.
Akutan Geothermal Resource Assessment
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Figure 9. First occurrence of indicator minerals with depth in core from Akutan well TG-4. Horizontal arrows
indicate formation temperature ranges for each mineral. Dashed lines indicate published values; solid lines indicate
the most commonly reported minimum temperatures.
Akutan Geothermal Resource Assessment
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Comparing the observations made in the two drill cores provides a basic sequence of alteration for the
HSBV geothermal outflow zone. Both cores show an alteration sequence progressing from an early
propylitic event, a narrow band of adularia-bearing propylitic alteration, followed by a later propylitic
event. The trend from moderate propylitic to high-temperature adularia-forming alteration and back to
moderate propylitic indicates that the shallow portion of the HSB field has reached its thermal peak and
has cooled moderately. Additionally, many of the higher temperature minerals occur at depths much
shallower than reported in other geothermal fields. Thus is it likely that 1) this region was hotter than it
is currently, and 2) the uppermost portion of the rock column has been removed and these rocks have
risen to their modern shallow depths.
3d. Permeability and Porosity of Well Rocks
The primary lithologies do not lend themselves to high primary permeability. The abundance of isolated
vugs filled with secondary minerals indicates that fluid flow through microscopic intergranular networks
has been important, but flow rates are likely very low. Vug filling is especially common in fine-grained,
detrital deposits (e.g., ash tuff), but clay alteration and fracture mineralization by carbonates and
zeolites reduces permeability in these rocks.
The primary fluid pathways appear to be associated with brittle fracturing and lithologic contacts, based
on the abundance and degree of alteration and secondary mineralization. Very fine grained deposits
(ash tuff) lack large crystals that would add structural control over the fracture patterns. As a result,
these rocks are prone to planar fractures at prescribed orientations (30o, 45o, 60o and 90o). The majority
of these fractures have some sort of secondary mineralization associated with them, and some of the
larger fractures are deeply altered to a variety of clays and other minerals. Because the tuff is more
susceptible to clay alteration, these fractures can seal before major secondary mineralization becomes
intense. However, these units are not very thick in the wells, so may not have extensive control over the
overall fluid flow in the reservoir. Permeability may locally increase at the top of lava flows where vugs
in vesicle-rich flow tops may collapse, but this was not observed in the core. Some heterogeneous
lithologies (e.g., “lithic basalt,” see below) contain entrained clasts of older material. Fluid flow within
these lithologies are concentrated and directed around the entrained clasts, which would likely result in
moderately increased permeability compared to intergranular flow.
The occurrence of the mineral adularia helps to elucidate the permeability. Although adularia occurs in
all lithologies in the HSB cores, the restriction of adularia to fractures highlights the importance of
secondary permeability, as it does in many fields worldwide. Adularia is strongly associated with zones
that once had high permeability but each occurrence of adularia in the core is in veins that are now
thoroughly sealed by mineralization. Therefore, the waxing of a higher temperature system and
subsequent waning has apparently reduced the permeability in the HSBV outflow system.
No evidence for large scale structures were encountered in Akutan geothermal wells. A number of
brecciated zones were observed in TG-4, but most were “sealed” with secondary mineral deposits and
therefore probably do not represent active faults. Minor slickensides observed in cores could be related
to a possible normal fault on the SW side of the valley near TG-4.
Akutan Geothermal Resource Assessment
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Resource Conceptual Models
Several conceptual models of the Akutan Geothermal Resource were presented in an earlier report
(Kolker et al, 2009). The acquisition of new data in 2010-2011 are consistent with the same basic upflow
– outflow model. The most important change in the conceptual model assessment is the increase in
confidence in the fumarole as the locus of a benign reservoir upflow that would be a suitable target,
based on the promising new gas geochemistry analyses. The new data significantly reduces the
probability that an economic reservoir would be found in HSBV.
The location of the high permeability outflow path is still only loosely characterized by two models,
although the upflow seems more closely connected to TG-2 than to TG-4. The alternative outflow
pathways continue to be either along the HSBV or along a northern trajectory from the fumaroles to the
hot springs. These two alternatives are explored in Figs. 10-13. Both conceptual models are based on the
notion that the Akutan geothermal system is a single resource comprised of two distinct features: a
high-temperature (>500 °F / >240 °C) upflow zone, and a lower-temperature outflow aquifer (~360-390
°F / 180-200 °C), as suggested by chemical data.
Figure 10. Map view of “Conceptual model 1,” showing outflow along HSBV. Isotherm contour placement is based
on downhole temperature data, chemical geothermometry, hot springs and fumarole locations, and MT resistivity
data (shown here at -300 m (~984 ft) depth). Profile line “CM1” corresponds to Fig. 11.
Akutan Geothermal Resource Assessment
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Figure 11. Profile “CM1,” as shown in Fig. 10. This model shows outflow along HSBV. Isotherm contours based on
downhole temperature data, chemical geothermometry, hot springs and fumarole locations, and MT resist ivity
data (shown here as 3D inversion model).
Conceptual model ‘CM1’(Figs. 10 and 11) shows a high temperature resource upflowing beneath the
fumarole field, and cooling along an outflow path that follows the L-shaped path of HSBV. The upflow
must be some lateral and vertical distance from well TG-4, since no trace of conductive heating from a
deep source was observed in the temperature profile of TG-4. Also, for this model to fit the observed
downhole temperature profiles in both wells, the outflow along HSBV can only be very thin (vertically
constrained low-permeability) and restricted to the shallow subsurface.
Because the 359 °F (182 °C) flow during the flow test completed while drilling is higher than the
measured static temperature, because there does not appear to be a downflow that would reduce the
temperature of this zone from 359 °F (182 °C) to 338 °F (165 °C) when the well is static, and because the
temperature reversal in TG-2 below this zone makes upflow from below the well unlikely, the produced
higher temperature fluid appears to have been “pulled in” laterally from a nearby source. This could be
related to the westward-dipping fault near TG-2 shown in Figs. 11 and 13. The rapidity with which this
hotter fluid was drawn in during such a short test implies that the 338 °F (165 °C) permeable zone in TG-
2 must be restricted in volume and at a higher natural state pressure than the 359 °F (182 °C) adjacent
reservoir.
Akutan Geothermal Resource Assessment
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Figure 12. Map view of “Conceptual model 2,” showing outflow beneath the mountain to the north of HSBV.
Isotherm contour placement is based on downhole temperature data, chemical geothermometry, hot springs and
fumarole locations, and MT resistivity data (shown here at -300 m (~984 ft) depth). Profile line “CM2” corresponds
to Fig. 13.
Conceptual model 1 ‘CM1’ does not resolve the location of a hotter outflow resource of 360-392 °F (180-
200 °C), for which there is a substantial amount of geochemical evidence. Therefore, an alternative
model is proposed called ‘CM2’ (Figs. 12 and 13). In CM2, the shallow outflow path takes a northerly
trajectory from the fumarole to the ENE towards the hot springs, circumventing HSBV altogether. This
model appears more likely based on several lines of reasoning: 1) the temperature profile for TG-4
shows no evidence for being along an outflow path, implying that outflow feeding the hot springs is
laterally distal; 2) a low-resistivity clay cap appears to form a dome pattern around the northerly outflow
path, which is consistent with the interpretation that the HSBV is near, but not in, the main outflow path
of geothermal fluids (Figs. 10 and 12); and 3) the isotherm contours on the CM2 profile (Fig. 13) are
slightly more typical of an outflowing geothermal system.
Akutan Geothermal Resource Assessment
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Figure 13. Cross section of profile line “CM2,” as shown in Fig. 12. This model shows outflow beneath the mountain
north of HSBV. Isotherm contours based on downhole temperature data and chemical geothermometry, MT
resistivity data, hot springs and fumarole locations, and fault lines.
Both models suggest that producing the outflow resource would be very risky, both because of the
generally low permeability expected based on several lines of reasoning and also because there is no
well-developed clay cap to indicate that a large-very permeable reservoir volume at ~360-390 °F (180-
220 °C) exists under HSBV. The lack of widespread surface alteration, geochemical, and ground
temperature anomalies (Kolker et al., 2009) in HSBV are consistent with this interpretation. Additionally,
the chemical composition of the hot springs fluids suggests that outflow fluids become extensively
mixed with cooler meteoric waters near the surface, raising concerns about cold water influx into the
outflow system with production.
While the conceptual models of the outflow resource have downgraded its potential for development,
geochemical data from the fumaroles significantly upgrades the fumarolic area as a drilling target . The
fumarole data suggest that the flank fumarole field lies in fairly close proximity to an upflow zone from
the reservoir, that a steam cap may overlie the upflow, and that reservoir temperatures could approach
570 °F (300 °C) within the upflow. The deep reservoir probably consists of a brine liquid capped by a
small two-phase region (steam cap) (Rohrs, 2011). Resistivity data suggest that the upflow reservoir is
situated in brittle rocks, implying propylitic alteration regime and a good possibility of high permeability.
Akutan Geothermal Resource Assessment
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Future Drilling Targets
The two types of resource targets represent two development options for the AGP:
1) The upflow resource has a high exploration risk, but potentially low development risk and high
output capacity.
2) The outflow resource has potentially easier access but higher exploration risk, and presents
several development risks, including a lower output capacity per well.
The highest priority target for future drilling is at the upflow resource, due to the following factors:
(1) Evidence of commercial-grade permeability due to the presence of fumaroles that are
chemically connected to a neutral-chloride reservoir with a steam cap.
(2) The fumarole gas geothermometry indicates that the source fluids are likely to be being
equilibrated to a temperature of >572 °F (>270 °C). These temperatures could exist directly
beneath the fumaroles. Alternatively, if the upflow originates further west, the fumaroles may
mark the location where the outflow first encounters boiling conditions. In this case,
temperatures beneath the fumaroles could be in the range of 428-464 °C (220—240 °C).
(3) As the highest-enthalpy target, the fumarole area could be expanded to meet additional
power demand if it should ever present itself (e.g., new industrial capacity, larger scale
secondary use, etc.)
The exploration data suggests that the likely upflow location is in the general vicinity of the fumarole.
However, the fumarole is located ~1150’ (~350 m) up a very steep hillside, posing access limitations.
Hence, an important issue is the trade-off between the cost and practicality of constructing a pad closer
to the fumarole and drilling further directionally. A small rig may only be able to achieve a very modest
directional offset, but a rig capable of greater directional offset would be several times more expensive.
Two alternative surface locations have been sited to target the high priority upflow zone. Regardless of
the pad location, the well should be targeted to at least 4500’ (1350m) MD and preferably to 6000’
(1800 m) MD.
The first, preferred alternative “A” is located near the fumarole field (Fig. 14). This is closest to the high
temperature upflow zone. Access to this location could be via a road running east-west which skirts the
mountain to the north of HSBV. Such a road appears to be buildable at less than 3 miles (6 km) from Hot
Springs Bay access, but would require dock facilities to be built at the beach. However, this access
option raises the question of transmission to Trident and Akutan Village. It also raises questions about
volcanic hazards (see ‘Risks’ section, below).
The second, less preferable alternative is located in the Fumarole Valley >2/3 mi (~1 km) southeast of
the fumarole field (Fig. 14). A directional well drilled from this location (called “Well-1” in past reports)
beneath the fumarolic features or to the north beneath the local resistivity high may intersect the
upflow zone. From pad location “B”, the margins of the upflow resource would be targeted via
directional drilling and the outflow resource could be targeted via vertical drilling. However, limitations
Akutan Geothermal Resource Assessment
26
on directional drilling may not allow the target to be reached from pad location “B.” Hence, this wellpad
location is riskier than alternative “A.” A determination on this issue should be solicited from a qualified
geothermal drilling engineer before a final decision is made.
Figure 14. Map showing possible wellpad locations to target the Akutan upflow resource (blue triangles). Each pad
could host two wells – a directional well aimed towards the fumarole field (knobbed black line), and a vertical well.
Possible road alignments to the wellpads are shown in red. Also shown are the three sections recently selected by
the Akutan Corporation for subsurface ownership rights in a land swap agreement with the Aleut Corporation.
Should drilling at sites A and B fail, or if developing the upflow resource is not possible, subsequent pad
locations could be sited to target other parts of the outflow zone. A 380 to 428 °F (180 to 220 °C)
outflow resource target about 2200’ (800 m) to the northwest of TG-2 might be preferred if its higher
targeting risk and lower generation per well due to its lower temperature were sufficiently offset by
lower drilling and access cost.
Prior to generating outflow targets, additional exploration activities should be undertaken to target the
hottest and most permeable part of the outflow resource. This would likely require additional
subsurface imaging work using one or several geophysical techniques. It would also probably require
additional slimhole drilling and/or deepening of TG-2. Since the casing in TG-2 was not cemented in
place, it could be retrieved it and the well deepened by 1000’ (300m) or more.
Akutan
Corporation
Subsurface
Selections
1
36
12
A
A
A
B
Akutan Geothermal Resource Assessment
27
Capacity Assessment
As summarized by Glassley (2008), different approaches and methodologies to geothermal resource
capacity assessment have given rise to a broad range of results that are not directly comparable. Hence,
the outcomes of resource assessments are sensitive to the methodology and assumptions employed in
the analysis, and different studies often produce widely different estimates of a resource. The
assessment of reserves by analogy used in previous Akutan reports is updated here based on the results
of the wells and the fumarole gas geochemistry. The approach applied here is to use analogies to a few
published examples in order to highlight important similarities and differences with respect to Akutan.
Resource Existence and Size
Resource risk assessment approaches commonly divide the assessment into two parts; 1) an assessment
of confidence in the existence of a resource as a percent probability, and, 2) assuming the resource
exists, an assessment of its size, usually as a statistical distribution (e.g. Newendorp and Schuyler, 2000).
The probability of existence is sometimes restated as the probability of exploration success; i.e., the
probability that an exploration drilling program would discover at least one economically productive
well. In many published geothermal resource assessments, the assessment of existence is often not
explicitly evaluated but nominally included in the size distribution, for example, in the Western
Governors’ Association (2006), Clean and Diversified Energy Initiative Geothermal Task Force Report. In
this report, many geothermal prospects in the western USA with poorer indications of temperature over
220 °C and much lower surface heat flow than Akutan are assessed as having over 20 MW potential.
Confidence in Resource Existence
The most common method of estimating the probability of existence for a resource is to have a group of
experts review the available data and, based on analogous experience with other geothermal prospect
areas, estimate the confidence (as a probability) that the necessary components of a resource exist
together. For volcanic prospects that have hot springs with cation geothermometry similar to Akutan’s
and a non-magmatic fumarole, few failure cases exist in which the most attractive target was drilled.
With respect to the earlier assessments of Akutan, the very minor magmatic indications and excel lent
gas geothermometer estimates of resource temperature have increased confidence in the existence of a
high enthalpy resource.
The numerous geothermal success cases differ in detail, particularly with respect to the geology and
very dilute chemistry characteristic of Akutan. For example, in the Americas there are several developed
geothermal fields in volcanic systems with different geologic settings but broadly similar liquid and/or
gas geochemistry. The 572 °F (270 °C) San Jacinto Field in Nicaragua has 10 MW installed and 72 MW
under development. It has roughly analogous fumarole gas geochemistry and a similar area of intense
alteration, although the resistivity of its clay cap is much lower, more like a conventional geothermal
field. The 320 to 350 °F (160 to 175 °C), ~40 MW Casa Diablo field at Long Valley (Sorey et al., 1991) and
the 320 to 360 °F (160 to 180 °C), 45 MW Steamboat Springs Field near Reno (Mariner and Janik, 1995)
have liquid chemistry similar to Akutan, but again, a lower resistivity clay cap. At Akutan, the
combination of a non-magmatic flank fumarole with excellent gas geothermometry over 518 °F (275 °C),
a trend in cation geothermometry to >428 °F (>220 °C), silica geothermometry over 320 °F (160 °C) with
Akutan Geothermal Resource Assessment
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sinter deposition proven to exist in the subsurface by a well support the existence of a convecting
geothermal resource on Akutan with a high confidence of 80%.
Probable Resource Capacity
The capacity of the geothermal resource at Akutan in terms of electrical power can be assessed using
analogies, both the rough comparisons to the prospect estimates provided in the Western Governors’
Association report and the analogs to the 20 to 72 MW San Jacinto development and the 40 to 45 MW
Casa Diablo and Steamboat Springs developments. Because of the dilute outflow chemistry and low
permeability relict alteration at Akutan, handicapping the Akutan likely 320 to 358 °F (160 to 180 °C)
outflow resource by 75% relative to these developed reservoirs would be reasonable, giving an
analogous low temperature resource capacity estimate of 15 MW with a 66% probability. Because a
high temperature resource very likely exists, a more optimistic capacity estimate for the entire system
would be like San Jacinto, 10 to 72 MW with a 66% handicap because of its high clay cap resistivity and
difficult access, this results in a risk weighted estimate of about 20 MW. Using the Western Governors’
Association report assessments as analogs, an assessment as high as 100 MW seems reasonable.
An alternative approach
An output capacity for the 359 °F (182 °C) fluids produced by TG-2 was estimated in 2010 based on the
flowing temperature of the well and assumptions about flow rate (Kolker et al., 2011). Based on then-
available information, it was estimated that a production well drilled at or near the TG-2 site could
produce 1.34 MW up to a maximum of 2.38 MW. However, recent data and analyses including the
stabilized temperature curves, alteration mineralogy from cored rocks, have supported revisions of the
earlier assumptions used for estimating wellhead flow capacity were optimistic.
Monte Carlo Heat-in-Place Option
In previous reports on Akutan (Kolker, 2010), the heat-in-place method has been outlined but it has not
been formally applied. Initially developed by the USGS for rough regional estimates (Muffler, 1979),
more elaborate Monte Carlo versions of the method have recently been adopted by stock exchange
regulators in Australia and Canada as a standard for publishing geothermal reserves (Lawless, J., 2010).
Despite its common use by geothermal investors, as detailed by Garg and Combs (2010) and more
generally considered in the context of other methods by Grant and Bixley (2011), Monte Carlo heat-in-
place approaches are commonly misleading and difficult to validate. If such an analysis is needed to
meet a reviewer’s request, the City of Akutan could consider employing a large consultancy that
routinely provides such analyses to meet regulatory needs, like GeothermEx or SKM.
Akutan Geothermal Resource Assessment
29
Resource Risks
The major volcanic hazard posed to a geothermal development on Akutan is ash fall. The modern
volcanic complex forms the western half of the island, and future eruptions are unlikely to affect the
eastern portions of the island (Ancestral Akutan), including HSBV. Destabilization of the fumarole area,
at an elevation of ~1150’ (350 m; see Fig. 1), may generate debris flows, and such deposits are seen in
the valley floor. According to the hazards map of Akutan, it is possible that the entire HSBV could be
inundated by cohesive lahars associated with small-scale slope failure(s), but not likely. Another possible
but unlikely hazard is a pyroclastic flow near the fumarole field (Waythomas et. al., 1998).
Re-injection beneath the surface is the most environmentally responsible means of disposing of the
produced fluids. Re-injection also supports reservoir pressure. Normally the fluids would be injected
back into the reservoir because this is where adequate permeability exists. Because of the possibility
that HSBV is fault-controlled, reinjecting the fluids into the shallow aquifer incurs a high risk of pre-
mature thermal breakthrough to the producing wells. This risk can be investigated through pressure-
interference and possibly tracer testing as additional delineation wells are drilled.
Calcite scaling in the production wells and silica scaling of the production pipeline system and injection
wells are both possibilities for the Akutan system. However, gas levels are likely to be moderate and
calcium and silica concentrations are low, suggesting that scaling risks should be low. Silica is unlikely to
achieve a significant level of supersaturation should the fluids be produced to a binary power plant.
Also, the risks of silica precipitation can be mitigated through pH modification of the produced waters .
In addition, the potential for producing acid corrosive fluids at Akutan is very low . The hot springs and
discharge waters demonstrate that the reservoir hosts a near neutral chloride reservoir.
Further assessment of the risks would require the acquisition of additional well performance data, such
as interference testing, and additional geochemical samples from the production and injection zones.
Upflow Development Risks
Two key questions remain unresolved concerning the deep high temperature (“upflow”) resource. The
first is the location of the upflow to the system. The second is the volume of the high temperature
resource. Resolution of these questions would require additional drilling and possibly the acquisition of
additional resistivity data near and to the west of the fumaroles. A reasonable minimum size at a 10%
confidence level would be the area covered by the fumaroles and gassy alteration. If this is taken to be
roughly 1500 ft2 (0.5 km2) then using the base case numbers for power density of 15 MW/km2, a
reasonable minimum for expected capacity of the upflow is 8 MW after Grant and Bixley (2011).
The risk of volcanic hazards should be carefully investigated if the wellpad were to be sited near the
fumarole field on the flank of Akutan volcano, as that location lies on a possible path of pyroclastic flows
from Akutan volcano (Waythomas et al, 1998).
Fumarole gas contents are 3.5 to 4 wt. %, which do not present an obstacle to development. A well
drilled beneath the fumarolic complex is also at a low risk of encountering acid fluids, because the gas
chemistry is indicative of a neutral chloride upflow to the geothermal system.
Akutan Geothermal Resource Assessment
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Outflow Development Risks
Other than the general risks mentioned above (injection breakthrough, scaling/corrosion, etc), the most
important development risk of the outflow resource discovered by core hole TG-2 is permeability and/or
volume limitations. Neither of the coreholes encountered clay alteration characteristic of a well-
developed smectite-rich argillic caprock. Perhaps the argillic alteration did not develop because of
dense lavas, or higher rank alteration that does not retrograde, or it never became well-developed, or
perhaps it was eroded off. Resistivity profiles of the HSBV also suggest only a very thin conventional clay
has formed over the outflow system, close to the hot springs (Kolker et al., 2009). The rocks in general
appear to be only weakly altered. This implies that HSBV does not host a substantial volume of hot fluid,
making it a risky development target.
Mineralogical studies of TG-2 core rocks suggest that secondary mineralization of permeable fractures
has “sealed” the outflow area, restricting flow. Analysis of the temperature profiles and flow behavior of
TG-2 suggests that the produced fluid of 359 °F (182 °C) was “pulled” into the system from elsewhere.
The subsurface source of the 359 °F (182 °C) fluid is unknown and therefore targeting this resource is
highly risky.
Additionally, there is a high risk that exploitation of the shallow reservoir could result in rapid enthalpy
declines during exploitation. The risk arises from any of the following: recharge of the reservoir by sea
water; cold meteoric water influx from near surface aquifers; and breakthrough from injection wells.
Groundwater influx probably poses the most significant risk. There are also a large number of
connection points between the shallow thermal aquifer and the surface along the outflow path. Any
pressure decline as a result of exploitation would likely allow these colder waters to descend into the
reservoir and cool the production wells.
Conclusions
The Akutan geothermal resource can be divided into an upflow zone and one or more outflow zones.
Studies of alteration minerals in the core suggest that the outflow resource discovered by TG-2 is likely
to have significant permeability limitations (Stelling and Kent, 2011). The outflow resource of 359 °F (182
°C) discovered by slimhole exploratory drilling in 2010 appears to have migrated from a more distal
source and may not be commercially developable. A temperature reversal at the bottom of the
stabilized TG-2 profile reduces the possibility that a hotter or more voluminous reservoir would be
encountered by drilling deeper at that location. These conclusions indicate that earlier estimates of
production capacity of the outflow resource discovered by slimholes are inaccurate, because the flow
assumptions for this estimate appear to have been overly optimistic.
The hottest modern zone in the TG-2 core is at 585-590’ (178-180 m), with a static measured
temperature of 338 °F (165 °C). The occurrence of wairakite, epidote and prehnite suggest that this
zone was permeable during the earlier higher temperature alteration event. The outflow zone
penetrated by the exploratory slimholes shows evidence of “self-sealing” through mineralization of
primary and secondary permeability channels. The chlorite- and zeolite-dominated hydrothermal
mineralogy of wells TG-2 and TG-4 indicate that a lower temperature alteration assemblage has been
overprinted on a higher temperature assemblage. The higher temperature alteration assemblage
contains illite, epidote, prehnite, and adularia. The mixed layer clays, illite-smectite and chlorite-
Akutan Geothermal Resource Assessment
31
smectite, and zeolites are part of the lower temperature retrograde assemblage corresponding to
temperatures of 300 – 430 °F (150-220 °C). The overprinting observations can be explained by a
vertically-limited outflow system in a waning phase after attaining higher temperatures, which suggests
that a deeper well drilled at or near the location of TG-2 is not likely to encounter the hotter fluids
predicted by chemical geothermometry. Since those fluids appear to be flowing laterally along the water
table towards Hot Springs Bay, the source fluids are probably westward up the valley towards the
fumaroles and/or southwest to the valley junction and then northwest (Figs 10 and 12).
Future drilling should target the upflow resource as the highest-grade, lowest-risk part of the system.
The upflow source fluids are likely to be within the range of 428-572 °F (220-300 °C), and are chemically
benign. The estimated output capacity of the upflow target is 15-100 MW by analog analysis, with a
minimum output of 8 MW based on pessimistic volume considerations.
If developing the upflow resource is not possible, the hottest part of the lower-grade outflow zone could
be targeted but with greater risk.
Recommendations
The unresolved resource properties and risks can only be addressed by additional characterization of the
resource through drilling. An evaluation of the access, drilling and financial issues involved in targeting a
well on the upflow resource below the fumarole should be top prioirity at this time. Future well(s)
should be directed west beneath the fumaroles or north to a postulated upflow beneath a local
resistivity high. The well should attain a minimum depth of 4500’ (1350m) to insure that it penetrates
through the reservoir top, although a target depth of 6000’ (1800m) would be preferable in order to
better establish reservoir thickness. As evaluation of the resource potential continues, obtaining
samples of separated steam and water from the production wells will be valuable for further assessing
the geochemical risks related to scaling and cold water influx. Pressure-interference and possibly tracer
testing will need to be conducted as additional wells are drilled.
The risks associated with drilling the upflow target could be mitigated by additional exploration work.
One focus of additional exploration work could be the identification of controlling structures (likely
faults). Since hot fluids are constantly plugging up the "plumbing" channels by depositing minerals in
open fractures, large-scale activity on faults is required to keep the system permeable. These faults must
exist, but none have been conclusively identified in HSBV or near the fumaroles. Hence, mapping large-
scale active structures controlling permeability in the Akutan geothermal field could reduce well
targeting risks. Aerial photography survey planned for summer 2011 may provide useful data.
Additional studies (LIDAR, seismic, or other geophysical methods) could supplement this investigation
after the initial review of the aerial photography.
Another exploration activity that could mitigate the upflow target drilling risk is extending coverage of
the MT survey further to the north and west of HSBV. This could be done with very limited additional
stations (possibly 10-20) with or without a helicopter, limited to the area in the direct vicinity of the
fumaroles. However, this additional data may not have a significant effect on the project risk assessment
of the outflow, especially along the north rim of the outflow. Because it is likely to be relatively
expensive and prone to severe wind noise, this activity is not top priority at this time.
Akutan Geothermal Resource Assessment
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If the shallow outflow is deemed to be more suitable for geothermal development, an important risk
mitigation measure would be analog studies of more shallow outflows that have been developed for
power generation and/or space heating. Analog studies of similar geologic environments in Iceland
could be particularly useful for assessing risks associated with cold water influx and injection
breakthrough. Additionally, several low-cost additional studies could help characterize the outflow
resource. These include: (1) Fluid inclusion analysis of hydrothermal minerals in deposited in fractures in
core rocks; (2) Analysis of the fracture orientation within well cores; (3) Detailed clay analysis identifying
the percentages of illite in illite-smectite and chlorite-smectite. As with the upflow target, pressure-
interference and possibly tracer testing should be conducted as additional wells are drilled.
References and Bibliography
Black, Robert F., 1975. Late quaternary geomorphic processes: Effects on the ancient Aleuts of Umnak Island in
the Aleutians. Arctic, v. 28, p. 159-169
Coombs, D.S., Ellis, A.J., Fyfe, W.S., and Taylor, A.M. (1959) The zeolite facies, with comments on the interpretation
of hydrothermal syntheses. Geoch. Cosmoch. Acta 17, 53-107.
Cumming, W., 2009. Geothermal resource conceptual models using surface exploration data. Proceedings, 34th
Workshop on Geothermal Reservoir Engineering, Stanford University, Stanford, CA.
Cumming, W. and Mackie, R., 2010. Resistivity Imaging of Geothermal Resources Using 1D, 2D and 3D MT
Inversion and TDEM Static Shift Correction Illustrated by a Glass Mountain Case History. Proceedings, World
Geothermal Congress 2010.
Garg and Combs, 2010. A Reexamination of USGS Volumetric “Heat in Place” Method. Proceedings, Thirty-Sixth
Workshop on Geothermal Reservoir Engineering, Stanford University, Stanford, California, SGP-TR-191, 5p.
Glassley, W., 2008. Geothermal Energy: Renewable Energy and the Environment. CRC Press, 290p.
Giggenbach, W., 1991. Chemical Techniques in Geothermal Exploration. In: The Application of Geochemistry in
Geothermal Reservoir Development, F. D'Amore Ed. 1991 UNITAR/UNDP Guidebook.
Grant, M.A., and P.F. Bixley, 2011. Geothermal Reservoir Engineering, 2nd Edition. El Sevier Press, 378 p.
Information Insights, 2010. Akutan Geothermal Energy Demand and Stakeholder Assessment. Unpublished report
to the City of Akutan and the Alaska Energy Authority, 34p.
Kolker, A., 2008. Geologic Setting of the Central Alaskan Hot Springs Belt: Implications for Geothermal Resource
Capacity and Sustainable Energy Production. Ph.D. Dissertation, University of Alaska Fairbanks, 203p. Available
Online at: http://www.uaf.edu/rap/students/Alumni/Kolker-dissertation-2008.pdf
Kolker, A., and R. Mann, 2009. Heating Up The Economy With Geothermal Energy: A Mult i-Component Sustainable
Development Project at Akutan, Alaska. Geothermal Resource Council Transactions No. 33, 11p.
Kolker, A., P. Stelling, B. Cumming, A. Prakash, and C. Kleinholt, 2009. Akutan Geothermal Project: Report on 2009
Exploration Activities. Unpublished report to the City of Akutan and the Alaska Energy Authority, 37p.
Kolker, A., B. Cumming, and P. Stelling, 2010. Akutan Geothermal Project: Preliminary Technical Feasiblity Report.
Unpublished report to the City of Akutan and the Alaska Ener gy Authority, 31p.
Akutan Geothermal Resource Assessment
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Kolker, A., B. Cumming, and P. Stelling, 2010. Geothermal Exploration at Akutan, Alaska: Favorable Indications for a
High-Enthalpy Hydrothermal Resource Near a Remote Market. Geothermal Resource Council Transactions No.
34, 14p.
Kolker, A., A. Bailey, W.T. Howard, 2011. Akutan Geothermal Project: Summary of Findings from the 2010
Exploratory Drilling Program. Unpublished report to the City of Akutan and the Alaska Energy Authority, 33p.
Lu, Z., C. Wicks, D. Dzurisin, W. Thatcher, and J. Power, 2000. Ground Deformation Associated with the March 1996
Earthquake swarm at Akutan Volcano, Revealed by Satellite Radar Interferometry. Journal of Geophysical
Research, v. 105, No. B9, p. 21483-21495.
Miller, T.P., G. McGimsey, D. Richter, J. Riehle, C. Nye, M. Yount, and J. Dumoulin, 1998. Catalog of the historically
active volcanoes of Alaska. USGS Open-file Report 98-582.
Motyka, R., and C. Nye, eds., 1988. A geological, geochemical, and geophysical survey of the geothermal resources
at Hot Springs Bay Valley, Akutan Island, Alaska. Alaska Division of Geological and Geophysical Surveys
(ADGGS), Report of Investigations 88-3.
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Professional Paper 114.
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Newendorp, P. and Schuyler, J., 2000. Decision Analysis for Petroleum Exploration, Second Edition. Planning Press,
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Thirty-Fifth Workshop on Geothermal Reservoir Engineering, Stanford University, Stanford, California, SGP -TR-
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Open-File Report 98-135, 1 sheet, 1:63,360 scale
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36p.
Seki, Y., Onuki, H., Okumura, K., and Takashima, I. (1969b) Zeolite distribution in the Katayama geothermal area,
Onikobe, Japan. Jap. J. Geol. Geogr. 40, 63-79.
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Smithsonian Institution Global Volcanism Program, Tucson AZ, 368 p.
Symonds, R. B., R. Poreda, W. C. Evans, C. J. Janik, and B. E. Ritchie, 2003. Mantle and crustal sources of carbon,
nitrogen, and noble gases in Cascade-Range and Aleutian-Arc volcanic gases. USGS Open-File Report 03-436.
Waythomas, C.F, J.A. Power, D.H. Richter, and R.G. McGimsey, 1998. Preliminary Volcano -Hazard Assessment for
Akutan Volcano, East-Central Aleutian Islands, Alaska: U.S. Geological Survey Open-File Report OF 98-0360, 36
p., 1 plate, scale unknown.
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Akutan Geothermal Resource Assessment
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WesternGeco, 2009. Magnetotelluric Survey at Hot Springs Bay Valley, Akutan, Alaska: Final Report – 3D Resistivity
Inversion Modeling. Unpublished report prepared for the City of Akutan, Alaska, GEOSYSTEM/WesternGeco
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Wood, C.P, 1994. Mineralogy at the magma-hydrothermal system interface in andesite volcanoes, New Zealand.
Geology, 22, 75-78.
ADDENDUM
Akutan Geothermal Resource Assessment
July 22, 2011
By
Amanda Kolker, AK Geothermal
Alan Bailey, Geothermal Resource Group
ADDENDUM: Akutan Geothermal Resource Assessment
2
Summary
On June 30, 2011, a report was submitted to the City of Akutan entitled the “Akutan Geothermal
Resource Assessment.” This report recommended the targeting the upflow zone, with chemically benign
fluids and temperatures approaching 572 °F (300 °C), for geothermal energy production. This zone
appears to exist at >6000’ depths below the 1500 ft2 (0.5 km2) fumarole field. Unfortunately, this zone
cannot be reached by a vertical well due to steep and hazardous terrain, and will have to be targeted via
directional wells across the fumarole field.
An important unresolved issue in the June 30 report was the trade-off between the cost and practicality
of constructing a pad at high elevations (closer to the target) but with difficult access, versus drilling
from the valley (further from the target) from an area with easier access. A recent site visit by an
experienced drilling engineer has, unfortunately, not completely clarified this issue. The site visit did
identify two areas – one in the valley and one at high elevation near the fumarole field – that could both
potentially host wellpads and facilities. However, there are problems associated with both options. First,
there is some uncertainty about the suitability of the valley wellpad sites that are within reach of the
upflow target. Also, the valley option requires 3200’ of horizontal offset from the wellpad, requiring a
highly engineered directional drilling operation(s). The high elevation option is also a challenge as it
requires additional road up steep terrain. Despite these challenges, either solution appears feasible.
Pending detailed economic and technical evaluation of these two options, the valley option is now
considered preferable based on the many advantages of valley-based project development. The other
alternative should continue to be examined in case the valley option turns out to be less economically
attractive and in case production needs to be augmented with further drilling in the future.
Site Visit Findings, July 2011
On July 8-13, drilling engineer Steve Nygaard (Geothermal Resource Group) and Akutan Geothermal
Project Logistics Manager Bob Kirkman (RMA Consulting) made a visit to the geothermal area. The
purpose of the investigation was to verify the feasibility of drilling pads, access roads, base camp, and
power plant facilities in the following general areas:
1. Hot Springs Bay Valley (HSBV). The main objective in the valley was to investigate how close
to the fumarole target a wellpad could be sited from the valley side. The issue is a creekbed
with banks that gradually steepen towards the target.
2. Fumarole field. The team was to investigate whether there was sufficient flat ground at high
elevation (>900’) near the fumarole field to site a wellpad, base camp, and plant facilities.
The team was also to investigate the best option for road access to the fumarole field area.
ADDENDUM: Akutan Geothermal Resource Assessment
3
Hot Springs Bay Valley
1. Wellpads and wellfield design
The July field team identified 3 sites in the northwest corner of the valley – V1-A, V1-B, V1-C – that could
potentially reach the proposed target via directional drilling. These sites follow Fumarole creek up
towards the target and get successively closer with V1-C being the closest. However, these locations will
require a substantial degree of site preparation, including cut and fill operations for the wellpads and
possibly the road; slope stabilization; stream diversion; and possibly additional site mitigation.
In addition to the site concerns, another problem with valley-based drilling operations is that the
proposed wellpad that is closest to the target – site V1-C – is still offset from the target by 3200’ or
greater. This is of concern because drilling directionally to achieve a horizontal offset of 3200’ poses
several technical challenges that could quickly escalate drilling costs. First, to reach a target of 6500’
below mean sea level (MSL), a deviated well with 3200’ horizontal offset would have a measured depth
of over 7700’, escalating drilling costs. Second, V1-C must achieve an angle of 33.5°/ 100 ft. to reach the
target, but such an angle will likely make pumping the well impossible. This would be a problem if well
does not flow. Fig. 1 shows a map and calculated trajectories of deviated wells towards several targets
(upflow, outflow, and/or a fault with downflow for reinjection purposes).
Figure 1. Map showing wellpad sites V1-A, V1-B, and V1-C, with a plant location at site 1. Annotations show
distance to target and max. deviation angle (e.g., maximum deviation for a well drilled from site 1C is 33.5°/ 100 ft.
to obtain a lateral distance of 3200’). Assumptions: each well will be drilled to 6500’ below MSL, each well is
deviated (directional) with trajectories are based on a target 6500 below MSL.
ADDENDUM: Akutan Geothermal Resource Assessment
4
Road access and facilities
The road access to the valley sites V1-A and V1-B is straightforward. According to Steve Nygaard,
“Without a doubt the best technical solution would be to extend the harbor road over Saddleback to
site 1. It would be cheaper and faster to build, especially if you could get started using the equipment
currently on the harbor construction building site (save on mobilization costs). With the direct road from
town, you wouldn’t need to build much of a base camp…” The road from Akutan Harbor to sites V1-A
and V1-B would run about 4 miles. Locating the power plant, base camp and other facilities is also
straightforward for the valley sites. As shown in Fig. 1, the plant and other facilities could be sited just
east of the wellpad(s). It is uncertain at this time whether a road could be constructed to wellpad V1-C.
According to S. Nygaard, “After alternate site 1 C, the cost to build the road would escalate appreciably
due to the steep slope of the canyon but doable (if the hillside formation is stable enough)… A
geotechnical geologist or civil engineer would have to confirm that the hillside is stable enough to cut a
path into it.”
Fumarole Field
1. Wellpads and wellfield design
The field team identified one site suitable for one or more wellpads, camp, and plant facilities near the
fumaroles. Steve Nygaard noted that “it wouldn’t be that difficult to construct a drilling pad on either
side of the fumaroles.” An area of relatively flat ground was located to the west of the fumarole area, at
site labeled F-A. Site WS-3 (relabeled F-B) was judged inaccessible based on poor road options (Fig. 2).
Figure 2. Map showing the location of wellpad site F-A relative to the other proposed sites. The 19-acre area
outlined in blue appears to be suitable for wellpad and other facilities. The site labeled WS3 is no longer being
considered due to access issues.
F-A
ADDENDUM: Akutan Geothermal Resource Assessment
5
The 19+ acres of relatively flat ridge line shown in Fig. 2 is attractive from the point of view of site
development as well as from a drilling and resource perspective. This area merits further investigation as
an alternative to the valley sites.
Road access and facilities
B. Kirkman identified a route up to site F-A from HSBV, ascending from a location near slimhole well TG-
4 (blue circle in Fig 2). As in the proposed route to sites V1-A-C, the road to access site F-A would begin
at Akutan Harbor and cross the saddle into HSBV. At the western end of HSBV, instead of turning north
it would continue up a gradual hill to the east and then north towards site F-A. This route is marked by a
white path in Figs. 2 and 3. Reaching the ridge line may be challenging, as there are steep intervals
which would require building switchbacks, and the site is roughly twice the distance from the 2010 camp
location. This route would have an estimated length of about 4.5 miles from Akutan Harbor. Hence, this
area will require an additional ~1/2 mile of road from HSBV, compared to sites V1-A-C.
Figure 3. Map showing the location of wellpad site F-A relative to the other proposed sites, courtesy of B. Kirkman.
This location would be suitable for wellpad and other facilities. The site labeled WS3 is no longer being consi dered
due to access issues.
Another alternative investigated during the site visit was access from the north side of HSBV to sites
near the fumarole field. The field team followed a route from the second cove on Hot Springs Bay;
however, they did not recommend it, noting that the terrain steepens quickly.
ADDENDUM: Akutan Geothermal Resource Assessment
6
Drilling plan and wellfield design
From a resource perspective, drilling closer to the target from sites F-A or F-B is preferable. The
probability of success will be higher because the wellpad is closer to the target, and because the
trajectory appears to cross one or more faults at near-perpendicular angles, rather than subparallel
angles (Fig. 4).
Figure 4. Map showing of proposed wellpads (white circles with crosshair) and well trajectories (white arrows),
overlain on resistivity data for 400m below sea level. Isotherms show temperatures at 400m below sea level
corresponding to conceptual model 2 (line CM2; see Resource Assessment for details) with outflow beneath the
mountain to the north of HSBV. Also shown are mapped and inferred fault traces.
However, the recent site evaluation suggests that a wellpad could be sited in HSBV within reach of the
upflow target at location V1-C. Due to several advantages of geothermal development in the HSBV, this
option is favored at the present time. A logical approach would be to begin by drilling at site V1-C and
then making a decision whether to drill at V1-A or V1-B based on the drilling results. However, further
engineering and economic evaluations of all sites must occur before a final decision is made.
The location of reinjection wells is unresolved at this time. This is because the reservoir geometry is still
unconstrained due to lack of subsurface data near the fumaroles. Understanding reservoir geometry is
important because it is easy to “miss the target” with reinjection. Hence, additional exploration and
drilling data are needed to constrain the reinjection site.
F-A
V1-C,B,A
F-B
ADDENDUM: Akutan Geothermal Resource Assessment
7
Conclusions
The next phase of drilling on Akutan will target the upflow resource, with temperatures anticipated
between 428-572 °F (220-300 °C). A recent evaluation of the access and drilling issues involved in
targeting a well on the upflow resource has identified a provisional direction for future drilling efforts.
However, a financial evaluation of the two options has not been performed. A detailed evaluation of the
following issues must be conducted before a final decision is made:
1. Cost of engineering a wellpad at Site V1-C.
2. Cost of engineering a wellpad at Site F-A.
3. Cost of drilling directionally 3200’ from site V1-C to a TVD of 6500’ beneath the upflow target,
plus evaluation of associated issues (rig type and availability, transportability of rig, ability to
pump well, etc.)
4. Cost of drilling directionally 1200’ from site V1-C to a TVD of 6500’ beneath the upflow target,
plus evaluation of associated issues.
5. Cost of building a road to site V1-C from Akutan Harbor.
6. Cost of building a road to site F-A from Akutan Harbor.
7. Evaluation of environmental impact of road and pad alternatives.
Pending the above information, the next phase of drilling will provisionally be staged in Hot Springs Bay
Valley, with wellpads located at the top of the valley and boreholes aimed directionally beneath the
upflow area. If the valley wellpad sites, upon further evaluation, are deemed unsuitable or too
expensive, or if the valley wells do not produce sufficiently for power production, drilling should instead
be staged at a high-elevation site just west of the fumarole field. The 19+ acres of relatively flat ridge
line near site F-A is attractive from the point of view of site development as well as from a drilling and
resource perspective. Reaching the ridge line may be challenging, but increased road construction cost
may be allayed by reduced pad construction costs and, perhaps more significantly, decreased drilling
costs. This area merits further investigation as an alternative to the valley sites.
At this time, it is recommended that permit applications for drilling be submitted for no less than ten
sites, listed below. Additional sites may be identified upon review of aerial photography (pending).
1. V1-C1
2. V1-C2
3. V1-B1
4. V1-B2
5. V1-A1
6. V1-A2
7. F-A1
8. F-A2
9. F-B1
10. F-B2
In addition to the financial evaluation described above, additional exploration prior to drilling should
focus on identifying faults and evaluating their control on the upflow system. This could upgrade the
valley wellpad sites by extending the target southeastward from the fumaroles. It will also provide
parameters useful in planning trajectories for both production and reinjection.
Akutan Geothermal Project Feasibility Report
16 August 2011
TAB D
Akutan Screening Study:
Conceptual Level Evaluation of Costs
and Economics
AKUTAN SCREENING STUDY
CONCEPTUAL LEVEL EVALUATION OF
COSTS AND ECONOMICS
AKUTAN GEOTHERMAL POWER PROJECT
P R E P A R E D B Y
G E O T H E R M A L R E S O U R C E G R O U P , I N C .
P A L M D E S E R T , C A L I F O R N I A
U R S C O R P | D E N V E R , C O L O R A D O
G E O T H E R M A L D E V E L O P M E N T A S S O C I A T E S
R E N O , N E V A D A
M A Y 2 0 1 1
5/16/2011
May 16, 2011
Mr. Ray Mann
RMA Consulting Group, LLC
221 East 7th Avenue #101B
Anchorage, AK 99501
Subject: Transmittal of Report—Conceptual Level Evaluation of Costs and Economics for the Akutan Geothermal
Power Project
Dear Mr. Mann,
Geothermal Resource Group, Inc. (GRG) is pleased to submit this report that presents a conceptual-level cost
estimate, economic analysis, and recommended alternative for the Akutan Geothermal Power Project located on
Akutan Island, Alaska. This report is prepared in accordance with our agreement with the City of Akutan dated
March 7, 2011.
Initially, the City requested a feasibility study for geothermal power development on Akutan. The scope of this
project resulted from a conference call on Tuesday February 22, 2011, from which it was agreed to divide the
feasibility study into two phases in order to get preliminary information to the City to meet certain deadlines. The
two phases decided upon are:
• Phase I—Alternatives Screening
• Phase II—Conceptual Design.
This report presents the results of the Phase I project. The report identifies and compares the various development
alternatives and the results of financial modeling. The result is the preferred alternative described in the report.
Information on conceptual design that was initially planned for Phase II has been added to this report at the City’s
request. Phase II—Conceptual Design is a future more detailed feasibility study and cost analysis that will be
conducted using on the preferred alternative from this study.
The project team consists of 1) Geothermal Development Associates of Reno, Nevada, experts in geothermal
resource assessment, power plant design and construction, 2) URS Corp of Denver, Colorado, experts in
construction management and power plant economics as well as environment and infrastructure, and 3) Geothermal
Resource Group, Inc. of Palm Desert, California, experts in geothermal drilling engineering, reservoir analysis and
geothermal development.
In addition, RMA Consulting of Anchorage, Alaska, the City of Akutan’s Program Manager and AK Geothermal of
Portland, Oregon actively contributed to the study.
It has been our pleasure to manage this project that has the potential to accelerate renewable energy development on
Akutan Island and throughout Alaska.
Sincerely,
Alan V. Lattanner
Project Manager
Cc: GDA, URS, AKG
5/16/2011
Table of Contents
1.0 BACKGROUND ........................................................................................................................................... 4
2.0 INTRODUCTION ......................................................................................................................................... 4
3.0 PURPOSE AND RECOMMENDATIONS ........................................................................................................ 5
3.1 PURPOSE ......................................................................................................................................................... 5
3.2 RECOMMENDATIONS (PREFERRED ALTERNATIVE) ..................................................................................................... 6
4.0 SUMMARY ................................................................................................................................................ 6
4.1 APPROACH ....................................................................................................................................................... 6
4.2 RESULTS .......................................................................................................................................................... 7
5.0 PLANT DESCRIPTIONS AND CONSIDERATIONS........................................................................................... 9
5.1 STEAM PRODUCTION ......................................................................................................................................... 9
5.1.1 Resource Assumptions ............................................................................................................................. 9
5.1.2 Resource Utilization ................................................................................................................................. 9
5.1.3 Brine Injection ........................................................................................................................................ 10
5.1.4 Non-Condensible Gas (NCG) .................................................................................................................. 10
5.2 NON-CONDENSING STEAM PLANT ............................................................................................................. 10
5.2.1 Description ............................................................................................................................................. 10
5.2.2 Advantages ............................................................................................................................................ 11
5.2.3 Disadvantages ....................................................................................................................................... 11
5.3 WATER-COOLED CONDENSING STEAM PLANT ........................................................................................... 11
5.3.1 Description ............................................................................................................................................. 11
5.3.2 Advantages ............................................................................................................................................ 12
5.3.3 Disadvantages ....................................................................................................................................... 12
5.4 AIR-COOLED BINARY PLANT ....................................................................................................................... 12
5.4.1 Description ............................................................................................................................................. 12
5.4.2 Advantages ............................................................................................................................................ 13
5.4.3 Disadvantages ....................................................................................................................................... 14
6.0 COSTS ESTIMATES AND ECONOMIC INPUTS ............................................................................................ 14
6.1 DESIGN AND COST ESTIMATE BASIS .................................................................................................................... 14
6.1.1 Site Preparation and Access Roads ........................................................................................................ 14
6.1.2 Environmental Assessment, Geothermal Wells, and Transmission Lines .............................................. 16
6.1.3 Power Plant Options .............................................................................................................................. 18
6.1.4 Overall Exclusions .................................................................................................................................. 20
6.2 OTHER PARAMETERS USED IN ECONOMIC ANALYSES ............................................................................................. 20
6.3 CAPITAL COST ESTIMATES ................................................................................................................................. 21
6.4 OPERATING COST ESTIMATES ............................................................................................................................ 21
7.0 ECONOMIC EVALUATION ........................................................................................................................ 23
7.1 EVALUATION OF CASES ..................................................................................................................................... 23
7.2 SENSITIVITIES ................................................................................................................................................. 27
8.0 APPENDIX A—COST INPUTS .................................................................................................................... 32
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Conceptual-Level Evaluation of Costs and Economics
Akutan Geothermal Project
1.0 BACKGROUND
Akutan is located in the Aleutian Islands of Alaska, about 760 miles southwest of Anchorage, and about 40
miles east of Unalaska/Dutch Harbor. Akutan Island is home to the Village of Akutan and Trident Seafood,
the largest fish processing plant in North America. The Village and Trident together currently use more than
4.5 million gallons of fuel annually for production of electricity and heating for both structures and processes
associated with the Trident plant and structures in the Village of Akutan.
About 95% of the total energy for Trident + Akutan Village is used by Trident. In fact the Trident plant has
a peak electric requirement of about 7 MW. Trident currently uses diesel engine generators to provide its
electricity. In 2009, the engine generators generated more than 36 million kWh at a reported cost of
$0.21/kWh.
Akutan Island is geologically active and includes the Akutan caldera which is one of the most active volcanoes
in the Aleutian Islands. The Akutan geology includes a geothermal resource that has long been considered
one of the most promising high-temperature sites. Until recently only reconnaissance level exploration had
been completed. In 2009, the Village of Akutan received an energy grant and loan funds from the state of
Alaska to perform a more detailed assessment of this potential energy source. These funds were used to
conduct surface exploration activities in 2009 and thermal gradient (TG) well drilling in 2010.
The 2010 exploratory drilling program was successful in identifying a geothermal resource that would likely
support proposed development of a geothermal power plant. This resource is located in a valley on the other
side of a rise about 6 km west northwest of the Village of Akutan and Trident Seafood.
During the 2010 exploratory program small-diameter core holes were drilled and a geothermal resource at
about 360 °F was discovered at depths of less than 600 ft. Since the core holes were small, it was necessary
to perform empirical calculations based on geothermal field observations. Calculations based on one of the
small TG wells indicated that a single full-sized production well could yield a capacity ranging from 465 to
820 gpm. Based on the temperature and these flow parameters it is estimated that one full-size well could
produce about 1.3 to 2.4 MW.
2.0 INTRODUCTION
This study provides an important and integral first step in the evaluation of Akutan the geothermal project. It
uses capital cost estimates, operating cost estimates, and financial parameters to provide an initial assessment
of the economic viability of several geothermal power plant options to provide an alternative form of
electricity to the Trident Seafood plant and the Village of Akutan.
It is important to note that the case recommended as a result of this study is based on initially defined
parameters and conceptual cost estimates. A more detailed analysis is required to confirm the choices and
recommendations made as a result of this study.
The following items are included in the capital cost estimates used herein:
• Environmental Assessment (cost estimate provided by URS Energy & Construction – URS E&C)
• Access road (capital cost estimate provided by RMA Consulting Group)
• Drilling and establishing geothermal wellheads (capital cost estimate provided by Geothermal Resource
Group – GRG)
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• Power plant (capital and operating and maintenance (O&M) cost estimates provided by Geothermal
Development Associates - GDA)
• Above-ground transmission line – routed within access road right of way (capital cost estimate provided
by URS E&C)
3.0 PURPOSE AND RECOMMENDATIONS
3.1 PURPOSE
The purpose of this study was to develop Class 5* capital cost estimates; O&M cost estimates; and provide
conceptual-level economic assessments for six geothermal power plant configurations and three access road
routes (alignments). The geothermal power plant options would produce electricity from the geothermal
resource on Akutan and provide the electricity to the Trident Seafood plant and the Village of Akutan. The
intent of the analysis was to determine whether geothermal-based electricity could potentially be produced at
a cost lower than would be incurred by the Trident Plant and Village of Akutan with the existing form of
power generation (oil-fired diesel engine generators).
The power plant options included in this evaluation are:
1. 1 x 5 MW net non-condensing steam plant
2. 2 x 5 MW net non-condensing steam plant
3. 1 x 5 MW net condensing steam plant
4. 2 x 5 MW net condensing power plant
5. 1 x 5 MW net binary power plant
6. 2 x 5 MW net binary power plant
Descriptions of these plants are provided in Section 5.
Because the geothermal resource is in an undeveloped and currently inaccessible area, it is necessary to
construct access roads, drill wells, construct the power generation plant, and provide transmission lines to
deliver power to the users.
* - Class 5 cost estimate defined in subsection 6.3.
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3.2 RECOMMENDATIONS (PREFERRED ALTERNATIVE)
The evaluation herein found that the most advantageous economics (rate of return) was for power plant
option 2 with road alignment 1, that is, two 5 MW non-condensing steam plants, four (4) production /
injection wells and the road construction / transmission line route from Akutan Bay over the saddle into the
southwest end of Hot Springs Bay Valley. Consequently, option 2/road alignment 1 is the recommended
choice and the option that should be explored in more detail in the next phase of the continuing development
of the Akutan Geothermal Project. Each component of the preferred alternative is further discussed later in
this report.
Table 1 provides a summary of the potential savings in the cost of electricity of geothermal option 2
compared to the existing oil-fired diesel engine generators for low, median, and high fuel price scenarios (fuel
price scenarios provided by the project).
The net present value or rates of return for the other five options were not as desirable as the option 2
configuration because of lower revenue, higher capital cost, and/or higher operating costs.
Table 1
4.0 SUMMARY
4.1 APPROACH
This study evaluated 3 types of power plant configurations at two sizes – 1x5 MW net and 2x5 MW net (six
power plant options total). URS Energy & Construction received the cost and economic inputs from the
companies listed in Section 2 and used its proforma spreadsheet to calculate the economics of the power
plant options. Section 6 provides the capital costs, operating costs, and economic criteria used to develop the
economic comparisons provided in this report.
These options are compared on the basis of net present value (NPV) and in particular are gauged with the
projects’ internal rate of return (IRR). The economic calculations include the capital costs, O&M costs,
economic inputs, Trident’s power demand profile, and other parameters outlined in subsection 6.2. The
results are based on annual escalation rates of 2.3% provided by the project, as well as other escalation rates
specific to other items (other escalation rates based URS E&C in-house data). The use of item-specific
escalation rates is reflective of a “tailored” treatment of future escalation.
Fuel Price
Scenario
Price of
Fuel,
$/gal
Levelized Cost
of Elec. from
Existing
Engines,
$/kWh
Price of Elec.
from
Geothermal @
12% IRR,
$/kWh
Elec. Price
Savings of
Geothermal,
$/kWh
Low $3.25 $0.20 $0.20 $0.00
Median $3.90 $0.24 $0.20 $0.04
High $4.85 $0.29 $0.20 $0.09
Option 2 -- 2x5 Non-Condensing Geothermal Plant
with Road Alignment 1
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4.2 RESULTS
The power from the geothermal plant would be provided to the Trident Seafood plant and Village of Akutan.
The Trident plant has an annual average peak demand of 7 MW for 180 days of the year. The 1x5 MW
geothermal plant options are at a disadvantage during this peak period because the difference between 7 MW
demand and the 5 MW output would need to come from Trident’s existing diesel generators. The NPV of
fuel needed by the engine generators to make up the 2 MW difference is very significant, representing half of
the NPV of revenues. The total of the NPV of O&M and the NPV of fuel is more than 70% of the NPV of
the revenues. When debt service is included, the results are negative annual cash flows over the entire plant
life. As a consequence, none of the 1x5 MW cases are economically feasible under the criteria established for
this study.
The NPV for the 2x5 MW non-condensing case shows improved economics with positive cash flows over
the plant life. However, the geothermal plant electricity price $0.13/kWh as initially established by the project
results in revenues that are not sufficient to produce desirable economics. With the $0.13/kWh price, the
IRR is only about 2%, well below the 12% hurdle rate established for this study. The considerations related
to the above economics are:
• The weighted average of the annual load for Trident + Akutan translate to an annual capacity factor of
about 51% (weighted average demand of Trident + Akutan for the entire year is 5,100 kW). Thus, only
51% of the geothermal plant’s 10 MW total production capability is contributing to revenue.
• The NPV for the annual debt service + NPV for O&M costs is about 70% of the NPV of the revenue
over the life of the plant.
• The price of power identified by the project participants for use in this study is $0.13/kWh. This is a
little below mainland Alaska’s average grid-wide price for industrial power for 2008 (the latest year for
which data are available from the US Energy Information Administration).
• Since Akutan is remote from mainland Alaska and has no way to obtain grid electricity, the price of
geothermal electricity should be referenced against the cost experienced by Trident with its existing form
of generation.
• In 2009, with the price of fuel for the diesel engines at about $3.10 per gallon, Trident’s cost diesel engine
generated electricity was reported to be $0.21/kWh. Based on the current price of fuel at about
$3.90/gal, the leveled price of diesel engine generated electricity over a 20 year life is estimated to be
about $0.24/kWh.
There are options to improve the economics of project. The following are two of a variety of possible
examples to improve project economics:
• The most straightforward option is to raise price for electricity from geothermal to $0.20/kWh (leaving
all other costs and parameters unchanged). If this change is made the IRR is estimated to meet the
minimum acceptable return of 12.0%. In this case, the acceptable return is achieved with an electricity
price that is still $0.04/kWh below the price Trident is expected to incur for its diesel engine based
electricity on a levelized basis.
• Another option is to obtain additional grants and raise the price of electricity. If the project were to
obtain an additional $8 million in grants or subsidies ($23 million total) and the price of geothermal
electricity is increased to $0.17/kWh, the IRR is estimated at 12.1%, slightly exceeding the minimum
acceptable return. Thus, the project could achieve acceptable returns with a geothermal plant electricity
price that is $0.07/kWh below the price Trident is expected to incur for its diesel engine based electricity
on a levelized basis.
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As a supplement to the above examples, Figure 1 provides a graph of IRR and corresponding prices of
electricity from the geothermal power plant. It also shows diesel engine plant electric price equivalent for the
low, median, and high prices of fuel (prices in 2011 dollars).
The table shown on the graph is another way of providing a comparison of the data. This table shows that if
the electricity from the geothermal plant is priced at $0.20/kWh, it is at a breakeven with the diesel engine
plant when the fuel is $3.25/gal. The table also shows that:
• If the price of fuel is $3.90/gal, the electric price of geothermal is $0.04/kWh less than the electric cost of
the diesel engine plant (including estimated non-fuel O&M), and
• If the price of fuel is $4.85/gal, the electric price of geothermal is $0.09/kWh less than the electric cost of
the diesel engine plant (including estimated non-fuel O&M).
Figure 1
Power Price for Geothermal* vs. Existing Engines
Akutan Geothermal Project (2011 Dollars)
0%
5%
10%
15%
20%
25%
$0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35
Electric Price, $/kWhInternal Rate of Return for Geothermal Plant, %Low
$3.25/gal
Median
$3.90/gal
High
$4.85/gal
* - 2x5 Non-Condensing Geothermal Plant with Road Alignment 1
Fuel Price
Scenario
Price of
Fuel,
$/gal
Levelized Cost
of Elec. from
Existing
Engines,
$/kWh
Price of Elec.
from
Geothermal @
12% IRR,
$/kWh
Elec. Price
Savings of
Geothermal,
$/kWh
Low $3.25 $0.20 $0.20 $0.00
Median $3.90 $0.24 $0.20 $0.04
High $4.85 $0.29 $0.20 $0.09
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5.0 PLANT DESCRIPTIONS AND CONSIDERATIONS
5.1 STEAM PRODUCTION
5.1.1 RESOURCE ASSUMPTIONS
The Akutan resource is assumed to exist as a hydrothermal reservoir at 225°C, producing a two-phase
mixture of steam and brine. This mixture expands as it rises in the production wells, causing them to flow
without pumping. Once above ground, the two-phase mixture is piped to a vessel where the steam and brine
are separated. A simplified diagram of the separation process is provided in Figure 1.
Figure 1 – Steam Separation
In Figure 1, the total mass flow extracted from the reservoir is designated as mt; the separated steam,
including non-condensible gases (NCG), is designated as ms; and the separated liquid, consisting of hot water
and dissolved minerals (brine), is designated as mb.
5.1.2 RESOURCE UTILIZATION
The optimal separation pressure depends on resource conditions and equipment choices. The amount of
steam and/or brine needed to run the power plant depends on the choice of power generation cycle. The
cycles studied in this report include a non-condensing steam cycle, a water-cooled condensing steam cycle,
and an air-cooled binary cycle. The cycles are further described in subsequent sections. Table 1 indicates the
amount of steam and/or brine needed to produce 5 MW of net power for each of the options studied.
SEPARATOR
PRODUCTION WELL
m t
ms
m b
BRINE
STEAM + NCG
PSEP
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TABLE 1 Psep mt ms mb
Plant Type (bar a) (T/hr) (T/hr) (T/hr)
Non-Condensing Steam 6.0 622 87.9 534
Water-Cooled Condensing
Steam
5.5 302 44.7 257
Air-Cooled Binary 8.0 288 35.5 253
5.1.3 BRINE INJECTION
After separation, the brine may or may not be used in the power cycle, but in either case it must be injected
back into the reservoir. There are many good reasons to inject, and reservoir support is one of them. If the
brine is not injected, the reservoir may become depleted of liquid and eventually fail to produce enough steam
to maintain plant output. Surface disposal of the brine, although practiced in a few places, can damage
vegetation and habitat for both fish and wildlife. In both of the steam plant options, the brine is not used in
the power plant so it is injected immediately after separation. Alternatively, the hot brine (over 150°C) can be
used for other processes which require heat. The binary plant uses the brine for preheating but is then
returned to the reservoir, albeit at a lower temperature (100°C) than in the steam cycles.
5.1.4 NON-CONDENSIBLE GAS (NCG)
Non-condensible gases are present in varying amounts in all geothermal fluids. Carbon dioxide (CO2) is the
predominant gas but significant amounts of hydrogen sulfide (H2S) are also common. Because these gases do
not condense at ambient temperatures and pressures, they are generally released to atmosphere in a way that
maximizes mixing and dilution in the surrounding air. The quantity of gas released is directly proportional to
the amount of steam separated for process use. The non-condensing plant has the highest steam
consumption so it will release more NCG into the atmosphere than the other plant cycles. However, even the
most efficient plant cycles considered here will release some NCG into the atmosphere.
5.2 NON-CONDENSING STEAM PLANT
5.2.1 DESCRIPTION
The non-condensing steam cycle is the simplest choice of plant considered in this study. Steam from the
separator is piped to a steam turbine where it does useful work as it expands through the turbine toward
atmospheric pressure. After expanding through the turbine, the steam is simply released to atmosphere. A
simple flow diagram of the cycle is provided in Figure 2.
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Figure 2 – Non-Condensing Steam Plant
5.2.2 ADVANTAGES
The non-condensing plant is the least costly plant to build and easiest plant to operate and maintain. The
process is not complicated and lends itself to unmanned operation with remote monitoring. The exhaust
steam is also hot enough (~100°C) to be used in some drying and curing processes.
5.2.3 DISADVANTAGES
The non-condensing plant requires significantly more steam than the other plant options. In fact, it takes
twice the steam per unit of power output. Because of this inefficiency, non-condensing plants are only used
where the resource is very large in comparison to the load. This appears to be the case at Akutan, so a non-
condensing plant is a serious option.
5.3 WATER-COOLED CONDENSING STEAM PLANT
5.3.1 DESCRIPTION
The condensing steam cycle is a natural extension of the non-condensing plant. Steam from the separator is
piped to a steam turbine as with the non-condensing plant, but instead of stopping the expansion at
atmospheric pressure, the steam is allowed to expand to sub-atmospheric pressure (e.g., 8 kPa abs). The
means to accomplish expansion to such low pressure adds considerable equipment and complication to the
power cycle, as shown in the flow diagram provided in Figure 3.
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Figure 3 – Water-Cooled Condensing Steam Plant
5.3.2 ADVANTAGES
The water-cooled condensing plant offers better efficiency in terms of resource utilization than the non-
condensing plant. The cycle also produces its own makeup water for cooling, so no fresh water source is
needed.
5.3.3 DISADVANTAGES
The additional equipment required for the condensing steam plant increases the capital cost and impacts
operation and maintenance costs. The cooling water must be treated to prevent corrosion and to prevent
fouling due to biological growth. Failure to maintain proper water treatment can result in severe damage to
equipment in a fairly short time period. The chemicals needed for water treatment are an ongoing expense
and might be a logistical problem on a remote island. Water based cooling in cold climates also raises
concerns about freezing. When in operation there is generally enough heat in the process pipelines to prevent
freezing. However, some lines can freeze in a very short time if the weather is extremely cold during a
shutdown.
5.4 AIR-COOLED BINARY PLANT
5.4.1 DESCRIPTION
The binary plant uses the separated steam and brine as indirect heat sources rather than directly in a turbine.
Heat from the steam and brine is transferred to a working fluid in a series of heat exchangers, causing the
working fluid to boil. Working fluid vapor is piped to a turbine where it expands and provides useful work in
turning the generator. The working fluid is then piped to an air-cooled condenser where it condenses as heat
is transferred to the ambient air.
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After the working fluid condenses back into a liquid, the working fluid completes the cycle by pumping back
to the heat exchangers, as shown in the flow diagram provided in Figure 4.
Figure 4 – Air-Cooled Binary Plant
5.4.2 ADVANTAGES
The air-cooled binary plant offers better efficiency in terms of resource utilization than
the steam plants, provided that the lower brine injection temperature doesn’t result in
deposition of minerals in the injection well. If the geochemistry is not favorable, the
injection temperature must be higher which diminishes the resource utilization
advantage. Another advantage of an air-cooled plant is elimination of concerns about
freezing and water treatment.
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5.4.3 DISADVANTAGES
The binary plant working fluid is often a hydrocarbon such as isobutane or isopentane. These fluids are fire
hazards requiring special design and construction features, not the least of which is a fire suppression system.
Alternatively, non-flammable working fluids such as R134a or R245fa can be used, but these are very
expensive. Some working fluid is lost during operation and maintenance and must be replaced from time to
time. In a remote location, obtaining replacement working fluid can be an expensive and time consuming
logistical problem.
6.0 COSTS ESTIMATES AND ECONOMIC INPUTS
6.1 DESIGN AND COST ESTIMATE BASIS
This subsection covers the items that were included in or excluded from capital cost estimates and economic
evaluation. The inclusions and exclusions herein are provided at summary-level. Additional details on and
costs for the Access Roads and Drilling are provided in the Appendix.
6.1.1 SITE PREPARATION AND ACCESS ROADS
The cost estimates for road access to the geothermal resource are based on three alignments (all have 300 ft
right-of-way). The beginning of the three road alignment options ties into the future Harbor Road near the
Village of Akutan and the Trident Seafood plant.
Table 2 provides the cost estimates for site preparation and access roads.
Table 2
These cost estimates are based on:
• Alignment 1 – 3.87 miles – the first section of the road proceeds in a northwesterly direction and at about
1.5 miles from Akutan crosses over the saddle proceeding southwest down along the west face of the
saddle into the Hot Springs Valley (Figure A). This is the shortest road distance to reach the potential
geothermal well sites in the valley floor.
Cost Estimate Summaries for Access Roads and Buildings
Akutan Geothermal Project
(Provided by RMA Consulting Group)
2011 $
Alignment 1 Alignment 2 Alignment 3
Item Cost, $1000 Cost, $1000 Cost, $1000
Power Plant Building, Modular Camp, and Drill Pads $1,450 $1,450 $1,450
Road Alignment 1 $9,680
Road Alignment 2 $20,450
Road Alignment 3 $20,030
TOTAL $11,130 $21,900 $21,480
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Figure A. Road Alignment 1
• Alignment 2 – 8.18 miles, the road is the same as Alignment 1 plus an extension to reach other potential
geothermal well sites on the lower face of the caldera west northwest of Hot Springs Valley (Figure B).
Figure B. Road Alignment 2
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• Alignment 3 – 8.01 miles, the beginning section of the road proceeds in a northwesterly direction, but
then turns southwest proceeding along the east side of the saddle in order to reach the potential
geothermal well sites on the lower face of the caldera west northwest of Hot Springs Valley (Figure C).
Figure C. Road Alignment 3
In addition to the road, the estimates for each alignment option include costs of materials, equipment, and
erection labor for the following:
• Pre-engineered building for the power plant (including warehouse space). The cost of the building
includes water well and septic systems.
• 24-Person Modular Camp – to house construction labor
• Drill Pads & Camp / Warehouse Staging Area
• Engine-Generator to provide power to the buildings and tools during power plant construction
• Landing Craft Marine Support
6.1.2 ENVIRONMENTAL ASSESSMENT, GEOTHERMAL WELLS, AND TRANSMISSION LINES
Table 3 provides cost estimates for environmental assessment, geothermal wells, and above-ground
transmission lines.
Table 3
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NOTE: The geothermal well cost for the 1x5 MW option is the total of the cost for the single well case plus the per-well
cost from the 4-well case. URS E&C realizes there is duplication of some items in the 4 well case that are already in the
single well case – the costs for some items should be removed. URS E&C did not attempt to determine all the changes
that would need to be made before the two costs are added – recommendations and revised cost estimates from GRG
would be required.
The cost estimates to drill geothermal wells include complete drilling rigs, temporary power, spare parts, and
drill rig labor on the following basis:
• Estimate is for four wells, 2 to be drilled vertically and 2 to be drilled directionally.
• The wells will be drilled to 4000’ measured depth, using the following design:
o 20” casing from surface to 250’.
o 13-3/8” casing from surface to 1000’.
o 12-1/4” open hole from 1000’ to 4000’ with a 9-5/8” slotted liner set on bottom.
• 25 days of mobilization of primary materials from the Port of Seattle.
• 25 days of demobilization from Akutan.
• 30 days will be required, including 3 day rig moves, to drill each of the two vertical wells.
• 35 days will be required, including 3 day rig moves, to drill each of the two directional wells.
The following items are excluded from the drilling cost estimates:
• Camp facilities (assumes camp facilities listed under access road will exist and be available for use)
• Jack-up barge or other offloading equipment.
The transmission line cost in based on 13.8 kV. It is assumed that it would be routed along the right-of-way
of Road Alignment 1. For purposes of the estimate the length is assumed to be 4.0 miles. The transmission
line cost would include:
• Poles
• Conductor & Shield Wires
• Insulator Sets & Hardware
• Grounding
Cost Estimate Summaries - Environmental Assessment, Wells, and Transmission Line
Akutan Geothermal Project
2011 $
Cost, $1000 Cost, $1000
Item 1 x 5 MW 2 x 5 MW Source
Environmental Assessment $250 $250 URS Energy and Construction
2 Wells 4 Wells
Geothermal Wells $9,990 $13,830 Geothermal Resource Group
Above-Ground Transmission Line, 13.8 kV $1,600 $1,800 URS Energy and Construction
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• Foundations
• Installation Labor
• Engineering
The transmission line cost would exclude:
• Power distribution lines to the delivery points
• Step-down transformers at the delivery points (if required)
6.1.3 POWER PLANT OPTIONS
Table 4 shows the cost estimates for the power plant options.
Table 4
The listings below provide breakdowns of the items included in the costs for the four categories: engineering;
power plant; gathering system; and spare parts and tools.
Engineering
• Engineering Specification and Design
o Architectural
o Civil/Structural
o Electrical/Mechanical
• Procurement Support
• Construction Support
• Startup
Power Plant
Cost Estimate Summaries for Geothermal Power Plant Options
Akutan Geothermal Project
2011 $
Case 1 Case 2 Case 3 Case 4 Case 5 Case 6
Item or System 1 x 5 MW 2 x 5 MW 1 x 5 MW 2 x 5 MW 1 x 5 MW 2 x 5 MW
Engineering $2,070 $2,320 $2,530 $2,660 $2,710 $3,140
Power Plant $9,340 $14,440 $17,780 $27,670 $19,280 $30,150
Gathering System $1,590 $2,310 $1,440 $2,080 $1,440 $2,080
Spare Parts and Vehicles $370 $370 $370 $370 $410 $410
Total Costs, $1000 $13,370 $19,440 $22,120 $32,780 $23,840 $35,780
Non-Condensing Condensing Binary
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• Earthwork and Foundations
• Structural Steel
• Powerhouse
• Turbine-Generator Sets
• Condenser (Not Applicable to Cases 1 and 2)
• Cooling Tower and Pumps (Not Applicable to Cases 1 and 2)
• Electrical
• Instrumentation and Controls
• Chemical Injection and Storage
• Emergency Generator
• Craft Labor
Gathering System
• Steam Piping
• Blowdown Piping
• Transfer Pumps
• Metering
• Acid Injection System
• Insulation
• Injection Piping
Spare Parts and Vehicles
• Critical Spares
• Initial Stock of Consumables
• Tools
• Vehicles
The following items are excluded from the power plant cost estimates:
• Switchyard
• Project Management
• Indirect Home Office Labor and Materials
• Onsite Engineering Support
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6.1.4 OVERALL EXCLUSIONS
From an overall perspective considering all of the previously shown cost estimate bases, the following items
are not included:
• Additional field exploration and drilling to confirm individual full-size well production, temperature, and
the capability of the geothermal resource to support the expected 20 year plant life
• Lender’s Fees
• Owner’s Costs
• Legal Fees
• Working Capital
• Debt Service Reserve
6.2 OTHER PARAMETERS USED IN ECONOMIC ANALYSES
Power Demand Profile
The following will be used for the Trident Seafood plant annual power profile:
• The plant operates on a 24 hour/day basis
• Peak power period – 7 MW, 180 days / yr
• Off-Peak power period – 4 MW, 65 days / yr
• Low season power period – 2 MW, 120 days / yr
The Akutan village load of 0.3 MW will be added to all of Trident’s loads for above time periods
Economic or Related Criteria
• Interest rate (cost of money) - 6%
• Financing:
o Period - 20 years
o Terms - 100% debt
• Minimum Acceptable Return - 12%
• Inflation rate - 2.3% (rates vary by category as indicated later in report)
• Federal income tax - None
• State income tax - None
• Property tax - None
• Insurance - $57,500 / year (all cases)
• Land / resource acquisition - $250,000 / year, total paid to Akutan and Aleut Corporations
• Electricity price (peak) - $0.13 / kWh
• Electricity price (off-peak) - $0.13 / kWh
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• Government grants / subsidies - $15 million (all cases)
For 1 x 5 MW power plant cases: During the Trident plant’s peak power period (180 days / year), the fuel
cost for 2.3 MW of diesel engine-based power generation will be added to the operating costs (7 MW + 0.3
MW [for Akutan] – 5 MW = 2.3 MW)
6.3 CAPITAL COST ESTIMATES
Table 5 provides the project costs for the six power plant options combining the costs from Tables 2, 3, and
4. The site preparation and road costs for all project cases in this report are based on Alignment 1. All of
these cost estimates are considered Class 5/4 as defined by Standard 18R-97 from the Association for the
Advancement of Cost Engineering International (AACE International). The Class 5/4 is defined as the
concept screening / feasibility study stage with the project definition in the range of 1% to 15% (expressed as
a percent of complete definition). The cost accuracy is considered to be in the range of -25% / +30% to -
30% / +35%.
Project contingency of 30% is applied to all items included in the capital cost estimates in accordance with
AACE International guidelines (based on the extent of project development and the amount of detail
currently available). Project contingency at 30% is particularly applicable to this estimate because of the
remoteness of the site and a number of other currently unknown specifics, such as: soil and underground
conditions along the complete length of the road route (amount and type of blasting required, etc.), the size
and scope of the geothermal fluid gathering system, the ultimate depth and work required to drill full size
geothermal wells, and the impact of weather conditions on construction labor productivity.
In addition to the above, all six cases are credited with $15 million, which would be provided in the form of
grants or subsidies.
Table 5
6.4 OPERATING COST ESTIMATES
Table 6 provides the annual operating and maintenance (O&M) cost estimates for each of the six power
plant cases. The various O&M activities are grouped into five categories as indicated in the “O&M Category”
column in Table 5. These five categories will be shown in the net present value tables that appear later in this
report. All costs are as provided by GDA, except:
• The two items with yellow highlight were changed from the values provided by GDA to the values
provided by RMA
Summary of Akutan Geothermal Project Capital Costs
(Costs in 2011 $, Thousands)
Case ---> 1 2 3 4 5 6
Item
1x5 MW Non-
Condensing
2x5 MW Non-
Condensing
1x5 MW
Condensing
2x5 MW
Condensing 1x5 MW Binary 2x5 MW Binary
Environmental Assessment $250 $250 $250 $250 $250 $250
Geothermal Wells $9,990 $13,830 $9,990 $13,830 $9,990 $13,830
Power Plant $13,370 $19,440 $22,120 $32,780 $23,840 $35,780
Roads & Buildings, Alignment 1 $11,130 $11,130 $11,130 $11,130 $11,130 $11,130
Transmission Line $1,600 $1,800 $1,600 $1,800 $1,600 $1,800
SUBTOTAL $36,340 $46,450 $45,090 $59,790 $46,810 $62,790
Project Contingency @ 30% $10,900 $13,940 $13,530 $17,940 $14,040 $18,840
TOTAL PROJECT CAPITAL COST $47,240 $60,390 $58,620 $77,730 $60,850 $81,630
Credit for Government Grants / Subsidies ($15,000) ($15,000) ($15,000) ($15,000) ($15,000) ($15,000)
NET PROJECT CAPITAL COST $32,240 $45,390 $43,620 $62,730 $45,850 $66,630
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• Ten percent was added to the cost of some items for the 2x5 MW cases to recognize that costs for the
2x5 MW case could be somewhat higher than the 1x5 MW cases. The costs for items with the 10%
addition are indicated by black font.
Table 6
Annual Operating and Maintenance Costs for Akutan Geothermal Power Plants
(O&M Estimates by Geothermal Development Associates)
Dollar Figures in Thousands
Annual Operating Costs, 2011 $
DESCRIPTION
1x5 MW Non-
Condensing
2x5 MW Non-
Condensing
1x5 MW
Condensing
2x5 MW
Condensing
1x5 MW
Binary
2x5 MW
Binary O&M Category Comments
1.0 GENERAL AND ADMINISTRATIVE (G&A)
1.1 Management Services $75 $75 $75 $75 $75 $75 G&A
1.2 Professional Services $25 $25 $25 $25 $25 $25 G&A
1.3 Permitting $15 $15 $15 $15 $15 $15 G&A Assumed to be annual permit renewals
1.4 Insurance $58 $58 $58 $58 $58 $58 G&A Replaced GDA estimate with RMA estimate
1.5 Travel $30 $30 $30 $30 $30 $30 G&A
1.6 Property Taxes $0 $0 $0 $0 $0 $0 G&A Replaced GDA estimate with RMA estimate
1.7 Education/Training $5 $5 $5 $5 $5 $5 G&A
Subtotal G&A $208 $208 $208 $208 $208 $208
2.0 OPERATION AND MAINTENANCE
2.1 Plant Payroll $185 $185 $185 $185 $185 $185 Plant Staff
2.2 Payroll Taxes/Benefits $72 $72 $72 $72 $72 $72 Plant Staff
2.3 Operations Overhead $28 $28 $28 $28 $28 $28 Plant Staff
2.4 Rentals $30 $30 $50 $50 $50 $50 Routine Maint.
2.5 Maintenance Contracts $50 $55 $50 $55 $50 $55 Routine Maint.
2.6 Materials and Supplies $15 $17 $50 $55 $50 $55 Routine Maint.
2.7 Equipment and Machinery $30 $33 $30 $33 $30 $33 Routine Maint.
2.8 Major Repair Reserve Fund $75 $83 $150 $165 $150 $165 Maint. Reserves
2.9 Well Workover Reserve Fund $100 $110 $100 $110 $100 $110 Maint. Reserves
2.10 Scale/Corrosion Inhibitors $100 $110 $50 $55 $50 $55 Chemicals
2.11 Transmission Line $20 $20 $20 $20 $20 $20 Routine Maint.
Subtotal O&M $704 $741 $784 $827 $784 $827
Land / Resource Acquisition $250 $250 $250 $250 $250 $250 Provided by RMA Consulting Group
Total O&M Costs $1,162 $1,199 $1,242 $1,285 $1,242 $1,285
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7.0 ECONOMIC EVALUATION
7.1 EVALUATION OF CASES
A URS Energy & Construction-developed proforma spreadsheet was used to calculate the economics of the
cases. This spreadsheet has been used on many types of utility projects ranging from coal-fired plants, natural
gas-combined cycle, diesel engine-generators, and many others. It has also been used to assess projects for
investor owned utilities, private power producers, and municipal utilities. The options for this project are
compared on the basis of net present value (NPV) and in particular are gauged with the project’s internal rate
of return (IRR).
The economic calculations include the capital costs, O&M costs, economic inputs, power demand profiles,
and other parameters outlined in subsection 4.2. Together these inputs and parameters are used to determine
the NPV of the respective cases. The results are based on annual escalation rates that for some items differ
from the 2.3% shown in subsection 4.2. These escalation rates are shown in the tables of NPV results that
follow. These alternate escalation rates are subject to the project participants’ review and if desired can be
“reset” to an across-the-board value of 2.3% (the 2.3% annual escalation applied to the revenue and all costs
items that go into determining the economics). However, the item-specific annual compound escalation rates
are based on URS E&C in-house databases and are believed to reflect an item specific or “tailored” treatment
of future escalation. The differing escalation rates are future forecast compound escalation rates based on
nationwide US averages over the 20 year plant life. The differing escalation rates are as follows:
• Industrial Electric Power - 3.2%
• Utility Worker Wages - 2.5%
• Industrial Chemicals 1.7%
• Light Fuel Oils - 2.6%
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Table 7 provides the NPV results for the 1x5 MW net non-condensing power plant case (Case 1). This table
shows that this 5 MW case is not economic. In fact, none of the 5 MW cases are economic because of the
cost incurred for the fuel needed to provide the balance of power to reach Trident's 180-day peak period
demand. With Trident’s total demand at 7 MW and the geothermal plant only able to provide 4.7 MW, the
balance of power would need to come from the Trident's existing diesel generators. Thus, 2.3 MW would be
provided by the diesel generators (7 MW – 4.7 MW = 2.3 MW; in this scenario 4.7 MW of geothermal power
would be delivered to Trident and 0.3 MW of geothermal power to Akutan).
Table 7 shows that the NPV of fuel needed to make up the difference in power is more than one-half of the
NPV of project revenues. In addition, the total the NPV of fuel and non-fuel O&M is more that 80% of the
NPV of project revenues. When debt service is included, the result is negative cash flow during the entire
plant life. In fact, the 1x5 MW net condensing and binary cases have even less desirable economics because
revenues stay the same while capital and O&M costs increase.
Table 8 provides the NPV results for the 2x5 MW net non-condensing case. The NPV results for this case
show that it has improved economics with positive cash flows over the plant life. However, the revenues are
not sufficient to result in a desirable IRR – the IRR is about 2%, well below the 12% hurdle rate established
for this study. The considerations related to the above situation are:
• The weighted average of the annual load for Trident + Akutan translate to an annual capacity factor of
about 51% (weighted average demand of Trident + Akutan for the entire year is 5,100 kW). Thus, only
51% of the geothermal plant’s 10 MW total production capability is contributing to revenue.
• The NPV for the annual debt service + NPV for O&M costs is about 70% of the NPV of the revenue
over the life of the plant
• The price of power identified by the project participants for use in this study is $0.13/kWh. This is a
little below mainland Alaska’s average grid-wide price for industrial power for 2008 (the latest year for
which data are available from the US Energy Information Administration).
• Since Akutan is remote from mainland Alaska and has no way to obtain grid electricity, the price of
geothermal electricity should be referenced against the cost experienced by Trident with its existing form
of generation.
• In 2009, with the price of fuel for the diesel engines at about $3.10 per gallon, Trident’s cost diesel engine
generated electricity was reported to be $0.21/kWh. Starting with the current price of fuel at about
$3.90/gal, the levelized price of diesel engine generated electricity over a 20 year life is estimated to be
about $0.24/kWh.
Page 25 Akutan Geothermal Screening Study Report 20110514.2.docx 5/16/2011 Table 7 Operating & Maintenance CostsSupplemental TotalRevenuesTotal Diesel-Engine Capital Debt NetEnd-of-YearO & M Fuel Cost Cost Service Cash FlowValue at Jan-114,541 -208 -284 -145 -175 -100 -250 -1,162 -2,761-32,240Esc Rate3.2% 2.3% 2.5% 2.3% 2.3% 1.7% 2.3% 2.6% 2.3%02011Comm Op.-32,982 -32,9821 2012 4,836 -217 -299 -152 -183 -103 -262 -1,216 -2,907 -2,875 -2,1622 2013 4,991 -222 -306 -155 -187 -105 -268 -1,244 -2,983 -2,875 -2,1113 2014 5,151 -227 -314 -159 -192 -107 -274 -1,272 -3,060 -2,875 -2,0574 2015 5,316 -232 -322 -162 -196 -109 -280 -1,302 -3,140 -2,875 -2,0015 2016 5,488 -238 -330 -166 -201 -111 -287 -1,332 -3,222 -2,875 -1,9426 2017 5,663 -243 -338 -170 -205 -113 -293 -1,362 -3,306 -2,875 -1,8817 2018 5,844 -249 -347 -174 -210 -114 -300 -1,394 -3,392 -2,875 -1,8178 2019 6,031 -255 -355 -178 -215 -116 -307 -1,426 -3,480 -2,875 -1,7509 2020 6,224 -261 -364 -182 -220 -118 -314 -1,459 -3,570 -2,875 -1,68010 2021 6,424 -267 -373 -186 -225 -120 -321 -1,492 -3,663 -2,875 -1,60711 2022 6,629 -273 -383 -191 -230 -122 -329 -1,527 -3,759 -2,875 -1,53112 2023 6,841 -279 -392 -195 -235 -125 -336 -1,562 -3,856 -2,875 -1,45213 2024 7,060 -285 -402 -199 -241 -127 -344 -1,598 -3,957 -2,875 -1,36914 2025 7,286 -292 -412 -204 -246 -129 -352 -1,634 -4,059 -2,875 -1,28315 2026 7,519 -299 -422 -209 -252 -131 -360 -1,672 -4,165 -2,875 -1,19316 2027 7,760 -305 -433 -213 -258 -133 -368 -1,711 -4,273 -2,875 -1,09917 2028 8,008 -313 -444 -218 -264 -135 -377 -1,750 -4,384 -2,875 -1,00218 2029 8,265 -320 -455 -223 -270 -138 -385 -1,790 -4,498 -2,875 -90019 2030 8,529 -327 -466 -229 -276 -140 -394 -1,832 -4,615 -2,875 -79320 2031 8,802 -335 -478 -234 -282 -142 -403 -1,874 -4,735 -2,875 -68321 2032 0 0 0 0 0 0 0 0 0 0 022 2033 0 0 0 0 0 0 0 0 0 0 023 2034 0 0 0 0 0 0 0 0 0 0 024 2035 0 0 0 0 0 0 0 0 0 0 025 2036 0 0 0 0 0 0 0 0 0 0 026 2037 0 0 0 0 0 0 0 0 0 0 027 2038 0 0 0 0 0 0 0 0 0 0 028 2039 0 0 0 0 0 0 0 0 0 0 029 2040 0 0 0 0 0 0 0 0 0 0 030 2041 0 0 0 0 0 0 0 0 0 0 0Net present value44,271-1,873-2,611-1,309-1,580-858-2,257-10,488-25,572-32,982-21,478-46,249Notes:IRR ---> #DIV/0!1 Capital cost at end-of-year 2011 = -$32,982 thousand2 Discount rate = 12.0%, Life = 20 years, income tax rate = 0.0%3 Equity proportion of total capital = 0.0%, Debt proportion total capital = 100.0%, Debt term = 20 years, debt interest rate = 6.0%4 Present value of the after tax net cash flow represents the present value of profit.5 Revenues based on electricity price of $0.130/kWh @ Jan-11 and diesel-engine fuel at $3.75 per gal.6 Annual revenue from sale of electricity is based on 5.0 MW for 180 days/yr, 4.3 MW for 65 days/yr, and 2.3 MW for 120 days/yr7 Supplemental power made up by Trident's diesel engine generation during peak season of 180 days per year = 2.3 MW8 Costs are not included for maintaining and keeping Trident's existing diesel engine-generators available for backup power9IMPORTANT: Escalation rates shown on this table are predictions. Differing escalation rates will have a positive or negative impact on economics and IRR.Akutan Geothermal Project Net Cash Flow Analysis ($1000)1x5 MW Non- Condensing, Case 1End-of-YearG&APlant StaffRoutine Maint.Maint ReservesChemicalsLand/ Resource
Page 26 Akutan Geothermal Screening Study Report 20110514.2.docx 5/16/2011 Table 8 Operating & Maintenance CostsSupplemental TotalRevenuesTotal Diesel-Engine Capital Debt NetEnd-of-YearO & M Fuel Cost Cost Service Cash FlowValue at Jan-115,833 -208 -284 -155 -193 -110 -250 -1,199 0-45,390Esc Rate3.2% 2.3% 2.5% 2.3% 2.3% 1.7% 2.3% 2.6% 2.3%02011Comm Op.-46,434 -46,4341 2012 6,212 -217 -299 -162 -201 -114 -262 -1,254 0 -4,048 9092 2013 6,411 -222 -306 -165 -206 -116 -268 -1,283 0 -4,048 1,0793 2014 6,616 -227 -314 -169 -211 -118 -274 -1,313 0 -4,048 1,2554 2015 6,828 -232 -322 -173 -216 -120 -280 -1,343 0 -4,048 1,4375 2016 7,048 -238 -330 -177 -221 -122 -287 -1,374 0 -4,048 1,6266 2017 7,274 -243 -338 -181 -226 -124 -293 -1,405 0 -4,048 1,8207 2018 7,507 -249 -347 -185 -231 -126 -300 -1,438 0 -4,048 2,0218 2019 7,747 -255 -355 -190 -236 -128 -307 -1,471 0 -4,048 2,2289 2020 7,995 -261 -364 -194 -242 -130 -314 -1,504 0 -4,048 2,44210 2021 8,251 -267 -373 -198 -247 -132 -321 -1,539 0 -4,048 2,66311 2022 8,515 -273 -383 -203 -253 -135 -329 -1,574 0 -4,048 2,89212 2023 8,787 -279 -392 -208 -259 -137 -336 -1,610 0 -4,048 3,12813 2024 9,068 -285 -402 -212 -265 -139 -344 -1,648 0 -4,048 3,37314 2025 9,359 -292 -412 -217 -271 -142 -352 -1,685 0 -4,048 3,62515 2026 9,658 -299 -422 -222 -277 -144 -360 -1,724 0 -4,048 3,88616 2027 9,967 -305 -433 -227 -283 -147 -368 -1,764 0 -4,048 4,15517 2028 10,286 -313 -444 -233 -290 -149 -377 -1,804 0 -4,048 4,43418 2029 10,615 -320 -455 -238 -297 -152 -385 -1,846 0 -4,048 4,72119 2030 10,955 -327 -466 -244 -303 -154 -394 -1,888 0 -4,048 5,01820 2031 11,306 -335 -478 -249 -310 -157 -403 -1,932 0 -4,048 5,32621 2032 0 0 0 0 0 0 0 0 0 0 022 2033 0 0 0 0 0 0 0 0 0 0 023 2034 0 0 0 0 0 0 0 0 0 0 024 2035 0 0 0 0 0 0 0 0 0 0 025 2036 0 0 0 0 0 0 0 0 0 0 026 2037 0 0 0 0 0 0 0 0 0 0 027 2038 0 0 0 0 0 0 0 0 0 0 028 2039 0 0 0 0 0 0 0 0 0 0 029 2040 0 0 0 0 0 0 0 0 0 0 030 2041 0 0 0 0 0 0 0 0 0 0 0Net present value56,864-1,873-2,611-1,395-1,738-944-2,257-10,8180-46,434-30,239-30,627Notes:IRR ---> 1.7%1 Capital cost at end-of-year 2011 = -$46,434 thousand2 Discount rate = 12.0%, Life = 20 years, income tax rate = 0.0%3 Equity proportion of total capital = 0.0%, Debt proportion total capital = 100.0%, Debt term = 20 years, debt interest rate = 6.0%4 Present value of the after tax net cash flow represents the present value of profit.5 Revenues based on electricity price of $0.130/kWh @ Jan-11.6 Annual revenue from sale of electricity is based on 7.3 MW for 180 days/yr, 4.3 MW for 65 days/yr, and 2.3 MW for 120 days/yr7 Supplemental power made up by Trident's diesel engine generation during peak season of 180 days per year = 0.0 MW8 Costs are not included for maintaining and keeping Trident's existing diesel engine-generators available for backup power9 IMPORTANT: Escalation rates shown on this table are predictions. Differing escalation rates will have a positive or negative impact on economics and IRR.Akutan Geothermal Project Net Cash Flow Analysis ($1000)2x5 MW Non- Condensing, Case 2End-of-YearG&APlant StaffRoutine Maint.Maint ReservesChemicalsLand/ Resource
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Akutan Geothermal Screening Study Report 20110514.2.docx 5/16/2011
Even though the previously presented results do not show favorable IRR, it is possible with a few changes in
the projects’ financial parameters to improve the project economics to acceptable rates of return.
The most straightforward option is shown in Table 9. In this option the price for electricity from the
geothermal plant is raised to $0.20/kWh (leaving all other costs and parameters unchanged). If this change is
made, the IRR is estimated to meet the minimum acceptable return of 12.0%. In this case, the acceptable
return is achieved with an electricity price that is still $0.04/kWh below the price Trident is expected to incur
for its diesel engine based electricity on a levelized basis.
Another option is shown in Table 10. It would have the following combined changes to the project financial
structure:
• The project would be able to obtain an additional $8 million in grants and subsidies, increasing the total
credits to the project from $15 million to $23 million
• The price of geothermal electricity would be $0.17/kWh; the project is estimated to achieve 12.1% IRR
with a geothermal plant electricity price that is $0.07/kWh below the price Trident is expected to incur
for its diesel engine based electricity on a levelized basis.
Both of these scenarios are different than the original project criteria, but do present two examples of how
the project could achieve acceptable returns. Project participants could assess whether additional grants are
available. However, the first option presents the most plausible approach with geothermal electricity price
that is $0.04/kWh lower than Trident would incur at a fuel price of $3.90/gal and an IRR of 12%.
7.2 SENSITIVITIES
This subsection presents two sensitivity cases. The purpose of the sensitivities is to show the impact of
changing one important cost item or parameter. The cases were as follows:
• Sensitivity 1 – same as Case 9 except that access road is changed from alignment 1 to alignment 2.
• Sensitivity 2 – same as Case 9 except that the annual compound escalation for electricity is changed
from 3.2% to 2.6% (2.6% escalation is the same as the annual escalation for oil).
Table 11 provides the results for Sensitivity Case 1 (also identified as Case 10). This table shows that a
geothermal plant with an electricity price of $0.24/kWh is required to achieve a 10.6% IRR. As previously
shown, $0.24/kWh is equivalent to the cost of electricity for the diesel engine plant with a fuel cost of
$3.90/gal. The $0.04/kWh increase in electricity price is required to offset the $10.8 million increase of road
alignment 2 over road alignment 1.
Table 12 provides the results for Sensitivity Case 2 (also identified as Case 11). This table shows that a
geothermal plant electricity price of $0.21/kWh is required to achieve 11.9% IRR. The $0.01/kWh increase
in electricity price is required to offset the decrease in the annual escalation of electricity from 3.2% to 2.6%.
Page 28 Akutan Geothermal Screening Study Report 20110514.2.docx 5/16/2011 Table 9 Operating & Maintenance CostsSupplemental TotalRevenuesTotal Diesel-Engine Capital Debt NetEnd-of-YearO & M Fuel Cost Cost Service Cash FlowValue at Jan-118,974 -208 -284 -155 -193 -110 -250 -1,199 0-45,390Esc Rate3.2% 2.3% 2.5% 2.3% 2.3% 1.7% 2.3% 2.6% 2.3%02011Comm Op.-46,434 -46,4341 2012 9,557 -217 -299 -162 -201 -114 -262 -1,254 0 -4,048 4,2542 2013 9,863 -222 -306 -165 -206 -116 -268 -1,283 0 -4,048 4,5313 2014 10,179 -227 -314 -169 -211 -118 -274 -1,313 0 -4,048 4,8184 2015 10,504 -232 -322 -173 -216 -120 -280 -1,343 0 -4,048 5,1135 2016 10,844 -238 -330 -177 -221 -122 -287 -1,374 0 -4,048 5,4226 2017 11,191 -243 -338 -181 -226 -124 -293 -1,405 0 -4,048 5,7377 2018 11,549 -249 -347 -185 -231 -126 -300 -1,438 0 -4,048 6,0638 2019 11,918 -255 -355 -190 -236 -128 -307 -1,471 0 -4,048 6,3999 2020 12,300 -261 -364 -194 -242 -130 -314 -1,504 0 -4,048 6,74710 2021 12,693 -267 -373 -198 -247 -132 -321 -1,539 0 -4,048 7,10611 2022 13,100 -273 -383 -203 -253 -135 -329 -1,574 0 -4,048 7,47712 2023 13,519 -279 -392 -208 -259 -137 -336 -1,610 0 -4,048 7,86013 2024 13,951 -285 -402 -212 -265 -139 -344 -1,648 0 -4,048 8,25614 2025 14,398 -292 -412 -217 -271 -142 -352 -1,685 0 -4,048 8,66415 2026 14,859 -299 -422 -222 -277 -144 -360 -1,724 0 -4,048 9,08616 2027 15,334 -305 -433 -227 -283 -147 -368 -1,764 0 -4,048 9,52217 2028 15,825 -313 -444 -233 -290 -149 -377 -1,804 0 -4,048 9,97218 2029 16,331 -320 -455 -238 -297 -152 -385 -1,846 0 -4,048 10,43719 2030 16,854 -327 -466 -244 -303 -154 -394 -1,888 0 -4,048 10,91720 2031 17,393 -335 -478 -249 -310 -157 -403 -1,932 0 -4,048 11,41321 2032 0 0 0 0 0 0 0 0 0 0 022 2033 0 0 0 0 0 0 0 0 0 0 023 2034 0 0 0 0 0 0 0 0 0 0 024 2035 0 0 0 0 0 0 0 0 0 0 025 2036 0 0 0 0 0 0 0 0 0 0 026 2037 0 0 0 0 0 0 0 0 0 0 027 2038 0 0 0 0 0 0 0 0 0 0 028 2039 0 0 0 0 0 0 0 0 0 0 029 2040 0 0 0 0 0 0 0 0 0 0 030 2041 0 0 0 0 0 0 0 0 0 0 0Net present value101,343-2,160-3,014-1,608-2,004-1,085-2,602-12,4730-46,434-34,4667,970Notes:IRR ---> 12.0%1 Capital cost at end-of-year 2011 = -$46,434 thousand2 Discount rate = 10.0%, Life = 20 years, income tax rate = 0.0%3 Equity proportion of total capital = 0.0%, Debt proportion total capital = 100.0%, Debt term = 20 years, debt interest rate = 6.0%4 Present value of the after tax net cash flow represents the present value of profit.5 Revenues based on electricity price of $0.20/kWh @ Jan-11.6 Annual revenue from sale of electricity is based on 7.3 MW for 180 days/yr, 4.3 MW for 65 days/yr, and 2.3 MW for 120 days/yr7 Supplemental power made up by Trident's diesel engine generation during peak season of 180 days per year = 0.0 MW8 Costs are not included for maintaining and keeping Trident's existing diesel engine-generators available for backup powerAkutan Geothermal Project Net Cash Flow Analysis ($1000)2x5 MW Non- Condensing-Alt-C, Case 9End-of-YearG&APlant StaffRoutine Maint.Maint ReservesChemicalsLand/ Resource
Page 29 Akutan Geothermal Screening Study Report 20110514.2.docx 5/16/2011 Table 10 Operating & Maintenance CostsSupplemental TotalRevenuesTotal Diesel-Engine Capital Debt NetEnd-of-YearO & M Fuel Cost Cost Service Cash FlowValue at Jan-117,628 -208 -284 -155 -193 -110 -250 -1,199 0-37,390Esc Rate3.2% 2.3% 2.5% 2.3% 2.3% 1.7% 2.3% 2.6% 2.3%02011Comm Op.-38,250 -38,2501 2012 8,124 -217 -299 -162 -201 -114 -262 -1,254 0 -3,335 3,5342 2013 8,383 -222 -306 -165 -206 -116 -268 -1,283 0 -3,335 3,7653 2014 8,652 -227 -314 -169 -211 -118 -274 -1,313 0 -3,335 4,0044 2015 8,929 -232 -322 -173 -216 -120 -280 -1,343 0 -3,335 4,2515 2016 9,217 -238 -330 -177 -221 -122 -287 -1,374 0 -3,335 4,5096 2017 9,512 -243 -338 -181 -226 -124 -293 -1,405 0 -3,335 4,7727 2018 9,817 -249 -347 -185 -231 -126 -300 -1,438 0 -3,335 5,0448 2019 10,131 -255 -355 -190 -236 -128 -307 -1,471 0 -3,335 5,3259 2020 10,455 -261 -364 -194 -242 -130 -314 -1,504 0 -3,335 5,61610 2021 10,789 -267 -373 -198 -247 -132 -321 -1,539 0 -3,335 5,91611 2022 11,135 -273 -383 -203 -253 -135 -329 -1,574 0 -3,335 6,22612 2023 11,491 -279 -392 -208 -259 -137 -336 -1,610 0 -3,335 6,54613 2024 11,859 -285 -402 -212 -265 -139 -344 -1,648 0 -3,335 6,87614 2025 12,238 -292 -412 -217 -271 -142 -352 -1,685 0 -3,335 7,21815 2026 12,630 -299 -422 -222 -277 -144 -360 -1,724 0 -3,335 7,57116 2027 13,034 -305 -433 -227 -283 -147 -368 -1,764 0 -3,335 7,93517 2028 13,451 -313 -444 -233 -290 -149 -377 -1,804 0 -3,335 8,31218 2029 13,882 -320 -455 -238 -297 -152 -385 -1,846 0 -3,335 8,70119 2030 14,326 -327 -466 -244 -303 -154 -394 -1,888 0 -3,335 9,10320 2031 14,784 -335 -478 -249 -310 -157 -403 -1,932 0 -3,335 9,51821 2032 0 0 0 0 0 0 0 0 0 0 022 2033 0 0 0 0 0 0 0 0 0 0 023 2034 0 0 0 0 0 0 0 0 0 0 024 2035 0 0 0 0 0 0 0 0 0 0 025 2036 0 0 0 0 0 0 0 0 0 0 026 2037 0 0 0 0 0 0 0 0 0 0 027 2038 0 0 0 0 0 0 0 0 0 0 028 2039 0 0 0 0 0 0 0 0 0 0 029 2040 0 0 0 0 0 0 0 0 0 0 030 2041 0 0 0 0 0 0 0 0 0 0 0Net present value 86,142 -2,160 -3,014 -1,608 -2,004 -1,085 -2,602 -12,473 0 -38,250 -28,391 7,027Notes:IRR ---> 12.1%1 Capital cost at end-of-year 2011 = -$38,250 thousand2 Discount rate = 10.0%, Life = 20 years, income tax rate = 0.0%3 Equity proportion of total capital = 0.0%, Debt proportion total capital = 100.0%, Debt term = 20 years, debt interest rate = 6.0%4 Present value of the after tax net cash flow represents the present value of profit.5 Revenues based on electricity price of $0.17/kWh @ Jan-11 6 Annual revenue from sale of electricity is based on 7.3 MW for 180 days/yr, 4.3 MW for 65 days/yr, and 2.3 MW for 120 days/yr7 Supplemental power made up by Trident's diesel engine generation during peak season of 180 days per year = 0.0 MW8 Costs are not included for maintaining and keeping Trident's existing diesel engine-generators available for backup powerAkutan Geothermal Project Net Cash Flow Analysis ($1000)2x5 MW Non- Condensing-Alt-B, Case 8End-of-YearG&APlant StaffRoutine Maint.Maint ReservesChemicalsLand/ Resource
Page 30 Akutan Geothermal Screening Study Report 20110514.2.docx 5/16/2011 Table 11 Sensitivity Case 1 Operating & Maintenance CostsSupplemental TotalRevenuesTotal Diesel-Engine Capital Debt NetEnd-of-YearO & M Fuel Cost Cost Service Cash FlowValue at Jan-1110,768 -208 -284 -155 -193 -110 -250 -1,199 0-59,390Esc Rate3.2% 2.3% 2.5% 2.3% 2.3% 1.7% 2.3% 2.6% 2.3%02011Comm Op.-60,756 -60,7561 2012 11,469 -217 -299 -162 -201 -114 -262 -1,254 0 -5,297 4,9172 2013 11,836 -222 -306 -165 -206 -116 -268 -1,283 0 -5,297 5,2553 2014 12,214 -227 -314 -169 -211 -118 -274 -1,313 0 -5,297 5,6054 2015 12,605 -232 -322 -173 -216 -120 -280 -1,343 0 -5,297 5,9655 2016 13,013 -238 -330 -177 -221 -122 -287 -1,374 0 -5,297 6,3426 2017 13,429 -243 -338 -181 -226 -124 -293 -1,405 0 -5,297 6,7277 2018 13,859 -249 -347 -185 -231 -126 -300 -1,438 0 -5,297 7,1248 2019 14,302 -255 -355 -190 -236 -128 -307 -1,471 0 -5,297 7,5359 2020 14,760 -261 -364 -194 -242 -130 -314 -1,504 0 -5,297 7,95810 2021 15,232 -267 -373 -198 -247 -132 -321 -1,539 0 -5,297 8,39611 2022 15,720 -273 -383 -203 -253 -135 -329 -1,574 0 -5,297 8,84812 2023 16,223 -279 -392 -208 -259 -137 -336 -1,610 0 -5,297 9,31513 2024 16,742 -285 -402 -212 -265 -139 -344 -1,648 0 -5,297 9,79714 2025 17,277 -292 -412 -217 -271 -142 -352 -1,685 0 -5,297 10,29515 2026 17,830 -299 -422 -222 -277 -144 -360 -1,724 0 -5,297 10,80916 2027 18,401 -305 -433 -227 -283 -147 -368 -1,764 0 -5,297 11,34017 2028 18,990 -313 -444 -233 -290 -149 -377 -1,804 0 -5,297 11,88818 2029 19,597 -320 -455 -238 -297 -152 -385 -1,846 0 -5,297 12,45519 2030 20,225 -327 -466 -244 -303 -154 -394 -1,888 0 -5,297 13,03920 2031 20,872 -335 -478 -249 -310 -157 -403 -1,932 0 -5,297 13,64321 2032 0 0 0 0 0 0 0 0 0 0 022 2033 0 0 0 0 0 0 0 0 0 0 023 2034 0 0 0 0 0 0 0 0 0 0 024 2035 0 0 0 0 0 0 0 0 0 0 025 2036 0 0 0 0 0 0 0 0 0 0 026 2037 0 0 0 0 0 0 0 0 0 0 027 2038 0 0 0 0 0 0 0 0 0 0 028 2039 0 0 0 0 0 0 0 0 0 0 029 2040 0 0 0 0 0 0 0 0 0 0 030 2041 0 0 0 0 0 0 0 0 0 0 0Net present value 121,612 -2,160 -3,014 -1,608 -2,004 -1,085 -2,602 -12,473 0 -60,756 -45,096 3,286Notes:IRR ---> 10.6%1 Capital cost at end-of-year 2011 = -$60,756 thousand2 Discount rate = 10.0%, Life = 20 years, income tax rate = 0.0%3 Equity proportion of total capital = 0.0%, Debt proportion total capital = 100.0%, Debt term = 20 years, debt interest rate = 6.0%4 Present value of the after tax net cash flow represents the present value of profit.5 Revenues based on electricity price of $0.240/kWh @ Jan-11.6 Annual revenue from sale of electricity is based on 7.3 MW for 180 days/yr, 4.3 MW for 65 days/yr, and 2.3 MW for 120 days/yr7 Supplemental power made up by Trident's diesel engine generation during peak season of 180 days per year = 0.0 MW8 Costs are not included for maintaining and keeping Trident's existing diesel engine-generators available for backup power9IMPORTANT: Escalation rates shown on this table are predictions. Differing escalation rates will have a positive or negative impact on economics and IRR.Akutan Geothermal Project Net Cash Flow Analysis ($1000)2x5 MW Non- Condensing-Alt-X, Case 10End-of-YearG&APlant StaffRoutine Maint.Maint ReservesChemicalsLand/ Resource
Page 31 Akutan Geothermal Screening Study Report 20110514.2.docx 5/16/2011 Table 11 Sensitivity Case 2 Operating & Maintenance CostsSupplemental TotalRevenuesTotal Diesel-Engine Capital Debt NetEnd-of-YearO & M Fuel Cost Cost Service Cash FlowValue at Jan-119,422 -208 -284 -155 -193 -110 -250 -1,199 0-45,390Esc Rate2.6% 2.3% 2.5% 2.3% 2.3% 1.7% 2.3% 2.6% 2.3%02011Comm Op.-46,434 -46,4341 2012 9,919 -217 -299 -162 -201 -114 -262 -1,254 0 -4,048 4,6162 2013 10,176 -222 -306 -165 -206 -116 -268 -1,283 0 -4,048 4,8453 2014 10,441 -227 -314 -169 -211 -118 -274 -1,313 0 -4,048 5,0804 2015 10,713 -232 -322 -173 -216 -120 -280 -1,343 0 -4,048 5,3215 2016 10,994 -238 -330 -177 -221 -122 -287 -1,374 0 -4,048 5,5726 2017 11,280 -243 -338 -181 -226 -124 -293 -1,405 0 -4,048 5,8267 2018 11,573 -249 -347 -185 -231 -126 -300 -1,438 0 -4,048 6,0878 2019 11,874 -255 -355 -190 -236 -128 -307 -1,471 0 -4,048 6,3559 2020 12,183 -261 -364 -194 -242 -130 -314 -1,504 0 -4,048 6,63010 2021 12,499 -267 -373 -198 -247 -132 -321 -1,539 0 -4,048 6,91211 2022 12,824 -273 -383 -203 -253 -135 -329 -1,574 0 -4,048 7,20212 2023 13,158 -279 -392 -208 -259 -137 -336 -1,610 0 -4,048 7,49913 2024 13,500 -285 -402 -212 -265 -139 -344 -1,648 0 -4,048 7,80414 2025 13,851 -292 -412 -217 -271 -142 -352 -1,685 0 -4,048 8,11715 2026 14,211 -299 -422 -222 -277 -144 -360 -1,724 0 -4,048 8,43916 2027 14,581 -305 -433 -227 -283 -147 -368 -1,764 0 -4,048 8,76817 2028 14,960 -313 -444 -233 -290 -149 -377 -1,804 0 -4,048 9,10718 2029 15,349 -320 -455 -238 -297 -152 -385 -1,846 0 -4,048 9,45419 2030 15,748 -327 -466 -244 -303 -154 -394 -1,888 0 -4,048 9,81120 2031 16,157 -335 -478 -249 -310 -157 -403 -1,932 0 -4,048 10,17721 2032 0 0 0 0 0 0 0 0 0 0 022 2033 0 0 0 0 0 0 0 0 0 0 023 2034 0 0 0 0 0 0 0 0 0 0 024 2035 0 0 0 0 0 0 0 0 0 0 025 2036 0 0 0 0 0 0 0 0 0 0 026 2037 0 0 0 0 0 0 0 0 0 0 027 2038 0 0 0 0 0 0 0 0 0 0 028 2039 0 0 0 0 0 0 0 0 0 0 029 2040 0 0 0 0 0 0 0 0 0 0 030 2041 0 0 0 0 0 0 0 0 0 0 0Net present value 100,763 -2,160 -3,014 -1,608 -2,004 -1,085 -2,602 -12,473 0 -46,434 -34,466 7,390Notes:IRR ---> 11.9%1 Capital cost at end-of-year 2011 = -$46,434 thousand2 Discount rate = 10.0%, Life = 20 years, income tax rate = 0.0%3 Equity proportion of total capital = 0.0%, Debt proportion total capital = 100.0%, Debt term = 20 years, debt interest rate = 6.0%4 Present value of the after tax net cash flow represents the present value of profit.5 Revenues based on electricity price of $0.210/kWh @ Jan-11.6 Annual revenue from sale of electricity is based on 7.3 MW for 180 days/yr, 4.3 MW for 65 days/yr, and 2.3 MW for 120 days/yr7 Supplemental power made up by Trident's diesel engine generation during peak season of 180 days per year = 0.0 MW8 Costs are not included for maintaining and keeping Trident's existing diesel engine-generators available for backup power9IMPORTANT: Escalation rates shown on this table are predictions. Differing escalation rates will have a positive or negative impact on economics and IRR.Akutan Geothermal Project Net Cash Flow Analysis ($1000)2x5 MW Non- Condensing-Alt-D, Case 11End-of-YearG&APlant StaffRoutine Maint.Maint ReservesChemicalsLand/ Resource
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8.0 APPENDIX A—COST INPUTS
Conceptual-Level Evaluation of Costs and Economics
Akutan Geothermal Project
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Costs for Roads, Drill Pads and Buildings
Akutan Geothermal -- Cost Estimates for Roads and Buildings
2011 $(Provided by RMA Consulting Group)
Item
Cost
Units Qty. No. Price Transport Alignment 1 Alignment 2 Alignment 3
50x100 Pre-Engineered Building $ LS 1 $46,097 $6,400 $52,497 $52,497 $52,497
Building Erection $ LS 1 $10,400 $10,400 $10,400 $10,400
30 CY Slab & Footings $ CY 30 $1,000 $30,000 $30,000 $30,000
Well / Septic Systems $ LS 1 $25,000 $25,000 $25,000 $25,000
Electrical $ LS 1 $6,000 $6,000 $6,000 $6,000
Kubota Model SQ-335W, 27.8 kW Engine-Generator $ Each 2 $8,499 $1,600 $20,198 $20,198 $20,198
24-Person Modular Camp $ LS 1 $750,000 $76,800 $826,800 $826,800 $826,800
Drill Pads & Camp / Warehouse Staging Area $ Acres 13 $10,000 $130,000 $130,000 $130,000
Permitting and Environmental Review $ LS 1 $150,000
Landing Craft Marine Support $ LS 1 $350,000 $350,000 $350,000 $350,000
SUBTOTAL $1,450,895 $1,450,895 $1,450,895
Road Alignment 1 $ Miles 3.87 $2,500,000 $9,675,000
Road Alignment 2 $ Miles 8.18 $2,500,000 $20,450,000
Road Alignment 3 $ Miles 8.01 $2,500,000 $20,025,000
TOTAL, Without Contingency $$11,125,895 $21,900,895 $21,475,895
TOTAL, Without Contingency $000 $11,130 $21,900 $21,480
TOTAL, With 30% Project Contingency, Rounded $000 $14,460 $28,470 $27,920
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Akutan Geothermal Screening Study Report 20110514.2.docx 5/16/2011
Cost for Drilling Four Wells
Akutan -- Geothermal Well Drilling Costs
2011 $(Provided by Geothermal Resource Group)
Unit Price Per Unit Cost Source
Mob/Demob $414,000.00 1 Total $414,000 Trinity Exploration Estimate
Day Rate $17,375.00 160 Day $2,780,000 Trinity Exploration Estimate
Spare Parts Package $400,000.00 1 Estimate $400,000 Trinity Exploration Estimate
BOPE $55,000.00 5 Months $275,000 John M Phillips Estimate + cost of gaskets, bolts, etc.
BOPE Testing Apparatus $18,200.00 1 Estimate $18,200 Estimate from MSC Industrial Supply catalog
Solids Control $1,200.00 180 Day $216,000 Petroleum Solids Current Prices
Cementing $375,000.00 4 Wells $1,500,000 Thermasource Estimate
30" 0.500W X40 conductor $145.00 220 Foot $31,900 Current Cost
20" 94# K55 Butt casing $105.00 1100 Foot $115,500 Current Cost
13-3/8" 68# K-55 Butt casing $56.25 4200 Foot $236,250 Current Cost
9-5/8" 40# K55 Butt Liner $34.00 12800 Foot $435,200 Current Cost
Perforation of 9-5/8" liner (25' per jt)$6.50 7380 Foot $47,970 Current Cost
Misc. Pipe, Fittings & flanges $75,000.00 1 Total $75,000 Estimate only
21-1/4" 2M Wellheads $14,200.00 1 Each $14,200 Current Cost
13-5/8" 3M Wellheads $13,680.00 4 Each $54,720 Current Cost
3-1/8" 3M Gate Valves $3,840.00 8 Each $30,720 Current Cost
Production Equipment $45,000.00 4 Each $180,000 Estimate only
Directional Drilling $16,500.00 100 Day $1,650,000 Estimate
Drilling Fluids $120,000.00 4 Wells $480,000 Sinclair Drilling Fluids Estimate
Mud Logging $2,250.00 180 Day $405,000 Prospect Geotech current price
Welding $2,500.00 60 Day $150,000 2 welders at $125/hr for 10 hour days.
Light Plants - 2 each $75.00 180 Day $13,500 Current Cost
250 Kw Generator $125.00 180 Day $22,500 Current Cost
All-terrain forklift/Gradall $135.00 180 Day $24,300 Current Cost
Fuel $3,825.00 180 Day $688,500 800 gallons/day at $4.50 gallon
Floats, Centralizers, Stab-Ins $68,000.00 1 quote $68,000 Davis Lynch Estimate
Casing Tong Rentals $75,000.00 1 Estimate $75,000 Current Cost
26" bits $55,000.00 2 Each $110,000 Current Cost
17-1/2" bits $45,000.00 3 Each $135,000 Current Cost
12-1/4" bits $32,000.00 8 Each $256,000 Current Cost
36" bit rental $30,000.00 2 Each $60,000 Current Cost
26" stabs $25,000.00 2 Each $50,000 Current Cost
17-1/2" stabs $17,500.00 3 Each $52,500 Current Cost
12-1/4" stabs $12,500.00 6 Each $75,000 Current Cost
12-1/4" reamers $13,200.00 2 Each $26,400 Current Cost
PTS Rental $350.00 180 Day $63,000 Current Cost
Directional Survey Tool $225.00 180 Day $40,500 Current Cost
Testing Equipment and Supplies $40,000.00 4 Each $160,000 Estimate only
Small Parts & Supplies $150,000.00 1 Estimate $150,000 Estimate only
Location, Cellar Cost $125,000.00 4 Each $500,000 Current Cost
Permits $10,000.00 4 Each $40,000 Estimate only
Supervision $1,900.00 175 Day $332,500 $1800/day + Travel Expenses
Engineering/Drilling Coordination $1,200.00 150 Day $180,000 6 hours per day average
Jars & Shock Subs $1,440.00 180 Day $259,200 Current Cost
3 Office Atco Unit $144.00 180 Day $25,920 Current Cost
Fishing Tools $300,000.00 1 Estimate $300,000 Estimate for purchase of fishing tools
Shipping $6,400.00 95 Loads $608,000 Load estimate for rig and all expendibles, 65 loads in, 30 loads out
Total, 4 Wells Dollars $13,825,480 No Contingency
Total, 4 Wells, No Contingency Thousands $$13,830 No Contingency
Total, 4 Wells, With Contingency Thousands $$17,970 Including 30% Project Contingency
Per Well $3,456,370
Thousands $Per Well $3,460
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Akutan Geothermal Screening Study Report 20110514.2.docx 5/16/2011
Cost for Drilling One Well
Akutan -- Geothermal Well Drilling Costs
2011 $(Provided by Geothermal Resource Group)
Unit Price Per Unit Cost Source
Mob/Demob $414,000.00 1 Total $414,000 Trinity Exploration Estimate
Day Rate $20,850.00 90 Day $1,876,500 Trinity Exploration Estimate
Spare Parts Package $440,000.00 1 Estimate $440,000 Trinity Exploration Estimate + 20%
BOPE $43,816.00 3 Months $131,448 John M Phillips Estimate
Solids Control $1,320.00 90 Day $118,800 Petroleum Solids Current Prices + 20%
Cementing $375,000.00 1 Wells $375,000 Thermasource Estimate
30" 0.500W X40 conductor $174.00 60 Foot $10,440 Current Cost + 20%
20" 94# K55 Butt casing $126.00 225 Foot $28,350 Current Cost + 20%
13-3/8" 68# K-55 Butt casing $67.50 150 Foot $10,125 Current Cost + 20%
9-5/8" 40# K55 Butt Liner $34.00 3500 Foot $119,000 Current Cost + 20%
Perforation of 9-5/8" liner (25' per jt) $6.50 1850 Foot $12,025 Current Cost + 20%
Misc. Pipe, Fittings & flanges $75,000.00 1 Total $75,000 Estimate only
21-1/4" 2M Wellheads $14,200.00 1 Each $14,200 Current Cost + 20%
13-5/8" 3M Wellheads $13,680.00 1 Each $13,680 Current Cost + 20%
3-1/8" 3M Gate Valves $3,840.00 2 Each $7,680 Current Cost + 20%
Production Equipment $45,000.00 1 Each $45,000 Estimate only
Directional Drilling $16,600.00 30 Day $498,000 Estimate +20%
Drilling Fluids $132,000.00 1 Wells $132,000 Sinclair Drilling Fluids Estimate +20%
Mud Logging $2,250.00 40 Day $90,000 Prospect Geotech current price +20%
Welding $2,500.00 20 Day $50,000 2 welders at $125/hr for 10 hour days.
Light Plants - 2 each $98.00 90 Day $8,820 Current Cost + 20%
250 Kw Generator $150.00 90 Day $13,500 Current Cost + 20%
All-terrain forklift/Gradall $138.00 90 Day $12,420 Current Cost + 20%
Fuel $3,825.00 90 Day $344,250 800 gallons/day at $4.50 gallon
Floats, Centralizers, Stab-Ins $68,000.00 0.25 quote $17,000 Davis Lynch Estimate
Casing Tong Rentals $75,000.00 0.25 Estimate $18,750 Current Cost + 20%
26" bits $55,000.00 1 Each $55,000 Current Cost + 20%
17-1/2" bits $45,000.00 1 Each $45,000 Current Cost + 20%
12-1/4" bits $32,000.00 2 Each $64,000 Current Cost + 20%
36" bit rental $30,000.00 1 Each $30,000 Current Cost + 20%
26" stabs $25,000.00 1 Each $25,000 Current Cost + 20%
17-1/2" stabs $17,500.00 2 Each $35,000 Current Cost + 20%
12-1/4" stabs $12,500.00 2 Each $25,000 Current Cost + 20%
12-1/4" reamers $13,200.00 1 Each $13,200 Current Cost + 20%
PTS Rental $500.00 90 Day $45,000 Current Cost + 20%
Directional Survey Tool $225.00 90 Day $20,250 Current Cost + 20%
Testing Equipment and Supplies $40,000.00 1 Each $40,000 Estimate only
Small Parts & Supplies $150,000.00 0.5 Estimate $75,000 Estimate only
Location, Cellar Cost $125,000.00 1 Each $125,000 Current Cost + 20%
Permits $10,000.00 1 Each $10,000 Estimate only
Supervision $1,900.00 100 Day $190,000 $1800/day + Travel Expenses
Engineering/Drilling Coordination $1,200.00 90 Day $108,000 6 hours per day average
Jars & Shock Subs $1,440.00 90 Day $129,600 Current Cost + 20%
3 Office Atco Unit $144.00 90 Day $12,960 Current Cost + 20%
Fishing Tools $300,000.00 1 Estimate $300,000 Estimate for purchase of fishing tools
Shipping $6,400.00 95 Loads $608,000 Load estimate for rig and all expendibles, 65 loads in, 30 loads out
Total, 1 Well Dollars $6,831,998 No Contingency
Total, 1 Well Thousands $$6,830 No Contingency
Total, 1 Well Thousands $$8,880 Including 30% Project Contingency
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Akutan Geothermal Screening Study Report 20110514.2.docx 5/16/2011
Costs Related to Trident’s Power Costs – Existing Generation
Calculations Related to Trident's Existing Power Producer - Diesel Engines
Diesel Engine Heat Rate, Btu/kWh (HHV)10,450 Estimated, Based on URS E&C Data
HHV of Diesel, Btu/gal 141,000 Per "Combustion" reference book
Current (2011) Price of Diesel, $/gal $3.75 Provided by RMA
Specific Diesel Use, kWh/gal (HHV)13.5
Fuel Oil Consumption and Electric-Related Costs for Trident Plant in 2009
Total Consumption of Fuel Oil for Electricity + Heating, gallons 4,500,000 Provided by RMA
Total Cost of Fuel Oil, $1000 $14,000 Provided by RMA
Cost of Diesel, $/gal $3.11 Calculated from the above
Consumption of Fuel Oil Used for Electricity, gallons 2,500,000 Provided by RMA
Cost for Fuel Oil Used to Make Electricity, $1000 $7,778
Fuel Contribution to Trident's Cost of Electricity, $/kWh $0.18 Based on diesel engine power generation
Trident's Reported Cost of Electricity, $/kWh $0.21 Estimated total cost diesel engine power generation
Trident's Estimated Cost of Non-fuel O&M, $/kWh $0.03
Diesel and Electric-Related Costs for Trident Plant Based on 2009 Consumption and Current Diesel Price
Current Price of Fuel Oil, $/gal $3.75
Cost to Make Electricity Based on Current Fuel Oil Price, $1000 $9,375
Fuel Contribution to Trident's Cost of Electricity, $/kWh $0.22 Based on diesel engine power generation
Akutan Geothermal Project Feasibility Report
16 August 2011
TAB E
Analysis of Access Alternatives
CITY OF AKUTAN
GEOTHERMAL ENERGY PROJECT
JULY 2011 FIELD SURVEY
OF
TARGET PRODUCTION WELL SITES
AND ACCESS ROUTES
Data Collected and Prepared By:
Robert E. Kirkman – RMA Consulting Group
and
Steve Nygard – Geothermal Resources Group
Data gathered by the Akutan Geothermal Project Team during the exploratory drilling operations
of 2010 has been analyzed. Based on this information the Team has identified target wells for
production drilling and located these wells on the existing USGS Topographical Map – Unimak
A-6 (see map JFS1). Suitability of these sites for drilling pads, and accessibility could only be
confirmed via a physical field survey. Subsequently members of the Geothermal Team were
mobilized during the month of July 2011 with an assignment to visit the sites, and proposed
access routes and gather survey data sufficient to finalize target selection. The actual scope of
work for this activity can be found as Attachment 1, to this report.
The information contained in this report was gathered via a field ground survey conducted over
a four (4) day period extending from 10 July to 13 July 2011. Three separate routes were
covered by the ground survey team. Data was gathered utilizing two Garmin 60 series GPS
devices. Cross comparisons were routinely made to insure accuracy. Time documented photos
were used to geo-reference the photography with the GPS locations. The routes chosen were
intended to locate and determine accessibility to each proposed well site, and determine potential
alternative locations.
The resultant GPS data was plotted using ESRI Arc GIS Explorer Software. The base map is
USGS Unimak A6. The projection is WGS84, and the coordinate reference is Lat/Long DD.
The plotted data and corresponding photography is available in a MS Power Point Presentation
format. It along with Arc Info Shape files are available on request. To obtain a link to the PPT
Presentation, GIS maps and/or for questions related to this report and the field survey activity
please contact Robert Kirkman at RMA Consulting Group: REKirkman@rma-cg.com
Following is a summary of the highlights of the survey including significant findings and
conclusions. Select photos have been included in this report to illustrate findings and
conclusions. A complete hard-copy of the geo-referenced photo library can be found in
Appendix 1 of this document.
Well Sites and Accessibility
Map JFS1 below shows the proposed locations of the four production well drilling sites and the
various road alignments under consideration for access to the sites. The routes are color coded
and have been assigned names for clarification.
North Rim Route – Dark Green
South Rim Route – Red
Valley Road – Light Green
Fumarole Road – Blue
Upper Wellfield Acess Road – Yellow
Saddle Road – Purple
Hot Springs Bay (HSB) Access – Black Dashed
The South Rim Route (Red) was eliminated early on in the field survey. The steep terrain and
length and significant changes in elevation made it extremely difficult to access even by foot.
Constructing a road along the route is considered to be extremely costly and time consuming.
The Hot Springs Bay (HSB) Access Route was used last summer during the exploratory drilling
as a foot path between well TG3 which lies along its path and the exploratory drilling camp
which was located in the south center of the valley. It is generally believed that the HSB route
could be developed as a pioneer road for mobilizing equipment during the exploratory drilling
operation; and until such time that a more permanent road can be constructed. It would require
one creek crossing at the beach location, and bridging and/or culverting of numerous drainage
swales found along the route.
JFS1
South Rim Route
Fumarole RoadUpper WellfieldAccess RoadTG3
JFS2
The above route was surveyed by Field Representatives Steve Nygard, Drilling Manager for
Geothermal Resources Group, and Robert Kirkman, Technical Services Manager for RMA
Consulting on July 10, 2011. The path follows that proposed for the North Rim Route, part of the
Upper Well Field Access Road, the HSBV Valley Road, and the Saddle Road. The objective
was to access WS3 and possibly WS4 from this direction and/or in reverse from the Valley floor.
Observations for this survey were as follows:
Beach access from NW HSB (North of the rock outcropping found center bay) would be
feasible. The ground immediately adjacent to the beach rises quickly to a +50’msl with a
reasonable slope. There are no wetlands similar to those found in SW HSB. Access suitable for
road construction continues from +50’msl up to +800’ msl. There is also suitable acreage to
support construction of a drilling camp and future operations facilities. From +800’ msl up to
+1800’ msl, and descending back to valley floor at HSBV, the terrain becomes quite difficult.
Constructing an access road in this area would require major cut and fill, possibly removal of
rock with explosives, bridging, and culverts. Weather would be a serious factor in road
maintenance. At the time of the survey the wind was blowing 75+ at the +1800 msl. Snow fields
were still present in July. Fog and minimal visibility is a constant problem.
The survey team’s chosen route took them within .2 mile of proposed well site WS3. However
access to the site was not possible from this direction or from above due to steep terrain, and a
waterfall. WS3 might be accessible from the fumaroles route describe later in this report, but
10 JULY FIELD SURVEY PATH
fumarole
Exiting ATV Trail
Field Representatives:Steve Nygard, GRG
Robert Kirkman, RMA Consulting Group
would require crossing above the fumaroles possibly in an area subject to subsurface geothermal
activity.
Generally the Field Survey Team does not consider the North Rim Route, as a suitable choice for
accessing the proposed well sites. Based on the route surveyed they do not consider WS3 as a
suitable location for a drilling pad.
JFS3
On July 11, 2011 the Survey Team followed a path originating from Akutan Bay along the
existing ATV path adjacent to the proposed Saddle Road dropping down to the HSBV Road to
WS1 and climbing up to the lower part of the Fumaroles Road, returning by the sa me route. The
objective was to access WS1 and WS2, and to further determine if WS1 could be moved further
up the valley in a westerly direction.
Observations from this survey are as follows:
Both WS1 and WS2 are accessible from the HSBV Road. Addition ally the Team was able to
identify potential alternate sites for WS1 located further to the West up the valley. These are
labeled WS1a, 1b, and 1c. The location of these wells is illustrated in JFS4 below.
11 JULY FIELD SURVEY PATH
fumarole
Field Representatives:Steve Nygard, GRG
Robert Kirkman, RMA Consulting Group
JFS4
Photographs of the alternate sites, and proposed well pad locations can be found in Appendix 1
of this report. The Survey Team believes that a road access could reasonably be constructed to
WS1a, and 1b parallel to a fast running stream that would most likely need to be channeled and
directed around the proposed drill sites. WS1c would accommodate a road and drill pad only
with some cut and fill of the valley sides which narrow considerably at this point. Water
resources available at all these locations are abundant.
Identified Alternative Well Sites WS1a, 1b, and 1c
JFS5
On July 13 2011 Field Representatives Joeseph Bereskin, City of Akutan, and Robert Kirkman
from RMA Consulting surveyed the proposed Fumaroles Access Road. The path taken followed
the previously traveled ATV/Saddle Road, and the HSBV Road.
Observations from this survey are as follows:
The team retraced the route taken by the July 11 survey team from the +1000 msl point of the
fumaroles road to HSBV Road. This route appears reasonable for road construction as it steps
up the mountain with accommodating slopes. There are numerous drainage swales; however, it
appears that these can be avoided by staying to the high ground as indicated by the GPS route
shown in JFS5 above. The Team found WS4 to be quite accessible surrounded by a large flat
area approximating 19 acres that would easily accommodate a drilling pad and other facilities as
required. The Team surveyed numerous GPS points within this area. These are illustrated in
map JFS6 shown below.
13 JULY FIELD SURVEY PATH
fumarole
Field Representatives:Joeseph Bereskin, City of Akutan
Robert Kirkman, RMA Consulting Group
JFS6
Although located at a higher elevation WS4 does provide access to ground water sources and
seasonal snow melt that could be impounded for use during production drilling operations.
POSSIBLE DRILLING AREA
Elevation: Varies Approx
1580’ –1630’
fumarole
JFS7
It has previously been noted in this report that an existing ATV path lies adjacent to the proposed
Saddle Road shown in Illustration JFS1. The Field Survey Team continuously used this route to
access HSBV from Akutan Bay, and considers it as a possible route for initial mobilization of
production drilling equipment and support facilities. Subsequently the team prepared a GPS
survey of this route that is shown in JFS7 above.
Observations from this survey are as follows:
The path is for the most part on ground the Team felt would be suitable to support mobilization
of the production drilling equipment with the addition of a gravel base and some minor
culverting and/or bridging of streams and drainage areas. However, it should be noted that this
area does pass directly through the middle of the wetlands area delineated by the USACE in their
September 2001 field survey and subsequent report. The boundaries of this wetland area have
been plotted over the mapped ATV road in map JFS7. It is not known whether the existance of
this ATV path would be sufficient to qualify it as a temporary access route to the valley w/o
further permitting. As shown in JFS1 the proposed permanent Saddle Road would circumvent
the wetlands on the north side.
HSBV SADDLE ROAD ACCESS -WETLANDS BOUNDARY
There is a conflict with the existing ATV road and the wetlands boundary as identified
by the USACE. However, the ATV road as surveyed does provide reasonable access to the saddle. With a 2”
gravel surface it should support equipment mobilization. This alignment might be considered as a temporary
pioneer road until such time that a permanent alignment skirting the wetlands could be constructed.
Akutan Geothermal Project
July 2011 Field Survey
Recommendations
Based on the findings derived from the July Field Survey, the Field Survey Team believes that
well sites WS1c and WS4 are the most accessible while offering the best opportunity for
targeting the desired geothermal resource locations as determined by the Scientific Team
findings. Both sites can be reached from Hot Springs Bay Valley and will require similar access
considerations and infrastructure development. These include:
Both sites will require some access road construction in the upper HSBV area
Both sites have similar access considerations:
o WS1c will require a geotechnical assessment of the cut and fill requirements,
stream diversion and slope stabilization.
o WS4 will require construction of an access road from +100’msl upper HSBV
floor to the +1600’msl WS4 location.
Both sites can be accessed either directly from Akutan Bay via a Saddle Road, or
directly from Hot Springs Bay. The final decision on these routes and initial equipment
mobilization can be included in the PhaseII design/economic analysis/mobilization plan.
Based on the findings derived from the July Field Survey and subseqent recommendations from
the Scientific Team it has been concluded that the Project should adopt a multi phased approach
to the production drilling process centered on specific WS target areas currently identified as
WS1c and WS4. These sites share common access options and have been determined by the
Scientific Team to have a high probability of producing a viable geothermal resource output. The
Phases proposed should include:
Phase I - Build a business plan, feasibility study, and project budget sufficient to
accommodate developing the proposed target well sites including supporting
infrastructure.
Phase II – Proceed with project design elements including: Geotechnical survey of well
sites, drilling targets, road access, facility locations. Conduct an economic cost/benefit
analysis, and base final target decisions on the results. Considerations should include both
cost of development and time to develop.
APPENDIX 1
GEO-REFERENCED PHOTO LIBRARY
The following photos were taken during the field survey. Most are geo-referenced to a GPS established
coordinate point along the survey route.
10 JULY FIELD SURVEY PATH
fumarole
Exiting ATV Trail
Field Representatives:Steve Nygard, GRG
Robert Kirkman, RMA Consulting Group
Aerial Shot of HSB Beach Access – Not geo-referenced
HSBV beach access – Starting point for July 10 field survey
Day 1 beach landing
point
Hiked up over this
ridge to next cove
over
Next cove on Hot Springs
Bay
Creek outlet from HSBV
Beach overview NW Hot Springs Bay – Note adjacent high ground
View of higher ground immediately above beach at NW HSB
View towards NW HSB From 250’ above MSL
View towards NW HSB From 500’ Above MSL
View towards NW HSB From 700’ Above MSL
Possible area for drilling camp and production plant
1000’ Above MSL – Severe Change In Terrain
1800’ USGS Volcano Monitoring Station In Background
View West Towards WS3 – Note Extreme Slopes and Waterfall
Rust Colored Stream Originating West of Waterfall In Previous Picture
Typical Seepage Found Above and Along West Side of Rust Colored Stream
Picture: 12:52a & b. Rust colored stream.
Originates West of stream shown in Pict.
12:42. Both streams merge together and
dump into waterfall above Target Well
WS2
N
fumarole
Typical ground seepage found
above and to the west of the rust
colored stream shown in Pict.
12:52a&b. Numerous examples of
this identified.fumarole
Waterfall Above WS2 – Source From Streams Shown In Previous Photos
Waterfall above and beyond
Target Well WS2
fumarole
11 JULY FIELD SURVEY PATH
fumarole
Field Representatives:Steve Nygard, GRG
Robert Kirkman, RMA Consulting Group
View Towards WS1
Identified Alternative Well Sites WS1a, 1b, and 1c
Alternate drill site WS1a
Alternate drill site WS1a
POSSIBLE DRILLING AREA 1a
Elevation 332’
Fast moving creek running through Alternate Site 1 A
Alternate Site 1 A
ADDITIONAL PHOTOS WS1a
Alternate Drill Site WS1b
Elevation: 360’
POSSIBLE DRILLING AREA 1b
POSSIBLE DRILLING AREA 1c
Note: As indicated in Picture 14:23
WS1c will probably need to be
located on the North side of the
stream. Cut and fill will be required
to accommodate the steep terrain
while still providing an approx.
20,000 sq.ft. site. It’s possible that
some slope stabilization will be
required.
Elevation: 406’
View down Towards
WS1c. Note: Numerous
examples of slope failure
above and adjacent to
proposed wellsite.
Same Location looking
upslope. Note: Steep
slopes of valley.
fumarole
fumarole
Same location looking
Northwest towards fumaroles
View From Step Looking SE Towards HSBV Saddle
13 JULY FIELD SURVEY PATH
fumarole
Field Representatives:Joeseph Bereskin, City of Akutan
Robert Kirkman, RMA Consulting Group
fumarole
View SE Towards HSBV Saddle From 1500’ msl
View from 1500’msl towards volcano
fumarole
fumarole
fumarole
WATER SOURCE
fumarole
Fumaroles
Fumaroles
fumarole
View from WS4 towards volcano
fumarole
FUMAROLE PICTURES
FUMAROLE PICTURES
Boiling Water
FUMAROLE PICTURES
POSSIBLE DRILLING AREA
Elevation: Varies Approx
1580’ –1630’
fumarole
HSBV SADDLE ROAD ACCESS -WETLANDS BOUNDARY
There is a conflict with the existing ATV road and the wetlands boundary as identified
by the USACE. However, the ATV road as surveyed does provide reasonable access to the saddle. With a 2”
gravel surface it should support equipment mobilization. This alignment might be considered as a temporary
pioneer road until such time that a permanent alignment skirting the wetlands could be constructed.
ATTACHMENT 1
JULY FIELD SURVEY
SCOPE OF WORK
Utilizing GPS in conjunction with USGS topographical map Unimak A-6; Perform the following
tasks:
1. Field verify all proposed road alignments.
a. Upflow Area B access via Hot Springs Bay Valley (HSBV) north rim
b. Upflow Area B access via HSBV saddle
c. Outflow Area A access from Hot Springs Bay (HSB)
d. Outflow Area A access via HSBV saddle (South Rim)
d. Segment of road extending from new harbor to HSBV saddle
2. Propose modifications to alignments and/or alternative alignments as determined by field
conditions.
3. Identify potential landing craft sites along HSB beach.
4. Examine and document topographical and geologic conditions along proposed routes. Assess
suitability for developing pioneer roads capable of supporting transport of well drilling and
operational support equipment.
5. Field verify proposed drilling sites (production and injection wells):
a. Upflow Area B
b. Outflow Area A
6. Propose alternative locations based on field observations.
7. Field verify facility location alternatives:
a. Camp site
b. Production facilities
8. Identify potential water sources for well drilling operations and make-up water for reinjection
wells. Assess water intake requirements (surface intake vs. impoundment).
9. Identify potential alignments for geothermal and reinjection distribution pipelines:
a. Production wells to geothermal plant
b. Geothermal plant and/or alternative water source to reinjection wells
10. Provide geo-referenced photography (including bearing) for all of the above.
11. Support all findings with copious field notes.