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Home My WebLink AboutUnalaska Geothermal Project Trips 1984-1988FEB 13 798 13:13 \ TARR GAS RDBMINER AR ROI UL CR ta tyBisss ee ee ndBe:Brann as Se.'1 CITY OF UNALASKA P.0 BOX 89 UNALASKA,AK 99685 TELECOPIER LEAD SHEETro_D4vin DO mou.Lhe.Faho SUBI::ro raxt,Sto/-PSFY DATE:TuE:/202 NO.OB PAGES (INCLUDING COVER PAGE)3 SIGNED___ae =PRONE#:(907)581-1251 TLE nen .FAX #(907)581-1417 FEB 13 '9@ 13:13 ."S ¥O "t.U S P.2/3 e MARUES GEOTHERMAL ' 12 rniles outside the fishing flown of Unalaska/Duteh Narbeor,a world class geothermal resource was discovered on Makushin Voleane im the mid 60's,The Stata of Alaska spent $6 million dolars drilling and proving the reservoir.The main reservoir was tapped at a depth of 1925 feet. Results of testing showed that the pressurized fluids were at a temperature of 200 degrees centigrade,(400 degrees farenheit),and that the resource was so large that it would generate electricity for Unalaska/Dutch Harbor for at least the next 500 years. Although feasability studies found the project to be technically feasible,it was not feasible for the City of Unalaska to corne up with financing or grants for a 40 to 50 million dollar project,so reluctantly we had to scrap it until a later date. Besides the enormity of the project,the City also had other priorities such as a water project,public safety building,city dock,and city school.Significant city revenues were dedicated to either self-finance or match state grants to accomplish these projectswhichcost$12 million dollars in State funds and $14 million in city funds,The private sector invested over $200 million as a result. Then in January of 1990 the City was seriously approached by Ormat Energy Systems,a world renowned Israeli geothermal production company.We searched for a package which would allow Ormat to obtain the private financing for the project and still bring the power in at an economic rate to attract the large canneries here who currently generate thelr own power by diesel. Here are the main elements:If the State can provide through the Alaska Energy Authority,a grant to construct the transmissionlines(approximately $6 million),then Ormat will privately finance $40 million to complete the remainder of the project. The city of Unalaska will sign a power sales agreement for a minimum of 10 megawatts power,and Ormat will sign a power rate for 20 years which will remain the sarne regardless of the price of petroleum.If additional capacity {is added,the power purchase rate will go down. FER 13 '9@ 13:14 i P.3 MAKUSHIN GEOTHERMAL Page two The MAKUSHIN geothermal]project provides several clear advantages to the State of Alaska: 1)$6 million in public funds will leverage $40 million In private development funds 2)Stabilzed power costs will be very attractive to onshore development in the Bottomfish industry. 3)Many Alaskans will be employed in the construction of this project,and in the fishing industry expansion which this project will promote. 4)The State of Alaska will save money through reduced future PCE payments to electrical consumers in Unalaska. 5)Developing the Makushin Geothermal reservoir will make creative use of Alaska's alternate energy resources. CONCLUSION: This project did not appear on any capital projects Ust submitted py the City of Unalaska.We did not know of the project until quite recently.We are aware that the legislature is discussing funding of "energy projects,and feel this is a golden opportunity for the State to promote a very practical alternative energy project which has long term economic development benefits. 'The power ts there on Makushin mountain and Unalaska/Dutch Harbor has the industrial demand to use it.We snould not let this one go to waste. MEMORANDuM TO: THRU: FROM: 02-001A (Rev.8/85) File Donald L.Shira Director of Pro and Facility Operations SB.Ot.OS State uf Alaska DATE:October 28,1988 FILE NO: TELEPHONE NO: SUBJECT:Trip Report -Unalaska Geothermal Well Plugging Oct.17-24,1988 Development David Denig-Chakroff Manager of Project Evaluation Remy wiltiams'£e 0CivilEngineer/Cost Estimator The purpose of the trip was to monitor the Contractor's (Lakloey,Inc.) operation for the plugging of the Makushin St-1 well.A secondary purposewastoassistDepartmentofGeological&Geophysical Supply (DGGS)with removal of the wind tower and the 2 stream gages near the well and the 3 stream gages on Akutan. 10/17/88 3:30 p.m. 5:35 p.m. 7:30 p.m. 10/18/88 10:00 a.m. 2:00 p.m. 4191/912(1) I boarded the plane for Dutch Harbor/Unalaska.The plane was about an hour late.The morning plane did not make it into Dutch Harbor because of fog. I was met at the Dutch Harbor airport by Jim White of Lakloey,Inc.After I picked up my bags we,went to the staging area next to the airport.The helicopter was flyingcementtothewellsite.The contractor had one man at the airport rigging slings and two men at the well site gettingsetup.Water tanks,pumps and hoses had already been moved to the site. After I had checked on the status of the job,Jim White drove me to the Royal Dutch Inn were I checked in and met with Al Vezey,one of the principals of Lakloey,Inc.Al was not getting around very well as he had dropped an acetylene bottle on his foot and broke his toe a couple of days before. The crew returned to the inn.39 sacks of cement have been moved to the site.(We need 62 to get started.) Fair weather Two men are transported to the well site and the helicopter continues to fly cement and silica to the site. By this time the contractor had enough cement and silica to the site for 100 cf of mix and Jim,Al and myself flew to the site.The contractor started pumping water down the well to File October 28,1988 Page 2 3:00 p.m. 10/19/88 10:00 a.m. 10:30 a.m. 12:20 p.m. 1:30 p.m. 2:00 p.m. 4:00 p.m. 4:30 p.m. 10/20/88 10:00 a.m. 10:35 a.m. 11:30 a.m. 4191/912(2) kill it and at the same time started mixing a 50 cf batch ofcementmix. The well had cooled down and the pressure had dropped to zero.Snow squalls were moving through and Al decided to wait until tomorrow to start pumping the cement down the well.The cement mix contains a retarder and it would take several days for it to set up at the ambient temperature(about 35 -40 degrees F). Rain The 3 man crew is flown to the site. Al,Jim and I flew to the site. Started pumping water down well. Stopped pumping water down well and started pumping the cement mix down the well. About 40 cf of cement mix down well;contractor closed valves and crew began mixing another batch of cement mix. Bill Van Dyke of the Division of Oil and Gas arrived at the site. The 2nd batch of cement is mixed and we decide to leave it set overnight.The 40 cf of cement down the well is enough to fill 800 linear feet of hole.At the downhole tempera- tures it should set up in a little over two hours.We left the site and returned to Dutch Harbor. I called Stan Carrick of DGGS and told him we needed someone to come out and take care of the stream gages real soon as it looked like the contractor would be finished in a few days and the helicopter would be leaving. Good weather Jim White and two of the crew are flown to the site. Al,Bill and myself arrive at the site.The well is dead and the crew is removing some of the valves from the wellhead. The contractor begins pumping the cement mix down the well.The well is full when only 40 gallon or so is down the whole.With an iron bar tied to a rope we determine the cement is hard at a depth of 145 feet.At Bill's suggestion the contractor mixes a batch of cement without retarder and displaces the top 50 feet or so of the mix in the whole with the non-retarder mix. File October 28,1988 Page 3 2:00 p.m. 6:30 p.m. 10/21/88 9:30 a.m. 10:30 a.m. 5:00 p.m. 10/22/88 9:30 a.m. 10:30 a.m. 11:30 a.m. 2:00 p.m. 3:30 p.m. 4:00 p.m. 4191/912(3) The cleanup operation is started. Bill and I disassembled the tower for the DGGS wind instru- ment. I return to Dutch Harbor. The crew returned to Dutch.They reported that they had set fire to the timbers. Good weather Crew left for the site. Bill and I arrive at the site.The timbers had only partial- ly burned.The crew works at cleaning up the site.The helicopter works at flying out the valves from the wellhead as well as the contractors pumps and tanks. The weather began closing in in the afternoon. Around 3 p.m.,Roy Ireland of DGGS arrives and is flown to the stream gage site.The helicopter picks me up at the well site and takes me down to assist Roy. Roy and I complete removal of the stream gage and are flown back to Dutch Harbor. Good weather The helicopter is called upon to fly a medivac mission.Roy and I cannot take the goose to Akutan because it is out ofcommissionwithabrokenwindshield(it hit a seagull). The helicopter returns and takes 2 men to the well site to finish cleanup and to weld on the well marker. I dropped Bill Van Dyke off at the airport for the flight to Anchorage. I fly out to the well site. ing wood. casing. The crew is burning the remain- They have the well marker welded on to the well The helicopter returns to tell us we have to go back to Dutch because he has to fly another medivac from Akutan.The well site is pretty much cleaned up by this time;the last of the wood is burning and the welder is the only remaining piece of equipment remaining to be removed from the site. Since the medivac is from Akutan,the helicopter takes Roy and I along on his trip over and drops us off at the Loud Creek gage sites. »File October 28,1988 Page 4 6:00 p.m.The helicopter returns and takes Roy and I to the North Site stream gage and waits for us while we take our measurements and remove the gage. 6:30 p.m.The helicopter takes Roy and I back to Dutch and then removes the welder from the well site.All work at the well site is now complete. The Contractor's personnel for this job consisted of Al Vezey and Jim White, two laborers from Fairbanks,a laborer hired locally and the Maritime Helicopter pilot and mechanic. 10/24/88 I returned to Anchorage on the evening flight. RW:it 4191/912(4) .*MEMORAR )UM. _ -_-s Stat'of Alaska TO: THRU: FROM (2-001 A (Rev 10-84) .">Ss-04.93FileDATE:September 9,1986 FILE NO.: TELEPHONE NO.: SUBJECT:Trip Report: Unalaska/Dutch Harbor avid Denig-Chakroff 9/4/86 -9/6/86 oject Manager Purpose of Trip The purpose of this trip was to accompany the feasibility study contrac-tor,Dames &Moore,and its subcontractor,SAI Engineers,to Unalaska/Dutch Harbor to meet with city officials and conduct field investigations for the Unalaska geothermal feasibility study. Thursday,September 4,1986 I travelled to Unalaska/Dutch Harbor with Marvin Feldman and Tom Krzewinski of Dames &Moore and Bob Membreno of SAI Engineers.I met Kim Sundberg of Fish and Game at the airport as he was leaving from completing his survey of the Makushin,Driftwood,and Glacier Rivers. We were met at the airport by Nancy Gross who dropped us off at the Unisea Inn.I called the Maritime Helicopter pilot,Rufus Crow,who did not recommend flying due to the weather.We set up a meeting with city officials for that afternoon. Marvin,Tom,Bob,and I met with Nancy,Jeff Currier,Bob Burton,and John Flory.We discussed the project,the City's schedule for bringing on new loads,and the City's capabilities for operating and maintaining a geothermal power plant.Jeff emphasized that the City would prefer a remote control operated system and expressed his preference for under- ground cable.We also discussed possibilities for direct cascading uses of the geothermal effluent.The consultants were very receptive to the concerns and ideas of the City.After the meeting,Jeff drove us to the powerhouse and gave us a tour of the facilities. Friday,September 5,1986 The weather did not clear up until late Friday morning.Then the pilot had to fly Wayne of Fish and Game to Glacier Creek to retrieve some equipment.We finally were able to fly late Friday afternoon.We flew to the site via Captains Bay and Nateekin Valley to observe that route as a potential transmission corridor.We walked around the plateau on which the exploration well is situated and discussed numerous transmis- sion and road access alternatives.Tom took soil samples near the wellsite.We flew and walked several potential corridors including a walk down the switchbacks between Makushin Valley and Driftwood Valley. We attempted to fly down Driftwood Valley but were unable to due to heavy fog.We landed on the muskeg in the lower part of Makushin Valley where Tom attempted another soil sample but was unable to retrieve one due to the high water content of the soils.We tried to reach Driftwood Valley by flying around to its mouth,but again we were obstructed by 6051/DD03 Memo to File Trip Report:Unalaska/Dutch Harbor September 9,1986 Page 2 fog.We returned to Unalaska by way of Nateekin and Captains Bay to inspect those areas for possible transmission lines. Saturday,September 6,1986 At 7:30 a.m.Rufus called to say the weather was clear and looked good for reaching Driftwood Valley.By 8:30 a.m.we were inspecting the airstrip and beach at Driftwood Bay.We followed the old road up the valley and flew around Sugarloaf cone looking at the potential road and transmission corridors.Upon reaching the head of the valley,we found a break in the clouds to the summit of Mt.Makushin.We flew to the summit and circled the caldera before returning to Unalaska by way of Makushin Valley. After breakfast,I checked out and got a ride with Wayne in a Fish and Game pickup to Victory Services to pick up the wind tower and deliver it to the helicopter pad.Afterwards,I met Marvin,Tom and Bob at the airport,and we returned to Anchorage. DDC:it CO;Dow Smjer- 'Breeat "'Ce7e=_ 6051/DD03 58-It.OSMEMORAN._UM Stat of Alaska THRU: 2-001 A (Rev 10-84) File DATE:September 9,1986 FILE NO.: TELEPHONE NO.: SUBJECT:Trip Report: Unalaska/Dutch Harbor avid Denig-Chakroff 9/4/86 -9/6/86 oject Manager Purpose of Trip The purpose of this trip was to accompany the feasibility study contrac-tor,Dames &Moore,and its subcontractor,SAI Engineers,toUnalaska/Dutch Harbor to meet with city officials and conduct field investigations for the Unalaska geothermal feasibility study. Thursday,September 4,1986 I travelled to Unalaska/Dutch Harbor with Marvin Feldman and Tom Krzewinski of Dames &Moore and Bob Membreno of SAI Engineers.I met Kim Sundberg of Fish and Game at the airport as he was leaving fromcompletinghissurveyoftheMakushin,Driftwood,and Glacier Rivers. We were met at the airport by Nancy Gross who dropped us off at the Unisea Inn.I called the Maritime Helicopter pilot,Rufus Crow,who did not recommend flying due to the weather.We set up a meeting with city officials for that afternoon. Marvin,Tom,Bob,and I met with Nancy,Jeff Currier,Bob Burton,and John Flory.We discussed the project,the City's schedule for bringingonnewloads,and the City's capabilities for operating and maintaining a geothermal power plant.Jeff emphasized that the City would prefer aremotecontroloperatedsystemandexpressedhispreferenceforunder- ground cable.We also discussed possibilities for direct cascading uses of the geothermal effluent.The consultants were very receptive to the concerns and ideas of the City.After the meeting,Jeff drove us to the powerhouse and gave us a tour of the facilities. Friday,September 5,1986 The weather did not clear up until late Friday morning.Then the pilot had to fly Wayne of Fish and Game to Glacier Creek to retrieve some equipment.We finally were able to fly late Friday afternoon.We flew to the site via Captains Bay and Nateekin Valley to observe that route as a potential transmission corridor.We walked around the plateau onwhichtheexplorationwellissituatedanddiscussednumeroustransmis- sion and road access alternatives.Tom took soil samples near the wellsite.We flew and walked several potential corridors including awalkdowntheswitchbacksbetweenMakushinValleyandDriftwoodValley.We attempted to fly down Driftwood Valley but were unable to due to heavy fog.We landed on the muskeg in the lower part of Makushin ValleywhereTomattemptedanothersoilsamplebutwasunabletoretrieveone due to the high water content of the soils.We tried to reach Driftwood Valley by flying around to its mouth,but again we were obstructed by 6051/DD03 Memo to File Trip Report:Unalaska/Dutch Harbor September 9,1986 Page 2 fog.We returned to Unalaska by way of Nateekin and Captains Bay to inspect those areas for possible transmission lines. Saturday,September 6,1986 At 7:30 a.m.Rufus called to say the weather was clear and looked good for reaching Driftwood Valley.By 8:30 a.m.we were inspecting the airstrip and beach at Driftwood Bay.We followed the old road up the valley and flew around Sugarloaf cone looking at the potential road and transmission corridors.Upon reaching the head of the valley,we found a break in the clouds to the summit of Mt.Makushin.We flew to the summit and circled the caldera before returning to Unalaska by way of Makushin Valley. After breakfast,I checked out and got a ride with Wayne in a Fish and Game pickup to Victory Services to pick up the wind tower and deliver it to the helicopter pad.Afterwards,I met Marvin,Tom and Bob at the airport,and we returned to Anchorage. DDC:it de.Dow Samer Beeat 'Henze 6051/DD03 -._,MEMORAN-UM Stat of Alaska TO: THRU: nN / 2-001 A (Rev 10-84) File DATE:September 9,1986 FILE NO.: TELEPHONE NO.: SUBJECT:Trin Report: :Unalaska/Dutch Harbor David Denig-Chakroff 9/4/86 -9/6/86 Project Manager i Purpose of Trip The purpose of this trip was to accompany the feasibility study contrac-tor,Dames &Moore,and its subcontractor,SAI Engineers,to Unalaska/Dutch Harbor to meet with city officials and conduct field investigatfons for the Unalaska geothermal feasibility study. Thursday,September 4,1986 I travelled to Unalaska/Dutch Harbor with Marvin Feldman and Tom Krzewinski of Dames &Moore and Bob Membreno of SAI Engineers.1! met Kim Sundberg of Fish and Game at the airport as he was leaving fromcompletinghissurveyoftheMakushin,Driftwood,and Glacier Rivers.We were metat the airport by Nancy Gross who dropped us off at theUniseaInn.I called the Maritime Helicopter pilot,Rufus Crow,who did not recommend flying due to the weather.We set up a meeting with cityofficialsforthatafternoon. Marvin,Tom,Bob,and I met with Nancy,Jeff Currier,Bob Burton,and John Flory.We discussed the project,the City's schedule for bringing on new loads,and the City's capabilities for operating and maintaining a geothermal power plant.Jeff emphasized that the City would prefer a remote control operated system and expressed his preference for under- ground cable.We also discussed possibilities for direct cascading uses of the geothermal effluent.The consultants were very receptive to the | concerns and ideas of the City.After the meeting,Jeff drove us to the powerhouse and gave us a tour of the facilities. Friday,September 5,1986 The weather did not clear up until late Friday morning.Then the pilothadtoflyWayneofFishandGametoGlacferCreektoretrievesome equipment.We finally were able to fly late Friday afternoon.We flew to the site via Captains Bay and Nateekin Valley to observe that route as a potential transmission corridor.We walked around the plateau on which the exploration well fs situated and discussed numerous transmis- sion and road access alternatives.Tom took soil samples near the wellsite.We flew and walked several potential corridors including a walk down the switchbacks between Makushin Valley and Driftwood Valley. We attempted to fly down Driftwood Valley but were unable to due toheavyfog.We landed on the muskeg in the lower part of Makushin ValleywhereTomattemptedanothersoilsamplebutwasunabletoretrieveoneduetothehighwatercontentofthesoils.We tried to reach Driftwood Valley by flying around to its mouth,but again we were obstructed by 6051/DD03 wee rene le ee Page ? , as fog.We returned to Unalaska by way of Nateekin and Captains Bay toinspectthoseareasforpossibletransmissionlines. Saturday,September 6,1986 At 7:30 a.m.Rufus called to say the weather was clear and looked goedforreachingDriftwoodValley.By 8:30 a.m.we were inspecting theairstripandbeachatDriftwoodBay.We followed the old road up thevalleyandflewaroundSugarloafconelookingatthepotentialroadand transmission corridors.Upon reaching the head of the valley,we found a break in the clouds to the summit of Mt.Makushin.We flew to the summit and circled the caldera before returning to Unalaska by way of Makushin Valley. After breakfast,I checked out and got a ride with Wayne in a Fish and Game pickup to Victory Services to pick up the wind tower and deliver it to the helicopter pad.Afterwards,I met Marvin,Tom and Bob at theairport,and we returned to Anchorage. Doc:it CC.ae w)-- 6051/DD03 |- MEMORAN )UM Stat of Alaska TO: THRU: 2-001 A(Rev 10-84) Sez -otf-03 File DATE:July 23,1986 FILE NO.: TELEPHONE NO:: SUBJECT:Trip Report Unalaska-Akutan avid Denig-Chakroff 7/13/86 -7/19/86 Project Manager Purpose of Trip The purposes of this trip were (1)to conduct field investigations with the state geological survey for its engineering geologic feasibility study including geologic,geophysical,hydrologic,andarchaeologicstudies;and (2)to visit Akutan to obtain information about the city and Trident Seafood power systems and to investigate three potential hydropower sites. Sunday,July 13,1986 I departed from Anchorage on Markair at 10:30 a.m.along with 12 members of the geological survey team that would be conducting investigations in the geothermal project area.Members of the team included: .Randy Updike Team Leader and Aggregate Materials Rod Combellick Wellsite Geotechnical Analysis Bill Long Glacial Constraints Gail March Avalanche Constraints &Computer Modeling Doug Jones Coastal Engineering John Reeder Slope Stability &Low-Enthalpy Studies Stan Carrick Surface Hydrology Mary Mower Water Chemistry Chris Nye Volcanic Constraints Chuck Holmes Archaeology Kerwin Krause Corridor Geotechnical Analysis Roger Allely Wellsite Survey &Site Seismicity Jim Beget Volcanic Constraints We were met at the Dutch Harbor/Unalaska Airport by John Reeder and our pilot,Ken Brown of Soloy Helicopters,Inc.Ken had already picked up our rental truck,and two loads of gear and people were transported from the airport to the Unisea Inn,our base of operations.Ken,Kerwin,and I returned to the airport where Ken looked into fuel availability and Kerwin and I picked up a truck load of equipment that had been sent by air freight.We delivered some of this equipment to the helicopter,a Hughes 500C,and the rest to the Unisea.At 3:30 p.m.Kerwin and I drove to Victory Services to pick up the explosives for the seismic analysis.We delivered the 5276/624(1) File July 23,1986 Page 2 explosives and more equipment to the helicopter and Ken flew two loads of gear to an equipment cache at the head of Makushin Valley. After dinner at the Unisea,Stan instructed me in conducting a data dump of stream gauge equipment in anticipation of my trip to Akutan the following day. Monday,July 14,1986 At 7:00 a.m.the team met over breakfast for the first of our daily morning work sessions lead by Randy to discuss work assignments and the helicopter schedule.After the work session,I obtained chains and locks for the Akutan stream gauges from Stan,then drove with Kerwin to get gas for the auger and to drop off my baggage with Aleutian Air.I took the helicopter to the wellsite with an intermediate stop at the equipment cache.I inspected the wellsite with John,Rod,Roger,Gail,and Randy and answered their questions about the project. At noon,I flew to the airport after dropping John and Roger at the equipment cache.I met Roy Taylor and Afzal Kahn arriving on Markair,and we flew to Akutan on the Goose.Dimitri,the VPSO,and Frank Anderson,the powerplant operator,were at the float plane port when we arrived.Frank took Afzal to the city powerplant while Dimitri took Roy and me in the city skiff to Loud Creek on the south side of Akutan Bay.Dimitri returned to town to take Afzal to Trident Seafoods while Roy and I worked at Loud Creek.I conducted a data dump and recorded stream stage (data attached)and installed chain locks on the datapod equipment.Roy and I hiked upstream and investigated potential weir sites on two branches of the creek. At 5:00 p.m.,Dimitri returned with the skiff and took us to Falls Creek on the south side of the Bay west of Loud Creek.I performed a data dump and stage reading while Roy hiked upstream to investigate potential weir sites.Dimitri then took us to North Site Creek where I found the equipment not working properly and could not conduct a data dump. We returned to Akutan in the skiff and found that Afzal had obtained all the information he needed from the city powerplant and Trident. We decided that Afzal and I should return to Unalaska in the morning so Afzal would get an opportunity to see the wellsite and fly the transmission line route of the geothermal project.Roy offered to remain and assist Stan if he arrived in Akutan on the morning flight to take a cross section of the three sites and check the equipment atNorthSiteCreek. Tuesday,July 15,1986 Roy and I walked to the stream east of the village which is the source of the town's water supply and the site of a 15 kw hydroelectric system which has been out of operation for four years. 5276/624(2) File July 23,1986 Page 3 We met with Frank and Tom who gave us a tour of the water supply system and answered questions about the old hydropower system.The system has 800 feet of head and operated seasonally as there was not eneugh flow to produce power during winter months. At 10:30 a.m.,Stan arrived on Aleutian Air.Roy stayed to assist Stan while Afzal and I returned to Unalaska.After waiting some time for the helicopter to pick us up,we drove to the staging area of a BLM surveying project to see if their helicopter pilot could radio Ken.They said Ken apparently was not monitoring their frequency,but offered to fly us to the wellsite since they were headed across the Bay anyway. Afzal and I inspected the wellsite and discussed the project with team members at the site.Ken arrived and flew us to Kerwin and Randy.Kerwin,Afzal and I flew to Driftwood Bay and then down the potential transmission route in Makushin Valley,and Afzal answered many questions Kerwin asked about transmission line construction.We dropped Afzal at the airport where we met Roy and Stan returning from Akutan.Roy and Afzal were able to catch the Reeve flight to Anchorage,and Kerwin,Stan,and I returned to the wellsite. During the afternoon,Randy,Kerwin and I inspected a lahar deposit at the mouth of Makushin Canyon,then Kerwin and I conducted a reconnaissance survey of potential transmission pole sites and road corridors along the south side of Makushin Valley.We returned to Unalaska at about 6:30 p.m.and discussed the days accomplishments with the entire team over dinner. Wednesday,July 16,1986 After the morning work session and breakfast,I was dropped off with Randy and Kerwin in the lower Makushin Valley where we drilled a 21 foot hole and hand augered to 25 feet.Soft,wet muds were encountered to 25 feet where we hit the top of an ash layer.No gravels were encountered. At 1:00 p.m.I was dropped off at the confluence of the Makushin River tributaries just below the wellsite plateau,where Stan and Bill had just finished installing two stream gauges.I noted what appeared to be a 100-year flood plain just below the plateau and between the two tributaries,which could be a potential site for aquaculture facilities.Bill,Stan,and I also discussed the need and possibility of installing wind and precipitation gauges at thewellsiteandalongthepotentialtransmissionroute. At 2:00 p.m.,I was dropped off at the wellsite and,for the rest of the afternoon,I assisted Rod and Doug in augering holes on the plateau while Roger and Bill conducted surveys for the detailed contour map of the plateau. 5276/624(3) File July 23,1986 Page 4 Thursday,July 17,1986 I worked all day with Rod,Doug and Roger at the wellsite augering and taking soil samples,surveying for the site contour map,and assisting in the seismic survey.Bill assisted at the wellsite in the morning and was replaced by Stan in the afternoon when Bill and John went to the glacier and the summit.Two seismic lines were successfully shot on the plateau.At about 11:30 a.m.,we received a radio transmission from Randy who was stuck in a cloud bank on Sugarloaf Cone.He could not see 50 feet in any direction and had completely lost his bearings.We could see the cloud bank from the plateau and informed him that it was not very thick and would probably pass shortly.We notified Ken who landed as close to Sugarloaf as he could.Randy was able to follow the sound of the rotors and walk out of the cloud bank. At 7:00 p.m.,I attended a public meeting with 11 of the team members to discuss the project and engineering geologic survey with townspeople.However,only six townspeople showed up,though the meeting was well advertised.City Manager Nancy Gross,Electric Utility Supervisor Bob Burton,and Ounalashka Corporation President Kathy Grimnes were present along with three other members of the public.Notably absent were the Mayor or any representatives of the City Council.I gave an overview of the geothermal project,and each member of the team discussed his or her responsibilities and preliminary findings. Friday,July 18,1986 Chuck and I operated the auger all day;in the morning,with Rod at the wellsite and,in the afternoon,with Kerwin in Makushin Valley. We found no area of the valley with less than 20 feet of muck. Seismic lines were shot in the valley by Roger and John.Late in theafternoon,Kerwin and I were dropped off on a spur Tow on the south side of Makushin Valley to investigate the area for a potential road route.We hand augered several holes and found gravelly till at 3 feet.We speculated that bedrock would be encountered at no more than 6 feet.The foundation in the area appeared good for road construction,however,there is avalanche danger all along the south side of Makushin Valley. Saturday,July 19,1986 After breakfast,the team packed gear and equipment and transported same to air freight services and the airport.John and I drove to Summer Bay so he could show me the location of the hydrothermal well that was drilled there in 1980.We departed Unalaska on Markair at 12:30 p.m.and arrived in Anchorage about 2:30 p.m. 5276/624(4) File July 23,1986 Page 5 General Observations The field investigation for the geothermal project was an unqualified success.The weather was incredible;we had only one morning of rain,and most of the week it was clear and sunny.The helicopter service was excellent.Although the 500C was marginal in size for the number of people we had to transport,the pilot was superb and effectively managed his air time to accomplished the needs of the group.He was always flexible,cooperative,and down-right pleasant, even when he was obviously under a great deal of pressure. The investigating team was the most highly motivated,well qualified, professional group of scientists I have ever had the pleasure to work with.Each member was well versed in his or her area of expertise and responsibility and proceeded to conduct his or her assignment in a professional,expedient manner.Members of the team were able to perform a variety of tasks outside their area of project responsibility and were willing and eager to do so whenever they were needed and their schedule permitted. Randy Updike managed the project and the team skillfully and proficiently.He obviously respected and was well respected by each member of the team.His organization and scheduling of the project and his selection of the team reflected and accomplished his goal to provide,within a tight timeframe,recognized technical experts with significant Alaskan experience to conduct a comprehensive program on an economical budget. The "team approach"was emphasized and effectively carried out. Randy solicited opinions from individual team members and gave them serious consideration when decisions were made.He organized the team into subgroups with group leaders to accomplish individual tasks.Consequently,a team member may,as a designated group leader,direct a colleague on one day and,as an assistant,answer to the same colleague on the following day.To the credit of both Randy and the team members,this structure was extremely effective and the project was a great success. DC:kyf 5276/624(5) -.MEMORAN )1UM_.___sStat_of Alaska "qo:FAle DATE:July 23,1986 |3S.0€O82 FILE NO.: TELEPHONE NO.: {i SUBJECT:Trip Report avi Unalaska-Akutan >avid Denig-Chakroff 7/13/86 =7/19/86 Project Manager Purpose of Trip The purposes of this trip were (1)to conduct field investigations with the state geological survey for its engineering geologic feasibility study including geologic,geophysical,hydrologic,andarchaeologicstudies;and (2)to visit Akutan to obtain information about the city and Trident Seafood power systems and to investigate three potential hydropower sites. Sunday,July 13,1986 I departed from Anchorage on Markair at 10:30 a.m.along with 12 members of the geological survey team that would be conducting investigations in the geothermal project area.Members of the team included: Randy Updike Team Leader and Aggregate Materials Rod Combellick Wellsite Geotechnical Analysis Bil?Long Glacial Constraints Gail March Avalanche Constraints &Computer Modeling Doug Jones Coastal Engineering John Reeder Slope Stability &Low-Enthalpy Studies Stan Carrick Surface Hydrology Mary Mower Water Chemistry Chris Nye Volcanic Constraints Chuck Holmes Archaeology Kerwin Krause Corridor Geotechnical Analysis Roger Allely Wellsite Survey &Site Seismicity Jim Beget Volcanic Constraints We were met at the Dutch Harbor/Unalaska Airport by John Reeder and our pilot,Ken Brown of Soloy Helicopters,Inc.Ken had already picked up our rental truck,and two loads of gear and people were transported from the airport to the Unisea Inn,our base of operations.Ken,Kerwin,and I returned to the airport where Ken looked into fuel availability and Kerwin and I picked up a truck load of equipment that had been sent by air freight.We delivered some ofthisequipmenttothehelicopter,a Hughes 500C,and the rest to theUnisea.At 3:30 p.m.Kerwin and I drove to Victory Services to pickuptheexplosivesfortheseismicanalysis.We delivered the §276/624(1) 2-001 A (Rev 10-84) reys r 4 explosives and more equipment to the helicopter and Ken flew twoloadsofgeartoanequipmentcacheattheheadofMakushinValley. After dinner at the Unisea,Stan instructed me in conducting a data dump of stream gauge equipment in anticipation of my trip to Akutan the following day. Monday,July 14,1986 At 7:00 a.m.the team met over breakfast for the first of our daily morning work sessions Tead by Randy to discuss work assignments and the helicopter schedule.After the work sessfon,I obtained chains and locks for the Akutan stream gauges from Stan,then drove with Kerwin to get gas for the auger and to drop off my baggage with. Aleutian Air.I took the helicopter to the wellsite with an {ntermediate stop at the equipment cache.I inspected the wellsite with John,Rod,Roger,Gail,and Randy and answered their questions about the project. At noon,I flew to the airport after dropping John and Roger at the equipment cache.I met Roy Taylor and Afzal Kahn arriving on Markair,and we flew to Akutan on the Goose.Dimitri,the VPSO,and Frank Anderson,the powerplant operator,were at the float plane portwhenwearrived.Frank took Afzal to the city powerplant while Dimitri took Roy and me in the city skiff to Loud Creek on the south side of Akutan Bay.Dimitri returned to town to take Afzal to Trident Seafoods while Roy and I worked at Loud Creek.I conducted adatadumpandrecordedstreamstage(data attached)and installed chain locks on the datapod equipment.Roy and I hiked upstream and investigated potential weir sites on two branches of the creek. At 5:00 p.m.,Dimitri returned with the skiff and took us to Falls Creek on the south side of the Bay west of Loud Creek.1 performed a data dump and stage reading while Roy hiked upstream to investigate potentfal weir sites.Dimitri then tock us to North Site Creek where I found the equipment not working properly and could not conduct adatadump.. We returned to Akutan in the skiff and found that Afzal had obtained all the information he needed from the city powerplant and Trident. We decided that Afzal and I should return to Unalaska in the morning so Afzal would get an opportunity to see the wellsite and fly the transmission line route of the geothermal project.Roy offered to remain and assist Stan if he arrived in Akutan on the morning flight to take a cross section of the three sites and check the equipment at North Site Creek. Tuesdav,July 15,1986 Roy and I walked to the stream east of the village which is thesourceofthetown's water supply and the site of a 15 kw hydroelectric system which has been out of operation for four years. 5276/624(2) rayu w We met with Frank and Tom who gave us a tour of the water supply system and answered questions about the old hydropower system.The system has 800 feet of head and operated seasonally as there was notenoughflowtoproducepowerduringwintermonths. At 10:30 a.m.,Stan arrived on Aleutian Air.Roy stayed to assist Stan while Afzal and I returned to Unalaska.After waiting some time for the helicopter to pick us up,we drove to the staging area of a BLM surveying project to see if their helicopter pilot could radtfo Ken.They said Ken apparently was not monitoring their frequency,butofferedtoflyustothewellsitesfncetheywereheadedacrosstheRayanyway. Afzal and I inspected the wellsite and discussed the project with team members at the site.Ken arrived and flew us to Kerwin and Randy.Kerwin,Afzal and I flew to Criftwood Bay and then down the potential transmission route in Makushin Valley,and Afzal answered many questions Kerwin asked about transmission line construction.We dropped Afzal at the airport where we met Roy and Stan returning from Akutan.Roy and Afzal were able to catch the Reeve flight to Anchorage,and Kerwin,Stan,and I returned to the wellsite. During the afternoon,Randy,Kerwin and I inspected a lahar deposit at the mouth of Makushin Canyon,then Kerwin and I conducted a reconnaissance survey of potential transmission pole sites and road corridors along the south side of Makushin Valley.We returned to Unalaska at about 6:30 p.m.and discussed the days accomplishments with the entire team over dinner. Wednesday,duly 16,1986 After the morning work session and breakfast,I was dropped off with Randy and Kerwin fn the lower Makushin Valley where we drilled a 21 foot hole and hand augered to 25 feet.Soft,wet muds were encountered to 25 feet where we hit the top of an ash layer.No . gravels were encountered. At 1:00 p.m.I was dropped off at the confluence of the Makushin 'River tributaries just below the wellsite plateau,where Stan and Bill had just finished installing two stream gauges.I noted what appeared to be a 100-year flood plain just below the plateau and between the two tributaries,which could be a potential site for aquaculture facilities.Bil1l,Stan,and I also discussed the need and possibility of installing wind and precipitation gauges at thewellsiteandalongthepotentialtransmissionroute. At 2:00 p.m.,I was dropped off at the wellsite and,for the rest of the afternoon,I assisted Rod and Doug in augering holes on the plateau while Roger and Bill conducted surveys for the detailed contour map of the plateau. 5276/624(3) reyu 7 Thursday,July 17,1986 I worked all day with Rod,Doug and Roger at the wellsite augeringandtakingsoflsamples,surveying for the site contour map,and assisting in the seismic survey.Bill assisted at the wellsite in the morning and was replaced by Stan fn the afternoon when Bill and John went to the glacfer and the summit.Two seismic lines were successfully shot on the plateau.At about 11:30 a.m.,we recefved a radio transmission from Randy who was stuck in a cloud bank on Sugarloaf Cone.He could not see 50 feet in any direction and hadcompletelylosthisbearings.We could see the cloud bank from the plateau and informed him that it was not very thick and would probably pass shortly.We notified Ken who landed as close to Sugarloaf as he could.Randy was able to follow the sound of the rotors and walk out of the cloud bank. At 7:00 p.m.,I attended a public meeting with 11 of the team members to discuss the project and engineering geologic survey with townspeople.However,cnly six townspeople showed up,though themeetingwaswelladvertised.City Manager Nancy Gross,Electric Utility Supervisor Bob Burton,and Ounalashka Corporation PresidentKathyGrimneswerepresentalongwiththreeothermembersofthe public.Notably absent were the Mayor or any representatives of the City Council.I gave an overview of the geothermal project,and each 'member of the team discussed his or her responsibilities and preliminary findings. Friday,July 18,1986 Chuck and I operated the auger all day;in the morning,with Rod at the wellsite and,in the afternoon,with Kerwin fn Makushin Valley. We found no area of the valley with less than 20 feet of muck. Seismic lines were shot in the valley by Roger and John.Late in the afternoon,Kerwin and I were dropped off on a spur Tow on the south side of Makushin Valley to investigate the area for a potential road route.We hand augered several holes and found gravelly till at 3 feet.We speculated that bedrock would be encountered at no more than 6 feet.The foundation in the area appeared good for road ; construction,however,there {s avalanche danger all along the southsideofMakushinValley. Saturday,July 19,1986 After breakfast,the team packed gear and equipment and transported same to air freight services and the airport.Jchn and I drove to Summer Bay so he could show me the location of the hydrothermal well that was drilled there in 1980.We departed Unalaska on Markair at 12:30 p.m.and arrived in Anchorage about 2:30 p.m. 5276/624(4) reya wv General Observations The field investigation for the geothermal project was an unqualified success.The weather was incredible;we had only one morning of rain,and most of the week it was clear and sunny.The helicopter service was excellent.Although the 500C was marginal in size for the number of people we had to transport,the pilot was superb and effectively managed his air time to accomplished the needs of the group.He was always flexible,cocperative,and down-right pleasant, even when he was obviously under a great deal of pressure. The investigating team was the most highly motivated,well qualified,professional group of scientists I have ever had the pleasure to work with.Each member was well versed in his or her area of expertise and responsibility and proceeded to conduct his or her assignment in a professional,expedient manner.Members of the team were able to perform a variety of tasks outside their area of project responsibility and were willing and eager to do so whenever they wereneededandtheirschedulepermitted. Randy Updike managed the project and the team skillfully and proficiently.He obviously respected and was well respected by each member of the team.His organization and scheduling of the project and his selection of the team reflected and accomplished his goal to provide,within a tight timeframe,recognized technical experts with significant Alaskan experience to conduct a comprehensive program onaneconomicalbudget. The "team approach"was emphasized and effectively carried out. Randy solicited opinions from individual team members and gave them serious consideration when decisions were made.He organized the team into subgroups with group leaders to accomplish individual tasks.Consequently,a team member may,as a designated group leader,direct a colleague on one day and,as an assistant,answer to the same colleague on the following day.To the credit of both Randy and the team members,this structure was extremely effective and the project was a great success. DC:kyf 5276/624(5) MEMORAI )UM-__sSStat_of Alaska38.0408 "70:FILE DATE:May 16,1936 FILE NO.: THRU:TELEPHONE NO.: SUBJECT:Trip Report Unalaska/Dutch HarborFROM,\|Dave Denig-Chakroff May 14,1986 -May 15,1986\\Project Manager 32-001 A(Rev 10-84) Purpose of Trip The purposes of this trip were (1)to meet with the Ounalashka Corpo- ration president and Board of Directors to discuss the final right-of-way agreement and seek approval of that agreement,and (2)to meet with the City's Public Works Director to discuss R.W.Beck's review for the City of the Power Authority-Aleut agreement. Wednesday,May 14,1936 1 departed Anchorage on MarkAir at 10:15 a.m.and arrived in Dutch Harbor at 12:10 p.m.I took a taxf to the Unisea Inn and called Kathy Grimnes,President of the Village Corporation. I tock a taxi to Unalaska and met with Kathy from about 1:00 to 3:00. We discussed the final draft of the right-of-way agreement,specifically reviewing the additions she had requested from the previous draft.She appeared content with the changes.We reviewed maps marked with the project area,and I gave Kathy copies of a summary report and three papers on the geothermal exploration program.I returned to the hotel to prepare for the Board presentation. At 7:30 p.m.,I attended the Village Corporation Board meeting.Soard members had reviewed the previous draft.I pointed out the two ad-ditions to the final draft:(1)the phrase "to the maximum extentconsistentwithitsownconcerns"added to section 4,and (2)section 6 addressing taxes.I answered questions of the Board and reviewed the project area map.Poard members seemed fairly well satisfied with the agreement.Kathy indicated that their attorney had not yet seen the tax section,and she felt he should review it before they make a final decision on the agreement.The Chairwoman of the Board indicated that it would require a resolution of the Board giving Kathy authority to sign the agreement pending approval by the attorney on the tax section and directed that such a resolution be prepared during the break.Ileftthemeetingpriortothebreak. Thursday,May 15,1986 On Thursday morning,I met with Jeff Currier,Director of Public Works,to discuss R.W.Beck's review of the APA-Aleut Agreement.I read the review and we discussed the recommendations in detail.Jeff was con- cerned abcut the time-frame involved in making additional changes to the agreement and suggested that some compromise was in order.He suggested 4370/422/1 reye «- that wea review the document and work directly with Kurt Winterfeld of R.W.Beck to resolve his concerns.He called Kurt and asked him to work directly with us after we had a chance to review the comments in more detail. Jeff has hired an electric utility manager who will be on staff on May 27.He has had over 20 years experience in the utility business, and Jeff expects he will have a great deal to offer the project.Jeff indicated he still plans to leave Unalaska as soon as he can sel]his home. I called Kathy before leaving for the airport,and she said she had not yet gotten in touch with their attorney.If she receives his approval, she will sign the original document and speedpack it to us.Jeff dropped me off at the airport after our meeting,and I departed from Dutch Harbor at 1:00 p.m.on MarkAir. DDC/tg 4370/422/2 MEMORADN.)JUM Stat of Alaska TO: THRU: FRO 32-001 A (Rev 10-84) 3y tot OS FILE DATE:April 14,1986 FILE NO.: TELEPHONE NO.: SUBJECT:Trip ReportUnalaska/Dutch Harbor-Dave Denig-Chakroff April 8,1986 to Project Manager April 10,1986 Purpose of Trip The purposes of this trip were (1)to meet with City of Unalaska offi- cials to review and discuss in detail the draft agreement between thePowerAuthorityandtheAleutCorporation,and (2)to meet with offi- cials and the Board of Directors and the Ounalashka Corporation to discuss the right-of-way agreement for the geothermal project. Tuesday,April 8,1986 I departed Anchorage on AirPac at 11:00 a.m.and arrived in Dutch Harbor at 1:00 p.m.I took a taxi to the Unisea Inn and called the City Manager,Nancy Gross,to tell her of my arrival.Nancy picked me up at the hotel and we went to City Hall where I met for approximately four hours with Nancy;Jeff Currier,Public Works Director;and John Florey, City Engineer.We held a conference call with Brent Petrie in which we discussed,generally,the provisions of the April 7 draft agreement and some of the history and thought that had gone into development of specific provisions.After the conference call,we went over the agreement page-by-page and discussed the details of the agreement.We also analyzed spreadsheets showing the royalty and rental payments that would result from the project under various scenarios and assumptions. Jeff indicated that the assumptions we used for the analysis were reasonable. Specific comments on the agreement were as follows: 1.The date of April 1,1986 in Article A,Section 4 (page 3) does not correlate with the date in Exhibit B.It should be changed to May 1,1987. 2.The definition of "Busbar"in Article C,Section 2(b)(page 9) is confusing because of its reference to power supplied by the City or by the Project.The Royalty calculation specifies that Busbar cost will be based on costs exclusive of the Project;thus,there is an apparent conflict that should beclarified. 3.We discussed the somewhat nebulous wording describing calcu- lation of the Busbar cost.Jeff was unsure as to weather busbar costs based on the backup system or a theoretical system designed to supply an equivalent amount of energy as the project would be lower.He felt that R.W.Beck could supply this information,as well as guidelines on what general 3846/582/1 Unalaska/Dutch bor Trip Report April 14,1986 Page 2 and administrative costs should be considered "generating" costs. 4,The City intends to send the document for review by its attorney and by R.W.Beck.It will discuss the agreement with it's City Council at an April 22 work session to which the Power Authority is invited and urged to attend. We also discussed briefly the status of the right-of-way agreement and the possibility of the City negotiating with the Village Corporation for that agreement.Nancy indicated that the City would consider it,but that it does not have very good relations with the Corporation,and the Power Authority might be more successful negotiating on its own.She did indicate that the City now has extended its boundaries incorporating the Corporation lands needed for the project,and they would have condemnation powers over said lands.After the meeting,I had dinner with Nancy and John at Stormy's,a new Greek/Italian restaurant in Unalaska.Nancy drove me back to the hotel about 9:00 p.m. Wednesday,April 9,1986 I met with Kathy Grimnes,President of the Ounalashka Corporation,at 8:00 a.m.We discussed the right-of-way agreement in some detail,and I responded to the concerns which she had passed on from her Board.I offered photographs of power lines and terminal facilities which she had requested.She asked about the height of the power poles and whether or not the line would make any noise when in operation.Otherwise,Kathy had very little response except to indicate that all of the concerns had been addressed.We discussed my proposed presentation to the Board that evening,and she indicated that it should be kept as short as possible due to a lengthy agenda.We agreed that a slide presentation would take up too much time,but Kathy felt it would be a good idea to have a map of the area available for reference. After the meeting,I walked to Nicky's Place bookstore where I purchased one map and borrowed another for the Board presentation and had a lengthy conversation about the geothermal project with townsperson and store owner,Abi Dickson.Upon returning to the hotel,I called Afzal Khan to ask about the power pole heights and line noise.I also spoke briefly with Brent and briefed him on my meetings.I spent the afternoon preparing for the Board presentation. At 7:30 p.m.,I arrived at the Corporation's offices and met with the Board for 14 hours.In general,the Board was very receptive to mypresentationandmembersaskedthoughtfulandreasonedquestions.WhileIperceivedindicationsofsupportfortheagreementfromsomemembers,I perceived skepticism from others.The major concerns expressed included: 1.The appearance of the facility.2.A misconception that this was an "experimental"project. 3846/582/2 Unalaska/Dutch rbor Trip Report April 14,1986 Page 3 3.A desire to narrow the proposed location of the easements as much as possible. 4.The need to negotiate an agreement at all before the exact location of the easements were determined. 5.The time schedule for completing negotiations. I agreed to revise the document to address concerns discussed at the meeting and to forward the revised draft next week.One member also asked for a copy of the agreement between the Power Authority and the Aleut Corporation.I said I would ask the Aleut Corporation if they had any objection to this and to send a copy if they had none.I informed the Board that I would be in town for a City Council work session around April 22,and that I would be willing to discuss the agreement further at that time or at their next regulatory scheduled Board meeting on May 7. Thursday,April 10,1986 After checking out of the hotel,I returned the borrowed map to Abi Dickson and then met with Nancy Gross at the airport.We discussed the possibility of a joint meeting between the City Council and the Village Corporation Board.Nancy thought it was a good idea,suggesting April 21 as a possible date,and I said I would approach Kathy Grimnes with the idea. Erika Tritremmel,City Administrator for Akutan,was at the airport on her way back to Anchorage.I met with Erika about our proposed trip to Akutan.She will be on vacation until May 1,but said to contact the City office if we wanted to make the trip before her return. DDC/tg cc:Don Shira,Manager,Program Planning &Analysis Brent Petrie,Director,Systems Planning 3846/582/3 G70-Unaetsdscsty Se.ge-ce *MEMORANDUM State of Alaska TO:File DATE:February 20,1986 FILE NO: TELEPHONE NO: FROM:avid Denig-Chakroff SUBJECT:Unalaska Trip Project Manager Report,February 10-15,1986 Purpose of Trip The purposes of this trip were (1)to meet with Unalaska city officials to present and discuss our financial and cost-of-power analyses for the geothermal project and to discuss its results with respect to ongoing negotiations with the Aleut Corporation and the Ounalashka Corporation,and (2)to meet with the Ounalashka Corporation to discuss the proposed right-of-way agreement.The trip was to be combined with a trip to Akutan to install stream gauges in three area streams and to gather data for analysis of proposed hydroelectric systems;however,inclement weather prevented us from reaching Akutan. Monday,February 10,1986 Brent Petrie and I departed from Anchorage on AirPac at 10:30 a.m.and arrived in Dutch Harbor at 12:30 p.m.We were met at the airport by City Manager Nancy Gross.After checking in at the Unisea Inn,Nancy dropped us off at the city shop where we met with Public Works Director Jeff Currier to discuss the financial and cost-of-power analyses.Jeff indicated that the analysis appeared reasonable and consistent with the city's current cost of power generation.Since the city does not provide any industrial loads at this time,its overhead is disproportionately high compared to its power sales.The city would like to be able to insure a block of power which it could presell to the seafood processors on a yearly basis at a price tied to the cost of diesel fuel.Jeff estimated the following costs of power using a 500 kWaverageload,which would provide $195,000/year to the budget for contingencies: Residential 21.50 ¢/kWh Small General 19.57 ¢/kWh Large General 19.18 ¢/kWh Industrial 18.68 ¢/kWh The electric utility payroll includes 9 staff including an outside line crew of four,a plant foreman,one operator,one laborer,and a portion of the Public Works Director and his secretary. 3116/553 02-001AtRev.10/79) The city could potentially pick up the base loads of Greatland/Universal,Eastpoint,and Alyeska (formerly Pan Alaska)if it can offer a price competitive with the processors cost of generation.At least two of the processors are considering installation of waste heat recovery systems which would further reduce their costs.Without further growth in power sales,Jeff estimates the city's cost of generation at 37 ¢/kWh.With increased production to pick up processors,operating costs would change little except for the cost of fuel. Jeff took us on a tour of the new powerhouse.Two 600 kW generators were destroyed in the fire at the old powerhouse and have been sent to Seattle for repair.The powerplant currently houses a 300 kW generator, a 920 kW generator,and the 1400 kW Cat test unit on loan from the manufacturer.After the two year test,this unit will likely be given to the city at a nominal cost.If the city expands to pick up industrial loads,it will add two additional 1400 kW machines. Monday evening we attended a work session of the city council scheduled specifically to discuss the Makushin geothermal project.In attendance were: Paul Fuhs,Mayor Nancy Gross,City Manager Ron Anderson,Councilman Frank Kelty,Councilman Glenn Boledovich,Councilman Abi Dickson,Citizen Sherry Thompson,Councilwoman Jim Dickson,Citizen Jeff Currier,Public Works Director The financial and cost-of-power analyses were presented and discussed. The Council and city staff agreed that the cost of geothermal power was within a range that the city would be interested in purchasing given the assumptions inherent in the analyses and decided to prepare a resolution for consideration at its February 13 meeting.Council members requested that an APA representative attend the February 13 meeting. Tuesday,February 11,1986 Brent and I met with Kathy Grimnes,President,Ounalashka Corporation. We discussed the geothermal project and the status of our negotiations with the Aleut Corporation.Kathy had not found a copy of the draft right-of-way agreement we had given the former President on July 15, 1985.We gave her a copy of the draft and she indicated that she would bring the issue before the Corporation's Board of Directors.We offered to give a presentation on the project to the Board.Kathy's major concern about the project was its potential impact on development plans of the Aleut Corporation.She was particularly concerned about a recent announcement to the press that the Aleut Corporation was looking at the possibility of developing a hazardous waste disposal site on Unalaska Island.She would like some assurance that development of 3116/553 geothermal power at the Makushin site would not result in undesirable ancillary development in the vicinity. We met with Paul Fuhs and Nancy Gross to review the resolution that had been drafted.We also discussed the possibility of leaving responsibility to the city for negotiating rights-of-way agreements with the Ounalashka Corporation.Paul and Nancy seemed receptive to this idea but indicated that they would not be in a position to do so until negotiations on city boundaries had been resolved. Roy Taylor,Afzal Khan,Stan Carrick,and Roy Ireland arrived at 12:30 and Brent departed for Anchorage at 1:30.Roy,Afzal,Stan,Roy,and I departed for Akutan on Aleutian Air.About 10 minutes out of Akutan we were forced to return to Dutch Harbor due to fog. Wednesday,February 12,1986 All flights to Anchorage and Akutan were cancelled due to bad weather. We contacted Jeff Currier and arranged for another tour of the city power plant for the members of our Akutan team. Thursday,February 13,1986 Again,all flights were cancelled due to weather.I contacted Frank Kelty and arranged for a tour of the Alyeska Seafood processing plant and power facility.We were provided a comprehensive tour of the powerplant,processing lines,compressors,and freezer building by the plant engineer,Bob Cummings. Thursday night I attended and gave a brief presentation at the City Council meeting.The council passed the resolution presented by city staff on the geothermal project. Friday,February 14,1986 Flights were again cancelled.I picked up the signed resolution at City Hall.We drove to Pyramid Creek and attempted to drive to Summer Bay but were stopped by rock slides on the road.We also hiked to the top of Bunker Hill overlooking Dutch Harbor.Friday evening,I attended a Valentine Day dance where I was able to socialize with members of the city council and staff. Saturday,February 15,1986 Weather improved,we departed Dutch Harbor at 1:30 p.m.and arrived in Anchorage at 3:30 p.m. 3116/553 S¥.04-OS ¢MEMORANDUM State of Alaska TO: 02-001A(Rev.10/79) File DATE:February 20,1986 FILE NO: f TELEPHONE NO: avid Denig-Chakroff SUBJECT:Unalaska Trip Project Manager Report,February .10-15,1985 Purpose of Trip The purposes of this trip were (1)to meet with Unalaska city officials to present and discuss our financial and cost-of-power analyses for the geothermal project and to discuss its results with respect to ongoing negotiations with the Aleut Corporation and the Qunalashka Corporation,and (2)to meet with the Ounalashka Corporation to discuss the proposed right-of-way agreement.The trip was to be combined with a trip to Akutan to install stream gauges in three area streams and to gather data for analysis of proposed hydroelectric systems;however,inclement.weather prevented us from reaching Akutan. Monday,February 10,1936 Brent Petrie and I departed from Anchorage on AirPac at 10:30 a.m.and arrived in Dutch Harbor at 12:30 p.m.We were met at the airport by City Manager Nancy Gross.After checking in at the Unisea Inn,Nancy dropped us off at the city shop where we met with Public Works Director Jeff Currter to discuss the financial and cost-of-power analyses.Jeff indicated that the analysis appeared reasonable and consistent with the city's current cost of power ceneration.Since the city does not provide any industrial loads at this time,its overhead is disproportionately high compared to its power sales.The city would like to be able to insure a block of power which ft could presell to the seafood processors on a yearly basis at a price tied to the cost of diesel fuel.Jeff estimated the following costs of power using a 590 kWaverageload,which would provide $195,000/year to the budget for contingencies: Residential 21.50 ¢/kith Small General 19.57 4/kWh Large General 19.18 ¢/k\Wh Industrial 18.68 ¢/kWh The electric utility payroll]includes 9 staff including an outside line crew of four,a plant foreman,one operator,one laborer,and a portion of the Public Works Director and his secretary. 3116/553 yoThe city could; entially pick up the base load Ff Greatland/Universal,Eastpoint,and Alyeska (formerlyPan Alaska)if {t can offerapricecompetitivewiththeprocessorscostofgeneration.At least two of the processors are considering installation of waste heat -recovery systems which would further reduce their costs.Without further growth in power sales,Jeff estimates the city's cost of generation at 37 ¢/kWh.With increased production to pick up processors,operating costs would change little except for the cost of fuel. Jeff took us on a tour of the new powerhouse.Two 600 kW generators were destroyed in the fire at the old powerhouse and have been sent to Seattle for repair.The powerplant currently houses a 300 kW generator, a 920 kW generator,and the 1400 kW Cat test unit on loan from the manufacturer.After the two year test,this unfit will likely be given to the city at a nominal cost.If the city expands to pick up industrial loads,it will add two additional 1400 kW machines. Monday evening we attended a work session of the city counc!!scheduled specifically to discuss the Makushin geothermal project.In attendance were: Paul Fuhs,Mayor Nancy Gross,City Manager Ron Anderson,Counct?man Frank Kelty,Councilman Glenn Boledovich,Councilman Abi Dickson,Citizen Sherry Thompson,Counctlwoman Jim Dickson,Citizen Jeff Currfer,Public Works Director The financfal and cost-of-power analyses were presented and discussed. The Council and city staff agreed that the cost of geothermal power was within a rance that the city would be interested in purchasing given the assumptions inherent in the analyses and decided to prepare a resolution for consideration at its February 13 meeting.Council members requested that an APA representative attend the February 13 meeting. Tuesday,February 11,1986 Brent and I met with Kathy Grimnes,President,Ounalashka Corporation. We discussed the geothermal project and the status of our negotiations with the Aleut Corporation,Kathy had not found a copy of the draft right-of-way agreement we had given the former President on July 15, 1985...We gave her a copy of the draft and she indicated that she would bring the issue before the Corporation's Board of Directors.We offered to give a presentation on the project to the Board.Kathy's major cencern about the project was its potential impact on development plans of the Aleut Corporation.She was particularly concerned about a recent announcement to the press that the Aleut Corporation was looking at thepossibilityofdevelopingahazardouswastedisposalsiteonUnalaska Istand.She would like some assurance that development of 3116/553 geothermal powe _t the Makushin site would not ult fn undestrableancillarydevelopmentinthevicinity. We met with Paul Fuhs and Nancy Gross to review the resolution that had been drafted.We also discussed the possibility of leavingresponsibilitytothecityfornegotiatingrights-of-way agreements withtheOunalashkaCorporation.Paul and Nancy seemed receptive to this idea but indicated that they would not be in a position to do so until negotiations on city boundaries had been resolved. Roy Taylor,Afzal Khan,Stan Carrick,and Roy Ireland arrived at 12:30andBrentdepartedforAnchorageat1:30.Roy,Afzal,Stan,Roy,andIdepartedforAkutanonAleutianAfr.About 19 minutes out of Akutan.we were forced to return to Dutch Harbor due to fog. Wednesday,February 12,1936 All flights to Anchorage and Akutan were cancelled due to bad weather. fe contacted Jeff Currier and arranged for another tour of the city power plant for the members of our Akutan team. Thursday,February 13,1986 Again,all flights were cancelled due to weather.I contacted Frank Kelty and arranged for a tour of the Alyeska Seafood processing plantandpowerfacility.We were provided a comprehensive tour of thepowerplant,processing lines,compressors,and freezer building by theplantengineer,Bob Cummings. Thursday night I attended and gave a brief presentation at the City Council meeting.The council passed the resolution presented by city staff on the geothermal project. Friday,February 14,1986 Flights were again cancelled.I picked up the signed resolution at City Hall.We drove to Pyramid Creek and attempted to drive to Summer Bay but were stopped by rock slides on the road,We also hiked to the tcp of Bunker Hil]overlooking Dutch Harbor.Friday evening,I attended aValentineDaydancewhereI!was able to socfalize with members of the city council and staff. Saturday,February 15,1986 Weather improved,we departed Dutch Harbor at 1:30 p.m.and arrived in Anchorage at 3:39 p.m. 3116/553 SB.OY.SOM Man teden MEMORANDUM State of Alaska | TO:TO FILE DATE:February 19,1986 FILE NO: TELEPHONE NO: FROM:Roy Taylor SUBJECT:Trip Report Project Manager,Smal?Hydro Akutan/Dutch Harbor February 11 -15,1986 This trip was intended to be an opportunity to visit three potential hydro sites near Akutan,perform a visual evaluation of their potential, install stream flow measuring devices,and collect electrical load data for Akutan and adjacent cannery.We did not get there. 1 departed Anchorage at 10:30 a.m.on February 11,1986,accompanied by Afzal Khan,Stan Carrick,and Roy Ireland.The two DGGS employees are to install gauging instruments and collect data for the next year.He four met Dave Dentg-Chakroff in Dutch Harbor and proceeded to Akutan in a "Goose".Five minutes from Akutan we encounted zero visibility and had to turn back.We wafted for the weather to clear but it stayed at the:terrible level until late on February 14 when it finally started to break up.Denig-Chakroff decided we would return to Anchorage on February 15 and try again at a later date.I arrived home fn Anchorageat7:00 p.m.on February 15.oe ; During our stay in Dutch Harbor with rain and 50 mph winds,we inspectedthelocalpowerplant,the Unalaska cannery equipment and loads,at- tended a city council meeting,inspected a potential hydro site,andobservedabout10millionchuckholes.We also discovered that sometelevisionstationsarestillplayingtapesof"Father Knows Best","T Love Lucy","My Three Sons","The Donna Reed Show","Dobie Gillis","Green Acres"_and "Hawafi 5-0".Dutch Harbor/Unalaska.has two grocery.stores,one hotel and 2%restaurants.”'They also have a large number of | eagles but for most of this visit the eagles and the ravens were hiding. End of report. RT/tg 3095/560/2- 02-001A(Rev.10/79)RRR nape er gy 2x .P 4.2, ALASKA POWER AUTHORITY MEMORANDUM DATE:January 31,1986 TO:Robert D.Heath Executive Director THRU:Ed Morris "Associate Executive Director of Planning and Operations Brent Petrie (0 Director,Systems Planning FROM:David Denig-Chakrof Project Manager SUBJECT:Unalaska Cost of Power Analysis This memo responds to your request to analyze and forecast the cost of power to the community of Unalaska/Dutch Harbor with and without the construction of a geothermal power plant.The analysis is based on load forecasts and cost estimates from our 1985 reconnais- sance study.All costs reflect real 1985 dollars assuming an average annual inflation rate of 54%and an interest rate of 9%.I analyzed the cost of power on the basis of a three-year construc- tion program and a $27 million,4.2 MW geothermal plant with a useful life of 35 years.The analysis assumes the project could be constructed with helicopter support without the need for a road. The moderate load growth scenario used in the reconnaissance studywasusedforthisanalysis(Fig.4).It reflects a projected 1986 energy use in the community of 16,435 MWh or about 6.2 MW peakincreasingto38,415 MWh (about 14.6 MW peak)over the next 20years.All forecasts are projected for only 20 years (to year2005);thus,all loads and costs are levelized between 2005 and the end of the project's life (year 2025).The City utility recently estimated a current total peak demand of 10 MW in the community.; Considering the City's estimate,recent increases in the area's fish and crab catches,and the announcement that two surimi plants will locate in the community,the moderate load growth scenario seems to be a conservative expectation. I have analyzed the cost of power under the standard "low"and "medium"diesel fuel escalation rates used by the Power Authority in its economic analyses (Fig.4).The low rate reflects a 4%av- erage annual decline in the real price of diesel fuel for three years followed by 17 years of fuel prices which escalate at the same rate as inflation.The medium escalation rate reflects a 4%average annual decline in the real price of diesel fuel for one 2842/538 Robert D.Heat Executive Director January 31,1986 Page 2 year,an escalation rate equal to the inflation rate for the next two years,and then a 2%average annual increase in the real price for the next 17 years. Figure 1 summarizes the results of the analysis.Assuming a medium fuel escalation rate,continued use of a diesel generation system to provide 100%of the power demand in the community would result in power generation costs declining from 16¢/kWh in 1986 to about 13¢/kWh in 1995 and then gradually increasing to about 14¢/kWh in year 2005.Under the same assumptions,the cost of power gen- eration with a geothermal system with diesel backup would be approximately 19¢/kWh when it comes online in 1990 but would decrease to 93¢/kWh over the following 15 years.Power generation cost with a geothermal system would become less expensive than a diesel system 5 years after the online date of the geothermal power plant,ultimately resulting in a 5¢/kWh savings. Assuming the low diesel fuel escalation rate,diesel generation costs would decrease over 20 years from 16¢/kWh to 11¢/kWh. Geothermal generation costs would decline from 19¢/kWh to 9¢/kWh between 1990 and 2005,becoming less expensive than diesel gen- eration 9 years after coming online.Geothermal generation would ultimately result in a 2¢/kWh savings over diesel generation under the low fuel escalation rate. Figures 2 and 3 illustrate the cost components of the diesel and geothermal systems for the medium and low fuel escalation rates respectively.For the diesel generation system,the major cost is for diesel fuel.Debt service is for diesel generator additions and replacements. The geothermal system has a very small diesel fuel component for backup generators.The major cost is in debt service which was determined using R.W.Beck's automated financial model resulting in the need for a $43 million bond sale.The geothermal system costs do not include the costs for rights-of-way,rents,and royalties. DDC:it 2842/538 Roal(1085)Cents-kWh(1985)Cents"kWhRealGEOTHERMAL 20 --- 19 is 4 ' FIGURE 1 YS.DIESEL COST MEDIUM DIESEL FUEL ESCALATION RATE Gectherma!online date DIESEL SYSTEM a a.SN eee NN aa SG e0TaERMAL STSTEM W/DIESEL BACKUP 0 +r i9901985 FO Te 1985 2000 eeneeeeeeeee 2005 2010 Lh Ae nee Sie ie ane sie ae bene mee sees 2015 2020 Year LOW DIESEL FUEL ESCALATION RATE 2025 12+paro'.aoweormNtlheADOD©Geotherma!online date DIESEL SYSTEM ene ee were ne +ee"GEOTHERMAL SYSTEM W/DIESEL BACKUP 1985 TTanreaesae 1990 NII 2000 2005 2010 2015 )re ee ee ai ee fe oe es | 1985 2020 Year 2025 (1985)Cents/LEWhReal(1985)Cents”"kWhRealFIGURE 2 MEDIOM FUEL ESCALATION RATE DIESEL SYSTEM COSTS FUEL Se 1985 1990 {995 2000 2005 2010 2015 2020 2025 Year GEOTHERMAL SYSTEM COSTS 9 DEBT SERVICE O&M oemNWDPODNI1)nr one ren meee oles coe ee OO ee es Slane ee Se a Se aa eee ce ae ee Soe ee see ce ce en ee ee cee ood i ee ee 1985 1990 1995 2000 2005 =2010 2015 2020 2025 Real(1985)Cente/'kWhReal(1985)Cente'kwhandlanandlandlnellandlandlonlonlond5°)orNWFAWNOaaorNWPONDIOOOaooOFNWOFADADDFIGURE 3 LOW FUEL ESCALATION RATE DIESEL SYSTEM COSTS - 4 + 4 4 LL 4 To DEBT SERVICE 7 O&M a ee 4 4 4 FUEL - a A A A OOa 1985 1990 1995 2000 2005 2010 2015 2020 2025 Year GEOTHERMAL SYSTEM COSTS - + EBT \5 -f oJ DEBT SERVICE to "FUEL 4 ae+a O&M PUEL.a a ae nn Se tO ee a a OO A Oe ee See Da a Oe A Oe 1985 1990 1995 2000 2005 2010 2015 2020 2025 Year MWhYyr(Thousande)Real(1985)DollarsFIGURE 4 ANALYSIS ASSUMPTIONS LOAD GROWTH SCENARIOS 100 80 70 HICH /f// MODERATE Low a_- se ele (ee ee ce se ee a ae eee eee eee ee ce ce cee a ce cee ee see ee oe ce ee ee es ee ee ee oe 1985 1990 1895 2000 2005 2010 2015 2020 Year DIESEL FUEL ESCALATION RATES 2025 2.00 1.90 + 1.80 4 1.70 -4 1.60 + 1.50 4 1.40 + 1.30 - 1.20 + 1.10 -4 1.00 -4 0.90 -4 0.80 -4 0.70 +4 0.60 - 0.50 0.40 - 0.30 - 0.20 0.10 HIGH MEDIUM 0.00 5 en ee ee eae ie ae es a neem eee ne es eee ae ee a ee ae ee ee ee ee ee ee ee oe eee 1985 1990 1995 2000 2005 2010 2015 2020 Year 2025 26.94.0, ALASKA POWER AUTHORITY TO: THROUGH: FROM: 2677/537/1 MEMORANDUM Robert D.Heath DATE:January 21,1986 Executive Director Ed Morris 77 Associate Executive Director/ Planning &Operatio Brent N.Petrie (> Director/Systems Planning Dave Denig-Chakro SUBJECT:Aleut Corporation Project Manager Negotiations: Briefing Memo On May 3,1985,the Board approved a reconnaissance study for Unalaska/Dutch Harbor,recommending a feasibility study for geothermal development.The Board directed staff to obtain signed agreements for access,use of lands,and a "long-term lease"for the project prior to commencing the feasibility study.Power Authority staff approached The Aleut Corporation,owner of the surface and subsurface estates at the geothermal exploration site, to negotiate such an agreement. Between May and December 1985,Power Authority and Aleut Corpo- ration staff met on numerous occasions and exchanged proposals and drafts for a long-term land and resource agreement (see "Chro-nology of Events"enclosed).By December,a comprehensive lease agreement had been developed based on standard private geothermal leases used elsewhere in the U.S.,which are normally negotiated prior to any exploration for geothermal resources.The Aleut Corporation addressed the Board on November 6,1985,expressing concern over being required to commit to a fixed royalty prior to the feasibility study.Later in discussions with staff and in a letter dated December 6,1985 (enclosed),the Corporation indi- cated three additional issues with which they were not in agree- ment:Term,Rents,and Capacity Limitations. The Board discussed the agreement on December 12,1985,and asked the Executive Director to become directly involved in and to expedite negotiations.The Board directed staff (1)to continue to seek a contractual royalty agreement prior to initiating thefeasibilitystudy,(2)to seek provisions that reflect industrypracticeandnationalandstatestandards,(3)to provide for a fixed royalty that can be adjusted up or down depending on the outcome of the feasibility study,and (4)to consult with City of Unalaska officials during the negotiations. Aleut Corp.Negoti ns _«January 21,1986aPage2cf After a thorough analysis of federal,state,and industry stan- dards and practice (see "Analysis of Geothermal Lease Provisions" enclosed),Power Authority staff prepared a compromise proposal for provisions of the draft agreement addressing the four remain-ing unresolved issues (letter dated January 7,1986,enclosed). The proposal would accept Aleut proposals for Royalty and Term provisions,providing a royalty between 10%and 15%to be fixed after completion of the feasibility study and providing a term of 35 years with two ten-year extensions.The January 7 proposal holds firm on previously compromised positions with respect to Rents and Capacity Limitations.It would provide for payment of rent based on the market value of the undeveloped property as a minimum annual royalty and for a project capacity limited to a single production well. At a meeting on January 7,the Aleut Corporation took the position that they had not yet committed to any portion of the document. They agreed to review the document and the new proposals in their entirety and to identify specific sections they could not agree to within two weeks.A meeting was later scheduled for January 22, 1986. Enclosures as stated DDC/tg 2677/537/2 48,OF 02 . pet " Alaska Power Authority State of Alaska CHRONOLOGY OF EVENTS Unalaska Geothermal Project Land and Resource Agreement January 21,1986 May 3,1985:The Board of Directors approved Reconnaissance Findings and Recommendations for Unalaska/Dutch Harbor and reservation of funds in the rural feasibility account for an Unalaska geothermal feasibility study.The Board directed staff to obtain signed agreements for access,use of lands and a long-term lease for the project prior to expending funds on the feasibility study. May 8,1985:Staff informed the Aleut Corporation by letter of the Board's action and the requirement to negotiate an agreement. May 15,1985:Power Authority staff met with the Aleut Corporation to initiate discussions on conceptual issues and necessary provisions of the agreement.The Power Authority and the Aleut Corporation agreed that since a long-term lease agreement was required,the agreement should provide for royalties and other standard provisions of a geothermal lease. June 7,1985:The Power Authority met with the Aleut Corporation and presented its Director of Lands and Minerals with draft provisions for the agreement including royalty clause that would provide Aleut a 10%royalty share based_on kilowatt-hours sold from the system,with the value of geo- thermal fluids being derived from a specified formula based on the value of alternative diesel fuels with consideration for geothermal station service and transmission line losses. June 11,1985:At the Aleut Director's request,the Power Authority sent an example of a calculation of royalties based on the June 7 draft. June 24,1985:Power Authority staff provided an information item to the Board presenting the status of their negotiations. June 24,1985:The Aleut Corporation submitted,in writing, proposed terms and conditions to be included in the agreement, including a provision for royalties of between 10%and 15%of gross revenues for the minimum-feasible initial installed capacity of the project and a ground lease rental of ten dollars per acre per year.The proposed term of the agreement was 20 years. July 15,1985:The Power Authority delivered a draft Agreement to the Aleut Corporation based on its June 24 submittal,previous P.O.Box 190869 70tEastTudorRoad Anchorage,Alaska 99519-0869 =(907)561-7877 July July meetings,and numerous telephone conversations.The draft conceptually incorporated all the provisions proposed by Aleut,although it contained counterproposals to specific terms and conditions.Due to a lack of specificity with respect to Aleut's proposed royalty provision and the Power Authority's rejection of the concept that the Agreement be limited to the minimum initially feasible project,the July 15 draft contained the royalty provision proposed on June 7.The term proposed by the Power Authority was the continuing operating life of the project. 15,1985:The Power Authority delivered the draft Agreement to the Attorney General's Office for review. 24,1985:The Power Authority met with the Aleut Corporation and delivered a new draft agreement,dated July 24,1985. Since there had been no counterproposal since the July 15 draft submitted to Aleut,the July 24 draft contained no substantive changes to that draft.The July 24 draft was reorganized and contained clarifying language suggested by the AG's Office.At the July 24 meeting,Aleut submitted a counterproposal to the July 15 draft.It contained provisions for a 15%royalty on the value of geothermal fluids based on the formula proposed on June 7 but without consideration for geothermal station service and transmission line losses.The Aleut proposal also provided for a three dollar ground lease rental and a $100,000 minimum annual royalty,but again stipulated that the agreement apply only to the minimum initially feasible project and only for a term of 20 years. August 6,1985:The Aleut Corporation delivered a counterproposal to the Power Authority's July 24 draft,dated August 5,1985. It contained a royalty provision for 124%of the "gross revenues and subsidies received for the sale of electricity" for a minimum initially feasible project.It also contained a term of 30 years,after which Aleut would have the right to own the project,and gave Aleut the right to proceed with development of the project after completion of the Power Authority's feasibility study with repayment to the Power Authority for feasibility study expenses. August 19,1985:Power Authority staff met with Aleut staff in an attempt to resolve differences,particularly with respect to the royalty provision. August 20 -September 20,1985:Power Authority staff extensively researched standard provisions of geothermal leases utilized elsewhere in an attempt to formulate a royalty provision acceptable to both parties. 2227/518 2 September 18,1985:The Aleut Corporation submitted new terms and provisions for consideration.They provided that Aleut would receive the following combination of royalties,rents,and payments:(1)10%to 124%royalty based on the value of diesel generation with a ceiling and base on diesel escalationfactors,(2)50%to 75%of the potential power cost savings totheCityfromtheproject,(3)$125,000 minimum annual royal-ty,and (4)$5,000 per acre per year property rental.This proposal offered a term equal to the term of initial financing of the project as well as the provision for Aleut to proceed with development of the project after feasibility with repay- ment to the Power Authority for feasibility expenses. October 29,1985:The Power Authority delivered a draft agreement to Aleut dated October 28,1985.This draft was reorganized and restructured into formal contract format and added numer- ous standard boiler-plate provisions for such agreements.It also contained compromises on major contested issues in an effort to reach expeditious agreement.It provided for a royalty of 10%on the market value of geothermal resources which would be the price received for electricity less the costs incurred by the Power Authority for producing and transmitting electricity to the point of sale.As a compro- mise to Aleut's request that the royalties apply to the minimum initially installed capacity,the royalty provision in the October 28 draft would apply only to production from a single primary production well or from a_back-up_or replacement well for the primary well.Drilling a second production well would require renegotiation of royalties with Aleut.During periods of no production it provided for land rental equal to the present market value of the land,and it provided a minimum annual royalty equal to the rental amount. The term of the agreement would be for the operating life of the project;however,Aleut would have the option upon completion of the feasibility study to develop the project if it could provide power at an equal or better rate than that proposed by the Power Authority and if it reimbursed the Power Authority for feasibility study expenses. November 6,1985:The Aleut Corporation addressed the Board with respect to negotiations requesting that agreement on a fixed royalty be postponed until after the feasibility study is completed and more firm cost estimates can be established. November 15,1985:The Power Authority met with the Aleut Corporation to discuss their Board request.The Power Author-ity offered revised wording regarding royalty providing that Aleut would receive from 10%to 15%of the value of geothermal resources but that the fixed royalty or formula for computing the royalty would be negotiated after detailed cost estimates are obtained from the feasibility study.The provision sets 2227/518 3 forth factors that would be taken into account in determining the royalty.This language was derived from the federal Geothermal Steam Act statutes and regulations. December 9,1985:The Power Authority received a letter (dated December 6,1985)from the Aleut Corporation setting forth its expectations with respect to a final Agreement,including royalties,rentals,capacity limits,and term and met with Aleut to discuss the letter.It appears that three majorissuesremaintoberesolved:(1)the content of the royalty provision and capacity limitation to which it applies,(2)a determination of a rental rate and whether rental would be in lieu of royalties or in addition to royalties,and (3)the term of the agreement. December 10,1985:Power Authority and Aleut Corporation staff met to discuss the December 6 letter and the upcoming Board meeting.Both sides agreed that there were four major issuesyettoberesolved:(1)Royalties,(2)Term,(3)Rent,and (4) Capacity Limitations. December 12,1985:The Power Authority Board of Directors discussed the status of negotiations (particularly the royalty issue)at some length,requested that the Executive Director become directly involved in negotiations,and passed a motiondirectingstaffto:(1)continue to seek a contractual royalty agreement before initiating the feasibility study,(2)seek provisions that reflect industry practice and national and state standards,(3)provide for a fixed royalty that can be adjusted up or down between 10%and 15%depending on theoutcomeofthefeasibilitystudy,and (4)consult with City of Unalaska officials during the negotiations. January 7,1986:The Power Authority provided the Aleut Corporation with proposed revisions to sections of the draft agreement addressing the four remaining issues to be resolved. Power Authority and Aleut Corporation staff met to discuss the proposals and the schedule for completing negotiations.There was little discussion on the proposal since Aleut Corporation staff had not had time to review it thoroughly.A meeting was later scheduled for January 22 to discuss it in detail. 2227/518 | 4 7?4.03 ALASKA POWER AUTHORITY TO: THROUGH: FROM: 2677/537/1 MEMORANDUM Robert D.Heath DATE:January 21,1986 Executive Director Ed Morris LbAssociateExecutive Director/ Planning &Operations Brent N.Petrie Director/Systems Planning Dave Denig-Chakro SUBJECT:Aleut Corporation Project Manager Negotiations: Briefing Memo On May 3,1985,the Board approved a reconnaissance study for Unalaska/Dutch Harbor,recommending a feasibility study for geothermal development.The Board directed staff to obtain signed agreements for access,use of lands,and a "long-term lease"for the project prior to commencing the feasibility study.Power Authority staff approached The Aleut Corporation,owner of the surface and subsurface estates at the geothermal exploration site, to negotiate such an agreement. Between May and December 1985,Power Authority and Aleut Corpo- ration staff met on numerous occasions and exchanged proposals and drafts for a long-term land and resource agreement (see "Chro-nology of Events"enclosed).By December,a comprehensive lease agreement had been developed based on standard private geothermal leases used elsewhere in the U.S.,which are normally negotiated prior to any exploration for geothermal resources.The Aleut Corporation addressed the Board on November 6,1985,expressing concern over being required to commit to a fixed royalty prior to the feasibility study.Later in-discussions with staff and in a letter dated December 6,1985 (enclosed),the Corporation indi- cated three additional issues with which they were not in agree- ment:Term,Rents,and Capacity Limitations. The Board discussed the agreement on December 12,1985,and asked the Executive Director to become directly involved in and to expedite negotiations.The Board directed staff (1)to continue to seek a contractual royalty agreement prior to initiating thefeasibilitystudy,(2)to seek provisions that reflect industrypracticeandnationalandstatestandards,(3)to provide for a fixed royalty that can be adjusted up or down depending on theoutcomeofthefeasibilitystudy,and (4)to consult with City of Unalaska officials during the negotiations. Aleut Corp.Negoti.-.ons January 21,1986 Page 2 2677/537/2 After a thorough analysis of federal,state,and industry stan- dards and practice (see "Analysis of Geothermal Lease Provisions" enclosed),Power Authority staff prepared a compromise proposal for provisions of the draft agreement addressing the four remain-ing unresolved issues (letter dated January 7,1986,enclosed). The proposal would accept Aleut proposals for Royalty and Term provisions,providing a royalty between 10%and 15%to be fixed after completion of the feasibility study and providing a term of 35 years with two ten-year extensions.The January 7 proposal holds firm on previously compromised positions with respect to Rents and Capacity Limitations.It would provide for payment of rent based on the market value of the undeveloped property as a minimum annual royalty and for a project capacity limited to a Single production well. At a meeting on January 7,the Aleut Corporation took the position that they had not yet committed to any portion of the document. They agreed to review the document and the new proposals in their entirety and to identify specific sections they could not agree to within two weeks.A meeting was later scheduled for January 22, 1986. Enclosures as stated DDC/tg Z2E.04,OF ALASKA POWER AUTHORITY ANALYSIS OF GEOTHERMAL LEASE PROVISIONS January 20,1986 A.Royalties 1.Federal (from Geothermal Steam Act of 1970 and regulations). (a)A royalty of not less than 10 percent or more than 15 percent of the amount or value ofsteam,or any other form of heat or energy derived from production under the Tease and sold or utilized by the Tessee or reasonably susceptible to sale or utilization by the lessee. (Actual sample federal lease we obtained has royalty of10percent.) (b)A royalty of not more than 5 percent of the value of any byproduct derived from production under the lease and sold or utilized or reasonably susceptible of sale or utilization by the lessee except for minerals named in the Mineral Leasing Act of February 25,1920 as amended. (c)The value of geothermal production from the leased premises for the purposes of computing royalties shall be the reasonable value of the energy and as determined by the Supervisor.In determining the reasonable value of the energy and the byproducts the Supervisor shall consider: (1)the highest price paid for a majority of the production of like quality in the same field or area; (2)the total consideration accruing to the lessee from any disposition of the geothermal production; (3)the value of the geothermal production used by the Tessee; (4)the value and cost of alternate available energy sources and byproducts; (5)the cost of exploration and production,exclusive of taxes; (6)the economic value of the resource in terms of its ultimate utilization; 2625/503(1) (7)production agreements between producer and purchaser;and (8)any other matters which he may consider relevant. 2.State (from ADNR Geothermal Lease No.355051). (a)The lessee shall pay to the state as royalty 10 percent in amount or value of...geothermal resources that are converted to other forms of energy which are subsequently sold...the state will determine the value of the geothermal resources,taking into account the consideration being paid for geothermal resources in the same general area or other relevant areas (includingareasoutsideAlaska),reasonable transportation costs, and other relevant factors,including the costs of conversion of the geothermal resources to the other forms of energy and the consideration paid for the other forms of energy. 3.Private Sector (from Republic Geothermal Inc.standard lease). (a) (b) Lessee shall pay royalty to Lessor out of the proceeds received by him from the sale of Substances,as follows: (i)On Energy Resources:As royalty,Lessee shall pay to Lessor ten percent (10%),hereinafter called the "agreed share,"of the market value at the point of removal from the earth (hereinafter referred to as the "well")of the steam,hot water,hot brines, thermal energy,or geopressured water produced from or allocated to the Lands and saved and sold or used {except for operations hereunder)off the Lands. (ii)On All Other Substances:As royalty,Lessee shallpaytoLessorfivepercent(5%)for the first ten(10)years of the lease term and ten percent (10%) thereafter,hereinafter called the "market share," of the market value at the well of all Substances other than steam,hot water,hot brines,thermal energy,or geopressured water produced from or allocated to the Lands and saved and sold or used (except for operations hereunder)off the Lands. If Lessee sells any such Substances at the well,the market value thereof shall be deemed to be the sales price received by Lessee.If Lessee sells any such Substances at any other point,the market value thereof shall be deemed to be the sales price received by Lessee Tess the cost of transporting the same form the well to 2625/503(2) the point of sale.If any such Substances are processed, manufactured or converted to other form on or in the vicinity of said Lands before sale or use by Lessee,the costs thereof incurred by Lessee shall be deducted from the sales price received by Lessee or from the market value thereof if taken and used by Lessee.The costs of transporting,processing,manufacturing or converting Substances shall include the cost of facilities and equipment used,including overhead and amortization charges,computed and allocated to the Substances sold or used in accordance with Lessee's standard accounting practices. (c)Lessee may use,free of royalty,Substances and electric power developed from said Land for all operations hereunder,and Lessee shall not be required to account to Lessor for or pay royalty on any Substances reasonably lost or consumed in operations hereunder. 4,Aleut Proposal (letter dated December 6,1985). "Royalties -As a fair and reasonably protection to each party,we propose that the royalty provisions of the 'Geothermal Steam Act of 1970'(specifically Section 1004(a)(b)be incorporated into the Agreement.Such provisions would ensure that a royalty of not less than 10%nor greater than 15%of the amount or value of steam and 5%for the value of byproducts,or equivalent sums based on an alternate means of calculation,would be factored into the Feasibility Study.At the conclusion of the Feasibility Study and by mutual agreement of the parties,the specific royalty provisions would be negotiated." B.Rents 1.Federal (from BLM geothermal lease No.CA 966). (a)Annual Rental -For each lease year prior to the commencement of production of geothermal resources in commercial quantities on the leased lands,the Lessee shall pay the Lessor on or before the anniversary date oftheleasearentalof$2.00 for each acre or fraction thereof. 2.State (from ADNR Geothermal Lease No.355051). (a)The lessee shall pay annual rental to the state in the amount of $3.00 per acre or fraction of an acre,provided that the state may adjust the annual rental rate as provided by applicable law and regulation beginning 20 2625/503(3) * (b) years after the commencement of production in paying quantities and at 10 year intervals thereafter. Annual rental paid in advance is a credit on the royalty or net profit share due under this lease for that year. 3.Private Sector (from Republic Geothermal Inc.standard lease). (a) (b) (c) If drilling operations are not commenced on said Lands on or before one (1)year from the date hereof,this Lease shall terminate unless the Lessee,on or before said anniversary date,shall pay to the depository...the sumof$per acre for all Lands then held under this Lease,such sum being hereinafter called "rental,"which payment shall extend,for twelve (12)months from said anniversary date,the time within which drilling operations may be commenced.Annually thereafter,in like manner and upon the payment of the sum of $per acre for all Lands then held under this Lease,the commencement of such drilling operations may be further deferred for successive periods of twelve (12)months each during the Primary Term but not beyond. If Lessee shall encounter a geothermal resource in any well drilled on said Lands or on any unit area hereinafter provided for,Lessee may suspend further operations hereunder;provided,however,that Lessee shall annually pay to Lessor on or before each anniversary date of this Lease an advance minimum royalty in an amount equal to the rental as set forth in paragraph (a)above.Any advance minimum royalty so tendered to Lessor shall be recoverable by Lessee out of future production of any or all of the above said Substances and Lessee is hereby authorized and directed to deduct the same from royalties thereafter due and payable. Notwithstanding the limitation of the terms of this Lease...,this Lease shall not be terminated for lack of production in commercial quantities after its Primary Term if Lessee shall have shut-in any or all producing wells for engineering or economic reasons sufficient in its good faith opinion to warrant such action;provided, however,that in the case of such shutdowns,Lessee shall have the option in,each year,in lieu of drilling or reworking,to pay Lessor,on or before the anniversary date of this Lease,the advance minimum royalty set forthinparagraph(b)above and each such payment shall extend the term of this Lease for an additional year. 2625/503(4) 4.Aleut Proposal (letter dated December 6,1985). "Rental -Aleut expects fair market value rental for the surface acreage leased for facilities,well sites,piping and other necessary appurtenances.Aleut considers such property to be industrial in nature and such rental costs will factor into the overall project costs during feasibility.Such rental payments for Leased Lands shall include only surface rights and no relationship to the location and/or quantity of subsurface resources or any rights thereto are coincident with the surface lease." C.Term 1.Federal (from BLM geothermal lease No.CA 966). (a)This lease shall be for a primary term of ten (10)years from the effective date and so long thereafter as geothermal steam is produced or utilized in commercial quantities but shall in no event continue for more thanforty(40)years after the end of the primary term. However,if at the end of that forty-year period geothermal steam is being produced or utilized in commercial quantities,and the leased lands are not needed for other purposes,the Lessee shall have a preferential right to a renewal of this lease for a second forty-year term in accordance with such terms and conditions as the Lessor deems appropriate. (b)If actual drilling operations are commenced on the leased lands or under an approved plan or agreement on behalf of the leased lands prior to the end of the primary term, and are being diligently prosecuted at the end of theprimaryterm,this lease shall be extended for five (5) years and so long thereafter,but not more thanthirty-five (35)years,as geothermal steam is produced or utilized in commercial quantities.If at the end of such extended term geothermal steam is being produced or utilized in commercial quantities,the Lessee shall have a preferential right to a renewal for a second term as in (a)above. 2.State (from ADNR Geothermal Lease No.355051). (a)This lease is issued for a primary term of ten (10)years from the effective date of this lease.The term...shall be extended automatically if and for so long as there is commercial production of geothermal resources from the Jeased area. 2625/503(5) (b)This lease may be renewed for a single additional term of five years if,at the end of the primary term,the lessee is diligently conducting operations necessary to drill a geothermal well,with equipment at the lease area of sufficient size and capacity to drill to the total depth proposed for the well. Private Sector (from Republic Geothermal Inc.standard lease). (a)This lease shall be for a term of ten (10)years from and after the date hereof (hereinafter referred to as the "Primary Term")and for so long thereafter as (i)any of the Substances shall be produced in commercial quantities from any of the Lands or (11)for so long as this Lease may be kept in force under any other provisions hereof. (b)If at the expiration of the Primary Term hereof none of the Substances is being produced,but on or before that date reworking operations or operations for the drilling of a well in search of any of the Substances are commenced on said Lands,this Lease will continue in force for so long as such operations are continuously prosecuted. Aleut Proposal (letter dated December 6,1985). "Term -Aleut expects that the Agreement will have an initial term of 30 years,commencing with commercial operation and APAshallhavetherighttotwo(2)10-year extensions.APA shall maintain the Agreement throughout its primary term and extensions thereof by maintaining an annualized production of at least two megawatts." Limitations and Production Federal -No limitations on production. State -No limitations on production. Private Sector -No limitations on production. Aleut Proposal (letter dated December 6,1985) "Generation Capacity Limitation -APA's rights of production from the resource,independent of any surface acreage leased, shall be limited to the initially installed generating capacity,whether initially active or idle,which can be feasibly and economically constructed as demonstrated by the Feasibility Study.APA may drill wells and build facilities which,in APA's judgment,are necessary and prudent for 2625/503(6) operation of the facility;however,APA's rights to generate and sell electricity under the current agreement being negotiated shall be strictly limited to the initially installed capacity regardless of resource or well potential. 2625/503(7) - .25,04,02% MEMORANDUM State of Alaskaa f TO:File pate:January 17,1986 FILE NO: TELEPHONE NO: FROM:ve Denig-Chakroff suBsect:Meeting with the Project Manager Aleut Corporation January 7,1986 At 2:00 p.m.,January 7,1986,Ed Morris,Brent Petrie and I met with Carl Cardinelli and Allan Aksell of the Aleut Corporation in their conference room to discuss the land and resource agreement we are negotiating for the Unalaska Geothermal Project.I had hand-delivered a draft proposal and transmittal letter to the Aleut Corporation at 11:00 a.m.that morning (see letter dated January 7,1986).The proposal contained new draft language for sections of the Agreement dealing with royalties,rents,term,and capacity limitation.Immediately prior to leaving for the meeting,I called Allan to see if he had had time to review that proposal.He said he had read it quickly but had not discussed it with others in the corporation.I suggested that we postpone the meeting until such time as they could analyze the proposal and give us substantive feedback,Allan seemed determined to have the meeting,stating that he wanted to discuss the negotiation "schedule"and other matters. At the meeting,Allan asked for an oral summary of the proposal and for a summary of the major points contained in the Board's December 12,1985 motion instructing staff with respect to the Agreement. He indicated that he would like to see a specified term in the Agreement rather than a term tied to an unknown term of finance. Ed agreed suggesting a 35-year primary term with two 10-year extensions. Allan suggested that it was time in the negotiations to begin going through the agreement section-by-section to determine which pro-visions are acceptable and which are not.He wants to do this through exchange of drafts.Ed expressed our understanding that we were way beyond that point in the negotiations and that we had nar- rowed the list of conceptually unresolved issues to four.Although we realize that some modifications in language will be necessary in finalizing the agreement,we thought the Aleut Corporation concep-tually agreed to all provisions except the four addressed in the current transmittal.Carl indicated agreement,but said some other sections may have an effect on the four unresolved issues.Allan indicated that they still wanted a substantial guaranteed minimum annual royalty.I pointed out my understanding that that issue had been dropped because there was no mention of it in Allan's letter of December 6,1985 in which he set forth the "expectations of TheAleutCorporation."Allan indicated that it was addressed in terms of a two MW minimum annualized output. 2620/529 02-001A(Rev.10/79) Memo to File January 17,1986 Page 2 Carl appeared to recognize the futility of discussing technical issues at this meeting since they had not yet reviewed the draft in detail.He promised that they would review the entire Agreement and identify parts they can agree with and parts they cannot within one to 14 weeks.In turn he would like to know the schedules,for the next few months,of Heath and others participating in the nego- tiations so we can plan a schedule for completing the negotiations. He also expressed the need,when we meet,for the presence of some- one with the authority to make final decisions.Allan asked when Heath would be back and whether he had been briefed on the nego- tiations.Brent said that he had been briefed and that the current transmittal was the result of that briefing. Ed promised to provide written schedules of our staff by the end of the week and asked about times when Aleut staff would be unavail- able.They will be tied up in planning sessions from January 20-27 and will be involved in preparing for and attending a Board meeting from February 11-14.Ed said he would arrange for a discussion of the status of negotiations at our Board Planning Committee meeting on January 23 and expected that representatives of the Aleut Corpo- ration would attend.Carl and Allan indicated that one or both would attend. The meeting ended at 2:45 p.m. DDC/cdc (LL.Ed Meees Seeur "Pereie 2620/529 Pl.04.05 Alaska Power Authority State of Alaska January 7,1986 Mr.Agafon Krukoff,President The Aleut Corporation One Aleut Plaza 4000 Old Seward Highway Anchorage,AK 99503 Dear Mr.Krukoff: Enclosed for your review is a proposed draft for Article C, Sections 1,2 and 3 of the Conditional Land and Resource Agreement for the Unalaska Geothermal Project (Agreement).These three sections incorporate the four major issues on which we have-not yet reached agreement:(1)Royaities,(2)Term,(3)Rent,and (4)Ce- pacity Limitation.In developing this draft we have consulted Mr. Aksell's letter of December 6,1985 in which he outlined expec- tations of the Aleut Corporation,and we have followed the guide- lines given by our Board of Directors at its meeting of December 12,1985. Other than the four tissues listed above,the only issue mentioned in the December 6 letter that does not appear to be adequately ad- dressed in the previous draft Agreement (dated October 28,1985)is the issue of taxes.As a result of our meeting at your offices on December 10,1985,we understand your concern with respect to the tax issue and agree in concept with the expectation set forth in the December 6 letter.Consequently,I am confident that this is- sue can de quickiy resolved with some minor language changes to thepreviousGraftAgreement. With the enclosed draft,we would propose a compromise whereby we would relinquish Gur request for term extensions for "so long as any of the Substaices are produced in commercial quantities"and accept your proposal for a term equal to project financing with two ten-year extensions.(In eddition,we would request preferential rights to @ new lease upon termination of this Agreement if Aleut has no other plans for the property.)Rather than complicating the Agreement with a reGuirement for &minimum average annual produc- tion of 2 MW,we would propose the industry standard whereby, should reworking ot wells be necessary,the Power Authority would simply be ellowed a certain period fer cessation of commercial pro- duction auring which reworking couid occur.Gased on weather and ether conditions at Unalaska and the remoteness of the site,we be- lieve that a twelve month period for restarting coanmercial produc- tion is reasunable.We are also proposing,at Mr.Aksell's re- quest,to delete paragraph (d)of Article C,Section 1,from the ee oe oo a Mr.Agafon Krukoft,President January 7,1986 Page 2 previous draft Agreement;thus,the lease would be terminated if we were forced to shut down due to uneconomic production. In turn for our concessions with respect to the term of the agree- ment,we would hope that The Aleut Corporation would be willing to accept our proposal with respect to rental payment.As is standard in private industry geothermal leases,rent would serve as an annu- al advanced minimum royalty and would'be recoverable from annual production and deducted from royalties due.The annual rental rate would be ten percent of the existing market value of the property as a remote,unimproved parcel.We would also be willing to con- sider a rental based on State and Federal standards which are $3.00 and $2.00,respectively,per acre per year,which is also paid only when royalties do not accrue. With this draft,we are also proposing a royalty provision that would meet the expectations outlinea in the Aleut Corporation's De- cember 6 letter and its presentations to our Board on November 6 and December 12,1985.That is,1%provides for a royalty within the range of 10%to 15%of the value of the resource at the wellhead,with a specific royalty determined only after conipletion of detailea cost estimates during the feasibility study.Following our Board's instructions,we have written the provision with a 124% royalty that can be adjusted upward or downward pending the outcome or the feasibility study.In addition,at The Aleut Corporation's suggestion,we have returned to the concept of basing the value of geothermal resources an the weighted average price of diesei fuel and generator efficiency in Unalaska/Dutch Harbor. With these concessions on tne term and royalty issues,we hope The Aleut Corporation can accept our compromise position with respect to capacity limitations.As you will recall,our original pro- pcsals did not contain @ capacity limitation and we compromised on this issue as a result of The Aleut Corporation's request for a ca- pacity limit equal to the initial instailed cépacity of the proj- ect.We have been directed by our Soard to negotiate an agreement that "reflects industry practices and national and state stan- dards".We have never seen nor heard of 2a private,state,or fed- eral geothermal lease that Timited production or generation capaci- ty in any way.However,we would be wiiling tc attempt to persuade the Board to accept a limitation based on productiun trom &single weil in the interest of reaching a meget tated agreement. T believe these draft provisiuns represent a fair and equitable compromise on the remaining,major outstanding issues with respect Mr.Agafon Krukoff,President January 7,1986 Page 3 to the Agreement.I look forward to meeting with you to discuss these issues and to finalize the agreement as soon as possible. Sincerely, LysZEtO2SfoRobertD.Heath Executive Director DOC/RDH/cde cc:Lee Nunn,Alaska Power Authority Boare of Directors -Ed Morris,Alaska Power Authority Brent Petrie,Alaska Power Authority Dave Denig-Chakroff,Alaska Power Authority John Carpenter,The Aleut Corporation Carl Cardinelli,The Aleut Corporation Allan Aksell,The Aleut Corporation Paul Fuhs,City of Unalaske Nancy Gross,City of Unalaska Jeff Currier,City of Unalaska 2441/529 Power Authority/Aleut Agreement Proposed Revisions to Article C,Sections 1,2,and 3 January 6,1986 Article C.TERMS AND CONDITIONS 1.Terms and Rentals.(a)Unless this Agreement is terminat- ed under any other provisions hereof,this Agreement and the lease granted herein shall remain in force through the term of Project. financing (the period of enforcement of this Aareement being hereinafter referred to as the "Primary Term").The term shall be extended automatically for a period of ten (10)years if any of the Substances are being produced in commercial quantities from any of the Leased Lands at the end of the Primary Term.The term shall be extended automatically for a second period of ten (10)years if any of the Substances are being produced in commercial quantities from any of the Leased Lands at the end of the initial ten-year extension.If at the end of the second ten-year extension Substances are being produced or utilized in commercial quantities, and the Leased Lands are not needed for other purposes,the Power Authority shall have a preferential right to a renewal of this Agreement for a second term in accordance with such terms and canditians ta which Aleut and the Pawer Authority may at that time agree. 2442 /528/1 (b)If at the expiration of the Primary Term or the initial ten-year extension thereof,none of the Substances is being pro- duced,but on or before that date reworking operations or opera- tions for the drilling of a well in search of any of the Substances are commenced on said Leased Lands,this Agreement will continue in force for so long as such operations are continuously prosecuted; and,such operations shall be considered to be continuously pros- ecuted if not more than twelve (12)months shall elapse between abandonment of one well and beginning of operations for the drill- ing or reworking of another well.If as a result of such opera- tions,any of the Substances are produced in commercial quantities, this Agreement will remain in force for the extended term of ten (10)years. (c)If said Substances,or any of them,are being so produced from any part of said Leased Lands at the expiration of the Primary Term or the initial ten-year extension thereof,and all of such production shall thereafter cease,the Power Authority may,within twelve (12)months from cessation of such production,resume drilling or reworking operetions in an effort to obtain or restore such praduction of anv of the Substances in which event this agreement shall remetn in force for so Tong a¢such operations are continuousty prosecuted.@s pravided abave and,if such operations shel]result in production in commercial quantities of any of the Substances,for the remainder of the ten-year extension."Rework- ing,"as used herein,shall include,among other things,cleaning, o 2482 /528/2 testing,repair,and replacement of wells and related facilities and equipment necessary to produce from such wells. (d)If drilling operations are not commenced on said Leased Lands on or before April 1,1988,this Agreement shall terminate unless the Power Authority,on or before said date,shall pay to the depository,as provided in Section 6 hereof,the sum of Four Hundred Dollars ($400.00)per acre for all Leased Lands then held, such sum being hereinafter called "Rental,"which payment shall extend,for twelve (12)months from saic date,the time within which drilling operations may be commenced. 2.Royalties.(a)The Power Authority shall pay royalty to Aleut,as hereinafter described,out of the proceeds received from the sale of Substances produced from a singie well,which shall be the Project's initially installed production well or a replacement well or backup wel!for the initially installed production well. Royalties on Substances produced from acditional wells other than the Project's initially installed production well or its replace- ment or backup well are not subject to this Section and shall be renegotiated prior to installation of en additional production well or wells, (id On Frerqvy Resources:As rovalty,the Power Authority shall pay Aleut tweive and one-heif percent (121%),hereinafter called the "Agreed Share,"af the market value,at the point of 2442 7828/3 removal from the earth (hereinafter referred to as the "Wellhead") of the steam,hot water,hot brines,thermal energy,or geo- pressured water,produced and saved and sold or used (except for operations hereunder)off the Leased Lands.If Phase (1)of the Feasibility Program reveals that the Project would be economically feasible at an Agreed Share higher than twelve and one-half percent (123%),the royalty rate shall be adjusted upward to the maximum percentage under which the Project would be economically feasible or to fifteen percent (15%),whichever is less.If Phase (1)of the Feasibility Program reveals that the Project is not economical- ly feasible at an Agreed Share cf twelve and one-half percent (124%),the royalty rate shall be adjusted downward to the maximum percentage at which the Project would be feasible or to ten percent (10%)whichever is greater.If Phase (1)of the Feasibility Program reveals that the Project is net economically feasible at an Agreed Share between ter percent (10%)and fifteen percent (15%) inclusive,this Agreement shall terminate,unless both parties hereto agree in writing to continue the Agreement under a specified Agreed Share. (ii)Cn All Other Substances:As royalty,the Power Authori- ty shall pay te Aleut five percens (5°),hereinafter called the "Market Share,"of the market value at the Wellhead of all Sub- stances other than steam,hot water,hat prines.thermal eneray,or ceopressured water produced fron or allocated to the Leased Lands 2442/572854 and saved and sold or used (except for operations hereunder)off the Leased Lands. (b)For any such Substances that are processed,manufactured or converted to electric power or other forms of energy on or in the vicinity of said Leased Lands before sale by the Power Authori- ty,the market value thereof,in cents per kilowatt-hour,for any current year shall be the quotient of the weighted average price of diesel fuel,in cents per gallon,delivered to the municipal utility power house during the preceding calender year;divided by the weighted average efficiency rating,in kilowatt-hours per gallon,of the municipal diesel generators during the preceding calendar year,minus the sum,in cents per kilowatt-hour,of direct,documented costs incurred by the Power Authority for transporting,processing,manufacturing,and converting Substances and transmitting power to the point of sale,including the cost of facilities and equipment used for same which shall include overhead and amortization charges.However,for the purpose of this calcu- lation,the weighted average price of diesel fuel used for any year shall not be greater than nor less than the prices representing a three percent (3°)real increase or aecrease,respectively,fram the prior year weicahted averace price when evaluated with respect to the inflation rate for the prior year as determined by the Consumer Price Inder,ali items,a1]Urban Censumers (CPL-U)as published by the U.S.Department of Labor Statistics.The weighted average diesel generator efficiency shal?not be greater than or less than 2442 /528/5 the efficiency rating representing a twenty percent (20%)increase or decrease,respectively,from the prior year weighted average efficiency rating.The market value thereof for any current year shall be calculated each year as soon as the data are available from the preceding year and shall be applied retroactively to January 1 of the current year. (c)If the Power Authority sells any such Substances at the Wellhead,the market value thereof shall be deemed to be the sales price received by the Power Authority. (d)If the Power Authority sells any such Substances at any other point,the market value thereof shall be deemed to be the sales price received by the Power Authority less the cost of transporting the same fram the Wellhead to the point of sale. \ (e)The Power Authority may use,free of royalty,Substances and electric power developed from said Leased Lands for ali op- erations hereunder,and the Power Authority shail not be required to account to Aleut for cr pay royalty on any Substances reasonably Tost or consumed in operations hereunder. 2.Payment of Royaltias.Upon commencement of commercial ” Operations,the Power Authority shali pay Aleut.on or before January i5 of each year during the term of this Agreement,an advance minimum royalty in an amount equal to the Rental as set 2442 7528/6 forth in Section 1,paragraph (d)hereof.Any advance minimum royalty so tendered to Aleut shall be recoverable by the Power Authority out of future production of any or all of the above said Substances and the Power Authority is hereby authorized and direct- ed to deduct the same from royalties thereafter due and payable. Following recovery of any advance minimum royalty,the Power Authority shall pay Aleut,on or before the last day of each and every calendar month,the royalties accrued and payable for the preceding calendar month.Concurrently with making each royalty payment,the Power Authority shall deliver to Aleut a statement setting forth the basis for the determination of the royalty then paid by the Power Authority. ZS.OF.07 ALASKA POWER AUTHORITY DRAFT CONDITIONAL LAND AND RESOURCE AGREEMENT FOR THE UNALASKA GEOTHERMAL PROJECT December 11,1985 THIS AGREEMENT is made and entered into as of the day of »1985,by and between the ALEUT CORPORATION,an Alaska corpo- ration,hereinafter referred to as "Aleut,"and the ALASKA POWER AUTHORITY,a public corporation of the State of Alaska,hereinafter referred to as the "Power Authority." WHEREAS the purpose of the Power Authority fis to promote,develop,and advance the general prosperity and economic welfare of the people of Alaska by providing a means of con- structing,financing,and operating power projects;and WHEREAS the Alaska Legislature finds that the establishment of said power projects is necessary to supply power at the lowest reasonable cost to the state's electric utilities,and thereby to the consumers of the state;and WHEREAS ft is the declared policy of the state,in the interests of promoting the general welfare of all the people of the state,and public purposes,to reduce consumer power costs and otherwise to encourage the long-term economic growth of the state,including the development of its natural resources,through the establishment of power projects;and WHEREAS the Power Authority,in cooperation with Aleut has completed a four-year geothermal exploration and drilling program near Mount Makushin on Unalaska Island,which re- sulted in the discovery of an extremely productive geothermal reservoir;and WHEREAS the Power Authority has also completed a reconnaissance study of energy re- quirements and alternatives indicating that a geothermal power system is likely the most econom- ic source of electric power for the community of Unalaska/Dutch Harbor;and 1594/498 DRAFT Land and Resource Agree 4 December 11,1985 Page 2 WHEREAS the Power Authority Board of Directors has allocated funds to conduct a Fea- sibility Program for developing a geothermal power system on Unalaska Island,with the stipu- lation that the Feasibility Program be initiated only after agreements have been negotiated with appropriate landowners for the use of lands and resources during the feasibility,design,con- struction,and operation phases;and WHEREAS Aleut has selected and expects to receive interim conveyance,under the Alaska Native Claims Settlement Act,to the surface and subsurface land estates on which the explora- tion and drilling took place; NOW,THEREFORE,witnesseth that: Article A.FEASIBILITY PROGRAM 1.Administration of Feasibility Program.The Power Authority shall,subject to appro- priation,fund and conduct a Feasibility Program in accordance with Exhibits A and B hereunder for a geothermal power system,hereinafter referred to as the "Project,"on Unalaska Island.The Project shall consist of geothermal wellsites,wells,piping and power generation facilities and transmission lines,roads and other appurtenances required to produce and transmit power to the City of Unalaska distribution system.The Project would be located within Township 72 South, Range 118 West,Sections 20,21,22,23,24,25,26,27,28,29,30,31,32,33,34,35,and 36; Township 72 South,Range 119 West,Sections 25,26,27,33,34,35,and 363;and Township 73 South,Range 120 West,Sections 1,2,and 33 Seward Meridian,hereinafter called the "Study Area."The Power Authority shall designate a project manager whose primary responsibility is administration of the Feasibility Program. 2.Termination of Feasibility Program.The Power Authority Board of Directors,here- inafter referred to as the "Board,"may,at its option,and upon written notification to Aleut, terminate the Feasibility Program and this Agreement upon the completion of Phases (1)or (2), as set forth in Exhibit A hereunder,or thereafter on the inability to acquire power sales agreements or financing for the Project after diligently pursuing acquisition of such agreements and financing. 3.Participation by Aleut in the Feasibility Program.The Power Authority shall notify Aleut in advance of,and Aleut shall have the right to attend,at its expense,all review meetings between the Power Authority and its Feasibility Program contractors except meetings regarding bid documents or matters the Power Authority deems proprietary or to constitute a 1594/498 DRAFT Land and Resource Agree ; December 11,1985 Page 3 conflict of interest with respect to provisions hereof.Unless both parties agree otherwise, the Power Authority and Aleut shall meet monthly during the Feasibility Program,at a time and place convenient to both parties,to review the Feasibility Program analyses.Aleut may make recommendations to the Power Authority with respect to continuation of the Feasibility Program; changes in the Feasibility Program,including scopes of work,schedules,and final report for- mat;and development or nondevelopment of the Project.The Power Authority shall give full consideration to recommendations of Aleut but such consideration shall not restrict or diminish the Power Authority's responsibility to make final decisions on matters concerning the Feasi- bility Program and the Project.The Power Authority shall provide Aleut,upon request,data and materfals developed during the Feasibility Program except data and materials the Power Authority deems proprietary or to represent a conflict of interest with respect to provisions hereof,at a cost not to exceed the Power Authority's direct costs for reproduction. 4.Commitment _to the Project.Upon completion of Phases (1)and (2)of the Feasibility Program,as set forth in Exhibit A hereunder,the Board shall commit to a course of action, within the timeframe set forth in Exhibit B hereunder,to develop the Project or to terminate this Agreement.The Power Authority shall notify Aleut in writing on or before November 1, 1986,of the decisfon by the Board.In the event the Power Authority commits to a course of action to develop the Project,the Power Authority shall diligently proceed to complete its obligations as set forth in Exhibits A and B hereunder.In the event the Power Authority fails to commit to a course of action within the timeframe set forth in Exhibit B hereunder,this Agreement shall terminate,unless both parties agree in writing to continue the Agreement. 5.Access to Study Area.Aleut shall allow access by the Power Authority,its employ- ees,agents,representatives,and contractors to land Aleut owns within the Study Area suffi- cient to conduct and complete the Feasibility Program as set forth in Exhibits A and B hereun- der.Such access by the Power Authority shall not prevent Aleut from allowing access by others to Aleut land and resources within the Study Area;however,Aleut guarantees that access by others shall be subordinate to Power Authority needs in the event of any access conflicts.Such access shall be permitted during the Feasibility Program so long as the Power Authority performs its obligations set forth hereunder.If the Feasibility Program is terminated prior to acquisi- tion of financing for the Project or if the Board decides not to develop the Project,Aleut agrees to allow access to lands for plugging and abandonment of the Power Authority's existing exploration well,unless the Power Authority and Aleut agree otherwise in writing. 6.Option for Project Development by Aleut.Prior to or upon completion by the Power Authority of Phase (2)of the Feasibility Study as set forth in Exhibit A hereunder,Aleut,in 1594/498 DRAFT Land and Resource Agre:t December 11,1985 Page 4 conjunction with reasonably qualified parties,may present proposals and agreements to provide for the funding,development and/or operation of the Project,or a reasonably comparable proj- ect.In the event an Aleut proposal and power sales agreement with the City of Unalaska pro- vides for the development of the Project at a delivered cost of power to the City of Unalaska that is equal to or less than that which the Power Authority can reasonably expect to deliver pursuant to the Feasibility Program,then Aleut's proposal for development of the Project shall be accepted.Upon acceptance of Aleut's proposal,the Power Authority shall document to Aleut the direct costs actually incurred on a monthly basis during the Feasibility Program set forth herein.Upon Aleut's reimbursement to the Power Authority for documented costs,this Agreement shall terminate. Articte B.GRANT OF LEASE AND RIGHTS FOR THE PROJECT 1.Lease and Production Rights.Upon the completion by the Power Authority of the Feasibility Program within the timeframe set forth in Exhibit B hereunder and a commitment by the Board to proceed with development of the Project,Aleut,for and in consideration of the royalties herein provided and of the covenants and agreements hereinafter contained,shal} grant,demise,lease,and let unto the Power Authority,sufficient and appropriately located acreage,hereinafter called "Leased Lands,"to construct and operate the Project,with the sole and exclusive right to the Power Authority to drill for,produce,extract,take and remove therefrom:(a)all products of geothermal processes,embracing indigenous steam,hot water and hot brines;(b)steam and other gases,hot water and hot brines resulting from water,gas,or other fluids artificially introduced into subsurface formations;(c)heat or other associated energy found beneath the surface of the earth;(d)water from geopressured zones;and (e) by-products of any of the foregoing such as minerals (exclusive of of]or hydrocarbon gas that can be separately produced)which are found in solution or association with or derived from any of the foregoing.Each of the foregoing is hereinafter collectively referred to as "Sub- stances."In addition to the rights granted to the Power Authority under items (a)through (e) above,Aleut shall hereby grant to the Power Authority the sole and exclusive right to explore the Leased Lands by geological,geophysical or other methods,whether now known or not,and to take water from said Leased Lands for operations hereunder. 2.Resource Use and Disposal Rights.For the same consideration,Aleut shall grant to the Power Authority the right to store,utilize,process,convert,and otherwise use such Substances on or off the Leased Lands and to sell the same or any part or derivative thereof on or off the Leased Lands during the term of this Agreement,with the right of entry thereon at all times for said purposes,and to construct,use,maintain,erect,repair and replace thereon, 1594/498 DRAFT Land and Resource Agre t December 11,1985 Page 5 and to remove therefrom all roads,pipelines,ditches and lanes,telephone and telegraph lines, utility installations,power lines,poles,tanks,evaporation or settling basins,extraction or processing plants,machinery,equipment,buildings,electric power plants,and equipment for generation and transmission of Substances and electric power,and for the handling,treatment or storage of the Substances,and all structures and facilities relating thereto,which the Power Authority may desire to erect,construct or install in carrying on the Power Authority's busi- ness and operations on or from the Leased Lands and other lands in the vicinity of the Leased Lands;and the Power Authority shall have the further right to erect,maintain,operate and remove a plant or plants,structures and facilities with all necessary appurtenances for the conversion of the Substances into heat,power or another form of energy,and for the extraction of products from steam,brine or water produced from the Leased Lands and other lands in the vicinity of said Leased Lands,including all rights necessary or convenient thereto,together with rights of way for passage over,upon and across and ingress and egress to and from the Leased Lands for any or all of the above mentioned purposes.The Power Authority shall also have the right to utilize or to dispose of waste brine and other waste products from a well or wells on the Leased Lands or on other land in the vicinity into a well or wells drilled or converted for that purpose on the Leased Lands or on other land in the vicinity,and the right to inject water,brine,steam and gases from a well or wells on the Leased Lands or such other land for the purpose of maintaining or restoring pressure,increasing or maintaining production, or testing in the productive zones beneath the Leased Lands or other land in the vicinity there- of. 3.Right-of-way Easement Rights.For the same consideration,Aleut shal?grant the Power Authority rights-of-way and easements for a road and transmission line over Aleut's surface and subsurface estates within the Study Area but located off Leased Lands.Said ease- ments shall be one hundred (100)feet in width and granted with the rights,privileges and authorities to:(a)construct,reconstruct,maintain,repair,operate,improve,and update upon or under lands within said easements an electric transmission line and road system including but not limited to poles,towers,wires,guys,anchors,bridges,abutments,culverts,supporting apparatus,and such other structures as the Power Authority may now or shall from time to time deem necessary;(b)provide ingress and egress to lands within said easements;(c)cut,trim, remove and control the growth of,by machinery or otherwise,vegetation on or adjoining lands within said easements which in the judgement of the Power Authority,might interfere with, threaten,or endanger the operation and maintenance of said line or systems;(d)clear and keep lands within said easements free from fences,buildings,pavements,or other structures which in the judgement of the Power Authority,might interfere with,threaten,or endanger the operation and maintenance of said line or system or may increase the safety risks to Aleut or its 1594/498 DRAFT Land and Resource Agre:E December 11,1985 Page 6 property;and (e)license,permit or otherwise agree to the joint use or occupancy of said line or system by any other person,firm or corporation for telephone,electrification,utility,or transportation purposes. Article C.TERMS AND CONDITIONS 1,Terms and Rentals.(a)Unless this Agreement is terminated under any other pro- visions hereof,this Agreement and the lease granted herein shall remain in force through the term of Project financing (the period of enforcement of this Agreement being hereinafter re- ferred to as the "Primary Term")and for so long thereafter as (i)any of the Substances shall be produced in commercial quantities from any of the Leased Lands or (if)for so long as this Agreement may be kept in force under any other provisions hereof. (b)If at the expiration of the Primary Term hereof none of the Substances is being produced,but on or before that date reworking operations or operations for the drilling of a well in search of any of the Substances are commenced on said Leased Lands,this Agreement will continue in force for so long as such operations are continuously prosecuted;and,such op- erations shall be considered to be continuously prosecutedif not more than nine (9)months shall elapse between abandonment of one well and beginning of operations for the drilling or reworking of another well.If,as a result of such operations,any of the Substances are produced in commercial quantities or production is restarted,this Agreement will remain in force for so long as any of the Substances shall be so produced.If said Substances,or any of them,are being so produced from any part of said Leased Lands at or after expiration of the Primary Term hereof and all of such production shall thereafter cease,the Power Authority may, within nine (9)months from cessation of such production,resume drilling or reworking op- erations in an effort to obtain or restore such production of any of the Substances in which event this Agreement shall remain in force for so long as such operations are continuously prosecuted,as provided above;and,if such operations shall result fn production in commercial quantities of any of the Substances,for so long as any of them are produced in commercial quantities."Reworking,"as used herein,shall include,among other things,cleaning,testing, repair,and replacement of wells and related facilities and equipment necessary to produce from such wells. (c)If drilling operations are not commenced on said Leased Lands on or before January 1,1988,this Agreement shall terminate unless the Power Authority,on or before said date, shall pay to the depository,as provided in Section 6 hereof,the sum of Four Hundred Dollars ($400.00)per acre for all Leased Lands then held,such sum being hereinafter called "Rental," 1594/498 DRAFT Land and Resource Agre t December 11,1985 Page 7 shall pay to the depository,as provided in Section 6 hereof,the sum of Four Hundred Dollars ($400.00)per acre for all Leased Lands then held,such sum being hereinafter called "Rental," which payment shall extend,for twelve (12)months from said date,the time within which drilt- ing operations may be commenced. (d)Notwithstanding the limitations of the term of this Agreement as set forth in paragraph (a)of this Section,this Agreement shall not be terminated for lack of production in commercial quantities after its Primary Term if the Power Authority shall have shut-in any or all producing wells for engineering or economic reasons sufficient in its good faith opinion to warrant such actions;provided,however,that in the case of such shutdowns,the Power Authority shall have the option,in each year,in lieu of drilling or reworking as described in paragraph (b)of this Section,to pay Aleut,on or before January 15 of each year,Rental as set forth in paragraph (c)of this Section and each such payment shall extend the term of this Agreement for an additional year. 2,Royalties.(a)The Power Authority shall pay royalty to Aleut out of the proceeds received from the sale of Substances,as follows: {{)On Energy Resources:As royalty,the Power Authority shall pay to Aleut not less than ten percent (10%)or more than fifteen percent (15%),hereinafter called the "Agreed Share,"of the amount or value,at the point of removal from the earth (hereinafter referred to as the "Wellhead")of the steam,hot water,hot brines,thermal energy,or geopressured water produced and saved and sold or used (except for operations hereunder)off the Leased Lands.A fixed royalty or formula for calculating the Agreed Share shall be negotiated upon completion of the Feasibility Program prior to development of the Project. (ii)On All Other Substances:As royalty,the Power Authority shall pay to Aleut five percent (5%),hereinafter called the "Market Share,"of the value at the Wellhead of all Sub- stances other than steam,hot water,hot brines,thermal energy,or geopressured water produced from or allocated to the Leased Lands and saved and sold or used (except for operations hereun- der)off the Leased Lands. (b)For the purpose of computing royalties,the following factors will be taken into account in determining the value of Substances produced from the Leased Lands: (i)The consideration being paid for Substances of similar quality in the same general area or other relevant areas (including outside Alaska); 1594/498 DRAFT Land and Resource Agree December 11,1985 Page 8 (ii)The total consideration accruing to the Power Authority from any disposition of the Substances; (iii)Reasonable transportation and transmission costs; (iv)The costs of conversion of Substances to other forms of energy and the consideration to be paid for the other forms of energy;and (v)Other relevant factors. (c)The Power Authority may use,free of royalty,Substances and electric power devel- oped from said Leased Lands for all operations hereunder,and the Power Authority shall not be required to account to Aleut for or pay royalty on any Substances reasonably lost or consumed in operations hereunder. 3.Payment of Royalties.Upon commencement of commercial operations,the Power Authority shall annually pay to Aleut,on or before January 15 of each year during the term of this Agreement,an advance minimum royalty in an amount equal to the Rental as set forth in Section 1,paragraph (c)hereof.Any advance minimum royalty so tendered to Aleut shall be recoverable by the Power Authority out of future production of any or all of the above said Substances and the Power Authority is hereby authorized and directed to deduct the same from royalties thereafter due and payable.Following recovery of any advance minimum royalty,the Power Authority shall pay Aleut,on or before the last day of each and every calendar month,the royalties accrued and payable for the preceding calendar month.Concurrently with making each royalty payment,the Power Authority shall deliver to Aleut a statement setting forth the basis for the determination of the royalty then paid by the Power Authority. 4&,Purchase of Aggregate Materials.The Power Authority shall pay Aleut one dollar fifty cents ($1.50)per cubic yard for aggregate materials extracted from Aleut land,as measured emplaced in construction of the Project.Payment shall be due and payable on or before the last day of the month in which said aggregate materials are actually extracted.The pur- chase price herein stated is effective only until commencement of operation of the Project. 5. Right-of-way Easement Fee.If the Power Authority completes the Feasibility Program and proceeds with development of the project,the Power Authority shall pay Aleut on or before January 15 of each year thereafter during the term of this Agreement a fee of ten dollars 1594/498 DRAFT Land and Resource Agre t December 11,1985 Page 9 ($10.00)for the rights granted herein for a road and transmission line right-of-way over Aleut's surface and subsurface estates within the Study Area but off Leased Lands. 6.Depository.All payments required to be made by the Power Authority to Aleut hereunder shall be paid to Aleut by mailing or delivering the Power Authority's check therefor to the Bank at ' its successors or assigns,herein designated by Aleut as depository,for deposit into a special account.Aleut hereby granting to said depository full power and authority on behalf of Aleut, and all those succeeding to Aleut's rights hereunder whether by voluntary act or operation of law,to collect and receipt for all sums of money which may become due and payable from the Power Authority hereunder,and said power jis hereby declared by Aleut to be coupled with an interest and to be irrevocable without the consent of the Power Authority.No change in the ownership of the Leased Lands or of any payments due Aleut hereunder shall be binding on the Power Authority until it shall have been furnished adequate written evidence thereof.In the event more than one person or entity shall at any time be entitled to receive sums of money payable hereunder to Aleut,all such persons shall have the right,jointly,to designate any other single depository to receive all payments hereunder on their joint and several behalf,and by jointly executed and acknowledged instrument so to advise the Power Authority,it being intended that the Power Authority shall never be required to make payment to more than one person or entity nor to draw more than one check for any separate payment becoming due hereun- der.Until such notice shall be furnished to the Power Authority,the Power Authority shall continue to make all payments to the depository last designated hereunder. 7.Lesser or Afteracquired Interest.!f it should hereafter appear that Aleut,at the commencement of Project development,owns a lesser interest in the Leased Lands than the fee simple estate therein and thereto,or less than the entire interest in the Substances contained in and under the Leased Lands,then the rentals,royalties and the like accruing to Aleut here- under shall be paid to Aleut in the proportion which Aleut's interest bears to the entire fee simple estate in the Leased Lands or to the entire interest in said Substances.Notwithstanding the foregoing,should Aleut hereafter acquire any additional right,title or interest in or to the Leased Lands or said Substances,then any increase in payments of money hereunder neces- sitated thereby shall commence with the payment next following receipt by the Power Authority of satisfactory evidence of Aleut's acquisition of such additional interest. 8,Taxes.(a)The Power Authority shall pay,except the Agreed Share and the Market Share,all taxes levied and assessed against the Power Authority's leasehold interest in the Leased Lands.The Power Authority shall pay al)taxes levied and assessed against all 1594/498 DRAFT Land and Resource Agree December 11,1985 Page 10 structures,improvements and personal property placed upon the Leased Lands by the Power Author- ity.Aleut shall pay all taxes levied and assessed against the Leased Lands as such and against any rights thereto not covered by this Agreement and shall pay all taxes levied and assessed against all structures and improvements placed on the Leased Lands by Aleut. (b)Aleut agrees to pay the Agreed Share and the Market Share of any and all taxes assessed upon any Substances produced and sold by the Power Authority from said Lands and ad valorem taxes on Substances together with the agreed share and the market share of all sever- ance,production and license taxes or other taxes or assessments levied or assessed on account of the production of Substances from or allocated to said Leased Lands,and to pay all of any other taxes assessed against said Leased Lands,whether the same are assessed to Aleut or the Power Authority or otherwise,and the Power Authority is hereby authorized to pay all such taxes and assessments on behalf of Aleut and to deduct the amount so paid from any royalties or moneys due Aleut hereunder. 9,Operations.(3)The Power Authority shall comply with all laws and regulations applicable to its operations hereunder as required by the laws of the State of Alaska. (b)The Power Authority,its agents,representatives,and contractors shall ever indemnify,save harmless and defend Aleut from and against any and all manner of claims,judg- ments or suits whatsoever arising out of the Power Authority's activities or operations hereun- der other than those arising in whole or in part from Aleut's act or failure to act and this Section shall survive termination of this Agreement. (c)Prior to exercising any access rights under this Agreement,the Power Authority, its agents,representatives and contractors shall provide Aleut with certificates for general liability and property damage insurances in reasonable amounts and form,and a Power Authority contractor shall name Aleut as an additional insured if such request is made in writing to the Power Authority by Aleut at least thirty (30)days in advance of execution of the contract with said contractor.All such insurance policies and certificates shall include the following cancellation or change clause or a similar clause approved by Aleut:"This insurance will not be cancelled by this insurance company nor any changes made in the policy which will change the name of the insured,without first giving thirty (30)days notice in writing to The Aleut Corpo- ration,One Aleut Plaza,Suite 300,4000 Old Seward Highway,Anchorage,Alaska 99503,as evi- denced by return receipt of registered or certified mail."The insurance required under this paragraph shall be maintained in full force and effect throughout the term of this Agreement and any extension hereof. 1594/498 DRAFT Land and Resource Agre t December 11,1985 Page 11 (d)All of the labor to be performed and all of the materials to be furnished in the operations of the Power Authority hereunder shall be at the Power Authority's sole cost and expense unless otherwise specified herein,and Aleut shall not be chargeable with or liable for any part thereof.The Power Authority shall protect the said Leased Lands against liens of every character arising from its operation thereon. (e)If the Power Authority or anyone purchasing Substances from the Power Authority constructs on said Leased Lands a plant for the conversion of Substances into heat,power or another form of energy or for the extraction and processing of by-products,or both,and if any such plant utilizes Substances produced or obtained from said Leased Lands and from other land in the vicinity,the Power Authority or such purchaser shall have the right and easement to continue to maintain and operate such plant and connected pipeline,transmission line and other associated facilities so long as it utilizes Substances from other land notwithstanding any cessation of production from said Leased Lands or the expiration,termination or forfeiture of this Agreement.In such event,Aleut shall be paid an annual Rental,as provided in Section 1, paragraph (c)hereof,for each surface acre of said Leased Lands so occupied. (f)Whenever used herein,the expression "drilling operations"shall mean,for all purposes hereof,any work or actual operations undertaken or commenced for the purpose of drill- ing of a well on or into said Leased Lands,including without limiting the generality hereof, the preparation of the ground therefor,the building of roads and other facilities therefor,the construction of a derrick and other necessary structures for the drilling of a well followed by the actual operation of drilling in the ground.Any such work or operations preliminary to the drilling in the ground may be undertaken in any order the Power Authority shal?see fit.All such work and operations shall be prosecuted with reasonable diligence. 10.Use of Production for Operations.The Power Authority shall be entitled,without accountability to Aleut therefor whether by payment of royalty or otherwise,to use in its drilling,production and processing operations hereunder such amounts of water,steam or other thermal energy produced from the Leased Lands as may be reasonably required by the Power Author- ity for such purposes.The Power Authority shall be entitled,without accounting to Aleut therefor in any manner,to flow and/or blow wells without restriction for testing purposes. 11. Uneconomic Substances.(a)Nothing herein contained shall require the Power Authority to produce any Substance or to recover,save and market any of the Substances con- tained in the brines or other well output produced from wells on the Leased Lands,which,in the Power Authority's judgment,is not economic to produce,recover,save or market,The Power 1594/&98 DRAFT Land and Resource Agree December 11,1985 Page 12 Authority shall have the right,without accountability to Aleut therefor,to waste or dispose of any such uneconomic Substances by such lawful manner or means as the Power Authority shall deem appropriate in the circumstances. (b)The Power Authority shall not be obligated to produce Substances it fs unable to market at the well or wells,plant or plants,or to convert Substances to other form it is unable to market.It is recognized that the market demand for the Substances and derivatives developed from the Substances may vary from time to time and during such periods as there is no market for any of the Substances or derivatives,the Power Authority's obligation to produce, process and extract such Substances shall be suspended.The Power Authority shall have no obligation to save or process by-products described in item (e}of Article B,Section 1 above. (c)Subject to the foregoing and except as herein otherwise provided,the Power Au- thority agrees to drill wells and operate each completed well with reasonable diligence and in accordance with good operating practice and all applicable laws so long as such wells shall produce Substances in paying quantities while this Agreement is in force as to the portion of said Leased Lands on which such well or wells are situated. 12.Damages Resulting From Operations.The Power Authority shall not be liable to Aleut for damages to any geothermal resources reservoir underlying said Leased Lands or for the loss of Substances therein or therefrom or for any subsidence or surface damages resulting from its operations hereunder unless such damage or loss is caused by the Power Authority's gross negligence or willful misconduct. 13.Unitization.(a)The Power Authority shall have the right,at its sole option, from time to time,either before or after production,to pool,unitize or combine all or any part of the Leased Lands with other land or lands or lease or leases (whether held by the Power Authority or others and whether or not the surface of such lands may be used for development or operating purposes)adjacent,adjoining or in the immediate vicinity of the Leased Lands to comprise one or more operating or development units of not more than 1920 acres each,and drill- ing operations or production on any such unit shall constitute compliance herewith to the same extent as though such operations or production were on the Leased Lands.In lieu of the roy- alties (less taxes),elsewhere herein provided,Aleut shall participate in the royalty from any such unit in the proportion that the number of acres owned by Aleut within the unit bears to the total number of acres in such unit.Such unit shall become in existence upon the Power Authori- ty's execution in writing and recordation in the conveyance records of the District in which the Leased Lands are situated,of an instrument identifying and describing the pooled or 1594/498 DRAFT Land and Resource Agre:b December 11,1985 Page 13 communitzied acreage.The Power Authority shall at all times keep Aleut informed of the lands embraced in any unit of which the Leased Lands form a part.Whenever used herein,the term "District"shall mean,for all purposes hereof,the State of Alaska Recording District. {b)As to each and any such operating or development unit,the Power Authority shall have the right to commingle for the purpose of utilizing,selling or processing,or causing to be processed,the steam or steam power and/or extractable minerals produced from such operating or development unit with the steam or steam power and/or extractable minerals produced from other lands or units,so long as the production from the unit which includes all or portions of the Leased Lands is measured,metered or gauged as to such unit production;unit production so measured,metered or gauged shall then be allocated to the Leased Lands in accordance with the provisions of paragraph (a)above, (c)Allocation,as foresaid,shall cease upon any termination,either in whole or in part (by surrender,forfeiture or otherwise),of this or any other agreement covering lands in such operating or development unit as to the lands covered by such terminated agreement or part thereof.tn the event of the failure of Aleut's or any other owner's title as to any portion of the land included in any such operating or development unit,such portion of such land shall likewise be excluded in allocating production from such unit;provided,however,the Power Authority shall not be held to account for any production allocated to any lands to be excluded, as aforesaid,from such unit unless and until the Power Authority has actual knowledge of the aforesaid circumstances requiring such exclusion. (d)If any taxes of any kind are levied or assessed (other than taxes on the land as such or any rights thereto not covered by this Agreement),any portion of which is chargeable to Aleut under Section 8 hereof,then the share of such taxes to be borne by Aleut as provided in this Agreement shall be in proportion to the shere of the royalty from such unit allocated to the Leased Lands. (e)The Power Authority may,at its sole option,at any time when there is no produc- tion in such unit of leased Substances in quantities deemed paying by the Power Authority, terminate such unit by a written declaration thereof,in the manner in which it was created. 14,Additional Operations.(a)Without any additional consideration to be paid, except as provided below,Aleut hereby grants to the Power Authority,its successors and as- signs,the following rights,rights-of-way and easements in,under,upon,through and across said Leased Lands which may be exercised at any time or from time to time during the duration of 1594/498 DRAFT Land and Resource Agre:b December 11,1985 Page 14 this Agreement and as long thereafter as the Power Authority exercises any of the rights granted in this Section:(i)The sole and exclusive right to locate a well or wells on the surface of said Leased Lands and to slant drill said well or wells into,under,across and through said Leased Lands and into and under lands other than said Leased Lands together with the right to repair,redrill,deepen,maintain,inject in,rework and operate or abandon such well or wells for the production of Substances from such other lands together with the right to develop water from said Leased Lands for any of the Power Authority's operations pursuant to this Section and together with the right to construct,erect,maintain,use,operate,replace,and remove all pipelines,power lines,telephone lines,tanks,machinery,and other facilities,together with all other rights necessary or convenient for the Power Authority's operations under this Section and together with the rights-of-way for passage over and upon and across and ingress and egress to and from said Leased Lands;and (fi)The sole and exclusive right to drill into and through said Leased Lands below a depth of five hundred (500)feet from the surface thereof,by means of a well or wells drilled from the surface of lands other than said Leased Lands,and the right to abandon or repair,redrill,deepen,maintain,inject in,rework and operate such well or wells for the production of Substances from lands other than said Leased Lands. (b)If the Power Authority does not pool or unitize in accordance with Section 13, paragraph (a)hereof and exercises the rights granted by Aleut in item (i)of paragraph (a)of this Section;the Power Authority shall pay to Aleut annual Rental,as provided in Section 1, paragraph (c)hereof,for each surface acre of said Leased Lands being exclusively occupied by the Power Authority pursuant to such grant.Any well drilled under the provisions of this Section shall be drilled so that the producing or injecting interval thereof shall lie wholly outside the boundary of said Leased Lands and Aleut recognizes and agrees that Aleut has no interest in any such well or wells drilled pursuant to this Section or any production therefrom. (c)Any surrender or termination under any other provision of this Agreement shall be effective notwithstanding the fact that the Power Authority in and by such surrender or termina- tion reserves the rights granted to the Power Authority under this Section,and regardless of such surrender or termination,the rights granted under this Section shall continue for the term hereinabove granted in this Section. 15.Aleut's Right to Bid.Aleut shall be notified as a potential bidder on any phases or tasks contemplated under this Agreement which the Power Authority or its agents or contractors may let for competitive bidding.Any bid that Aleut may submit,in conjunction with a reasonably qualified party or parties,for which the Power Authority determines there would be 1594/498 DRAFT Land and Resource Agree December 11,1985 Page 15 no conflict of interest in awarding the bid to Aleut,shall receive equal consideration to other bids submitted. 16.Title Warranty.Aleut shall grant and agrees to defend title to the Leased Lands except for rights-of-way and easements of record,and further agrees that the Power Authority at its option may pay and discharge any delinquent taxes,mortgages,trust deeds or other delinquent liens or encumbrances existing,levied or assessed on or against the said Leased Lands;and,in the event the Power Authority shall exercise such option,the Power Authority shall be subrogated to the rights of any holder or holders hereof and shall have the right,in addition to other remedies provided by law or equity,to reimburse itself by applying to the discharge of any such mortgage,tax or other lien or encumbrances any and all payments accruing to Aleut hereunder. 17.Force Majeure.The Power Authority's obligations hereunder shall be suspended, and the term of this Agreement and the period for removal of the Power Authority's property in the event of termination shall be extended while the Power Authority is prevented from complying therewith by:strikes;lockouts;rfots;action of the elements;accidents;delays in transporta- tion;inability to secure labor or materials in the open market;laws,rules or regulations of any Federal,State,Municipal or other governmental agency,authority or representative having jurisdiction;litigation or administrative proceedings affecting title to lands covered hereby or operations thereon;inability to secure or absence of a market for commercial sale of Sub- stances,or any of them,produced from the Leased Lands or of derivatives developed by the Power Authority therefrom;or by other matters or conditions beyond the reasonable control of the Power Authority,whether or not similar to the conditions or matters in this Section specifical- ly enumerated. 18.Surrenders.The Power Authority may,at any time,surrender this Agreement to Aleut in its entirety or,from time to time,surrender only so much of the Leased Lands as the Power Authority may elect in the instrument of surrender by executing and delivering to Aleut or placing on record in the District in which the Leased Lands are located a quitclaim deed or deeds covering all or any part of the Leased Lands so selected by the Power Authority for surrender and the Power Authority shall thereby be relieved of all obligations as to the acreage so surrendered,except for obligations already accrued by the terms hereof or as provided by Section 20 hereof.Notwithstanding such surrender,the Power Authority shall nevertheless retain such rights-of-way,easements and privileges over,upon,through and across the lands so surrendered as shall be necessary or convenient for the Power Authority's operations on so much 1594/498 DRAFT Land and Resource Agre 4 December 11,1985 Page 16 of the Leased Lands as shall then be retained by the Power Authority under this Agreement and on the Power Authority's other lands in the vicinity. 19.Breach of Agreement.{f the Power Authority has defaulted in any substantial respect in its obligations hereunder,Aleut shall so notify the Power Authority in writing, setting out in what respects Aleut deems the Power Authority to be in such default.If,within sixty (60)days after receipt of such notice,the Power Authority shall commence to correct the default alleged by Aleut and continue the same with due diligence,the Power Authority shall not be deemed in default hereunder.The service of said notice and the lapse of sixty (60)days without the Power Authority's commencing to correct the alleged default shall be a condition precedent to any action by Aleut for or on account of such default.Neither the service of said notice nor the doing of any acts by the Power Authority aimed to correct all or any of the alleged defaults shall be deemed an admission or presumption that the Power Authority has failed in any respect to perform it obligations hereunder.In the event of cancellation or termination of this Agreement for any cause other than surrender by the Power Authority,this Agreement shall nevertheless remain in effect as to forty (40)acres surrounding each well then producing, being drilled or reworked,as to which the Power Authority shall not be in default,and saving and excepting rights-of-way across the Leased Lands necessary for the Power Authority's op- erations on the Leased Lands so retained by the Power Authority and on the Power Authority's other lands in the vicinity.Termination or cancellation of this Agreement pursuant hereto shall be the sole remedy of Aleut for failure of the Power Authority to drill any well hereunder or to pay rental or delay rental in lieu thereof. 20.Removal of Property and Restoration.(a)The Power Authority may at any time during the term of this Agreement remove all or any of the property and fixtures placed by it in or upon the Leased Lands,including the right to draw and remove all casing. (b)Following termination of this Agreement or any part thereof for any cause,and following abandonment of any well drilled pursuant to the provisions hereof,the Power Authority shall,within nine (9)months thereafter or in accordance with a schedule agreed upon by both parties,remove all personal property which the Power Authority shall have brought upon the lands affected by such termination or upon the drillsite of such abandoned well;shall fill all sumps,remove all foundations and so nearly as practicable restore the areas affected by such termination or abandonment to the condition in which they were prior to the commencement of its operations hereunder;and,in the case of termination,shall deliver to Aleut a quitclaim deed, in recordable form,surrendering to Aleut all right,title and interest of the Power Authority in that part of the said Leased Lands as to which this Agreement shall have been so terminated, 1594/498 DRAFT Land and Resource Agre:b December 11,1985 Page 17 saving and excepting necessary easements and rights-of-way on the Leased Lands for the Power Authority's further operations on any part of the said Leased Lands as to which this Agreement shall not have been terminated and on the Power Authority's other lands in the vicinity.The ownership of any of the Power Authority's property not removed by it during the period herein provided shall,in the absence of force majeure as defined in Section 17,be deemed abandoned by the Power Authority and shall pass to Aleut without further act of the parties or either of them effective upon expiration of such period. 21.Assignment.(a)The Power Authority shall have the right to assign all or any part of its rights or interest in and to this Agreement,including but not limited to the Power Authority's right to occupy such portions of the surface of the Leased Lands as may be necessary for the construction of plants and other facilities,only to another state agency,department, office,authority or representative having jurisdiction.No assignment by either party hereun- der shall be effective for any purpose whatsoever until and unless a certified copy of the recorded instrument of assignment;or,if such assignment shall have been recorded only in short form,a true and complete copy of the instrument described in such short form under the true signatures of each of the parties thereto,together with a certified copy of such recorded short form,shall be given to the other party,in the same manner as is provided for a notice hereun- der. (b)In the event of assignment by the Power Authority of this Agreement as to a seg- regated portion of the Leased Lands,payments due Aleut hereunder shall be apportionable among the several leasehold owners according to the surface area of each of their respective lease- holds,and default in such payment by one or more of such leasehold owners shall in nowise affect the right of any other leasehold owner hereunder. 22.Notices.Any notice or other communication hereunder from Aleut to the Power Authority shall be given in writing by sending the same by prepaid registered or certified mail with return receipt requested addressed to the Alaska Power Authority at 334 West Fifth Avenue, Anchorage,Alaska 99501,and any notice or other communication hereunder from the Power Author- ity to Aleut shall be given in like manner to Aleut addressed to The Aleut Corporation,One Aleut Plaza,Suite 300,4000 01d Seward Highway,Anchorage,Alaska 99503.Any notice mailed as aforesaid shall be deemed given and received within seventy-two (72)hours after the deposit thereof in the United States mail if mailed within the State of Alaska and if deposited in the United States mail outside of the State of Alaska,such notice shall be deemed to have been given and received within one hundred twenty (120)hours after deposit in the United States mail.The parties may,by like notice at any time,and from time to time,change their 1594/498 DRAFT Land and Resource Agre:b December 11,1985 Page 18 respective addresses for the purposes hereof.Postmark dates on registry receipts for such notices shall be conclusive as to the date of mailing. 23.Entirety Clause.If the leased premises shall hereafter be owned in severalty, or in separate tracts,the premises nevertheless shall be developed and operated as one lease, and all royalties accruing hereunder shal]be treated as an entirety,and shall be divided among and paid to such separate owners in the proportion that the acreage owned by each such separate owner bears to the entire leased acreage.Any payment required to be made by the Power Authori- ty pursuant to the foregoing shall be paid in accordance with the provisions in Section 6 hereof.There shall be no obligation on the part of the Power Authority to off-set wells on separate tracts unto which the Leased Lands may be hereafter divided by sale,devise, unitization,or otherwise,or to furnish separate measuring or receiving facilities. 24,Severability.If any part,portion or provision of this Agreement shall be found or declared null,void or unenforceable for any reason whatsoever by any court of competent jurisdiction or by any governmental agency having authority thereover,then only such part, portion or provision shall be affected thereby and the remainder of this instrument shall con- tinue fin full force and effect.The foregoing provisions of this paragraph shall be severable for the purposes of the provisions of this Section. 25.Binding Effect.This Agreement and all of the terms,covenants and conditions hereof shall extend to and be binding upon the respective heirs,executors,administrators, grantees,successors and assigns of the parties hereto. 26.Termination by Mutual Agreement.This Agreement may be terminated at any time by mutual agreement of both parties hereto. IN WITNESS WHEREOF,the parties hereto have executed this instrument as of the date hereinabove first written. The Aleut Corporation The Alaska Power Authority By By 1594/498 DRAFT Land and Resource Agree December 11,1985 Page 19 1594/498 EXHIBIT A FEASIBILITY PROGRAM SCOPE OF WORK PHASE (1) (2) (3) (4) (5) ON _OR BEFORE TECHNICAL AND ECONOMIC FEASIBILITY ANALYSES. PLAN OF FINANCE. ACQUISITION OF POWER SALES AGREEMENTS. FINANCIAL FEASIBILITY ANALYSIS. ACQUISITION OF FINANCING FOR THE PROJECT. EXHIBIT B DEADLINES FOR FEASIBILITY PROGRAM AND DEVELOPMENT OF PROJECT October 1,1986 January 1,1987 August 1,1987 March 1,1988 March 1,1991 Complete Technical and Economic Feasibility Analyses,accept final report. Complete Plan of Finance.Commit to course of of action for proceeding with the Project or terminating this agreement. Acquire power sales agreements,complete financial feasibility report,issue bonds (if necessary),secure funding. Complete project design,commence construction phase. Complete construction,commence operation. BE.OY.03 gy: |a SS St.George Neison Lagoon Sand PointSo-]Oo:_.,,.,fihe Aleut Corporation naa oor eran i lia tetld Qa Srotst opsoo!ONE ALEUT PLAZA Akutan cpsanak nee4000OldSewardHighway,Suite 300,Anchorage,Alaska 99503 }o o °°PreLoTelephone(907)561-4300 5 fPen nS O SYo °3&PS?e RY Ses =e +d Cc Nikolskt Alka December 6,1985 Mr.Brent Petrie Director of Power Systems Planning Alaska Power Authority 334 W.5th Avenue Anchorage,AK 99501 Dear Brent: Herein set forth are expectations of The Aleut Corporation (Aleut)to be incorporated in the Conditional Land and Resource Agreement for the Unalaska Geotherinal Project (Agreement), between the Alaska Power Authority (APA)and Aleut: l.Royalties -As a fair and reasonable protection to each party we propose that the royalty provisions of the "Geothermal Steam Act of 1970"(specifically Section 1004(a)(b))be incorporated into the Agreement.Such provisions would ensure that a royalty of not less than 103 nor greater than 15%"of the amount or value of steam"and 5%for the value of any byproducts,or equivalent sums based on an alternate means of calculation,would be factored into the Feasibility Study.At the conclusion of the Feasibility Study and by mutual agreement of the parties,the specific royalty provisions would be negotiated, 2.Rental -Aleut expects fair market value rental for the Surface acreage leased for facilities,well sites,piping and other necessary appurtenances.Aleut considers such property to be industrial in nature and such rental costs Will factor into the overall project costs during feasibility.Such rental payments for Leased Lands shall include only surface rights and no relationsnip to the location and/or quantity of subsurface resources or any rights thereto are coincident witn the surface lease, 3.Easements -Aleut expects an easement rental of $10 per year total for the LOU-foot wide road and transmission line corridor across Aleut lands.Such easement corridor will commence at the Leased Lands encompassing the project site and terminate at the point of tie-in to the City distribution*system. Mr.Brent Petrie December 6,1985 Page 2 4.Aggregate Materials -Aleut will make available to APA during construction at a firm price of $1.50 per c.y.(as Measured emplaced in construction of the Project)all aggregate materials necessary,wherever located on Aleut lands. Generation Capacity Limitation -APA's rights of production from the resource,independent of any surface acreage leased,snall be limited to the initially installed generating capacity,whether initially active or idle,which can be feasibly and economically constructed as demonstrated by the Feasibility Study.APA may drill wells and build facilities which,in APA's judgment,are necessary and prudent for operation of the facility;however,APA's rights to generate and sell electricity under the current agreement being negotiated shall be strictly limited to the initially installed generating capacity regardless of resource or well potential.As we have previously discussed,should there be a need or opportunity to upgrade the generating capacity as demand grows,such upgrades will be negotiated at a later date between Aleut,APA or other parties,and should Aleut choose to proceed to upgrade independent of APA,the Opportunity still exists for unitization of facilities. Aleut's commitment to APA in the current agreement is to ensure that no subsequent activities will hinder or infringe upon APA's rights to sufficient geothermal resources,if available,to supply APA's initially installed generating capacity. Taxes -Aleut expects to pay only its normal tax obligations for royalty and rental income to Aleut.APA will pay on its own behalf,and on behalf of Aleut,alli other taxes of whatever nature which may arise out of APA's activities. Right to Bid -Aleut expects the right to deliver a bona fide funded development proposal with supporting Power Sales Agreement to APA.If such proposal by Aleut is equal or better than other proposals received by APA,then Aleut shall be allowed to buy back the project and reimburse all APA's costs for the Feasibility Study.Since APA's goal is to deliver power to the City of Unalaska at the lowest reasonable cost,the delivered cost of Aleut's proposal in comparison to APA's proposals shall be the threshold in determining Aleut's "equal or better"right to buy back and develop the project.This opportunity of Aleut's may also Mr.Brent Petrie December 6,1985 Page 3 be used in conjunction with the City of Unalaska to allow the City to be a principal in the development and operation of the project. 8.Term -Aleut expects that the Agreement will have an initial term of 30 years,commencing with commercial operation and APA shall have the right to two (2)10-year extensions.APA shali maintain the Agreement throughout its primary term and extensions thereof by maintaining an annualized production of at least two megawatts. 9.Commencement of Feasibility Study -Aleut expects,upon signing an agreement with APA,that a date certain will be established for commencement by APA of the Feasibility Study in lieu of any other agreements or obligations of APA. This letter,at the request of Mr.David Denig-Chakrofft, reiterates Aleut's expectations and concerns.AS you are aware, many of these items have been discussed previously in depth and, we feel,many of these have been agreed to previously by the parties.Aleut views this Agreement as an initial project or "unit™to provide for the foreseeable electric needs (as determined by the Feasibility Study)for the City of Unalaska. We have never viewed this Agreement,nor do we feel it is necessary for APA to require,that APA receive unlimited resource rights to provide for unforeseen and speculative growth in the City's electric needs.Since unforeseen and speculative growth have no bearing on the acquisition by APA of a firm power sales agreement or project financing,we maintain that such factors have no bearing on the rights to be granted by Aleut to APA in this Agreement.Certainly Aleut hopes to meet the future needs of the City and would welcome future negotiations for upgrades or unitization beyond this initial project to be developed by APA;however,Aleut desires to retain its flexibility to look at those options independent of this Ayreement.We do not feel this is unreasonable and we believe that the provisions set forth above provide APA with the necessary assurances and flexibility to accomplish its goal of providing dependable electric power at reasonable cost for the foreseeable future to the City of Unalaska. We find your draft agreement of October 28,1985,ambiguous in regards to several of the crucial issues enumerated above. Mr.Brent Petrie December 6,1985 Paye 4 These problems may be conceptual or semantic and we hope they can be expeditiously resolved. We look forward to meeting with you and discussing these matters further. Very truly yours, THE ALEUT CORPORATION Mar C Aactlf Allan Cc.Aksell Director of Lands &Minerals ACA:ct $5-94.95 MEMORANDUM STATE QF ALASKA TQ:FILE September 19,1985 FROM:DAVE DENI KROFF Trip Report:International Project Manager Geothermal Symposium 8/26/85 -8/30/85 The purpose of the trip wae to attend and present a paper at the 1985 International Symposium on Geothermal Energy in Kailua-Kona, Hawaii.Specific objectives were to learn as much as possible about water-dominated geothermal systema and technologies,to determine etandard leasing and royalty arrangemente for hydro- thermal power systems,to visit an operating 3 MW geothermal power plant,to provide information about the Unalaska project to firms that may have interest in bidding future aspects of the project,and to make contacte with specialiste who may be ofassistancetotheprojectinthefuture. On Auguat 26,27,29,and 30,I attended technical seasions covering topics related to economics and finance,direct use of geothermal resources,production and power generation technolo- gies,and tax credits and leasing issues.On August 29,I attended a field trip to Hawaii Volcanic Park and a 3 MW geo- thermal power plant.The plant has been in operation for four yeare.Although production has been declining recently,new wells are currently being drilled to increase the capacity of the plant to 12 MW. On August 29,I presented a paper on the development potential of the Unalaska Geothermal Project.The session was well attended and well received.The presentation generated interest in the project and I received numerous inquiries following the presenta- tion.Fifty copies of the paper provided for attendees quickly disappeared. During the conference,I spoke with representatives of many firms and individuals about the Unalaska project.Several firms expressed interest in receiving copies of the RFP for the feasi- bility study including Union Geothermal,Stone &Webster,Bechtel, Flour,Ansaldo and Geotherma S.A.I also met with the with-the - manager of a Greek geothermal project with many similarities to the Unalaska project and with Gerry Huttrer to discuss standard leasing and royalty provisions used in other Western estates. SS 94.03 MEMORANDUM otate of Alaska To:FILE DATE:July 24,1985 RECEIVED FILE NO:;JUL 24 1985 TELEPHONE NO:ALASKA POWER AUTHORIEA FROM DAVE DEN KROFF susvECT'Unalaska Trip Report Project nager 7/15/85 -7/16/85 The purpose of the trip was to meet with Ounalashka Corpora- tion officials to initiate negotiations for a right-of-way agreement for the Unalaska Geothermal Project,to inspect the geothermal wellsite at Mt.Makushin,and to survey potential road and transmission routes from the helicopter. On Monday,July 15,1985,Gary Ransom,Right-of-Way Agent, and I flew to Unalaska/Dutch Harbor on Airpac,arriving about 3:00 p.m.We were met at the airport by City Manager Nancy Gross and townsperson Kathy Grimnace.Nancy offered us a city vehicle to use during our stay which we gladly accepted. Gary and I met with Ounalashka Corp.President Emil Berikoff and Business Manager Hondo DeBakker from 4:00 to 6:00 p.m. We discussed the status of the geothermal project and our need for resource and right-of-way agreements prior to conducting a feasibility study.With the aid of a map of the island,we discussed current land status and potential road and transmission routes.The Ounalashka Corp.has interim conveyance to the surface estate of the majority of Makushin Valley.It does not own land in Driftwood Valley some of which has been selected by CINA.Berikoff and DeBakker advised against Driftwood Valley as an access route due to severe weather conditions because it opens to the Bering Sea.They also informed us that Hog Island is privately owned but not by Exxon as we had previously heard. We presented a review draft right-of-way agreement to Berikoff and DeBakker making it clear that the draft had not undergone internal review or review by the Attorney General's Office.They had little comment on the draft but said they would review it,send a copy to their attorney in Anchorage, and respond to us in two to three weeks.Berikoff made it clear that they were making no commitments at this time, even as to weather or not they are willing to negotiate. 02-001A(Rev.10/79) Unalaska Trip Report July 24,1985 Page 2 Gary took the name of the Corporation's attorney and re- ceived permission from Berikoff and DeBakker to contact the attorney directly on this matter. On Tuesday morning,about 8:30 a.m.,we contacted Jim Sink at Maritime Helicopters and confirmed our suspicion that weather conditions were too poor to fly to the wellsite.We agreed to stop by his office or call later in the morning to check the weather status.We went to City Hall to see if we could meet with Nancy Gross and/or Jeff Currier but Nancy wasn't in the office yet and Jeff was on vacation.I gave Gary a tour of the city while we waited for the weather to Clear,including the major seafood processors,residential areas,and the new powerhouse. At about 10:00 a.m.we stopped at Maritime and found that the weather was still too bad to fly.I talked to Jim Sink about the condition at the wellisite on his last trip.There appeared to have been little leakage at the wellhead and, after having closed the valves to the kill line,the leakage was stopped. At about 11:00 a.m.we returned to City Hall and met with Nancy Gross.We discussed the status of the project and the status of shore lands where a transmission line might be landed on Amaknak Island.Tidelands are owned by the state and all uplands in areas where a cable would likely be landed appear to be owned by the Ounalashka Corporation.I asked Nancy about the status of the ESI hydroproject proposal and the R.W.Beck rate study.The ESI project is on hold unless and until ESI returns with a modified power sales proposal.The R.W.Beck study is progressing well. Gary and I had lunch with Nancy at the airport where she left us to catch our plane.The 1:30 p.m.Airpac flight was diverted to Cold Bay due to weather conditions at Dutch Harbor and was finally cancelled about 3:00 p.m.We were able to change our reservation to the Reeve flight which finally left Dutch Harbor around 5:00 p.m.and arrived in Anchorage at about 8:00 p.m. V ce:Gary Ransom CID UnetlensFe - ; ,©OS 33.04.03'MEMORANDUM State of Alaska To:FILE pate:July 24,1985 FILE NO TELEPHONENO FROM:DAVE DEN KROFF suBJect|Unalaska Trip Report Project mager 7/15/85 -7/16/85 The purpose of the trip was to meet with Ounalashka Corpora- tion officials to initiate negotiations for a right-of-way agreement for the Unalaska Geothermal Project,to inspect the geothermal wellsite at Mt.Makushin,and to survey potential road and transmission routes from the helicopter. On Monday,July 15,1985,Gary Ransom,Right-of-Way Agent, and I flew to Unalaska/Dutch Harbor on Airpac,arriving about 3:00 p.no.We were met at the airport by City Manager Nancy Gross and townsperson Kathy Grimnace.Nancy offered us a city vehicle to use during our stay which we gladly accepted. Gary and I met with Ounalashka Corp.President Emil Berikoff and Business Manager Hondo DeBakker from 4:00 to 6:00 p.m. We discussed the status of the geothermal project and our need for resource and right-of-way agreements prior to conducting a feasibility study.With the aid of a map of the island,we discussed current land status and potential road and transmission routes.The Ounalashka Corp.has interim conveyance to the surface estate of the majority of Makushin Valley.It does not own land in Driftwood Valley some of which has been selected by CINA.Berikoff and DeBakker advised against Driftwood Valley as an access route due to severe weather conditions because it opens to the Bering Sea.They also informed us that Hog Island is privately owned but not by Exxon as we had previously heard. We presented a review draft right-of-way agreement to Berikoff and DeBakker making it clear that the draft had not undergone internal review or review by the Attorney General's Office.They had little comment on the draft but said they would review it,send a copy to their attorney in Anchorage, and respond to us in two to three weeks.Berikoff made it clear that they were making no commitments at this time, even as to weather or not they are willing to negotiate. 02-001A(Rev.10/79) ©© Unalaska Trip Report July 24,1985 Page 2 Gary took the name of the Corporation's attorney and re- ceived permission from Berikoff and DeBakker to contact the attorney directly on this matter. On Tuesday morning,about 8:30 a.m.,we contacted Jim Sink at Maritime Helicopters and confirmed our suspicion that weather conditions were too poor to fly to the wellsite.We agreed to stop by his office or call later in the morning to check the weather status.We went to City Hall to see if we could meet with Nancy Gross and/or Jeff Currier but Nancy wasn't in the office yet and Jeff was on vacation.I gave Gary a tour of the city while we waited for the weather to Clear,including the major seafood processors,residential areas,and the new powerhouse. At about 10:00 a.m.we stopped at Maritime and found that the weather was still too bad to fly.I talked to Jim Sink about the condition at the wellsite on his last trip.There appeared to have been little leakage at the wellhead and, after having closed the valves to the kill line,the leakage was stopped. At about 11:00 a.m.we returned to City Hall and met with Nancy Gross.We discussed the status of the project and the status of shore lands where a transmission line might be landed on Amaknak Island.Tidelands are owned by the state and all uplands in areas where a cable would likely be landed appear to be owned by the Ounalashka Corporation.I asked Nancy about the status of the ESI hydroproject proposal and the R.W.Beck rate study.The ESI project is on hold unless and until ESI returns with a modified power sales proposal.The R.W.Beck study is progressing well. Gary and I had lunch with Nancy at the airport where she left us to catch our plane.The 1:30 p.m.Airpac flight was diverted to Cold Bay due to weather conditions at Dutch Harbor and was finally cancelled about 3:00 p.m.We were able to change our reservation to the Reeve flight which finally left Dutch Harbor around 5:00 p.m.and arrived in Anchorage at about 8:00 p.m. cc:Gary Ransom MEMORANDUM TO:BRENT PETRIE DATE:6/21/05 FROM:DN OWE DENT G-CHARROFF RES Briefing for Board Meeting informatian item on Unalaska preject nmegatiatians We offered to give a brief oral presentation to the Hoard at its June 24 meeting on the status of the negotiations with Native carporations affected by the Unalaska geothermal feasibility program.The follawing ig the status of those negotiations: (4)We have apprised the AG's affice of the negqotatians and will present draft agreements for its review. (2)We have held two meetings with the Aleut Corporation and are working out details af provisions of a draft aareement. C3)We have contacted the Qunalashka Corporation and have scheduled a meeting with them on July Sth at Unalaska.We will prepare a draft agreement which we will send ta the Munalashka Corp.far their review prior ta the meeting. 7 of Os ALASKA POWER AUTHORITY UNALASKA GEOTHERMAL PROJECT LAND AND RESOURCE AGREEMENT Chronology of Events May 3,1985:The Board of Directors approved Reconnaissance Findings and Recommendations for Unalaska/Dutch Harbor and reservation of funds in the rural feasibility account for an Unalaska geothermal feasibility study.The Board directed staff that,prior to commitment of funds for the feasibility study,signed agreements must be obtained for access into and use of the lands required for the feasibility study and the project. May 8,1985:Staff informed the Aleut Corporation by letter of the Board's action and the requirement to negotiate an agree- ment. May 15,1985:Power Authority staff met with the Aleut Corporation to initiate discussions on conceptual issues and necessary provisions of the agreement.The Aleut Corporation requested that the agreement provide for its receipt of a royalty share of the value of geothermal resources produced. June June June June 7,1985:The Power Authority met with the Aleut Corporation and presented its Director of Lands and Minerals with draft provisions for the agreement including royalty clause that would provide Aleut a 10%royalty share based on kilowatt-hours sold from the system,with the value of geo- thermal fluids being derived from a specified formula based on the value of alternative diesel fuels with consideration for geothermal station service and transmission line losses. 11,1985:At the Aleut Director's request,the Power Authority sent an example of a calculation of royalties based on the June 7 draft. 24,1985:Power Authority staff provided an information item to the Board presenting the status of their negotiations. 24,1985:The Aleut Corporation submitted,in writing, proposed terms and conditions to be included in the agreement, including a provision for royalties of between 10%and 15%of gross revenues for the minimum-feasible initial installed capacity of the project and a ground lease rental of ten dollars per acre per year.The proposed term of the agreement was 20 years. 2227/518 2 July July July 15,1985:The Power Authority delivered a draft Agreement to the Aleut Corporation based on its June 24 submittal,previous meetings,and numerous telephone conversations.The draft conceptually incorporated all the provisions proposed by Aleut,although it contained counterproposals to specific terms and conditions.Due to a lack of specificity with respect to Aleut's proposed royalty provision and the Power Authority's rejection of the concept that the Agreement be limited to the minimum initially feasible project,the July 15 draft contained the royalty provision proposed on June 7.The term proposed by the Power Authority was the continuing. operating life of the project. 15,1985:The Power Authority delivered the draft Agreement to the Attorney General's Office for review. 24,1985:The Power Authority met with the Aleut Corporation and delivered a new draft agreement,dated July 24,1985, Since there had been no counterproposal since the July 15 draft submitted to Aleut,the July 24 draft contained no substantive changes to that draft.The July 24 draft was reorganized and contained clarifying language suggested by the AG's Office.At the July 24 meeting,Aleut submitted a counterproposal to the July 15 draft.It contained provisions for a 15%royalty on the value of geothermal fluids based on 2227/518 3 the formula proposed on June 7 but without consideration for geothermal station service and transmission line losses.The Aleut proposal also provided for a three dollar ground lease rental and a $100,000 minimum annual royalty,but again stipulated that the agreement apply only to the minimum initially feasible project and only for a term of 20 years. August 6,1985:The Aleut Corporation delivered a counterproposal to the Power Authority's July 24 draft,dated August 5,1985. It contained a royalty provision for 124%of the "gross revenues and subsidies received for the sale of electricity" for a minimum initially feasible project.It also contained a term of 30 years,after which Aleut would have the right to own the project,and gave Aleut the right to proceed with development of the project after completion of the Power Authority's feasibility study with repayment to the Power Authority for feasibility study expenses. August 19,1985:Power Authority staff met with Aleut staff in an attempt to resolve differences,particularly with respect to the royalty provision. August 20 -September 20,1985:Power Authority staff extensively researched standard provisions of geothermal leases utilized elsewhere in an attempt to formulate a royalty provision acceptable to both parties. 2227/518 4 September 18,1985:The Aleut Corporation submitted new terms and provisions for consideration.They provided that Aleut would. receive the following combination of royalties,rents,and payments:(1)10%to 124%royalty based on the value of diesel generation with a ceiling and base on diesel escalation factors,(2)50%to 75%of the potential power cost savings to the City from the project,(3)$125,000 minimum annual royal- ty,and (4)$5,000 per acre per year property rental.This proposal.offered a term equal to the term of initial financing of the project as well as the provision for Aleut to proceed with development of the project after feasibility with repay- ment to the Power Authority for feasibility expenses. October 29,1985:The Power Authority delivered a draft agreement to Aleut dated October 28,1985.This draft was reorganized and restructured into formal contract format and added numer- ous standard boiler-plate provisions for such agreements.It also contained compromises on major contested issues in an effort to reach expeditious agreement.It provided for a royalty of 10%on the market value of geothermal resources which would be the price received for electricity less the costs incurred by the Power Authority for producing and transmitting electricity to the point of sale.As a compro- mise to Aleut's request that the royalties apply to the minimum initially installed capacity,the royalty provision in the October 28 draft would apply only to production from a 2227/518 5 single primary production well or from a back-up or replacement well for the primary well.Drilling a second production well would require renegotiation of royalties with Aleut.During periods of no production it provided for land rental equal to the present market value of the land,and it provided a minimum annual royalty equal to the rental amount. The term of the agreement would be for the operating life of the project;however,Aleut would have the option upon completion of the feasibility study to develop the project if it could provide power at an equal or better rate than that proposed by the Power Authority and if it reimbursed the Power Authority for feasibility study expenses. November 6,1985:The Aleut Corporation addressed the Board with respect to negotiations requesting that agreement on a fixed royalty be postponed until after the feasibility study is completed and more firm cost estimates can be estab- lished. November 15,1985:The Power Authority met with the Aleut Corporation to discuss their Board request.The Power Author- ity offered revised wording regarding royalty providing that Aleut would receive from 10%to 15%of the value of geothermal resources but that the fixed royalty or formula for computing the royalty would be negotiated after detailed cost estimates are obtained from the feasibility study.The provision sets forth factors that would be taken into account in determining 2227/518 6 the royalty.This language was derived from the federal Geothermal Steam Act statutes and regulations. December 9,1985:The Power Authority received a letter from the Aleut Corporation setting forth its expectations with respect to a final Agreement,including royalties,rentals,capacity limits,and term and met with Aleut to discuss the letter.It appears that three major issues remain to be resolved:(1)the content of the royalty provision and capacity limitation to which it applies,(2)a determination of a rental rate and whether rental would be in lieu of royalties or in addition to royalties,and (3)the term of the agreement. 2227/518 7 be ISSUE Royalty Production Limitation Rental Term 2231/514 PREVIOUS APA POSITION 10%on market value at wellhead based on sale of electricity less costs of generation and transmission. No limitation on production. Rent based on 10%of present market value and paid in lieu of royalty during periods of non- production. Operating life of the project. PREVIOUS ALEUT POSITION 10%to 123%with valuation of re- source based on cost of diesel plus 50%to 75%of potential power cost savings to City,or 10%to 15%of gross revenues. Production limited to that required to meet capacity of minimum feasi- ble project initially installed. Rent based on market value of land after development and paid in addition to royalty. Period equal to term of initial financing. POSSIBLE COMPROMISE POSITION 10%to 15%with valuation of resource determined after feasibility study. Production limited to that which canbeproducedfromasinglecommercial- size well. SRO LOS UNALASKA GEOTHERMAL FEASIBILITY STUDY Information Item At the May 3,1985 Board meeting,the Board of Directors affirmed the Planning Committee's recommendation to approve staff findings and recommendations for the Unalaska/Dutch Harbor reconnaissance study and to initiate a detailed feasibility study for a geothermal power plant on Unalaska Island.The Board's directive contained the condition that,prior to initiating the feasibility study,the Power Authority must enter into binding agreements with appropriate Native corporations for the use of lands and resources,should the project proceed to construction. Staff determined that a geothermal project at Unalaska would affectboththeAleutCorporation(regional)and the Ounalashka Corporation (village).The Aleut Corporation has selected the land containing the site where our geothermal exploration took place and will receive title and rights to both the surface and subsurface. Consequently,they will own the geothermal resources and building materials (gravel,fill,etc.)that would be needed for the pro- ject.The Qunalashka Corporation owns 'the surface rights to lands that would be needed for a road and transmission line. ® Both corporations have been contacted to initiate negotiations,andasofthiswriting(6/17/85),negotiations have begun with the Aleut Corporation.A brief verbal presentation will be made at the Board meeting to update members on the latest status of these negotiations. 9774/406 Ff TO: FROM: 02-001A(Rev.10/79) Q°.O4-dO8 .MEMORANDUM State of Alaska David Denig-Chakroff DATE:April 23,1985 Project Manager FILE NO: TELEPHONE NO: Richard Acuff Kee SUBJECT:Unalaska Geothermal Property Administrator Inventory Listed below is a breakdown of the remaining inventory from the Unalaska Geothermal Project.This inventory is stored in the OQunalashka warehouse facility near the Unalaska/Dutch Harbor Airport.Three parties are involved in the disposition of this equipment.The AlaskaPowerAuthorityandArcticResourcesDrilling,Inc.(ARDI),a project subcontractor,own supplies and equipment in the warehouse.RepublicGeothermal,Inc.(Republic),the prime contractor,is contractually responsible for disposing of the equipment as requested by the Power Authority.I took an inventory of the equipment in this warehouse on October 7,8,and 9,1984,with the help of project consultant Michael Economides.Ownership status of the equipment has been verified through inventory records and discussions with Republic and ARDI.The Power Authority inventory is as follows: DRILLING SUPPLIES 10 Bags of Cement 30 Bags of Quik-gel 200 bags of Barite100sacksofsand 13 buckets of halliburton CRF-2 &HR-6L USED EQUIPMENT Property Control No.Item Original Value 12,517 96 cu.ft.Steel Mud/Water Tank $783 .33 12,518 96 cu.ft.Steel Mud/Water Tank $783.33 12,519 96 cu.ft.Steel Mud/Water Tank $783.33 12,504 3"-600 RTJ Flow Tee Valve Geo. Trim 200 psi w/p $1,087.00 12,514 Neages 6'Level $53.16 12,522 Metal Joint -Threaded Coupling Undetermined MISCELLANEOUS ITEMS Sinker bar Wire lines Wire Tine tube for pressure testing Used Drill Bit Used Drill rod Core samples 9053/024 ar David Denig-Chakroff April 23,1985 Pane 2 The following equipment stored at the same location is owned by ARDI. 21 Bundles (16/Bundle)of 2"Drill Rod 6 Bundles (16/Bundle)of 24"Drill Rod 6 Bundles (16/Bundle)of 3"Drill Rod Several generators and other miscellaneous equipment have been left for storage by ARDI.I have given ARDI verbal notification that the Alaska Power Authority will not accept responsibility for any costs incurred for the storage of its equipment. The Power Authority inventory at the warehouse is either expendable or well used equipment that is of marginal value.Equipment determined by Republic to be of any value to the Power Authority was shipped to Anchorage on September 18,1984.This equipment is being stored in the basement of the Alaska Power Authority building at 334 W.5th Avenue.I suggest we donate the inventory at the Unalaska/Dutch Harbor warehouse to the community or to any other interested parties.Republic should be required to dispose of any items that cannot be donated.The cost in shipping the inventory to Anchorage would be greater than its value to the Power Authority. RA/ald cc:William H.Batt,Alaska Power Authority David Rietze,Alaska Power Authority 9053/024 36.04.NB a 7 RECEIVED oo REPUBLIC GEOTHERMAL,INC.ale 26 1985 SANTAFE SPRINGS,CALIFORNIA 90670.ALASKA POWER AUTHORITY TWX 910-586-1696 (213)945-3661 August 22,1985 Mr.David Denig-Chakroff Alaska Power Authority 334 West 5th Street Anchorage,Alaska 99501 Dear Dave; Enclosed isadaily summary of operations dealing with the casing valve replacement work on ST-1 last week. All things considered,the job went very well and should be substantially under budget. Also enclosed is a drawing of the wellhead as it cur- rently stands. Very truly yours, R.E.rter Manager -Operations REY /mw enc. THUR 8/8 FRI 8/9 SAT 8/10 SUN 8/11 MON 8/12 TUES 8/13 WED 8/14 SUMMARY OF OPERATIONS Traveled Ontario/Anchorage -Alaska Airlines Flt.#83. Checked in at APA office,delivered correspondence from RGI (J.L.Smith)to D.Denig-Chakroff. Attempted travel Anchorage/Dutch Harbor -Mark-Air Fit.#71;unable tolandDutchHarbor(weather).Returned to Anchorage. Traveled Anchorage/Dutch Harbor -Mark-Air Fit.#71. Arrived Dutch Harbor 10:00 a.m. Flew to well site with Paul Schwartz (Yard Foreman,Panama Marine). Checked out wellhead mechanics and pressure -155 psi. Located water supply source. Made detailed program and schedule of work (see attachment A)to beperformed.Reviewed material with Andy Blahut (General Manager,Panama Marine). Checked APA and drilling rig equipment at Aleute Corp.warehouse. Lifted 3 ea water storage tanks (approx.740 gal/tank)and spotted atwellsite.Strung approximately 100 yd hose from water supply point to wellsite. Made earthen dam at supply point to serve as suction basin for supply pump. Note:Unable to sling equipment in afternoon -high winds. Unable to fly in a.m.(fog).Checked out air freight shipment from Valve Svcs.(valves,flanges,gaskets,pipe fittings,etc.)-OK.Made up fittings in PanamaMarineshop. Lifted welding machine and tools to site.Repaired break in 2"blowdown line. Wellhead pressure at 12 noon -156 psi. Pressure tested blowdown line weld with well pressure -OK.Welded leak (bullet hole)in one water holding tank. Blew down well to determine producing behavior. Leveled sites for kill pump and water supply pump. Lifted pumps to location and set in place. Hooked up kill pump and lines;tested with well pressure -OK. Began filling tanks with water. Unable to fly entire day -fog,wind,rain -no visibility. Lifted 40'2"sched 80 pipe and oxygen and acetylene bottles and hoses to location. Completed filling water tanks.Approximately 1 1/2 hours required tofilleachtank(740 gal). SI pressure -151]psi. THUR 8/15 FRI 8/16 SAT 8/17 Began bleeding down well to kill.Gradually bled down to approximately 45 psi and attempted to pump in water.Pump engine stalled out.Repeated five times with same results. Returned y°Dutch Harbor -located check valve (Panama Marine unable tosupply). Installed check valve in kill line and replaced sched 40 tee with high pressure fitting. Again bled off pressure to 35-40 psi.Pump engine continued to stall. Tried several more times;producing pressure rose to 60-70 psi.No SUCCESS. Left site -checked on drilling rig Bean pump at warehouse.Appeared to be operable -would require disassembly in order to lift tolocation(i.e,two lifts)and diesel fuel on site. Arrived location 9:30 a.m.SI casing pressure -141 psi. Drained #3 tank and installed 3"suction for kill pump -refilled #3 tank. Gradually bled off well pressure to 41 psi -opened well,pressure dropped to 25 psi for approximately 30 seconds.While heading,attempted to pump in water -pump failed (apparently gearboxfailure).Producing pressure back up to 70 psi within two minutes. Returned kill pump to Panama Marine.Lifted replacement pump (38 psi max.pressure rating)to location (onsiteat4:00 p.m.).SI wellhead pressure -115 psi.Changed out kill line high pressure hose (leak). Began bleeding down pressure;well began to head water at 35 psi. Opened well wide,began pumping water and closed in blowdown line. Well went on vacuum.Pumped in 740 gal water -well dead.Cut blowdown line,removed right side wing valve and replaced with newvalve.Pumped additional 400 gal water.Tore out kill line andleftsidewingvalve;replaced with new valve.Total time well open -30 minutes.Left well SI.Reinforced all welds on expansionspool(pinhole leaks).Drained remaining tanks. Completed welding on expansion spool. Installed blowdown line,kill line gate valve and check valve,pressure gauge,bleed valve and 1/4"ss bleed line. Fabricated well access doors. Lifted all equipment from location and returned to Panama Marine and Aleute Corp.warehouse. Cleaned up location. 8:00 a.m.-checked well site.No evidence of leaks,SI wellhead pressure -92 psi. Traveled Dutch Harbor/Anchorage -Mark-Air Fit.#72. Traveled Anchorage/Ontario -Alaska Airlines Flt.#86. ATTACHMENT '!A!! le TNSTRet Kee Ra SQUP MENT AsStavInInB,CroséVarve*1 2 FeessueeTESTKielSYCTEMCEOpsipwsCcose€D2,eED OFF GAS PRESSKIe2E THeouGH BlLowWDpowWY LIVE S7e/-Osa twa Vaeve KeeLacemEer/7- nn mys. i A \(70 BE STAKEDA Wew Heap |DINKY).(2 OpenASrrSTANDSNX2"yacves <@ L @® ,_,6"VALVECDarrearyOp=n)-A)erosenafbAtenPRESSURE STRGILI LES 2 WELL MAKING STERN _Crose Varyes(2)?@) F Fame COLD WATER. INTO WELL-w orl) 4,tJtev WELL DEAD Insta.vew Frmnes é CONTIVLE Pumping O'CLANGED VALVE ON BlowDIIn INTO WELL SLOWLYSipe,Croce New varve EAD ¢TEAR OUT ALLb,Téne out Kiet vin€EQUIPT on FITTinGs¢Live OW LEET SIDE é REIPITALL OW ET RLOWDOWN SIDE- Sire-Peesc TEST. ,7)PumpP into WELL,Kitt iF NEAESSAeY f REP EAT234,65 #eOVE,| (\.Wer AFTEe VarVE Replace eHT, Maus Neepes cuensI.re SUPP ey Pump wft|SO yd Hose (NEED STRAINEE ON A 1 |2.Were Kice PumeP W/+20 FT HIGH PRESS Hose é FTESTOGerTO2"w&UnioN,VALVE ok CHECK VALVE)TEE,BUSH WS TO GET PREXURE GAUGE,§NIPPLES,2,Fee WRewedes((F"at )26')4,Karcdet Ve Vy"SocketTe"p Y7"Box oe EWn wee ncdesSs,Weroine MACH WES GWE RA TORsO!2"prpe '¢Peers .6,Foue foes 2"JUNK PIPE t4')ove -2 per card 57,Wee ces)&SA (NAIC RAR)+CLAW HAMMER .Stover Ca fre Pop Pe Scenaele.TREE Measuee -MAKUSHIN ST-1 WELLHEAD DRAWING FOR SUSPENSION STATUS AS OF 8/16/85 -(NOT TO SCALE) V2"SALL VALVE J°XT"ADAPTER FLANGE PRESSURE GAUGE T SWAB O7XT"ADAPTER FLANGE SATE +UT SMALL VALVE a7 FLOW LINE THROTTLING VALVE orxerxe*|sos ATI PLOW TEE O7X4"AQAPTER FLANGE OISCONNECTED FLOW LINE & TESTING EQUIPMENT 47-600 ATJ SARTON to 4°LENGTH? MASTER VALVE 67X47 ADAPTER FLANGE *g-500 ATZ KM MASTER VALVE ot | EXPANSION $004 StL PLAN fred BELOW FOR DETAIL ye ANSI 300 RF ANSI 300 RFhsspesGareVavEGareYaeveere2Ssas(New).(New)ros”7 y i{ExeantianjfMffoctrSe0en : Veuve”- Kar 4bine Sis Cow Zoops PLAN VIEW -ine 5GartVaeve .ue . ye was WING Valve DETAIL.ay,.aepst IN (ht vaeveEs £7682"UNLESS ITNERWISE NeTEO>)fOxVaLvebyT2"ih”asce 2"PLuG ; 'MEMORANDUM State of Alaska .: TO:Susan C,.Rogers DATE:Necember 27,1934 Administrative Assistant/Planning ;FILE NO: f TELEPHONE NO: (FROM:David Denig-Chakroff /'*SUBJECT.Project Summaries Project Manager This memo responds to your request for a summary and updated status of my projects for inclusion tn the Power Authcrity's 1984 Annual Report. Unalaska Geothermal Exploration After three years of surveying,drilling,and testing on the flanks of the Makushin Volcano on Unalaska Island in the Aleutians,the Alaska Power Authority has successfully completed {ts $5.1 million ceothermal exploration program.Operations in 1984 were directed at determining the areal extent,amount of reserves,and delivera- bility of geothermal fluids encountered during drilling in August 1983.Activities fncluded conducting an electrical resistivity survey,drilling an additional temperature gradient hole,and performing a long-term flow test of the geothermal resource. The water-dominated geothermal fluid encountered at 1,949 feet has a flowing temperature of 379°F and a bottomhole pressure of 494 psi.The productivity index derived from the long-term flow test approximates 30,000 Ibs/hr/psi.Based on these conditions and a reasonably optimum wellhead pressure of 60 psia (for powercenerationpurposes),a flow rate of 1.25 to 2.0 million Ibs/hr is anticipated,depending on wellbore size.A calculation of the mass of fluids-in-place indicates reserves capable of meeting the current and projected electrical needs of the Unalaska/Dutch Harbor area for several hundred years. During 1985,the Power Authority will conduct a feasibility study to determine the economic and environmental viability of establ{ish- ing a geothernal power plant at the site. Unalaska Reconnaissance In addition to the geothermal exploration effort at Unalaska,the Alaska Power Authority has conducted a reconnafssance study of energy requirements and alternatives for Unalaska.The majority of this study was completed in 1984 and the final report is scheduled to be released early in 1985. Kotzebue Geothermal The Alaska Power Authority reevaluated the potential for geothermalenergydevelopmentatKotzebue.This evaluation included a reser- voir analysis to determine the flow rate of the geothermal -->o .rj.Coder SO Fils Code:_+O44.0 3J.Date:_4A,362.,|02-001A(Rev.10/79)7652 /222/N1 /F1 a,ayy-- rage¢ formation.It was determined that the flow rate was significantly lower than previously anticipated.The analysis reconfirmed the conclusions from previous studies that geothermal energy is noteconomicallyfeasibleatKotzebue. King Cove Geotechnical Study The Alaska Power Authority conducted a geotechnical investigation of the proposed hydroelectric site on Delta Creek.The investiga- tion concluded that weir desicn must account for heavy sediment transport conditions but that ground water seepage beneath the wefr should not present a hindrance to construction. 1985 Long-Term Energy Plan The Alaska Power Authority contributed to the State's 1985 Long- Term Energy Plan which will be released early in 1985. Toaqlak/Elim Hydroelectric Projects The Alaska Power Authority continued its streamflow monitoring at potential hydroelectric sites for these two communities. ODC/tmn 7652/323/D1/F1 *to Linrctlarte -S¥.d%-OF PLANNING DIRECTORATE TRIP REPORT NAME:David Denig-Chakroff DATE:October 17,1984 TRIP DATE:October 7-9,1984 LOCATION:Unalaska/Dutch Harbor PURPOSE OF TRIP: 1.To attend a meeting of oil industry representatives concerning the effect of using Unalaska as a marine base for petroleum exploration operations. To inventory APA equipment being stored at Dutch Harbor. To visit the well site,inspect the well,and videotape potential trans- mission and construction road access routes. To acquire current load data and other information relevant to the recon- naissance study evaluation.>WPACTIVITIES/AGENDA (participation in meetings,scheduled appointments): October 8,1984 Morning:Denig-Chakroff and Acuff began inventory of equipment at the warehouse.Afternoon:Denig-Chakroff,Acuff,Economidies and Petrie visited the well site,inspected the well and videotaped potential transmission and construction road access routes in Makushin and Driftwood valleys. Evening:Denig-Chakroff,Economidies and Petrie attended an oil and gas industrymeetingwithcityofficialsabouttheeffectofusingDutchHarborasamarine base for petroleum exploration operations in the St.George,Navarin,NorthAleutianandNortonBasins(see agenda attached). Denig-Chakroff,Economidies,Acuff and Petrie met with Paul Palmitier of Republic Geothermal,Inc.to discuss the inability to inspect the well due to the lack of a door on the wellhead housing. October 9,1984 Morning:Denig-Chakroff,Economidies and Acuff met with the City Manager andPublicWorksDirectortodiscussthestatusofthegeothermalproject. Denig-Chakroff and Economidies drove to Summer Bay with the Parks and Recreation Director and the Chairman of the Board of the Ounalashka Village Corporation to inspect the hot springs there and discuss the potential for a state-funded hydrothermal demonstration project at the site. Petrie and Acuff returned with a helicopter to the well site for additional videotaping.The City Planner and the Electric Utility Director also went along on this trip. Afternoon:Acuff and Economidies returned to the warehouse to complete the equipment inventory. Petrie and Denig-Chakroff met with the Public Works Director and Electric UtilityDirectortodiscussthecity's current electric system and future expansion plansandtheeffectsofgeothermalandhydropowerproposals.The Electric UtilityManagergaveusatourofelectricfacilities,including potential cable landing sites and the new diesel powerhouse. 5963/287/F1 CONTACTS: Gene Makarin,President,Ounalashka Corporation Jim Sink,Pilot,Maritime Helicopters Judy Meidinger,Consultant,Counselors,Inc. Nancy Gross,City Manager,City of Unalaska Jeff Currier,Public Works Director,City of Unalaska Carl McConnel,Electric Utility Manager,City of Unalaska Kent,Electric Utility Worker,City of Unalaska Jim Dickson,Electric Utility Worker,City of Unalaska Arne Erickson,City Planner,City of Unalaska Bill Fisher,Mayor,City of Unalaska Jurate Mazeika,Parks and Recreation Director,City of Unalaska Kathy Grimnace,Chairman of the Board,Ounalashka Corporation Paul Palmitier,Republic Geothermal,Inc.(See attached agenda for oil industry contacts.) SIGNIFICANT ITEMS: 1. 2. Excellent videotapes of potential transmission and access routes were obtained.During taping the door of the helicopter flew open at 6,000 feet. Inspection of the well site revealed that no door was built into the wellhead housing for well inspection purposes.This matter was corrected by Republic at our request. Petroleum exploration will not likely have a significant effect on community growth;however,significant growth could occur if petroleum reserves are discovered. Congress has appropriated $30 million for a Coast Guard search and rescue facility in the Aleutians.Dutch Harbor is a prime candidate for this site which could draw 150 additional people to the community.APA should consider a submarine transmission route from the mouth of Makushin Valley to Hog Island and from Hog Island to Amaknak Island where it would tie into the city distribution system near the airport or at the new powerhouse. Any economic analysis of hydropower from Pyramid Creek or Shaisnakof River should include the cost of a transmission line into the city. 5963/287/F1 AGENDA -Unalaska Workshop October 8,1984 5:30pm e Soup/Sandwich Buffet -City Council Chambers 6:15pm e Welcome to Unalaska Nancy Gross City Manager e Opening comments/Introduction of participants Judy Meidinger Counselors,Inc. e Overview of workshop Tom Gallagher Chevron e Review of 5 year federal leasing schedule -discussion of what's due for leasing in the Bering Sea -Where and when -How the schedule is developed -How and why changes are made Tom Cook Chevron e Discussion of events and activities that occur after a lease sale -Focus on explora- tion activities that may occur in more than one leased area at a time Dan Jones Exxon e Overview of specific oil industry activities for the next 3-5 years in the Bering Sea Mark Beckmeier Shell e What will this mean for Unalaska -Discus- sion on specific impacts -What do con-: tractors do -How many people will be in- volved -Revenues -Housing -Local hire - Land use -etc.Lee Gefvert ARCo Our format will be informal in order to allow all participants an opportunity to ask questions and discuss issues &concerns. Other oil company representatives present will be: ARCo -Hank Rosenthal Shell -Billy Vehnekamp,Dave Yesltund Gulf -Ann Jochens $8 Od US MEMO TO THE RECORD ALASKA suBJECT ______Weekly Status Report __BY _Dave D-C DATE_1O/10_ POWER 9/24/84 -9/28/84 SHEET NO OFAUTHORITY10/1/84 -10/5/84 PROJECT 9/24/84 -9/28/84 UNALASKA GEOTHERMAL The project manager and property manager received equipment and inventoryinformationfoxrthe-preiece1O-P¥EOFCCtKHr $if Pee oeee|HOT -ETere testing on Makushin ST-l. UNALASKA RECONNAISSANCE The project manager and project economist reviewed the draft recon study in preparation for finalizing the document, The project manager discussed the hydropower proposal for Unalaska with a representative of the Corps of Engineers. LONG-TERM ENERGY PLAN The project manager reviewed the draft long-term enrgy plan and distributed it for comments. 10/1/84 -10/5/84 UNALASKA GEOTHERMAL The project manager made arrangements for a trip to Unalaska to inventory equipment,videotape potential road and transmission routes,acquire load data and attend a meeting about the effects on the community of offshorepetroleumexploration. The project manager,project consultant,and public information officer prepared amt tssueda2 press relaase on the project. IN ATAGCVA DECONNATC CANCEWirtRECVNNIrEPetpas |_The project manager.worked most of the week with Bob Loeffler,project-ecenemist-§- and Dr.Economides,project consultant on the reconnaissance study for Unalaska. Cost estimates were obtained from Remy Williams,Jerry Larson,and outside sources.Load data were obtained from the City of Unalaska and its rate study contractor,Authur Young,Inc.Assumptions and preliminary formats for présenting data were formulated.Data entry into the computer program was initiated. LONG-TERM ENERGY PLAN The project manager reviewed comments received and submitted revisions to the geothermal section of the plan, li_nealeslea... 3s.04.0%PROJECT EVALUATION TRIP REPORT NAME:Dave Denig--Chakroff DATE:7/23/84 -7/25/84 LOCATION:Unalaska/Dutch Harbor PURPOSE OF TRIP: The purpose of the trip was to visit the project site of the Unalaska GeothermalDrillingprojectandtoobserveongoingoperationsandtests.An additionalobjectivewastovisitthesiteoftheproposedCorpshydropowerprojectonPyramidCreekandtodiscussthisproposalwithCityofficials ACTIVITIES/AGENDA (participation in meetings,schedule appointments): Field trip to geothermal project site,observation of flow test and other ongoingtestsanddrillingoperations. Flew helicopter reconnaissance of potential road access routes,transmission routes,power plant sites,and fumerole sites. 't Met with Drs.Economides and Dehghani to discuss test results and significance oftemperaturereversalinexplorationwell. Met with Bill Smith to discuss project and proposal for drilling Surgarloaf deeper in CONTACTS:(over) Dr.Michael Economides,Univ.of AK Nancy Gross,City ManagerDr.Kaveh Dehghani,Univ.of AK Arnie Erickson,City PlannerDr.Charles Morris,Republic Carl McConnel,Elec.Util.ManagerDr.Bill Smith,Republic Mike Aronson,Newspaper EditorMr.Danny Sanders,Republic SIGNIFICANT ITEMS We may wish to drill Sugarloaf deeper rather than deepen ST-1 as planned based ondiscoveryofatemperatureinversioninST-l,potential technical problems todeepeningST-1 and other considerations.This decision must be made by Aug.16th The City is very skeptical about proposals for hydropower on Pyramid Creek.Better communication between the City,Power Authority,The Corps,and sponsorsofasecondhydropowerproposalisneeded. 873/102 ACTIVITIES/AGENDA (Cont'd) lieu of deepening the exploration well (ST-1) Met with the City Manager and City Planner to discuss geothermal project and proposals for a hydropower project on Pyramid Creek as well as the status of the City's cost-of-power and rate study and the Power Authority's Reconnaissance study. Visited the Pyramid Creek Water Supply facilities and met with City officials to further discuss hydropower proposals. Met with city officials and the Newspaper editor for a field trip to the geothermal project which was cancelled due to inclement weather.Provided an interview to the editor for an article on the project. Se.Of.O8 SS ALASKA POWER AUTHORITY 334 WEST 5th AVENUE -ANCHORAGE,ALASKA 99501 Phone:(907)277-7641 (907)276-0001 SUMMARY AND STATUS OF THE UNALASKA GEQTHERMAL PROGRAM July 15,1984 The Alaska Legislature in 1981 appropriated $5 million to be administered by the Alaska Power Authority for geothermal drilling and exploration at Makushin Volcano on Unalaska Island.The appropriation was preceded by a number of geologic investigations and a preliminary economic analysis which indicated potential for a geothermal power facility at Makushin Volcano. In November 1981,Republic Geothermal,Inc.was selected by the Power Authority to be the consultant to plan and coordinate the exploration and drilling program.The program was divided into two phases.Phase I activities included data review and synthesis;technical planning;land status determination;permitting requirements;acquisition of baselineenvironmental]data;geological,geochemical,and geophysicalinvestigationsandmapping;and the drilling of three temperature gradient holes.Phase II activities include the drilling of a deep exploratory well,the drilling of a fourth temperature gradient hole,the testing and evaluation of any resources encountered,and an electrical resistivity survey to delineate the extent of the reservoir. Under Phase I,the first three temperature gradient holes were drilled in 1982 to depths of 1500 feet and encountered temperatures of up to 383°F (195°C).Two of the holes indicated a close proximity to geothermal resources below,while the third appeared to be on the fringe of the geothermal system.The Phase I final report was completed in 1983 concluding the strong possibility of a water-dominated geothermal system in excess of 480°F (250°C)on the eastern flank of Makushin Volcano at a depth of less than 4000 feet. Phase II was initiated in the Spring of 1983.The exploratory well was started in early June.After numerous delays caused by unexpected drilling conditions,on August 25,1983,the well encountered a substantial geothermal resource at a depth of 1946 feet.Well testing confirmed a water-dominated geothermal system with a steam cap and bottomhole temperature and pressure of 379°F (193°C)and 478 psi respectively.The flow rate of the well was approximately 47,000 Ibs. per hour.At this flow rate,temperature,and pressure,it is calculated that one commercial-size production well at this location could produce six megawatts of electric power.The remaining Phase II activities planned for 1984 include a long-term flow test of the resourceencountered,deepening of the exploration well to approximately 2450feet,drilling of a 1200 feet temperature gradient hole about two milesnortheastoftheexplorationwell,and performing an electrical 1867/086 resistivity survey of the area to determine the extent of the geothermal system. In addition to the contract with Republic Geothermal,Inc.,the Power Authority has established reimbursable services agreements for work at Unalaska with the University of Alaska,Department of Petroleum Engineering and with the Department of Natural Resources,Division of Geological and Geophysical Surveys.These agreements have resulted in the publication of papers on geological and geochemical investigations and well testing and a paper comparing the Unalaska geothermal potential with other geothermal sites worldwide. Another related effort was the production of a 15-minute video presentation entitled "Alaska's Geothermal Future."This educational video tape,funded through a federal grant from the U.S.Department of Energy,discusses geothermal resources in general,its potential for development,and its occurrence in Alaska and reviews the Pilgrim Hot Springs demonstration project and the Unalaska Geothermal Program.In addition to its educational value,the tape will provide useful information for potential investors in the projects. Closely aligned with the Unalaska geothermal exploration program is a reconnaissance study of energy alternatives for Unalaska.This study is being funded through the Power Authority's Rural Community Reconnaissance Program and is investigating and comparing the economics of various power alternatives for the Unalaska power market,including diesel generation(base case),hydropower,wind,and geothermal.The reconnaissance study, being conducted by Acres American,Inc.under contract to the Power Authority,is scheduled for completion August 31,1984.A load forecast has been developed for Unalaska which will be used in conjunction withdevelopmentcostestimatesprovidedbyRepublicGeothermal,Inc.in ordertoperformaneconomicanalysisofthegeothermaloptiontobeincluded in the reconnaissance study.This effort will also be aided by a study being conducted by the City of Unalaska to establish electrical capacity addition and retirement plans and to determine rate structure and load management alternatives that would levelize daily peak demands and stabilize load factors. If the reconnaissance study shows that a power alternative other than the existing diesel alternative is the most favorable option for the power market,a detailed feasibility study will be initiated for that particular alternative.Using information gained from the geothermalexplorationprogram,this analysis would determine whether a geothermalprojectwarrantsfurtherStateoroutsideinvestment.The feasibilitystudywouldbefundedthroughthePowerAuthority's Rural CommunityFeasibilityProgramandwouldrequireuptooneyeartocomplete.If theresultsofthefeasibilitystudyarepositive,a study of financing options,design,and finally,project construction and operation could follow.It is anticipated,assuming the geothermal option proves feasible and the required studies proceed in a timely manner,that a geothermal power plant could be on line at Unalaska as soon as 1988. 1867/086 33-904.03 PROJECT EVALUATION TRIP REPORT NAME:Dave Denig-Chakroff Py DATE:5/20/84 -5/25/84 LOCATION:Palm Springs,CA PURPOSE OF TRIP: To attend workshop on geothermal development economics and financing held bytheGeothermalResourcesCouncilandtheU.S.Department of Energy.To meetwithRepublicGeothermalstafftodiscussdetailsandlogisticsofthe1984 field program and to visit operating geothermal facilities similar to a possible Unalaska plant. ACTIVITIES/AGENDA (participation in meetings,schedule appointments): See attached workshop program. Also met with Republic Geothermal,Inc.(RGI)staff and toured geothermal projects and facilities in Imperial Valley,CA. CONTACTS: Jim Sikes,President,RGI Gregg Long,M-K Gerry Huttrer,V.Pres.,RGI Doug Powell,M-K Dick Yarter,Operations Mgr.,RGI Bill Long,O'Brien Resource Corp. Don Campbell,Geologist,RGI Tom Eiden,Transamerica Delaval Allan Aksell,The Aleut Corp.Salvatore Pantano,Geothermal Floral Pauline Labire,U.S.DOE Ben Lunis,U.S.DOE Maureen Mahoney,Union Jodie Fisher,Union SIGNIFICANT ITEMS (potential probiems): Attended workshop--Transactions obtained Received many comments on Unalaska Reconnaissance Study. Received interest in future phases of Unalaska project from potential bidders Discussed federal geothermal commercialization grant extension with federal manager Toured RGI projects in Imperial Valley and 10 MW Binary geothermal projects. °S¥.Of,OF ALASKA POWER AUTHORITY 334 WEST 5th AVENUE -ANCHORAGE,ALASKA 99501 Phone:(907)277-7641 (907)276-0001 SUMMARY AND STATUS OF THE UNALASKA GEOTHERMAL PROGRAM July 15,1984 The Alaska Legislature in 1981 appropriated $5 million to be administered by the Alaska Power Authority for geothermal drilling and exploration at Makushin Volcano on Unalaska Island.The appropriation was preceded by a number of geologic investigations and a preliminary economic analysis which indicated potential for a geothermal power facility at MakushinVolcano. In November 1981,Republic Geothermal,Inc.was selected by the Power Authority to be the consultant to plan and coordinate the exploration and drilling program.The program was divided into two phases.Phase I activities included data review and synthesis;technical planning;land status determination;permitting requirements;acquisition of baseline environmental data;geological,geochemical,and geophysical investigations and mapping;and the drilling of three temperature gradient holes.Phase II activities include the drilling of a deep exploratory well,the drilling of a fourth temperature gradient hole,the testing and evaluation of any resources encountered,and an electrical resistivity survey to delineate the extent of the reservoir. Under Phase I,the first three temperature gradient holes were drilled in 1982 to depths of 1500 feet and encountered temperatures of up to 383°F(195°C).Two of the holes indicated a close proximity to geothermal resources below,while the third appeared to be on the fringe of the geothermal system.The Phase I final report was completed in 1983 concluding the strong possibility of a water-dominated geothermal system in excess of 480°F (250°C)on the eastern flank of Makushin Volcano at a depth of less than 4000 feet. Phase II was initiated in the Spring of 1983.The exploratory well was started in early June.After numerous delays caused by unexpected drilling conditions,on August 25,1983,the well encountered a substantial geothermal resource at a depth of 1946 feet.Well testing confirmed a water-dominated geothermal system with a steam cap and bottomhole temperature and pressure of 379°F (193°C)and 478 psi respectively.The flow rate of the well was approximately 47,000 Ibs. per hour.At this flow rate,temperature,and pressure,it is calculated that one commercial-size production well at this location could producesixmegawattsofelectricpower.The remaining Phase II activities planned for 1984 include a long-term flow test of the resource encountered,deepening of the exploration well to approximately 2450 feet,drilling of a 1200 feet temperature gradient hole about two miles northeast of the exploration well,and performing an electrical 1867/086 resistivity survey of the area to determine the extent of the geothermal system. In addition to the contract with Republic Geothermal,Inc.,the Power Authority has established reimbursable services agreements for work at Unalaska with the University of Alaska,Department of Petroleum Engineering and with the Department of Natural Resources,Division of Geological and Geophysical Surveys.These agreements have resulted in the publication of papers on geological and geochemical investigations and well testing and a paper comparing the Unalaska geothermal potential with other geothermal sites worldwide. Another related effort was the production of a 15-minute video presentation entitled "Alaska's Geothermal Future."This educational video tape,funded through a federal grant from the U.S.Department of Energy,discusses geothermal resources in general,its potential for development,and its occurrence in Alaska and reviews the Pilgrim Hot Springs demonstration project and the Unalaska Geothermal Program.In addition to its educational value,the tape will provide useful information for potential investors in the projects. Closely aligned with the Unalaska geothermal exploration program is a reconnaissance study of energy alternatives for Unalaska.This study is being funded through the Power Authority's Rural Community Reconnaissance Program and is investigating and comparing the economics of various power alternatives for the Unalaska power market,including diesel generation(base case),hydropower,wind,and geothermal.The reconnaissance study, being conducted by Acres American,Inc.under contract to the Power Authority,is scheduled for completion August 31,1984.A load forecast has been developed for Unalaska which will be used in conjunction withdevelopmentcostestimatesprovidedbyRepublicGeothermal,Inc.in ordertoperformaneconomicanalysisofthegeothermaloptiontobeincluded in the reconnaissance study.This effort will also be aided by a study being conducted by the City of Unalaska to establish electrical capacity addition and retirement plans and to determine rate structure and load management alternatives that would levelize daily peak demands and stabilize load factors. If the reconnaissance study shows that a power alternative other than the existing diesel alternative is the most favorable option for the power market,a detailed feasibility study will be initiated for that particular alternative.Using information gained from the geothermalexplorationprogram,this analysis would determine whether a geothermalprojectwarrantsfurtherStateoroutsideinvestment.The feasibilitystudywouldbefundedthroughthePowerAuthority's Rural Community'Feasibility Program and would require up to one year to complete.If theresultsofthefeasibilitystudyarepositive,a study of financing options,design,and finally,project construction and operation couldfollow.It is anticipated,assuming the geothermal option proves feasible and the required studies proceed in a timely manner,that a geothermal power plant could be on line at Unalaska as soon as 1988. 1867/086 tt&70 Sr.OL_GS ALASKA POWER AUTHORITY May 1984 David Denig-Chakroff Project Status Report UNALASKA GEOTHERMAL EXPLORATION (Account #670) Actions Completed The Producers: Video production complete Contract complete Republic Geothermal: Phase IA Final Report complete Phase IB Final Report complete 1982 and 1983 field activities complete Phase II draft report complete and distributed for comments. Amendment to contract for 1984 field activities complete. University of Alaska: 1982 and 1983 field activities and reports complete RSA for 1984 field activities and reports complete Division of Geological and Geophysical Surveys: 1982 and 1983 field activities and reports complete. Division of Oil and Gas (formerly DMEM): RSA for permit compliance inspection during 1984 field activities complete. Actions Pending Republic Geothermal: Finalize Phase II report.Complete 1984 field activities (Phase III). Complete Phase III report. University of Alaska: Complete 1984 field activities and reports. Division of Geological and Geophysical Surveys: Finalize RSA for 1984 field activities and reports. Complete 1984 field activities and reports. Division of Oi]and Gas (formerly DMEM): Complete permit compliance inspection. Other: Obtain and distribute copies of video production. Actions Needing Intra-agency Coordination None 2257/203/F1 ZZ.OF:AS MEMORAP.JUM Stateof Alaska TO: FROM: Brent Petrie DATE:April 20,1984 Acting Director of Project Evaluation FILE NO: TELEPHONE NO: Dave DenigChékroff SUBJECT:Status Report and Project Nanager Project Summaries Harch 29,1984 through April 18,1984 Unalaska Geothermal The Project Manager has been negotiating with representatives of Republic Geothermal,Inc.,to finalize Amendment No.7 to contract CC08-2334.The final amendment was sent to Republic for signature and returned to the Alaska Power Authority for signature on April 19.It fs important that the processing of this amendment be expedited through the Power Authority and Juneau since the exploration season is nearing and Republic must finalize subcontracts for work at Unalaska. The Project Manager has been working with the Power Authority's contract administrator and insurance consultant to acquire approval from the Division of Risk Management to delete the requirement for professional liability insurance in the Republic contract.Since the Unalaska project is not an engineering and design study,the professional liability insurance requirement does not appear to be applicable.Deletion of the requirement would save about $23,000.00 over the remainder of the contract,which could be productively used for actual drilling and exploration activities.As of April 16,1984,the Power Authority received verbal approval from the Divisfon of Risk Management to delete the requirement for Amendment No.7. The Project Manager has been working with the Power Authority'sControllertounencumber$100,000 cf project funds now reserved in lfeuofabondrequiredbytheDivisionof011andGas(formerly Division ofHineralsandEnergyManagement),to assure proper abandonment of the project.The Controller has requested an opinion from the Director of the Division of Risk Management as to whether the bond can be covered under the State's SIR program.If not,there is a possibility funds designated for an Unalaska feasibility study can be designated as thereservefundsothatthe$100,000 dollars can be spent on actual drilling and exploration. The Project Manager has been negotiating with a representative of theDivisionofGeologicalandGeophysicalSurveys(DGGS)to finalizeAmendmentNo.3 to RSA 08-8227 for $15,000.The amount would cover only a portion of the cost of work proposed by DGGS at Unalaska this surmer.If the $100,000 bond reserve can be unencumbered,an additional amount could be encumbered for DGGS activities.However,there may also be additional funds remaining from DGGS'previous amendryer ' File Coda:2 OY OF886/050 d1/F2 aoae £4,[Jb [” j over to this amendment.The Project Manager has reached verbal agree- ment on the terms of the RSA with DCGS,but 1s wafting to finalize theamendmentuntilquestionsconcerningpreviousbillingshavebeen answered by DGGS. The Project Manager has been working with the Power Authority's accoun- tant,DCGS'accountant,and DGGS'primary investigator for the project to resolve questions concerning billings under an RSA amendment that expired on March 1,1984.The Power Authority has not recetved abillingontheaccountfortwomonths,and there fs still $99,102.58 intheaccountoriginallybudgetedat$164,520.The primary investigator claims that virtually al]the money has been spent,but that the billingprocessinJuneauisbacklogged.The DGGS accountant says all but$17,000 has been spent,and the Power Authority will receive its final billing within the next week. The Project Manager has been working with representatives of the Depart-ment of Community and Regional Affairs (DCRA)to obtain an extensfon on a federal grant for geothermal commercfalization.The grant came to the Power Authority through the now defunct Division of Energy and PowerDevelopment(DEPD)and was transferred to DCRA when DEPD was disbanded.The grant was to be used for a video presentation of geothermalpotentialinAlaskaandforareconnafssancestudycomparingthe poten- tial for geothermal development with other energy alternatives at Unalaska.The video is complete,but an extension 1s needed in order to complete the reconnaissance study. The Project Manager has received and distributed for review the draft Phase II report prepared by Republ{c Geothermal,Inc.on 1983 explora- tion activities and results. The Project Manager has recefved the draft report on geothermal power generation analysis at Unalaska required by Amendment No.6 to Republic's contract.This draft will be distributed for review within the next week. Unalaska Reconnafssance Study The Project Manager received the draft reconnaissance study of energyalternativesforUnalaskafromAcresAmerican,Inc.and discussed several concerns with a representative of Acres and with the Acting Director of Project Evaluation.The Project Manager will draft a letter to Acres suggesting the changes we would like to see before the draft is distributed for public review. The Project Nanager is awaiting recefpt of a cost of power and rate study being prepared by Arthur Young and Company for the City of Unalaska under contract to the Power Authority.The results of this study and Republic's Amendment No.6 report should be incorporated {nto the final reconnafssance study. €86/090 d1/F2 Pedro Bay Electrical Distribution The Project Manager has been working with representatives of DCRA and the Village of Pedro Bay to finalize an RSA that would transfer a $500,000 appropriation to DCRA for electrical distribution at Pedro Bay.The appropriation will be added to a $400,000 grant to be administeredbyDCRA.The combined funds will be used to construct an intertie with the INEC system,to construct a local distribution system,and to install backup generators in the village.The Board has approved thetransferofthesefundstoDCRAwiththestipulationthattheproject be closely monitored by the Power Authority. False Pass Electrification The Project Manager has been working with a representative of FalsePass,the village's engineer,and project managers in the Construction Directorate to draft a contract for False Pass Electrification.A preliminary draft has been prepared and turned over to the constructiondirectorate. Nikolski Purchase and Uporade of Electrical System The Board recently approved a Power Authority staff recommendation toadministerfundsforthevillagepurchaseandupgradeoftheelectrical system at Nikolski.Ongoing negotiations between the village and thecurrentowneroftheutilityhavebrokendown.Representative Adelheid Hermann has requested that the Power Authority contract with an independent appraiser to determine the value of the system. Skagway Wind The Project Manager has been working closely with a representative ofDCED's Division of Energy and the Power Authority's Controller to determine the current status of this project.We recently determined that the Power Authority still has an active RSA with the now defunctDivisionofEnergyandPowerDevelopmentfortheproject.Since theDivisionofEnergyhastakenchargeofthisproject,the Power Authoritywil]continue working with them through the completion of the RSA(June 30,1984). ODC/ald 886/090 d1/F2 CONTRACT STATUS REPORT PROJECT:UNALASKA GEOTHERMAL REPORT OATE:March.31,1984CC-08-2334 Republic Geothermal,Inc.Current toFebruary 29,1984 PERCENT OF BUDGET BUDGETED BUDGETED PERCENT BUDGET ACTIVITY MANHOURS COST COMPLETE EXPENDED EXPENDED COMMENTS i N d 66,245 1001XPlanningocReporte$ $51,687 78.02 X Drilling "1,853,504 99 956,355 51.60 Xl Testing "259,478 99 87,229 33.62 XIL Reporting "74,349 85 70,567 94.91 XILL &XIV Abd.or Susp."159,224 90 160,212 100.62 TOTALS 2,412,800 95 1,326,050 54.96 Sotho"2S CONTRACT STATUS REPORT Department of Natural Resources Division of Geological &Geophysical Surveys RS08-8227 BUDGETED BUDGETED ACTIVITY MANHOURS COST Field investigations and geological mapping not reported $164,520 PERCENT COMPLETE 100 PROJECT:UNALASKA GEOTHERMAL REPORT DATE:March 31,1984 PERCENT OF BUDGET BUDGET EXPENDED EXPENDED COMMENTS $59,544.42 36 CONTRACT STATUS REPORT University of Alaska--Fairbanks Petroleum Engineering Department RS08-8199 BUDGETED BUDGETED ACTIVITY MANHOURS COST Consulting Services Not Reported $109,251 PERCENT COMPLETE 70 PROJECT:UNALASKA GEOTHERMAL REPORT DATE:_March 31,1984 PERCENT OF BUDGETED BUDGET MANHOURS EXPENDED EXPENDED COMMENTS $73,509.07 67 CONTRACT STATUS REPORT Department of Natural Resources Division of Minerals and Energy Management RS08-4055 BUDGETED BUDGETED ACTIVITY MANHOURS COST Inspection to determine compliance with permit stipulations not reported $1320 PERCENT COMPLETE PROJECT:UNALASKA GEOTHERMAL REPORT DATE:March 31,1984 PERCENT OF BUDGET BUDGET EXPENDED EXPENDED COMMENTS CONTRACT STATUS REPORT CC-08-2270 Acres American,Inc. ACTIVITY Reconnaissance Study BUDGETED MANHOURS not reported BUDGETED cost $17,000 PERCENT COMPLETE 60% PROJECT:UNALASKA RECONNAISSANCE REPORT DATE:March 31,1984 PERCENT OF BUDGET BUDGET a EXPENDED EXPENDED COMMENTS -0-0% CONTRACT STATUS REPORT CC-08-4224 City of Unalaska ACTIVITY Cost-of-Power/ Rate Study BUDGETED MANHOURS not reported BUDGETED COST $20,000 PERCENT COMPLETE 60% PROJECT:UNALASKA RATE STUDY REPORT DATE:March 31,1984 PERCENT OF BUDGET BUDGET eee EXPENDED EXPENDED COMMENTS -0-0% CONTRACT STATUS REPORT PROJECT:|UNALASKA GEOTHERMAL REPORT DATE:March 31,1984 The Producers CC-08-2625 PERCENT OF BUDGET BUDGETED BUDGETED PERCENT BUDGET ACTIVITY MANHOURS cost COMPLETE EXPENDED EXPENDED COMMENTS Task Il Not reported $4815 100 $4815 100 Deliverables accepted by Project Manager JanuaryTask2"4815 100 4815 100 26,1984 Task 3 "4815 100 4815 100 Task 4 "4815 100 4815 100 TOTAL 19,260 100 19,260 100 PROJECT:|UNALASKA GEOTHERMAL PROJECT MANAGER:Dave Denip-Chakroff DATE:March 31,1984 Milestone The Producers--Deliverables due Republic Geothermal--1983 field rpt. U of A RSA completion &deliverables Acres American--Contract completion Reconnaissance Study Findings &Recommendations DGGS RSA completion &deliverables Rate Study completion The Producers--contract complete Resistivity study completion Republic Geothermal contract complete Preliminary Feasibility study Final Feasibility study Findings and Recommendations Preliminary independent cost estimate Preliminary plan of finance Final plan of finance Power sales agreement Power sales contract Land acquisition plan Final independent cost estimate Detailed design completion Findings and Recommendations Land acquisition complete Construction startup Construction complete *The Acres American contract was amended to extend MILESTONE PROGRESS Scheduled 10-31-84 04-30-84 04-30-84 05-31-84 06-30-84 06-01-84 10-31-84 12-31-84 12-31-84 04-31-85 06-30-85 09-30-85 09-30-85 10-31-85 10-31-85 12-31-85 03-31-86 04-30-86 04-30-86 06-30-86 06-30-86 07-01-86 06-30-87 Postponed*Accomplished 01-18-84 04-15-84 06-30-84 05-31-84 06-30-84 03-01-84 the due date of the Unalaska ReconnaissalStudyto06-30-84.The actual completion of the study is now scheduled for 05-31-84.ThescheduleforFindingsandRecommendationshasbeenmovedbackto06-30-84.The reasonforpostponementwasanunforeseendelayinreceiptofdataneededtocompletethestudy. IMBSKA CEOTHECL Macpower”EusnEaTs i ry ry \ TA SCN D TEMApw Ky os DAs pW nrtecmaemy PUBLIC GeorHEeemALl COTTORET aya oe .b 2CONN WISSRNLE QS ____ Sw oy YY ee wwe /oS TE «Soy gwrrr rt carr tne 3,6 \WECSITY OF AlasKa SAE ee ee ee en > {a, RESiTIVAY Swoy ZWeo ee ee ee LL LY a5 CGS FSPO _V7----------<¢'2 we PRovuceps ComrRacT i V !4 5 2 SeSIBierry STVoyY Ywi--- -_--V___Y__ &Findiwes &/,&@ /a "Preommenv atin S WZ...V Z__A LEFGEND- )Derianend)oF Peaster Cesmen |2.Iarcrmey OnE Q/LED Co mAETION Daqe (Peozcer ELemEs )P440°043.Exrewrep Comeettion OATe C24 Y.Deaer PEWEeASLL Dee PATS CS Fwanr DeceiCCaAQe Due.DATE 6,Barenpen Deciverance Dee DA BEC LLEmEAT) 7e VALRSER GeopeenmL FY 8&8 FY 97powserELemew7sTASONDTEWAMITASONYJT FMA fo iraen at 4 AsradpeCwavteeK---"ZY OE PEM COST 1 4 asemaeWV.Ltv swe SALES /A ae Agee mE [tomeeT Y VV /a8aweAavisiTionv__.V__*d 2,0, Derarced Desicn ZH.Lv fgFinnmes¢Rec 'nV 6 4% ConsrreeTiaN goo : PROJECT:UNALASKA GEOTHERMAL PROJECT MANAGER:Dave Denig-Chakroff <_<DATE:March 31,1984 MILESTONE PROGRESS Milestone Scheduled The Producers--Deliverables due Republic Geothermal--1983 field rpt. U of A RSA completion &deliverables 10-31-84 Acres American- Contract completion 04-30-84 Reconnaissance Study 04-30-84 Findings &Recommendations 05-31-84© DGGS RSA completion &deliverables Rate Study completion 06-30-84 The Producers--contract complete 06-01-84 Resistivity study completion 10-31-84 Republic Geothermal contract complete 12-31-84 Preliminary Feasibility study 12-31-84 Final Feasibility study 04-31-85 Findings and Recommendations 06-30-85 Preliminary independent cost estimate 09-30-85 Preliminary plan of finance 09-30-85 Final plan of finance 10-31-85 Power sales agreement 10-31-85 Power sales contract 12-31-85 Land acquisition plan 03-31-86 Final independent cost estimate 04-30-86 Detailed design completion 04-30-86 Findings and Recommendations 06-30-86 Land acquisition complete 06-30-86 Construction startup 07-01-86 Construction complete 06-30-87 39,Of OZ Postponed*Accomplished 01-18-84 04-15-84 06 -30-84 65-31-84 06-30-84 03-01-84 *The Acres American contract was amended to extend the due date of the Unalaska Reconnaissan Study to 06-30-84.The actual completion of the study is now scheduled for 05-31-84.The schedule for Findings and Recommendations has been moved back to 06-30-84.The reason for postponement was an unforeseen delay in receipt of data needed to complete the study. ALASKA POWER AUTHORITY 334 WEST 5th AVENUE -ANCHORAGE,ALASKA 99501 Phone:(907)277-7641 (907)276-0001 SUMMARY OF THE UNALASKA GEOTHERMAL PROGRAM March 15,1984 The Alaska Legislature in 1981 appropriated $5 million to be administered by the Alaska Power Authority for geothermal drilling and exploration at Makushin Volcano on Unalaska Island.The appropriation was preceded by anumberofgeologicinvestigationsandapreliminaryeconomicanalysiswhichindicatedpotentialforageothermalpowerfacilityatMakushinVolcano. In November 1981,Republic Geothermal,Inc.was selected by the Power Authority to be the consultant to plan and coordinate the exploration and drilling program.The program was divided into two phases.Phase I activities included data review and synthesis;technical planning;land status determination;permitting requirements;acquisition of baseline environmental data;geological,geochemical,and geophysical investigations and mapping;and the drilling of three temperature gradient holes.Phase II activities include the drilling of a deepexploratorywell,the drilling of a fourth temperature gradient hole,the testing and evaluation of any resources encountered,and an electrical resistivity survey to delineate the extent of the reservoir. Under Phase I,the first three temperature gradient holes were drilled in 1982 to depths of 1500 feet and encountered temperatures of up to 383°F(195°C).Two of the holes indicated a close proximity to geothermal resources below,while the third appeared to be on the fringe of the geothermal system.The Phase I final report was completed in 1983 concluding the strong possibility of a water-dominated geothermal systeminexcessof480°F (250°C)on the eastern flank of Makushin Volcano at a depth of less than 4000 feet. Phase II was initiated in the Spring of 1983.The exploratory well was started in early June.After numerous delays caused by unexpected drilling conditions,on August 25,1983,the well encountered a substantial geothermal resource at a depth of 1946 feet.Well testing confirmed a water-dominated geothermal system with a steam cap andbottomholetemperatureandpressureof379°F (193°C)and 478 psi respectively.The flow rate of the well was approximately 47,000 lbs. per hour.At this flow rate,temperature,and pressure,it is calculated that one commercial-size production well at this location could produce six megawatts of electric power.The remaining Phase II activitiesplannedfor1984includea_long-term flow test of the resourceencountered,deepening of the exploration well to approximately 2450 feet,drilling of a 1200 feet temperature gradient hole about two miles northeast of the exploration well,and performing an electrical 1867/086 resistivity survey of the area to determine the extent of the geothermal system. In addition to the contract with Republic Geothermal,Inc.,the Power Authority has established reimbursable services agreements for work at Unalaska with the University of Alaska,Department of Petroleum Engineering and with the Department of Natural Resources,Division of Geological and Geophysical Surveys.These agreements have resulted in the publication of papers on geological and geochemical investigationsandwelltestingandapapercomparingtheUnalaskageothermalpotentialwithothergeothermalsitesworldwide. Another related effort was the production of a 15-minute video presentation entitled "Alaska's Geothermal Future."This educational video tape,funded through a federal grant from the U.S.Department of Energy,discusses geothermal resources in general,its potential for development,and its occurrence in Alaska and reviews the Pilgrim Hot Springs demonstration project and the Unalaska Geothermal Program.In addition to its educational value,the tape will provide useful information for potential investors in the projects. Closely aligned with the Unalaska geothermal exploration program is a reconnaissance study of energy alternatives for Unalaska.This study is being funded through the Power Authority's Rural Community Reconnaissance Program and is investigating and comparing the economics of various power alternatives for the Unalaska power market,including diesel generation (base case),hydropower,wind,and geothermal.The reconnaissance study, being conducted by Acres American,Inc.under contract to the Power Authority,is scheduled for completion May 31,1984.A load forecast has - been developed for Unalaska which will be used in conjunction with devel- opment cost estimates provided by Republic Geothermal,Inc.in order to perform an economic analysis of the geothermal option to be included in the reconnaissance study.This effort will also be aided by a study being conducted by the City of Unalaska to establish electrical capacity addition and retirement plans and to determine rate structure and load management alternatives that would levelize daily peak demands and stabilize load factors. If the reconnaissance study shows that a power alternative other than the existing diesel alternative is the most favorable option for the power market,a detailed feasibility study will be initiated for that particular alternative.Using information gained from the geothermal exploration program,this analysis would determine whether a geothermal project warrants further State or outside investment.The feasibility study would be funded through the Power Authority's Rural Community Feasibility Program and would require up to one year to complete.If the results of the feasibility study are positive,a study of financing options,design,and finally,project construction and operation could follow.It is anticipated,assuming the geothermal option proves feasible and the required studies proceed in-a timely manner,that a geothermal power plant could be on line at Unalaska as soon as 1988. 1867/086 SE-OF.03 ALASKA POWER AUTHORITY 334 WEST 5th AVENUE -ANCHORAGE,ALASKA 99501 Phone:(907)277-7641 (907)276-0001 SUMMARY OF THE UNALASKA GEOTHERMAL PROGRAM March 15,1984 The Alaska Legislature in 1981 appropriated $5 million to be administered by the Alaska Power Authority for geothermal drilling and exploration at Makushin Volcano on Unalaska Island.The appropriation was preceded by anumberofgeologicinvestigationsandapreliminaryeconomicanalysis which indicated potential for a geothermal power facility at MakushinVolcano. In November 1981,Republic Geothermal,Inc.was selected by the Power Authority to be the consultant to plan and coordinate the exploration and drilling program.The program was divided into two phases.Phase I activities included data review and synthesis;technical planning;land status determination;permitting requirements;acquisition of baseline environmental datas geological,geochemical,and geophysical investigations and mapping;and the drilling of three temperature gradient holes.Phase II activities include the drilling of a deepexploratorywell,the drilling of a fourth temperature gradient hole,the testing and evaluation of any resources encountered,and an electrical resistivity survey to delineate the extent of the reservoir. Under Phase I,the first three temperature gradient holes were drilled in 1982 to depths of 1500 feet and encountered temperatures of up to 383°F(195°C).Two of the holes indicated a close proximity to geothermal resources below,while the third appeared to be on the fringe of the geothermal system.The Phase I final report was completed in 1983 concluding the strong possibility of a water-dominated geothermal systeminexcessof480°F (250°C)on the eastern flank of Makushin Volcano at a depth of less than 4000 feet. Phase II was initiated in the Spring of 1983.The exploratory well was started in early June.After numerous delays caused by unexpected drilling conditions,on August 25,1983,the well encountered a substantial geothermal resource at a depth of 1946 feet.Well testing confirmed a water-dominated geothermal system with a steam cap andbottomholetemperatureandpressureof379°F (193°C)and 478 psi respectively.The flow rate of the well was approximately 47,000 lbs. per hour.At this flow rate,temperature,and pressure,it is calculated that one commercial-size production well at this location could produce six megawatts of electric power.The remaining Phase II activities planned for 1984 include a long-term flow test of the resource encountered,deepening of the exploration well to approximately 2450 feet,drilling of a 1200 feet temperature gradient hole about two miles northeast of the exploration well,and performing an_electrical 1867/086 resistivity survey of the area to determine the extent of the geothermal system. In addition to the contract with Republic Geothermal,Inc.,the Power Authority has established reimbursable services agreements for work at Unalaska with the University of Alaska,Department of Petroleum Engineering and with the Department of Natural Resources,Division of Geological and Geophysical Surveys.These agreements have resulted in the publication of papers on geological and geochemical investigations and well testing and a paper comparing the Unalaska geothermal potential with other geothermal sites worldwide. Another related effort was the production of a 15-minute video presentation entitled "Alaska's Geothermal Future."This educational video tape,funded through a federal grant from the U.S.Department of Energy,discusses geothermal resources in general,its potential for development,and its occurrence in Alaska and reviews the Pilgrim Hot Springs demonstration project and the Unalaska Geothermal Program.In addition to its educational value,the tape will provide useful information for potential investors in the projects. Closely aligned with the Unalaska geothermal exploration program is a reconnaissance study of energy alternatives for Unalaska.This study is being funded through the Power Authority's Rural Community Reconnaissance Program and is investigating and comparing the economics of various power alternatives for the Unalaska power market,including diesel generation(base case),hydropower,wind,and geothermal.The reconnaissance study, being conducted by Acres American,Inc.under contract to the Power Authority,is scheduled for completion May 31,1984.A load forecast has been developed for Unalaska which will be used in conjunction with devel- opment cost estimates provided by Republic Geothermal,Inc.in order to perform an economic analysis of the geothermal option to be included in the reconnaissance study.This effort will also be aided by a study being conducted by the City of Unalaska to establish electrical capacity addition and retirement plans and to determine rate structure and load management alternatives that would levelize daily peak demands and stabilize load factors. If the reconnaissance study shows that a power alternative other than the existing diesel alternative is the most favorable option for the power market,a detailed feasibility study will be initiated for that particular alternative.Using information gained from the geothermal exploration program,this analysis would determine whether a geothermal project warrants further State or outside investment.The feasibility study would be funded through the Power Authority's Rural Community Feasibility Program and would require up to one year to complete.If the results of the feasibility study are positive,a study of financing options,design,and finally,project construction and operation could follow.It is anticipated,assuming the geothermal option proves feasible and the required studies proceed in a timely manner,that a geothermal power plant could be on line at Unalaska as soon as 1988. 1867/086 resistivity survey of the area to determine the extent of the geothermal system. In addition to the contract with Republic Geothermal,Inc.,the Power Authority has established reimbursable services agreements for work at Unalaska with the University of Alaska,Department of Petroleum Engineering and with the Department of Natural Resources,Division of Geological and Geophysical Surveys.These agreements have resulted in the publication of papers on geological and geochemical investigations and well testing and a paper comparing the Unalaska geothermal potential with other geothermal sites worldwide. Another related effort was the production of a 15-minute video presentation entitled "Alaska's Geothermal Future."This educational video tape,funded through a federal grant from the U.S.Department of Energy,discusses geothermal resources in general,its potential for development,and its occurrence in Alaska and reviews the Pilgrim Hot Springs demonstration project and the Unalaska Geothermal Program.In addition to its educational value,the tape will provide useful information for potential investors in the projects. Closely aligned with the Unalaska geothermal exploration program is a reconnaissance study of energy alternatives for Unalaska.This study is being funded through the Power Authority's Rural Community Reconnaissance Program and is investigating and comparing the economics of various power alternatives for the Unalaska power market,including diesel generation(base case),hydropower,wind,and geothermal.The reconnaissance study, being conducted by Acres American,Inc.under contract to the Power Authority,is scheduled for completion August 31,1984.A load forecast has been developed for Unalaska which will be used in conjunction with development cost estimates provided by Republic Geothermal,Inc.in order to perform an economic analysis of the geothermal option to be included in the reconnaissance study.This effort will also be aided by a study being conducted by the City of Unalaska to establish electrical capacity addition and retirement plans and to determine rate structure and load management alternatives that would levelize daily peak demands and stabilize load factors. If the reconnaissance study shows that a power alternative other than the existing diesel alternative is the most favorable option for the power market,a detailed feasibility study will be initiated for that particular alternative.Using information gained from the geothermal exploration program,this analysis would determine whether a geothermal project warrants further State or outside investment.The feasibility study would be funded through the Power Authority's Rural Community Feasibility Program and would require up to one year to complete.If the results of the feasibility study are positive,a study of financing options,design,and finally,project construction and operation could follow.It is anticipated,assuming the geothermal option proves feasible and the required studies proceed in a timely manner,that a geothermal power plant could be on line at Unalaska as soon as 1988. 1867/086 SUMMARY OF .THE UNALASKA.GEOTHERMAL PROGRAM Alaska Power Authority February 9,1984 The Alaska Legislature in 1981 appropriated $5 million to be administered by the Alaska Power Authority for geothermal drillingandexplorationatMakushinVolcanoonUnalaskaIsland.The appropriation was preceded by a number of geologic investigations and a preliminary economic analysis which indicated potential for a geothermal power facility at Makushin Volcano. In November 1981,Republic Geothermal,Inc.was selected by the Power Authority to be the consultant to plan and coordinate the exploration and drilling program.The program was divided into two phases.Phase I activities included data review and synthesis;technical planning;land status determination;permitting require- ments;acquisition of baseline environmental data;geological, geochemical,and geophysical investigations and mapping;and the drilling of three temperature gradient wells.Phase II activities include the drilling of a deep exploratory well,the drilling of a shallower resource confirmation well,the testing and evaluation of any resources encountered,and an electrical resistivity survey to delineate the extent of the reservoir. Under Phase I,the three temperature gradient wells were drilled in 1982 to depths of 1500 feet and encountered temperatures of up to383°F (195°C).Two of the wells indicated the presence of a geothermal resource below,while the third appeared to be on the edge of the geothermal reservoir.The Phase I final report wascompletedin1983concludingthestrongpossibilityofawater-dominated geothermal resource in excess of 480°F (250°C)on theeasternflankofMakushinVolcanoatadepthoflessthan4000feet. Phase II was initiatedin the Spring of 1983.The exploratory wellwasstartedinearlyJune.After numerous delays caused by unex- pected drilling conditions,on August 25,1983,the well encoun- tered a substantial geothermal resource at a depth of 1946 feet. Well testing confirmed a water-dominated geothermal resource with asteamcapandbottomholetemperatureandpressureof379°F (193°C) and 478 psig respectively.The flow rate of the well was approxi- mately 47,000 lbs.per hour.At this flow rate,temperature,and pressure,it is calculated that one commercial-size production well at this location could produce six megawatts of electric power.A report of 1983 drilling activities and results is scheduled for completion March 1,1984.The remaining Phase II activities planned for 1984 include a 45-day flow test of the producing well, deepening of the producing well to approximately 2450 feet, 1867 /086 drilling of a 2000 feet resource confirmation well about two miles northeast of the current drilling location,and performing an electrical resistivity survey of the area to determine the extent of the geothermal reservoir. In addition to the contract with Republic Geothermal,Inc.,the Power Authority has reimbursable services agreements for work at Unalaska with the University of Alaska,Department of Petroleum Engineering and with the Department of Natural Resources,Division of Geological and Geophysical Surveys.These agreements have "resulted in the publication of papers on geological and geochemical investigations and well testing and a paper comparing the Unalaska geothermal potential with other geothermal sites worldwide. 'Another related effort was the production of a 15-minute video presentation entitled "Alaska's Geothermal Future."This educa- tional video tape,funded through a federal grant from the U.S. Department of Energy,discusses geothermal resources in general, its potential for development,and its occurrence in Alaska and reviews the Pilgrim Hot Springs demonstration project and the Unalaska Geothermal Program.In addition to its educational value, the tape will provide useful information for potential investors in the projects. Closely aligned with the Unalaska geothermal exploration program isareconnaissancestudyofenergyalternativesforUnalaska.This study is being funded through the Power Authority's Rural Community Reconnaissance Program and is investigating and comparing the economics of various power alternatives for the Unalaska powermarket,including diesel generation (base case),hydropower,wind, and geothermal.The reconnaissance study,being conducted by Acres American,Inc.under contract to the Power Authority,is scheduled for completion April 30,1984.A load forecast has been developed for Unalaska which will be used in conjunction with development cost estimates provided by Republic Geothermal,Inc.in order to perform an economic analysis of the geothermal option to be includ- ed in the reconnaissance study. If the reconnaissance study shows that a power alternative other than the existing diesel alternative is the most favorable option for the power market,a detailed feasibility study will be initi-ated for that particular alternative.Using .information gainedfromthegeothermalexplorationprogram,this analysis would determine whether a geothermal project warrants further State or outside investment.The feasibility study would be funded through the Power Authority's Rural Community Feasibility Program and would require up to one year to complete.If the results of the fea- sibility study are positive,a study of financing options,design, and finally,project construction and operation could follow.It is anticipated,assuming the geothermal option proves feasible andtherequiredstudiesproceedinatimelymanner,that a geothermal power plant could be on line at Unalaska as soon as 1988. 1867 /086 OM TO: FROM: 02-001A(Rev.10/79) EMORANDUM State of Alaska ALASKA POWER AUTHORITY File pate:February 2,1984 FILE NO: TELEPHONE NO:Dave venttll decent suBJecTt:Milestone Progress Report Project Manager Project Evaluation This memo explains the reasons for postponement dates of scheduled milestones on the January 31,1984 Milestone Progress Report. The Producers--Deliverables due:scheduled 06-30-83,postponed to 12-31-83,accomplished 01-18-84.Numerous delays required the rescheduling of this deadline.No amendment to the contract with The Producers was necessary for the extension.However, an amendment to the RSA with DEPD and an extension of the federal grant funding the task were necessary.The task is now complete. University of Alaska:scheduled 10-31-83,postponed 10-31-84.This postponement is the result of an amendment to the RSA to extend the University's participation in the program through the 1984 field season. Acres American,Inc./Reconnaissance study:scheduled 11-01-83,postponed to 04-30-84.This contract was extended so that Acres could incor- porate results of the 1983 field work into its economic analysis of the geothermal option. DGGS RSA:scheduled 12-31-83,postponed to 03-01-84.This RSA was extended at the request of DGGS due to unforseen delays in the analysis of core samples. Republic Geothermal,Inc.contract:scheduled 06-31-84,postponed to 12-31-84.Republic's contract will be extended in order to complete the drilling and exploration program in 1984.No additional funds are involved in this time extension. BY.0S.OSMEMORANJUMStateofAlaska TO:File DATE:February 10,1984 FILE NO: TELEPHONE NO: FROM:Dave Denig-Chakroff SUBJECT:Weekly Status Project Manager Report 2/2/84 -2/8/84 Unalaska Geothermal The project manager finalized and sent to the prime contractor a letter clarifying agreements with respect to Amendment No.6 to its contract. The project manager finalized and sent a letter to Kurt Dzinich, Legislative Advisor,transmitting technical information about the geothermal project. The project manager met with the Power Authority's cost estimator to discuss routing options and development cost estimates of a transmission line from Makushin Volcano to the City of Unalaska. The cost estimator provided estimates for two possible routes selected by the project manager.The project manager spoke with the prime contractor's economic analyst and discussed the estimates and their underlying assumptions.Both agreed to rework their estimates and to hold a conference call on the subject in several days. The project manager met with Dr.Economides,the University of Alaska's consultant to the project,to receive and discuss his critiques of proposals for 1984 activities by the other partici- pants in the program.They also discussed Dr.Economides'trip report for his recent trip to a geothermal seminar in Stanford and discussed the status of reports provided under the RSA between the two agencies. The project manager and Director of Project Evaluation met with two representatives of Morrison-Knudsen Engineering of Boise,Idaho to discuss the status of the Unalaska project and about development costs and economic analysis of a potential geothermal facility at . Unalaska. The project manager spoke with Roman Motyka of DGGS about the status of the report due March Ist and the status of the PowerAuthority's review of 1984 proposals. The project manager prepared a draft of a summary of the project tobeusedasabasisforapresentationattheAlternativeEnergyConferenceinFairbanksandtobeusedtoprovideipfgpmetionabout.Code:=v 7OF. 1901/141 Fis Cote:"OY 23 L Date FAY,f 7 | .2yr- the project upon the request of interested parties including legislators,other agencies,potential contract bidders,and the general public.The project manager also initiated preparation of a biblfography of publications directly related to the project as an addendum to the above summary. The project manager responded to a request from a representative of the U.S.Geological Survey and from a student at Columbia Universi- ty for information about geothermal activities in Alaska. The project manager spoke with Allen Aksell,Land Director of the Aleut Corporation,about load forecasts and the power cost assis- tance program at Unalaska. The project manager responded to a request from Gerry Huttrer, Project Manager for Republic Geothermal,for a copy of the letter sent to the City of Unalaska authorizing use of Power Authority equipment stored at Unalaska to drill monitoring wells in the vicinity of the city landfill. The project manager completed his review of the Corps'of Engineers draft "Small Hydropower Feasibility Report and Environmental Impact Statement for Unalaska"and drafted a transmittal letter andspecificcommentsonthedraft. The project manager researched the source of a questionable state- ment contained in the geothermal video production.He spoke with The Producers about the possibility of making changes in the tape and made a recommendation to the Director of Project Evaluation concerning this.He also looked into prospects of getting addi- tional copies of the video made. The project manager spoke with Jeff Currier,Public Utilities Director at Unalaska,to discuss transmission line development cost estimates,route options,line sizes,and the need for substations. Nikolski,False Pass and Pedro Bay Grants The project manager called Dan Bachorst,of DCRA,to determine the status of DCRA's response to the Power Authority's request for a proposal for administering these grants.The status of the re- sponse could not be determined. The project manager spoke with Charles Evans about the status of the Nikolski Grant.It appears that the village is again in a position to negotiate a purchase of the utflity and wants a portion of the grant to perform an evaluation and appraisal of the utility. The project manager responded to Mr.Evans'request for a vendor list of electrical engineers, 1901/141 sy sd ar i Skagway Wind The project manager spoke with Jim Gurke of DCED about the status of the Skagway project and set up a meeting to discuss the project. DDC/it 1901/141 SUMMARY OF THE UNALASKA GEOTHERMAL PROGRAM Alaska Power Authority February 9,1984 The Alaska Legislature in 1981 appropriated $5 million to be administered by the Alaska Power Authority for geothermal drilling and exploration at Makushin Volcano on Unalaska Island.The appropriation was preceded by a number of geologic investigations and a preliminary economic analysis which indicated potential for a geothermal power facility at Makushin Volcano. In November 1981,Republic Geothermal,Inc.was selected by the Power Authority to be the consultant to plan and coordinate the exploration and drilling program.The program was divided into two phases.Phase I activities included data review and synthesis; technical planning;land status determination;permitting require- ments;acquisition of baseline environmental data;geological, geochemical,and geophysical investigations and mapping;and the drilling of three temperature gradient wells.Phase II activities include the drilling of a deep exploratory well,the drilling of a shallower resource confirmation well,the testing and evaluation of any resources encountered,and an electrical resistivity survey to delineate the extent of the reservoir. Under Phase I,the three temperature gradient wells were drilled in 1982 to depths of 1500 feet and encountered temperatures of up to383°F (195°C).Two of the wells indicated the presence of a geothermal resource below,while the third appeared to be on the edge of the geothermal reservoir.The Phase I final report was completed in 1983 concluding the strong possibility of a water- dominated geothermal resource in excess of 480°F (250°C)on the eastern flank of Makushin Volcano at a depth of less than 4000 feet. Phase II was initiated in the Spring of 1983.The exploratory well was started in early June.After numerous delays caused by unex- pected drilling conditions,on August 25,1983,the well encoun- tered a substantial geothermal resource at a depth of 1946 feet. Well testing confirmed a water-dominated geothermal resource with a steam cap and bottomhole temperature and pressure of 379°F (193°C) and 478 psig respectively.The flow rate of the well was approxi- mately 47,000 ibs.per hour.At this flow rate,temperature,and pressure,it is calculated that one commercial-size production wel] at this location could produce six megawatts of electric power.A report of 1983 drilling activities and results is scheduled for completion March 1,1984.The remaining Phase II activities planned for 1984 include a 45-day flow test of the producing well, deepening of the producing well to approximately 2450 feet, 1867 /086 drilling of a 2000 feet resource confirmation well about two miles northeast of the current drilling location,and performing an electrical resistivity survey of the area to determine the extent of the geothermal reservoir. In addition to the contract with Republic Geothermal,Inc.,the Power Authority has reimbursable services agreements for work at Unalaska with the University of Alaska,Department of Petroleum Engineering and with the Department of Natural Resources,Division of Geological and Geophysical Surveys.These agreements have resulted in the publication of papers on geological and geochemical investigations and well testing and a paper comparing the Unalaska geothermal potential with other geothermal sites worldwide. Another related effort was the production of a 15-minute video presentation entitled "Alaska's Geothermal Future."This educa- tional video tape,funded through a federal grant from the U.S. Department of Energy,discusses geothermal resources in general, its potential for development,and its occurrence in Alaska and reviews the Pilgrim Hot Springs demonstration project and the Unalaska Geothermal Program.In addition to its educational value, the tape will provide useful information for potential investors in the projects. Closely aligned with the Unalaska geothermal exploration program is a reconnaissance study of energy alternatives for Unalaska.This study is being funded through the Power Authority's Rural Community Reconnaissance Program and is investigating and comparing the economics of various power alternatives for the Unalaska powermarket,including diesel generation (base case),hydropower,wind, and geothermal.The reconnaissance study,being conducted by Acres American,Inc.under contract to the Power Authority,is scheduled for completion April 30,1984.A load forecast has been developed for Unalaska which will be used in conjunction with development cost estimates provided by Republic Geothermal,Inc.in order to perform an economic analysis of the geothermal option to be includ- ed in the reconnaissance study. If the reconnaissance study shows that a power alternative other than the existing diesel alternative is the most favorable option for the power market,a detailed feasibility study will be initi- ated for that particular alternative.Using information gained from the geothermal exploration program,this analysis would determine whether a geothermal project warrants further State or outside investment.The feasibility study would be funded through the Power Authority's Rural Community Feasibility Program and would require up to one year to complete.If the results of the fea- sibility study are positive,a study of financing options,design, and finally,project construction and operation could follow.It is anticipated,assuming the geothermal option proves feasible and the required studies proceed in a timely manner,that a geothermal power plant could be on line at Unalaska as soon as 1988. 1867/086 SY ol.03 INFORMATION ITEM --INVITATION FOR BID FOR PLUGGING OF GEOTHERMAL TEST WELL AT UNALASKA The Power Authority intends to issue an Invitation for Bid (IFB)for the plugging of the geothermal test well at Unalaska.This well was drilled in 1985 in conjunction with our geothermal exploration and drilling program on Unalaska Island.The well encountered a highly productivegeothermalresourceandwasplacedinasuspendedstatus(rather than being plugged at the end of the field season)so it would be available for future temperature and flow testing.In accordance with our drill- ing permit with the Alaska Division of Oil and Gas,the well has re- mained in suspended status pending the results of our economic and financial feasibility analysis of the Unalaska Geothermal Project.The permit requires that the well be properly plugged and abandoned by September 30,1988. All anticipated and necessary tests on the well have been conducted. This well is not designed to be utilized as a production well;if the site is ever developed for geothermal power generation,a new production well would be required.The test well will have to be plugged and abandoned whether or not a geothermal power project is ever developed at the site.Having outlived its usefulness as a test well,the well represents a liability to the Power Authority at this time and must be plugged during the upcoming field season in accordance with our State permit.Funds were set aside in compliance with the permit and are available for this purpose. The economic feasibility analysis for the Unalaska Geothermal Project and a preliminary financial analysis indicate that it is very unlikely that a geothermal power project at the site is financially feasible at this time.Over the next month,these draft finings will be presented and discussed with the City of Unalaska and the two native corporations whose land and resources would be involved in the project.It is anticipated that final findings and recommendations on the economic and financial feasibility of the project will be presented for Board ap- proval before June 30,1988. 2365/0D34/1 SBLO 4.O% SUMMARY OF THE UNALASKA GEOTHERMAL PROGRAM Alaska Power Authority February 9,1984 The Alaska Legislature in 1981 appropriated $5 million to be administered by the Alaska Power Authority for geothermal drilling and exploration at Makushin Volcano on Unalaska Island.The appropriation was preceded by a number of geologic investigations and a preliminary economic analysis which indicated potential for a geothermal power facilityat Makushin Volcano. In November 1981,Republic Geothermal,Inc.was selected by the Power Authority to be the consultant to plan and coordinate the exploration and drilling program.The program was divided into two phases.Phase I activities included data review and synthesis; technical planning;land status determination;permitting require- ments;acquisition of baseline environmental data;geological, geochemical,and geophysical investigations and mapping;and the drilling of three temperature gradient wells.Phase II activities include the drilling of a deep exploratory well,the drilling of a shalloweWresource confirmation well,the testing and evaluation of any resources encountered,and an electrical resistivity survey to delineate the extent of the reservoir. Under Phase I,the three temperature gradient wells were drilled in 1982 to depths of 1500 feet and encountered temperatures of up to 383°F (195°C).Two of the wells indicated the presence of a geothermal resource below,while the third appeared to be on the edge of the geothermal reservoir.The Phase I final report was completed in 1983 concluding the strong possibility of a water- dominated geothermal resource in excess of 480°F (250°C)on the eastern flank of Makushin Volcano at a depth of less than 4000 feet. Phase II was initiated in the Spring of 1983.The exploratory wel] was started in early dune.After numerous delays caused by unex- pected drilling conditions,on August 25,1983,the well encoun- tered a substantial geothermal resource at a depth of 1946 feet. Well testing confirmed a water-dominated geothermal resource with asteamcapandbottomholetemperatureandpressureof379°F (193°C) and 478 psig respectively.The flow rate of the well was approxi- mately 47,000 Ibs.per hour.At this flow rate,temperature,and pressure,it is calculated that one commercial-size production well at this location could produce six megawatts of electric power.A report of 1983 drilling activities and results is scheduled for 1867/086 Summary of The Unalaska Geothermal Program Page 2 completion March 1,1984.The remaining Phase II activities planned for 1984 include a 45-day flow test of the producing well, deepening of the producing well to approximately 2450 feet,drill-ing of a shattow 4 2000-feet§resource confirmation wel]about twomilesnortheastofthecurrentdrillinglocation,and performing an electrical resistivity survey of the area to determine the extent of the geothermal reservoir. In addition to the contract with Republic Geothermal,Inc.,the Power Authority has reimbursable services agreements for work at Unalaska with the University of Alaska,Department of Petroleum Engineering and with the Department of Natural Resources,Division of Geological and Geophysical Surveys.These agreements have resulted in the publication of papers on geological and geochemical investigations and well testing and a paper comparing the Unalaska geothermal potential with other geothermal sites worldwide. Another related effort was the production of a 15-minute video presentation entitled "Alaska's Geothermal Future."This educa- tional video tape,funded through a federal grant from the U.S. Department of Energy,discusses geothermal resources in general, its potential for development,and its occurrence in Alaska and reviews the Pilgrim Hot Springs demonstration project and the Unalaska Geothermal Program.In addition to its educational value, the tape will provide useful information for potential investors in the projects. Closely aligned with the Unalaska geothermal exploration program is a reconnaissance study of energy alternatives for Unalaska.This study is being funded through the Power Authority's Rural Community Reconnaissance Program and is investigating and comparing the economics of various power alternatives for the Unalaska power market,including diesel generation (base case),hydropower,wind,and geothermal.The reconnaissance study,being conducted by Acres American,Inc.under contract to the Power Authority,is scheduled for completion April 30,1984.A load forecast has been developed for Unalaska which will be used in conjunction with development cost estimates provided by Republic Geothermal,Inc.in order to perform an economic analysis of the geothermal option to be includ- ed in the reconnaissance study. If the reconnaissance study shows that a power alternative other than the existing diesel alternative is the most favorable option for the power market,a detailed feasibility study will be initi- ated for that particular alternative.Using information gained from the geothermal exploration program,this analysis would determine whether a geothermal project warrants further State or outside investment.The feasibility study would be funded through the Power Authority's Rural Community Feasibility Program and would require up to one year to complete.If the results of the fea-sibility study are positive,a study of financing options,design, 1867/086 Summary of The Unalaska Geothermal Program Page 3 and finally,project construction and operation could follow.It is anticipated,assuming the geothermal option proves feasible and the required studies proceed in a timely manner,that a geothermal power plant could be on line at Unaltaska as soon as 1988. 1867/086 SUMMARY OF THE UNALASKA GEOTHERMAL PROGRAM Alaska Power Authority February 9,1984 The Alaska Legislature in 1981 appropriated $5 million to be administered by the Alaska Power Authority for geothermal drillingandexplorationatMakushinVolcanoonUnalaskaIsland.The appropriation was preceded by a number of geologic investigationsandapreliminaryeconomicanalysiswhichindicatedpotentialfora geothermal power facility at Makushin Volcano. In November 1981,Republic Geothermal,Inc.was selected by the Power Authority to be the consultant to plan and coordinate the exploration and drilling program.The program was divided into two phases.Phase I activities included data review and synthesis; technical planning;land status determination;permitting require- ments;acquisition of baseline environmental data;geological,geochemical,and geophysical investigations and mapping;and the drilling of three temperature gradient wells.Phase II activities include the drilling of a deep exploratory well,the drilling of a shallow resource confirmation well,the testing and evaluation of any resources encountered,and an electrical resistivity survey to delineate the extent of the reservoir. Under Phase I,the three temperature gradient wells were drilled in1982todepthsof1500feetandencounteredtemperaturesofupto383°F (195°C).Two of the wells indicated the presence of a geothermal resource below,while the third appeared to be on the edge of the geothermal reservoir.The Phase I final report was completed in 1983 concluding the strong possibility of a water- dominated geothermal resource in excess of 480°F (250°C)on the eastern flank of Makushin Volcano at a depth of less than 4000 feet. Phase II was initiated in the Spring of 1983.The exploratory well was started in early June.After numerous delays caused by unex- pected drilling conditions,on August 25,1983,the well encoun- tered a substantial geothermal resource at a depth of 1946 feet. Well testing confirmed a water-dominated geothermal resource with a steam cap and bottomhole temperature and pressure of 379°F (193°C) and 478 psig respectively.The flow rate of the well was approxi- mately 47,000 Ibs.per hour.At this flow rate,temperature,andpressure,it is calculated that one commercial-size production wellatthislocationcouldproducesixmegawattsofe report of 1983 drilling activities and results 1867/086 Summary of The Unalaska Geothermal Program Page 2 completion March 1,1984,The remaining Phase II activities planned for 1984 include a 45-day flow test of the producing well, deepening of the producing well to approximately 2450 feet,drill-ing of a shallow (2000.feet)resource confirmation well about two miles northeast of the current drilling location,and performing an electrical resistivity survey of the area to determine the extent of the geothermal reservoir. In addition to the contract with Republic Geothermal,Inc.,the Power Authority has reimbursable services agreements for work at Unalaska with the University of Alaska,Department of Petroleum Engineering and with the Department of Natural Resources,Division of Geological and Geophysical Surveys.These agreements have resulted in the publication of papers on geological and geochemical investigations and well testing and a paper comparing the Unalaska geothermal potential with other geothermal sites worldwide. Another related effort was the production of a 15-minute video presentation entitled "Alaska's Geothermal Future."This educa- tional video tape,funded through a federal grant from the U.S. Department of Energy,discusses geothermal resources in general, its potential for development,and its occurrence in Alaska and reviews the Pilgrim Hot Springs demonstration project and the Unalaska Geothermal Program.In addition to its educational value, the tape will provide useful information for potential investors in the projects. Closely aligned with the Unalaska geothermal exploration program is a reconnaissance study of energy alternatives for Unalaska.This study is being funded through the Power Authority's Rural Community Reconnaissance Program and is investigating and comparing the economics of various power alternatives for the Unalaska powermarket,including diesel generation (base case),hydropower,wind, and geothermal.The reconnaissance study,being conducted by Acres American,Inc.under contract to the Power Authority,is scheduled for completion April 30,1984.A load forecast has been developed for Unalaska which will be used in conjunction with development cost estimates provided by Republic Geothermal,Inc.in order to perform an economic analysis of the geothermal option to be includ- ed in the reconnaissance study. If the reconnaissance study shows that a power alternative other than the existing diesel alternative is the most favorable option for the power market,a detailed feasibility study will be initi- ated for that particular alternative.Using information gained from the geothermal exploration program,this analysis would determine whether a geothermal project warrants further State or outside investment.The feasibility study would be funded through the Power Authority's Rural Community Feasibility Program and would -require up to one year to complete.If the results of the fea- sibility study are positive,a study of financing options,design, 1867/086 Summary of The Unalaska Geothermal Program Page 3 and finally,project construction and operation could follow.It is anticipated,assuming the geothermal option proves feasible and the required studies proceed in a timely manner,that a geothermal power plant could be on line at Unalaska as soon as 1988. 1867/086 MEMORA..2UM Stai of Alaska ALASKA POWER AUTHORITY 'O File DATE:February 2,1984FILENO:SHOS-Soffew: : TELEPHONENO: FROM:!(I SUBJECT:Dave Denig+Chakroff 'Milestone Progress Report Project Manager Project Evaluation -a '""This meme explains the reasons for postponement dates of scheduled ae milestonss of the January 31,1984 Milestone Progress Report. The Producers--Delimerables due:scheduled 06-30-83,postponed to 12-31-83,accomplibhed 01-18-84.Numerous delays required the rescheduling of this deadline..No amendment to the contract _.with The Producers was necessary for the extension.However, "**"an amendment to the RSA with DEPD and an extension of theoS.Rew com grant funding tthe task were:necessary.The task isoanowcomp)ateW -.é ; ; _: )University of.'Alaska:"scheduled 10-31-83,postponed 10-31-84.This postponement is the result of an amendment to the RSA to extend -the University's participation in the program through the 1984.f1eld season.PeAmerican,Inc./Reconnaissance study:scheduled 11-01-83,postponed ©"Eo.to 04-30-84.This contract was extended so that Acres could incor- e porate results of the 1983°field work into its economic analysis:"of the geothermal option.°°oy a "pecs”RSA:scheduled 12-31-83,postponed to03-01-84."This RSA was--extended at the request of DGGS due to unforseen delays in the-analysis”of core samples.Republic Geothermal,Inc.contract:scheduled 06-31-84,postponed to 12-31-84.Republic's contract will be extended in order to complete the drilling and exploration program in 1984.No \_additionsaafunds are involved in this time extension. PROJECT:UNALASKA GEOTHERMAL PROJECT MANAGER:Dave Denig-Chakroff DATE:January 31,1984 Milestone The Producers--Deliverables due Republic Geothermal--1983 field rpt. U of A RSA completion &deliverables Acres American--Contract completion Reconnaissance Study Findings &Recommendations DGGS RSA completion &deliverables Rate Study completion The Producers--contract complete Resistivity study completion Republic Geothermal contract complete Preliminary Feasibility study Final Feasibility study Findings and Recommendations Preliminary independent cost estimate Preliminary plan of finance Final plan of finance Power sales agreement Power sales contract Land acquisition plan Final independent cost estimate Detailed design completion Findings and Recommendations Land acquisition complete Construction startup Construction complete 917/061 MILESTONE PROGRESS Scheduled 06-30-83 03-01-84 10-31-83 11-01-83 11-01-83 05-31-84 12-31-83 06-30-84 06-01-84 10-31-84 06-31-84 12-31-84 04-31-85 06-30-85 09-30-85 09-30-85 10-31-85 10-31-85 12-31-85 03-31-86 04-30-86 04-30-86 06-30-86 06-30-86 07-01-86 06-30-87 Postponed* 12-31-83 10-31-84 04-30-84 04-30-84 03-01-84 12-31-84 Accomplished CONTRACT STATUS REPORT PROJECT:UNALASKA GEOTHERMAL REPORT DATE:January 31,1984CC-08-2334 Republic Geothermal,Inc.Current to December 31,1983 PERCENT OF BUDGET BUDGETED BUDGETED PERCENT BUDGET ACTIVITY MANHOURS COST COMPLETE EXPENDED EXPENDED COMMENTS IX Planning Not Reported $66,245 100 $51,687 78.02 X Drilling "1,853,504 98 964,610 52.04 XL Testing "259,478 95 75,531 29.11 XII Reporting "74,349 55 55,429 74.55 XIII &XIV Abd.or Susp."159,224 70 153,637 96.49 TOTALS 2,412,800 84 1,300,894 53.92 CONTRACT STATUS REPORT Department of Natural Resources Division of Geological &Geophysical Surveys RS08-8227 BUDGETED BUDGETED ACTIVITY MANHOURS COST Field investigations and geological mapping not reported $164,520 PERCENT COMPLETE 95 BUDGET EXPENDED $59,544.42 PROJECT:UNALASKA GEOTHERMAL REPORT DATE:January 31,1984 PERCENT OF BUDGET EXPENDED COMMENTS. 36 CONTRACT STATUS REPORT Department of Natural Resources Division of Minerals and Energy Management RSO8-4055 BUDGETED BUDGETED ACTIVITY MANHOURS COST Inspection to determine compliance with permit stipulations not reported $1320 PERCENT COMPLETE PROJECT:UNALASKA GEOTHERMAL REPORT DATE:January 31,1984 PERCENT OF BUDGET BUDGET EXPENDED EXPENDED COMMENTS CONTRACT STATUS REPORT University of Alaska--Fairbanks Petroleum Engineering Department RSO8-8199 BUDGETED BUDGETED ACTIVITY MANHOURS COST Consulting Services Not Reported $109,251 PERCENT COMPLETE 70 PROJECT:UNALASKA GEOTHERMAL REPORT DATE:January 31,1984 PERCENT OF BUDGET BUDGET EXPENDED EXPENDED COMMENTS an $71,559.25 65 RSA amended for 1984 program with increase in budget and extended period of performance PROJECT:UNALASKA GEOTHERMALCONTRACTSTATUSREPORT REPORT DATE:January 31,1984 The Producers CC-08-2625 PERCENT OF BUDGET BUDGETED BUDGETED PERCENT BUDGET ACTIVITY MANHOURS cost COMPLETE EXPENDED EXPENDED COMMENTS Task 1 Not reported $4815 100 $4815 100 Deliverables accepted by ,Project Manager JanuaryTask24815100481510026,1984 Task 3 "4815 100 4815 100 Task 4 "4815 100 4815 ,100 TOTAL 19,260 100 19,260 100 PROJECT:|UNALASKA GEOTHERMAL PROJECT MANAGER:Dave Denig-Chakroff DATE:January 31,1984 -- Milestone The Producers--Deliverables due Republic Geothermal--1983 field rpt. U of A RSA completion &deliverables Acres American--Contract completion Reconnaissance Study Findings &Recommendations DGGS RSA completion &deliverables Rate Study completion The Producers--contract complete Resistivity study completion Republic Geothermal contract complete Preliminary Feasibility study Final Feasibility study Findings and Recommendations Preliminary independent cost estimate Preliminary plan of finance Final plan of finance Power sales agreement Power sales contract Land acquisition plan Final independent cost estimate Detailed design completion Findings and Recommendations Land acquisition complete Construction startup Construction complete 917/061 MILESTONE PROGRESS Scheduled 06-30-83 03-01-84 10-31-83 11-01-83 11-01-83 05-31-84 12-31-83 06-30-84 06-01-84 10-31-84 06-31-84 12-31-84 04-31-85 06-30-85 09-30-85 09-30-85 10-31-85 10-31-85 12-31-85 03-31-86 04-30-86 04-30-86 06-30-86 06-30-86 07-01-86 06-30-87 36 O¢.O?g Postponed*Accomplished 12-31-83 01-18-84 10-31-84 04-30-84 04-30-84 03-01-84 12-31-84 a Maa TO: FROM: iP A Rey Sia 2a EMORANDUM State of Alaska ALASKA POWER AUTHORITY File pate:February 2,1984 FILE NO TELEPHONENODavevenitlleeoessugvect:Milestone Progress Report Project Manager Project Evaluation This memo explains the reasons for postponement dates of scheduled milestones on the January 31,1984 Milestone Progress Report. The Producers---Deliverables due:scheduled 06-30-83,postponed to 12-31-83,accomplished 01-18-84.Numerous delays required the rescheduling of this deadline.No amendment to the contract with The Producers was necessary for the extension.However, an amendment to the RSA with DEPD and an extension of the federal grant funding the task were necessary.The task is now complete. University of Alaska:scheduled 10-31-83,postponed 10-31-84.This postponement is the result of an amendment to the RSA to extend the University's participation in the program through the 1984 field season. Acres American,Inc./Reconnaissance study:scheduled 11-01-83,postponed to 04-30-84.This contract was extended so that Acres could incor- porate results of the 1983 field work into its economic analysis of the geothermal option. DGGS RSA:scheduled 12-31 83,postponed to 03-01-84.This RSA was extended at the request of DGGS due to unforseen delays in the analysis of core samples. Republic Geothermal,Inc.contract:scheduled 06-31-84,postponed to 12-31-84.Republic's contract will be extended in order to complete the drilling and exploration program in 1984.No additional funds are involved in this time extension. NAME AND ADDRESS OF AGENCY JOHNSON &HIGGINS 2029 CENTURY PARK EAST .. LOS ANGELES,CA 90067 TEL:(213)552-8700 COMPANIES AFFORDING COVERAGES COMPANY LETTER A Argonaut Insurance Company-© COMPANY LETTER B Central National Insurance Company NAME AND ADDRESS OF INSURED ALASZN POSED SOTHORITY Republic Geothermal,Inc. 11823 East Slauson Avenue,Suite 1 Santa Fe Springs,California 90670 COMPANY CLETTER COMPANY ' LETTER ? COMPANY ELETTER This is to certify that policies of insurance listed below have been issued to the insured named above and are in force at this time.Notwithstanding any requirement,term or conditionofanycontractorotherdocumentwithrespecttowhichthiscertificatemaybeissuedormaypertain,the insurance afforded by the policies described herein is subject to all theterms,exclusions and conditions of such policies. Limits of Liabitity in Thousands (000)COMPANY POLICYTYPECFINSURANCEPOLICYNUMBER EACHLETTEREXPIRATIONDATEOCCURRENCE AGGREGATE GENERAL LIABILITY BODILY INJURY $$cx]COMPREMENSIVE FORM[X]Premises-oPERATIONS PROPERTY DAMAGE $$ EXPLOSION AND COLLAPSE HAZARD UNDERGROUND HAZARDA|RE UNDERGROUND HAZAR CL 20-426 107985 1/1/85 OPERATIONS HAZARD BODILY INJURY ANDCONTRACTUALINSURANCEPROPERTYDAMAGE +500BROADFORMPROPERTYCOMBINED ' DAMAGEx]INDEPENDENT CONTRACTORS PERSONAL INJURY PERSONAL IN 'S$ MOBILE LIABILI BODILY INJURY oA EO Mars,AUTOMOBILE LIABILITY BODILY INJURY $nae:KX]comPrenensive FoRM BODILY INJURY s i '4 EK]owneo (EACH ACCIDENT) A me CA 20-426-107984 1/1/85 scostery bawace TEHi- eee isa BODILY INJURY AND aaiNON-OWNED PROPERTY DAMAGE |*500.COMBINED ' EXCESS LIABILITYra BODILY INJURY AND UMBRELLA FORM $4 $B Cl CNU 00-26-48 1/1/85 PROPERTY DAMAGE 10,000,10,000,OTHER THAN UMBRELLA COMBINED [oe "§ FORM WORKERS'COMPENSATION STATUTORY barnegat aches A and we 20-426-106454 1/1/85 2,000EMPLOYERS'LIABILITY im ,CA,sen accroenns ; OTHER er States $100,000. DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES Cancellation:Should any of the above described policies be cancelled before the expiration date thereof,the issuing com- pany will endeavor to mail days written notice to the below named certificate holder,but failure to mail such notice shall impose no obligation or liability of any kind upon the company. Anchorage,Alaska 99501.Attention:Ms.Patty De Jong NAME AND ADDRESS OF CERTIFICATE HOLDER:me Alaska Power Authority DATE ISSUED:84 > 3344 West 5th Avenue-Second Floor A B LLP),shh ZAUTHORIZEDREPRESENTATIVE a ACORD 25 (1 79) PROJECT EVALUATION TRIP REPORT NAME:Dave Denig-Chakroff DATE:1/9/84 -1/11/84 LOCATION:Unalaska/Dutch Harbor PURPOSE OF TRIP: (1)To attend the Corps of Engineers'(COE)public meeting on two small hydropower proposals and to discuss the proposals and draft feasibility report with COE personnel. (2)To meet with the City Manager to finalize the professional services contract for a cost-of-power and rate study. (3)To meet with the City Manager,Public Utilities Director,and Electric Utility Manager to discuss load forcasts. ACTIVITIES/AGENDA (participation in meetings,schedule appointments): Monday afternoon:Met with the City Manager to discuss contractual arrangements for the cost-of-power and rate study.We also discussed load forecasts for the community. Monday evening:Met with representatives of COE to discuss the draft feasibility study for two small hydropower projects. Tuesday morning:Met with the City Manager,Public Works Director,Electric Utility Manager,City Planner and representatives of COE to discuss the draft feasibility study and EIS.(over) CONTACTS: Nancy Gross,City Manager Jeff Currier,Public Works Director Jack Anderson,Electric Utility Manger Arnie Erickson,City Planner Jurate Mazeika,Parks,Culture &Recreation Director Sherry Thompson,City Councilwoman Abi Dickson,citizen (owner of bookstore and gift shop) Kathy Grimnes,Chairman of the Board,Ounalaska Village Corporation Frank and Betty Abello,citizens (owners of construction company) Tom Gould,owner,Maritime Heliocopter,Inc. SIGNIFICANT ITEMS (potential problems): Contractual arrangements for the cost-of-power and rate study have been worked out. APA may proceed to finalize the professional services contract. , (over) The Public Works Director and Electric Utility Manager project that electrical demand will increase significantly in the near future.The major cogenerators of electricity on the island have expressed interest in purchasing electricity from the city if rates are competitive with their own cost of generation.City officials feel that the long-range population and load forcasts presented by Acres American,Inc.are speculative but not unrealistic.The new electric system is being designed to handle the output of a geothermal power plant should one be constructed.New diesel generators proposed for the system would be needed for backup and peak demand periods if a geothermal power plant is installed. 873/102 (over) ACTIVITIES/AGENDA:(continued) Tuesday afternoon:Met with the Public Works Director and Electric Utility Manager to discuss load forecasts,capabilities of the present and proposed upgraded system, effect of cogeneration in the community,and the role of and potential for geothermal power in the community. Tuesday evening:Attended COE public meeting on small hydropower projects and answered questions that arose concerning the geothermal project. Wednesday morning:Met with interested members of the community to discuss the status of the geothermal project and to take a driving tour of the island.Talked to Tom Gould of Maritime Heliocopters about the status of the geothermal well. CONTACTS:(continued) Ron Maj,Project Manager,COE John Burns,Project Biologist,COE Diane Walters,Public Information Officer,COE Bruce Batten,Public Information Officer,COE Lt.Colonel Saage,COE SIGNIFICANT ITEMS:(continued) The COE's two small hydropower projects would provide relatively low installed capacities (700 kW and 260 kW)and would have a minor effect on the feasibility of a geothermal power project of 10-30 MW.The larger of the COE projects (Shaishnikoff)is not likely to be built due to a minimally positive B/C ratio (1.04).The hydropower projects could not be built for at least 5 to 10 years and their feasibility will be reevaluated after the economics of a geothermal facility are determined. The people of Unalaska are,generally,very interested and enthusiastic about the prospects of a geothermal power plant on Makushin.They want to be kept updated on the project and expressed their willingness to support the project in any way Se i yligc/ed IAABSKA CBOE LMAL |powcr EenenTs |R FY FY 'my eS” so ,N>FJF MF MII Te sp tnt er mend PUBLIC GeoTHEemal 5 Qe -%-th COMTORLT-Yo0.----/"|----------- ZCONN ISS RNLE a ___' Srv vy SZ-_---- ';2,5 ate =Svoy W-------------¥ AS 3,6 TTY OF ALasea BSAC ae ee ee ee ee ee 9 {a RESTIATY Swoy Ze eH LK |LL LG aS CoS SAR -V Sn BR we PRobucers Com react Yom _--9 --ee Le Vv /4 Lg a SeSIBinrry STUDY GW -. _WV __Y__s R Find ves /1,@&i p) "Preomm end anion S WZ...Y ZI LEGEND - Jit Darianens of Peaster Ceemewr|CF |2.Larmey Seveocep Comee7ion Deqe (Peozeer ELemen )e)3.Exreovep ComecéTion OAT (Rast cr Lremcn7) V1Y.Desarr PEWELASLE DUE PATE V 1S.twa DeciCOAQKe Due.Dare 4.€,Betenpen DELIVGRARCE Dee DATE-. VALRSER Geopyemmt FY 8&6 FY g7 ,oCposueerCremen7s |JTaA soN DITEF MA MITA SON PT Fuh pr I 4 AScaspeCiwavtee---ZY 0G PEM CosT /4 osOTWEZY...stiW, Puce SALES /d asAyeument/tarneheT YZ V__ !d aeLAwe?AguisiTIn 2,6. Deraiceo Desien 2..-V /xFinvwwesgKeewyW_¥ CousrroeTiaM go.F WMPSKA CeotHeemac =|cy eyPeosvteTEvEenEnTsS+A Y ry eS BON DT F A Z ;m (A_JI\T DT Emam CPLBLIC GeoTHeemal _---¢)a COMTORL T-a iV o oo eee 'SCONN ISS ROLE QS __a 4¢ Soy YZ...<2:_-- 1 4 Rate Svoy W-----o” 5 3,6 vi "PST OF Acaswa RSAC _-__--_-------L ee .> "RESISTIVITY Swoy Z _-_---=a>as. GS CSA-&Y fg 6 BRwe."PRobucers tow rete Wom _---9 -oe L LL VY - 4 L a ERSVSIOrTY Soy v7 V.VY 4 PR Findiwoes &/a Pres mm eEwvandn S V._.Y gq % LEGEND: Jl Laranond)of Peester CcemewTVY{2.Iarriey Sve OUcED Co mAE7TION Daqe (Peozeer Eremem)0)s.Exteovep Comeprt Tiow OATE (Rast Cr LrEemcenr7) VY.Deser DEWEeASLE DUE DATS V 15.Fwar DecweOnage Due.PATE \4 6,Berenpen Derivaeance Der DATE WALRSER Gropeenmt|TY &ry 97eoseterEremew7s|TR SON DITEFMWMA MIATA SON DT FmAwmz AasProdveLwauteeK----"Y Lw0G PEM CosT ,4 157OOWEWY.Vv A 3s4wveSALE/;Acecemcor onaenes Y--V._V !di aeaweAauisiTio”Y__V__ '2,9 Derarceo PEsien 2 -- - -.-V /xinvesdReonW_¥ / Comsrructiew Yo.Ly PROJECT:UNALASKA GEOTHERMAL PROJECT MANAGER:Dave Denig Chakroff DATE:November 30,1983 Milestone The Producers--Deliverables due Republic Geothermal--1983 field rpt. U of A RSA completion &deliverables Acres American--Contract completion Reconnaissance Study Findings &Recommendations DGGS RSA completion &deliverables Rate Study completion The Producers--contract complete Resistivity study completion Republic Geothermal contract complete Preliminary Feasibility study Final Feasibility study Findings and Recommendations Preliminary independent cost estimate Preliminary plan of finance Final plan of finance Power sales agreement Power sales contract Land acquisition plan Final independent cost estimate Detailed design completion Findings and Recommendations Land acquisition complete Construction startup Construction complete 917/061 MILESTONE PROGRESS Scheduled 06-30-83 06-31-83 10-31-83 11-01-83 11-01-83 05-31-84 12-31-83 03-31-84 06-01-84 10-31-84 06-31-84 12-31-84 04-31-85 06-30-85 09-30-85 09-30-85 10-31-85 10-31-85 12-31-85 03-31-86 04-30-86 04-30-86 06-30-86 06-30-86 07-01-86 06-30-87 Postponed* 12-31-83 12-31-83 10-31-84 04-30-84 12-31-83 12-31-84 Accomplished CONTRACT STATUS REPORT CC-08-2334 Republic Geothermal,Inc.- Thy me ee oo or ae i ee BUDGETED :oo ACTIVITY _MANHOURS. og Es IX Planning Not Reported - X Drilling " XI Testing " XII Reporting XIII &XIV Abd.or Susp." TOTALS BUDGETEDCOST- $66,245 1,853,504 259,478 74,349 159,224 2,412,800 PERCENT COMPLETE 100 90 70 30 50 69 ogre Ae ka ete soe rae ie ON gea ee noe entnen Fe eo EXPENDED = $ 7 "PROJECT:UNALASKA GEOTHERMAL ""TREPORT 'DATE:Nov.30,1983 _ BUDGET. 51,334 975,851 70,722 32,787 37,753 1,168,447 == "Current to:Octs" PERCENT OF.0 BUDGET EXPENDED (COMMENTS STA we 77.49 52.65 27.26 44.10 23.71 48.43 _CONTRACT STATUS REPORT BUDGETEDactivityMANHOURS a Consulting Services Not Reported BUDGETED COST $71,450.00 -PERCENT:BUDGET COMPLETE EXPENDED -98 $69,313.16 REPORT DATE: 16 ORO TBE A OthetatesmdBe4: 4S -oy b PROJECT:_UNALASKA GEOTHERMAL.- PERCENT OF BUDGET EXPENDED So pe Nov.30.°19830°US, 97 COMMENTS RSA expired.APA will pay $1118.68 withheld pending receipt of final report bringing total expenditure to $70,431.84. ee,Se Tw ere NTS alah:anniecer ea Renee oy owe vee te ee aor =o os soeBeEEeeSeMeateeggenerye.eet ee a os .Poe TEIN wef ee °wee ?ae 7 a NOSE Rm erm a in mee 8 TE wom,Sawoes.-'To The .es newer eB hee Yo SEO te ek :ge Me nal eae ese le 1 .Swe ade. -os .ime 'tae in . 2oe)Les [CONTRACT STATUS REPORT Te PROJECT:|_UNATASKA GEOTHERMAL e!Producers 22 ee ABETES ECTS tnt rere a a ee ¢itlieRaebeasbeesdaha'The'P hate?Ft1tBaeDRSa ae ee ce :a "LL PERCENT OF orPhesa 2 e -te 7 ce BUDGET Oe ee te: BUDGETED BUDGETED ©.PERCENT®-©°°BUDGET ©0 ORT ERg SectACTIVITYMANHOURS"COST.=---«COMMPLETEE EXPENDED _.EXPENDED COMMENTS CRT mee Task 1 Not reported $4815 100 $4815 , 100 Task 2 "4815 100 4815 100 Task 3 "4815 90 0--0- Task 4 4815 -0--0--0- _TOTAL 19,260 73 9630 ©50 ---@ a 4 nee ae Pa eed .we +TO ing8 cme ..Ne a ep EE en an ot Ne een ae eran Kee -apt Sgt van * t ee ee eeSootmemeae.:.wate th tee . ; *: . L .mo .SO ee me ae me ee eps.: .- CONTRACT STATUS REPORT PROJECT:UNALASKA GEOTHERMAI REPORT DATE:Nov.30.1983DepartmentofNaturalResources Division of Geological &Geophysical Surveys RSO8-8227 ee ".°wots Hors PERCENT OF a BUDGETED stBUDGETEDBUDGETEDPERCENTBUDGETMANHOURS: ACTIVITY MANHOURS COST COMPLETE EXPENDED EXPENDED COMMENTS Field investigations and geological mapping not reported $164,520 95 $40,133.55 24 25.bf.08% ALASKA POWER AUTHORITY Unalaska Geothermal Program Selected References Ansari,J.A.,and Economides,M.J.,1981,Geothermal parameters in significant sites,worldwide,and their implications on the Unalaska drilling project:University of Alaska,Fairbanks, submitted to the Alaska Power Authority,34 p. Campbell,D.A.,and Economides,M.J.,1983,A summary of geo- thermal exploration and data from Stratigraphic Test Wel] No.1,Makuskin Volcano,Unalaska Island:paper presented at Geothermal Seminar,Stanford,California. Dames &Moore,1980,Geothermal drilling studies near Unalaska, Alaska:Final Report submitted to State of Alaska,Division of Energy and Power Development,Anchorage,5 p. Dames &Moore,1983,1982 Environmental Baseline Data Collection Program,Final Report prepared for Republic Geothermal,Inc., and the Alaska Power Authority.53 p. Drewes,H.,Fraser G.D.,Synder,G.L.and Barnett,H.F.,Jdr., 1961,Geology of Unalaska Island and adjacent insular shelf, Aleutian Islands,Alaska:U.S.Geological Survey Bulle- tin 1028-S,p.583-669. Economides,J.F.,Reeder,J.W.,and Markle,D.R.,1982,Unalaska geothermal development,paper presented at UNDP Geothermal Workshop,New Zealand,6 p. Morrison-Knudsen Company,Inc.,1981,Geothermal potential in the Aleutians:Unalaska:Submitted to Alaska Division of Energy and Power Development,82 p. Motyka,R.J.,Moorman,M.A.and Liss,S.A.,1981,Assessment of thermal springs sites Aleutian arc,Atka Island to Becherof Lake -preliminary results and evaluation:Alaska DGGS Open-File Report 144,p.68-85. Motyka,R.J.,Moorman,M.A.and Poreda,R.,1983,Progress report -thermal fluid investigations of the Makushin Geothermal Area:Alaska DGGS -Report of Investigations 83-15,52 p. Reeder,J.W.,1981,Preliminary assessment of the geothermal resources of the northern part of Unalaska Island,Alaska: Alaska Department of Natural Resources,In Press. 1875/152 Selected Refere 5 Page 2 Reeder,J.W.,1982,Hydrothermal resources of the northern part of the Unalaska Island,Alaska:Alaska DGGS Open-File Report 163,17 p. Reeder,J.W.,Coonrod,P.L.,Bragg,N.J.,Denig-Chakroff,D., and Markle,D.R.,1980,Draft Alaska geothermal implementation plan:Report to U.S.Department of Energy,108 p. Reeder,J.W.,Economides,M.J.,and Markle,D.R.,1982,Geolog- ical and engineering studies for geothermal development on Unalaska Island:Draft submitted to International Conference on Geothermal Energy,Florence,Italy,16 p. Republic Geothermal,Inc.The Unalaska geothermal drilling project;Phase 1A Final report 1982;Phase 1B Final Report 1983,submitted to the Alaska Power Authority. Swanson,S.,1983,Petrology of the Makushin Volcanic Field, Unalaska Island,Alaska,In Press. 1875/152 o °PROJECT:UNALASKA GEOTHERMAL SEs 4.02 PROJECT MANAGER:Dave Denig-Chakroff DATE:November 30,1983 ca Milestone The Producers--Deliverables due Republic Geothermal--1983 field rpt. U of A RSA completion &deliverables Acres American--Contract completion Reconnaissance Study Findings &Recommendations DGGS RSA completion &deliverables Rate Study completion The Producers--contract complete Resistivity study completion Republic Geothermal contract complete Preliminary Feasibility study Final Feasibility study Findings and Recommendations Preliminary independent cost estimate Preliminary plan of finance Final plan of finance Power sales agreement Power sales contract Land acquisition plan Final independent cost estimate Detailed design completion Findings and Recommendations Land acquisition complete Construction startup Construction complete 917/061 MILESTONE PROGRESS Postponed*AccomplishedScheduled 06-30-83 06-31-83 10-31-83 11-01-83 11-01-83 05-31-84 12-31-83 03-31-84 06-01-84 10-31-84 06-31-84 12-31-84 04-31-85 06-30-85 09-30-85 09-30-85 10-31-85 10-31-85 12-31-85 03-31-86 04-30-86 04-30-86 06-30-86 06-30-86 07-01-86 06-30-87 12-31-83 12-31-83 10-31-84 04-30-84 12-31-83 12-31-84 'WMSSKA CEOTHELMAL PeovtcTy CuswEnTs ey ey TRS ON DTEMAmw J]fA os aw pT Emam cry *S EPUBLiC GeoTneemal COMTO ALT CONN WISSNLE Sw oy Rate Svoy «VEESITY OF Alasca BSA "RESISTIVATH-Y Swoy 1G6GS ESPRH [ue "Propucers CowteécT EMSIBicrry Soy CR Find wes gPreommENDATION S ee an,a b 3,62,5 Feah oO"ee 3,6BSDmeeeeeeeeee9 i 2,29Zio.LLL |LL!V aS-¥,Reeee ;4 5 SS |a ae Vow V__S /,a /a V._.V ZN PadaoadLFGEND- - )Tapianond oF Peester Ceemenwsr 3.Extewmrep Comme tion ¥.Derer PEWWERASLE Doe PATE S.Fwar DeciweeAge Due.DATE 6,Berenpen Derivaeearnce Der DA Te 2.Tarrrmey Seveocep Compeevion Date (Peozecr Eremen )DATE (hast Cr LrEemen7) NALRSER GropeerPL FY &FY &7eosserEremew7s[Tp soON DITEWA MITA SON PT Fm Pole as | Pra oF Linantee - [wobPErgur cstEstTImate [eure SALE $AGeeemewy Loneher Lavo AQuisiTien Derarceo DESIGN Finnymes Ree!a Cowsreuctiow _3¥ ,4 20 WYO.LLL LW /fo as YVvV__V 'df. Y___V_ 1 2,2 2-----¥ / QZ oO "¢ of _¥ /ooyo...________{@ x.4.03EdCONTRACT STATUS REPORT The Producers CC-08 -2625 ACTIVITY. Task 1 Task 2 Task 3 Task 4 TOTAL BUDGETED MANHOURS Not reported BUDGETED COST $4815 4815 4815 4815 19,260 COMPLETE PROJECT:UNALASKA GEOTHERMAL REPORT DATE:Nov,30,1983 PERCENT OF BUDGET BUDGET EXPENDED EXPENDED COMMENTS $4815 100 4815 100 -0--0- -0- 0- 9630 50 =coca eliettattietl*=_Se ee aY --_ae CONTRACT STATUS REPORT PROJECT:UNALASKA GEOTHERMAL REPORT DATE:Nov.30.1983 Department of Natural Resources Division of Geological &Geophysical Surveys 7 ee RSO8-8227 °a PERCENT OF os BUDGETED af BUDGETED BUDGETED -PERCENT BUDGET MANHOURS : ACTIVITY MANHOURS -COST _COMPLETE EXPENDED EXPENDED COMMENTS Field investigations and geological mapping not reported $164,520 95 $40,133.55 24 CONTRACT STATUS REPORT CC-08-2334 Republic Geothermal,Inc. BUDGETED ACTIVITY MANHOURS IX Planning Not Reported X Drilling " XI Testing " XII Reporting XIII &XIV Abd.or Susp." TOTALS BUDGETED COST $66,245 1,853,504 259,478 74,349 159,224 2,412,800 PERCENT COMPLETE 100 90 70 30 50 69 $ BUDGET EXPENDED 51,334 975,851 70,722 32,787 37,753 1,168,447 PROJECT:UNALASKA GEOTHERMAL REPORT DATE:Nov.30,1983 Current to Oct.31,1983. PERCENT OF BUDGET EXPENDED COMMENTS. 77 52 27. 44. 23. 48 49 -65 26 10 71 -43 CONTRACT STATUS REPORT University of Alaska--Fairbanks RSA #8199 BUDGETED ACTIVITY MANHOURS Consulting Services Not Reported BUDGETED COST $71,450.00 PERCENT COMPLETE 98 BUDGET EXPENDED $69,313.16 PROJECT:UNALASKA GEOTHERMAL REPORT DATE: PERCENT OF BUDGET EXPENDED 97 Nov.30,1983 COMMENTS RSA expired.APA will pay $1118.68 withheld pending receipt of final report bringing total expenditure to $70,431.84. CONTRACT STATUS REPORT Department of Natural Resources Division of Minerals and Energy Management RSO8-4055 BUDGETED BUDGETED ACTIVITY MANHOURS COST Inspection to determine compliance with permit stipulations not reported $1320 PERCENT COMPLETE PROJECT:UNALASKA GEOTHERMAL REPORT DATE:March 31,1984 PERCENT OF BUDGET BUDGET EXPENDED EXPENDED COMMENTS CONTRACT STATUS REPORT The Producers CC-08-2625 ACTIVITY Task 1 Task 2 Task 3 Task 4 TOTAL BUDGETED MANHOURS Not reported BUDGETED COST $4815 4815 4815 4815 19,260 PERCENT COMPLETE 100 100 100 100 100 PROJECT:UNALASKA GEOTHERMAL REPORT DATE:March 31,1984 PERCENT OF BUDGET BUDGET EXPENDED EXPENDED COMMENTS $4815 100 Deliverables accepted by Project Manager January481510026,1984 4815 100 4815 100 19,260 100 CONTRACT STATUS REPORT Department of Natural Resources Division of Geological &Geophysical Surveys RS08-8227 BUDGETED BUDGETED ACTIVITY MANHOURS COST Field investigations and geological mapping not reported $164,520 PERCENT COMPLETE 100 PROJECT:UNALASKA GEOTHERMAL REPORT DATE:March 31,1984 PERCENT OF BUDGET BUDGET EXPENDED EXPENDED COMMENTS $59,544.42 36 CONTRACT STATUS REPORT PROJECT:UNALASKA GEOTHERMAL REPORT DATE:March.31,1984CC-08- -2334 Republic Geothermal,Inc.Current tofebruary 29,1984 PERCENT OF BUDGET BUDGETED BUDGETED PERCENT BUDGET ACTIVITY MANHOURS COST COMPLETE EXPENDED EXPENDED COMMENTS IX Planning Not Reported $66,245 100 $51,687 78.02 X Drilling "1,853,504 99 956,355 51.60 Xl Testing "259,478 99 87,229 33.62 XII Reporting "74,349 85 70,567 94.91 XIII &XIV Abd.or Susp."159,224 90 160,212 100.62 TOTALS 2,412,800 95 1,326,050 54.96 CONTRACT STATUS REPORT CC-08-4224 City of Unalaska ACTIVITY Cost-of-Power/ Rate Study BUDGETED MANHOURS not reported BUDGETED COST $20,000 PERCENT COMPLETE 60% PROJECT:UNALASKA RATE STUDY REPORT DATE:March 31,1984 PERCENT OF BUDGET BUDGET eo EXPENDED EXPENDED COMMENTS -0-0% CONTRACT STATUS REPORT CC-08-2270 Acres American,Inc. ACTIVITY Reconnaissance Study BUDGETED MANHOURS not reported BUDGETED COST $17,000 PERCENT COMPLETE 60% PROJECT:UNALASKA RECONNAISSANCE REPORT DATE:March 31,1984 PERCENT OF BUDGET BUDGET 4s EXPENDED EXPENDED COMMENTS -0-0% CONTRACT STATUS REPORT University of Alaska--Fairbanks Petroleum Engineering Department RSO08-8199 BUDGETED BUDGETED ACTIVITY MANHOURS COST Consulting Services Not Reported $109,251 PERCENT COMPLETE 70 BUDGET EXPENDED $73,509.07 PROJECT:UNALASKA GEOTHERMAL REPORT DATE:March 31,1984 PERCENT OF BUDGETED MANHOURS EXPENDED COMMENTS 67 CONTRACT STATUS REPORT PROJECT:UNALASKA GEOTHERMAL REPORT DATE:January 31,1984CC-08-2334 Republic Geothermal,Inc.Current to December 31,1983 PERCENT OF BUDGET BUDGETED BUDGETED PERCENT BUDGETACTIVITYMANHOURS.COST COMPLETE EXPENDED EXPENDED COMMENTS IX Planning Not Reported $66,245 100 $51,687 78.02 X Drilling "1,853,504 98 964,610 52.04 XI Testing "259,478 95 75,531 29.11 XII Reporting "74,349 55 55,429 74.55 XIII &XIV Abd.or Susp."159,224 70 153,637 96.49 TOTALS 2,412,800 84 1,300,894 53.92 CONTRACT STATUS REPORT Department of Natural Resources Division of Minerals and Energy Management RSO8-4055 BUDGETED BUDGETED ACTIVITY ©MANHOURS COST Inspection to determine compliance with permit stipulations not reported $1320 PERCENT COMPLETE PROJECT:UNALASKA GEOTHERMAL REPORT DATE:January 31,1984 PERCENT OF BUDGET BUDGET EXPENDED EXPENDED COMMENTS CONTRACT STATUS REPORT University of Alaska--Fairbanks Petroleum Engineering Department RSO8-8199 BUDGETED BUDGETED ACTIVITY MANHOURS COST Not Reported $109,251ConsultingServices PERCENT COMPLETE 70 BUDGET EXPENDED $71,559.25 PROJECT:UNALASKA GEOTHERMAL REPORT DATE: PERCENT OF BUDGETED MANHOURS EXPENDED 65 January 31,1984 COMMENTS re RSA amended for 1984 program with increase in budget and - extended period of performance CONTRACT STATUS REPORT Department of Natural Resources Division of Geological &Geophysical Surveys RSO8-8227 BUDGETED BUDGETED ACTIVITY MANHOURS COST Field investigations and geological mapping not reported $164,520 PERCENT COMPLETE 95 PROJECT:UNALASKA GEOTHERMAL REPORT DATE:January 31,1984 PERCENT OF BUDGET BUDGET EXPENDED EXPENDED COMMENTS $59,544.42 36 CONTRACT STATUS REPORT The Producers CC-08-2625 ACTIVITY Task 1 Task 2 Task 3 Task 4 TOTAL BUDGETED MANHOURS Not reported BUDGETED COST $4815 4815 4815 4815 19,260 PERCENT COMPLETE 100 100 100 100 100 PROJECT:UNALASKA GEOTHERMAL REPORT DATE:January 31,1984 PERCENT OF BUDGET BUDGETEXPENDED EXPENDED ©=-»-COMMENTS. $4815 100 Deliverables accepted by Project Manager January481510026,1984 4815 100 4815)100 19,260 100 oe MEMORAROUM StatPot Alask TO:Patti DeJong paTE:October 17,1983 Director of Project Evaluation FILE NO: TELEPHONE NO: a ne FROM:Don Markle .SUBJECT'Status Report 10/10/83 Acting Project Manager There have been a number of items take place over the last few weeks that should be written down for the file.I have choosen to do so in a status report. Republic Geothermal:Contract expires June 30,1984, Republic is within budget and is making most of the milestones set.A contract amendment for the remainder of the field work next year will be worked out after the G.R.C.Planning Meeting,October 25,1983.I plan on addressing incentive and penaltyclauses. I have witheld some money from Republic's billing for July.Ten percent (10%)of the operating time for A.R.D.I.was witheld until Republic submits a report on the negotiations with A.R.D.I. on delays attributable to their lack of timely response and not having parts on hand.Republic has protested the witholding to me saying they plan on negotiating at the last billing.I told him to put it in writing.I think Republic would have ignored the problem if I hadn't withheld the money. I belfeve Republic is a good technical contractor.They have predicted the resource extremely accurately and they were very good during the testing phase.Republic's management of subcontractorshasbeenonlyfairatbest.I believe next summers work will require much closer supervision and some contract changes as a result.ly personal observation is that Hutterer is the Manager and I believe he has been preoccupfed with business development. I believe the program is an unqualified success based onRepublic's science.One must consider that if their science would not have been accurate,their management from design to field supervision would have left the Power Authority open to criticism with only 1947 feet in three months.Next year,the thrill ofdiscoverywillnotbesoforgivingtethepreblemsexperienced. q Amendment #6 work is being extended by letter to November 1,1983,due to a legitimate need to incorporate the results of the September field testing. Division of Geological and Geophysical Surveys. RS-08-8227 Expires December 31,1983. Proj.Code:2%" ; ie Code,2%93.U/ J.Date:73 290.{501/087 -_ rayo 9 oe ore .-- Roman recently sent us a report of 1982 work which is very comprehensive.He also managed to take credit in his cover letter for the drilling program sucess,good old Roman, The survey has billed us $41,887.75 of the $164,520 R.S.A. total.I have drafted a letter to Roman on the subject and thedeliverableswhicharea1:12,000 map of Mt.Makushin and a1:24,000 Dags.professional paper geologic map of resource. I imagine both the Power Authority and 0.6.G.S.will find it to their mutual benefit to extend the R.S.A.to cover next year. The area of debate will be whether the Power Authority will add any additional money to the R.S.A.I have asked Roman fn the letter to give us a breakdown of the present R,S.A.and expenditures. I belfeve the Power Authority should have some 0.G.G.S. presence at Makushin next year to give us at a minimum independentcoreanalysisandgeochemistryofsamplesandanystreamorwater shows.I incidently belfeve all technical work should be independently confirmed. Acres American -Contract expires 11/1/83 I believe the study will be completed about 11/10/83.Final completion and report will not be reivewed until December 1.The main delay is getting the materfal from Republic to Acres.I would suggest the procedure for a one month contract extensifon is prohibitive.I believe we can review the billing and report within the time frame of the contract and be legal with Juneau by holding payment until]acceptance of tha final reports.Otherwise,we will have to get a contract amendment.Your decision {s required. Acres and I will be fn Unalaska October 12-14,to gather remaining alternative information and inform Town Counci]of the project.Nancy Gross is setting the agenda for us to meet with quite a few people.She is a very strong supporter of thegeothermalproject. Producers -Contract expfres Nay 31,1984 The fact that the contract dees not expire until May 1984 ignores the fact that the federal arant has expired.We are at the mercy of the Federal Grant on this one although I belfeve the active contract will allow the bill to be paid.We will have to remedy the situation after the fact.Present status is the Federal government 1s processing the Grant Extension.We will have to have our R.S.A.with Community and Regional affairs extended once thegrantextensionisconfirmed, The filming is complete.Editing is now underway.I anticipate that the final product will be out by November 1. 501/087 reye ©9 oO 6. The filming is complete.Editing is now underway.I anticipate that the final product will be out by November 1. I suggest we move quickly to make a second film on theUnalaskaproject.I belfeve we have enough footage to cover a 15-20 film that could be used to inform and sel]the project to potential investors and be used in the feasibility work for plant siting and transmittion corridor planning.The cost should bearound$15,000.00 I guess,which will be mainly for editing and visuals. General - I belfeve the reconaissance analysis will prove positive for a number of reasons.One reason in particular is the tax credits and finance options that favor geothermal energy.I belfeve we should ask Ray Benish whether his group will be able to evaluate and recommend a financial package or whether we should include this analysis in a contracted prebability analys{s. I belfeve we should contact Senator's Stevens,Murkowski and Representative Young on the probability for extension of geothermal energy tax credits past 1985.These credits could vary the cost per kilowatt for the citizens of Unalaska.Our fall back position should be to have the credits extended for any project cormitted to prior to expiration. _We are confirmed at the Red Lion for the 26th and 27th and the Thunderbird for the 24th and 25th.I am session chairman for the Unalaska Sessfon on the 25th.Alan Axsell and someone from the village corporation will attend.Nancy Gross will likely be going as well,so I feel the meeting will be very productive. I met with some people from H-K that passed along some good information on possible participation.I have attached a handout they gave me.What I detect the concerns are for private enterprise {s a resource guarantee and a market guarantee.The amount of risk shared by the Power Authority will be reflected in the price charged to the consumer. DM/ald 501/087 PROJECT NAME:Unalaska Geothermal Drilling Project _PROJECT MANAGER:Patti DeJong/Don Markle DATE:September 20,1983 Project Status: The 1983 Exploration Drilling program was completed September 1983.The project goals for this summer were the completion and testing of a reservoir confirmation well on the Makushin Terrace and the completion of a thermal gradient well in the relatively accessible sugarloaf region.The gradient well was designed to determine the lateral extent of the postulated geothermal resource. Serious problems plagued the project during the first month of operation.A late winter season,unusual rock formationsencounteredduringdrillingandahelicoptercnteachcaused extensive delays in the proposed schedule.The first resource confirmation well had to be abandoned due to the drilling condi- tions. The resource confirmation was completed and tested the last three week of the program.A very significant resource was discovered at 1947 feet.The temperature of the resource was recored at 370°F and the downhole pressure at 471 PSIG.A suite of chemical temperature and pressure tests were completed on the well.The resource was confirmed as being large but the extentcouldnotbecalculatedwithoutalongdurationflowtest(three - five months).Negative weather,permitting,and logisticalconsiderationsweresuchthatprogramandwellweresuspended untilJuneof1984,this included the gradient well.Program is stillwithinprojectedbudget. Statement of Project Goal: The original project goal of discovery and evaluation of a possible geothermal resource has been partially accomplished. The new objective is to economically and technically evaluate the Unalaska Geothermal discovery and prepare it for private sector development of electrical power. Statement of Objectives to Meet Goal: The objectives for completion of technical field evaluation is to flow the discovery well for three -five months starting June of 1984.Pressure and temperature measurements wil]completed.for thewellduringthistestprogram.;_.BSF 222/071 Page 1 ee F3.264)| The gradient well will be drilled in the sugarloaf region to determine the lateral extent of the resource. The present well will be re-entered after the flow tests and drilled to greater depths.The objective is to locate postulated hotter resources at depth.There are budget considerations for the completion of this portion of the technical evaluation. The objective of the economic evaluation is to complete the reconnaissance geothermal power cost evaluation,and Unalaska reconnaissance evaluation presently underway.A feasibility analysis will be completed in the event the reconnaissance study is positive. The Alaska Power Authority will also address the land status, possible incentives to development,and education of the Unalaska community and industry on the discovery. 222/071 Page 2 10/83 Exploration Review and Planning Meeting -Geothermal Resource Council. 11/83 Develop 1984 Resource Exploration Plan. 11/83 Complete Unalaska Reconnaissance Plan -Acres. 12/83 Complete Preliminary Land Status -staff. 01/84 Decision to proceed with project -Alaska Power Authority Board. 01/84 Prepare 1984 Exploration Contracts. 01/84 Prepare Feasibility Analysis -Solicit for same. 03/84 Award Feasibility Analysis. 04/84 Final Report 1983 Program. 05/84 Initiate long duration flow test (five months). 06/84 Initiate gradient well drilling (six months). 08/84 Deepen production well (three weeks). 11/84 Decision on degree to State participation in project - Power Authority Board. 06/85 Final Report Feasibility Analysis. 222/071 Page 3 A -t oat Trip Report imAugust29September7,1983 D.R.Markle Alaska Power AuthorityProjectManagervy) The origina]l purposé of-thts-trip was to oversee the initialdownholepressureandtemperaturetestandtoarrangeanitinerary for the film crew. There were three A.R.D.crew members on hand,the cook and pilot.Republic Geothermal personnel present were Don Campbells reservoir engineer,Lee Waldon;Technician,Skip Matlock; geologist,Dick Yarder;drilling superintendent,Jerry Hutterer; geologist,and Dwight Casey;environmental coordinator.Others present were:Michael Economides,Christine Economides;of the University of Alaska,Fairbanks (UAF},Roman Motyka,Chris Nygh, John Reeder,Shirley and two more members of the United States Geological Survey (U.$.G.5.)chemical group from Menlo Park,Larry representing Dames and Moore was also present.Republic should be commended upon the very professfonal manner in which the entire testing program was conducted.The U.S.G.S.,UAF, 0.G.G.S.were all accommodated in the testing program.Economides and Campbel?worked very well together.I belfeve ft was extremely useful to have both on site as they stimulated each others profes- sional ability. Static testing during flow,build up analysis and static testing after shut in were the major engineering analysis com- pleted.The chemistry was conducted by four different groups for a variety of reasons;D.G.G.S and U.S.G.S.for geothermometry and constituents,Republic for independent interpretation and transient analysis,Republic and Dames &Moore for environmental tracing. During the testing a meeting was held at my request to help determine near term and long range plans for the well and drill. The topics for discussion are listed below. Hodel: The system tapped {fs a subpressure reservoir with a bottom hole temperature of 365°F +5°and a bottom hole pressure of 471 PSIG.The reservoir is 16%steam and the well flows artesian at 53,000 1b/hr.Productivity fs very high with a very small amount of draw down indicating a very large system.The reservoir fs fracture controlled in the dioritic Unalaska formation.The well was located near the intersection of two faults and the producing zone is a vertical fracture with a three foot void. 116/03 Proj.Code:-3¢File Code:04,03,Vi |J.Date:J3.auh ! itC The present well 1s capable of producing 500 kw of energy. Well suspension: All agreed that the well should be suspended rather than abandoned.ODwight Carey indicated that there were no requlations for suspension but felt he would achieve the suspension via phone and written follow-up describing the suspensifon and winterization of the well.The Alaska Power Authority will have to express to D.M.E.M.the reasons for suspension.The reasons for suspensi{on are future use for observation or injection during production,and the additional tests recommended for next year. Extended flow testing of well: We discussed the possibility of having an extended flow test and it was unanimously agreed that it would be beneficial for the following reasons: 1)The high permeability of the reservoir could be tested further to see if we could achfeve a measurement on drawdown.This would indicate the extent of the system and the duration of production. 2)The testing develops credibility of reservoir.5 months test will be much more acceptable to financial people. 3)The extended flow actually cleans the reservoir plumbing. Debate centered on whether to flow it over the winter or wait until next summer.It was agreed that a shorter test next summer was a scunder idea for the following reasons: 1)The well was not drilled and completed for production purposes and should therefore be monitored if used as a production well. 2)Logistics of having to do anything related to the well in the winter would be cost prohibitive. 3)Water and freezing near the well could be a problem. 4)Flow during winter would increase the heavy metal con- centration in the stream when the sensitive salmon eqqs are in stream.The winter also has the lowest flow rate which means the dilution would be least. 5)Land ownership questions cculd be addressed in next nine months, 6)Unsure of budget figures. 116/03 '||A |5.97 The cost of such a test program above would be $10,000 to initiate including the downhole testing.Approximately,$20,000formonthlyobservationandtestingandanother$10,000 to completeandasmuchas$10,000 for analysis and updating.This figure could be reduced if done in conjunction with second well. Drilling deeper at present site: The objective of such a venture would be to try and achleve higher temperature and pressures by penetrating another sealed zone.Chemistry supports higher temperature zone.Lower gradient change speaks against the likelihood of a lower zone unless it fs independent of the discovery.General agreement was reached that the activity could produce significant results, It was agreed that the initiation of such a project should be accomplished after an Extended Flow of the present system.The major reasons were: 1)rt will be tough drilling and we could lose or impairwell. 2)We would have to block off present production. 3)Weather fs going to be a major factor now adding cost which would be more than remobilizing of rig if it is left in Dutch Harbor over the winter. 4)Psychological problem of losing present production to great to chance.Could affect possible financing. Drilling second well: The reasons for drilling the gradfent are the same as they were sold to the Power Authority.The major two reasons are to determine the lateral extent of the reservoir and the possible success of a wildcat well located in the more accessible and thus better development location at Sugarloaf, The cost including mobilizing for such a well would be $500,000 or less. The decision has been made to cancel the second well this season.I recommend the Power Authority determine land conveyance status,budget,permitting,and recon economics befor any furtherworknextyear. Other items of pertinence are that members of city council, fisheries,Native corporations and local media were taken to mountain to be informed of the discovery.The City has agreed to allow the Power Authority to store materials at their warehouse 116/03 rays + -S.04aok,(LoD over the winter,so has Native Corporation.I have set upinventorycheckoffforsuchstorage. The film crew has completed all field filming including veryvaluablefootageoftransmissioncorridorsandpossibleaccess routes to both the location well and possible Sugarloaf developmentSites.U.S.G.S.and 0.G.G.S.will beth be completing new mapsincludinggeologyandtopographyoftheisland.0.G.G.S.has no budget entrees for geothermal this coming year at department level probably because of lack of interest in Mt.Spurr sale. ¥Jearned a couple rules of thumb that are very helpful. Projections of production from geothermal wells are valid for about 10 times the flow test duration.Power production in geothermalwellsaverageabout20,000 Ib./hr/MW for steam. The resource discovery 1s an unqualified success for the Power Authority. 116/03 MEMORA,MEBum''DATE: "staof'AlaskaTe:patti Dedong-Director of Project evaluat jon Se 7 ;can FILENO: -x TELEPHONE NO:..-)* FROM:-.°arkle "|SUBJECT:UnalaskactingProjectManager.-The drilling 'performance has improved subctantialty sincelastreport.°_is.what.we would expect on the project.The.crews:are coring about 100 feet.per.day,whichTheincreaseinproduc-|tion is.due-in-part to.the reduction in rod size and operation -within the:'Standard operation range of the Longear 44 rig.--..The hole:has encountered a substantial lost circulation zone ee eeat1926feet:*Hot water and steam has been encountered with a0 22650086 075wellheadpressureof40p.s.i.and flowing temperature of 207°F.The build up pressure was variable indicating that this zone is.|not the main resource.The resource does appear to be water dominated at least in this zone,as predicted by Republic.bottom hole temperature is in excess of 400°F. The All indications are that we are on the brink of getting into a substantialresource. The crew:management change has been made at.ARD 'and Republichasaddressed'the logistical problem with ARD,though a little too |-*diplomatically;°' a!integrity of the 'Project. 'We might consider a*separate'meeting with ARD.to --- see what remedy they are planning to institute for.the2 logistical .'The'reconnaissance studies are both proceeding,but are aedependentuponthe.results of the drilling program.Co tags.The film script review is complete and the shooting is.scheduled for either the 5 -7 or 11 -13 of September,depending on weather and drilling results. 02-001A(Rev.10/79) "pane J1983,BB me 26-18} _brilling Project ee QecaeCuday aeoneen Oe oatMey.|File Code!Bh23 NV)|soa:£3:2.2%-} e::MEMORANDUM Stat of Alaska (<04) :oePatti|DeJong i :DATE:August29,1983DirectorofProjectEvaluation-ILE NO: if TELEPHONE NO: FROM:SUBJECT:bereFarkle Unalaska Acting Project Manager Drilling Project The drilling performance has improved substantially since last report.The crews are coring about 100 feet per day,which is what we would expect on the project.The increase in produc- tion is due in part to the reduction in rod size and operation within the standard cperation range of the Longear 44 rig. The hole has encountered a substantial lost circulation zone at 1926 feet.Hot water and steam has been encountered with a well head pressure of 40 p.s.i.and flowing temperature of 207°F.The bufld up pressure was variable indicating that this zone is not the main resource.The resource does appear to be water dominated at least in this zone,as predicted by Republic.The bottom hole temperature is in excess of 400°F.All indications are that we are on the brink of getting into a substantial resource. The crew management change has been made at ARD and Republic has addressed the logistical problem with ARD,though a little too diplomatically.We might consider a separate meeting with ARD to see what remedy they are planning to institute for the logistical integrity of the project. The reconnaissance studies are both proceeding,but are dependent upon the results of the drilling program. The film script review is complete and the shooting is scheduled for either the 5 -7 or 11 -13 of September,depending on weather and drilling results. Did/se $958/013 ememorattoum staat aasigea-.:st ine,Qs AE August 10,1983=_Director,Project Evaluation co .ee OE Pant FILE NO: TELEPHONE NO: cero WN Farkte a 7 SUBJECT:nataska. "Project Manager - A .I spoke with Jerry Hutterer August 1,1983.He indicated.that.the operation had been shut down for.two days because of a broken -pump.There was really no appreciable progress as a result.The oo .22.-.temperature.had increased fn the bottom hole to 350°F.This fs Fr'full 100°F hotter than the first well._.wo '+Corky 'Issethart -is going to go:'down to Unalaska onAugust3,.1983,with Michael and me.I will come back fromUnalaska"with some recommendations on the future course of theprojectthatshouldimproveproduction.Right now,things are not going as well as can be expected,and I hope to find a solution.Judging from reports,I be}teve the solution may lie in gettingbetterfieldmanagement.<<We may have to require some newmanagementbyeftherRepublfcorthedrillingcontractor.Iinformedthedrillertnoffictallythatweneededsomecorrective.action on their part and would welcome a proposal through Republic to improve the.field,team.I satd we might pay in part for suchimprovement.”: The final script draft wi]be in for your approval onAugust9,1983.All other filming dependent upon our approval ofthescript.2 The reconnatssance analysis by Republic*and Acres ts on holduntilapprovedbyCommerce.© DM:ald elt Proj.Code:5d.File Code: "Tn g |Gg H?%'MEMORANDUM Sta of Alaskaé” To:Patti DeJong gon "DATE:July 27,1983 Director,Project Evaluation FILE NO: TELEPHONE NO: FROM:Don Markle SUBJECT:Unalaska Project Manager Geothermal Project Report from Jerry Hutterer is mixed.There is a second zone of hot water at 525'.There are several calcite deposits and other fracture results that are very interesting.The temperatures significantly hotter in this well as opposed to last years well. The drilling crew cemented the fracture at 670',but it flash dried while they were setting it.This means that the well will have to be re-drilled at the bottom.This is a delay.Dick Yander is on site,and had pumped cold water down the hole to prevent the flash drying.The heat gradint is extreme.I personally feel weareintheboundariesofthestyfeamcapfromthesoundofit.Thebottomholetemperatureisgredterthan150°c. The finding of the resource this shallow could be a mixed blessing.It will be cheaper to develop and the resource will have been found.The down side is it will possibly be limited in size and subject to quick depletion,low pressure,sudden surface water contamination,mineralization and stabilization problems.We will not likely confirm or deny the existence of a larger deep resource be it water or steam. The power demand at Unalaska is so small that it may not matter if we do find a small resource.Small could be up to 100 MW potential. The graduent in the well increases from 113°c to 150°c in 10 feet.The bottom hole is not stabilized,so I would guess we are very close to 175°-190°c. aa w Proj.Code:3 x File Coder 22%23.VJJ.Date:£3 268-1 9626/021 62-001A(Rev.10/79) Qo.©5.0%-MEMORANDUM State of Alask4 "73> TO: FROM: Patti DeJong eh)©DATE:July 21,1983 Director,Project Evaluation FILE NO: TELEPHONE NO:/n Markle SUBJECT:Unalaska Acting Project Manager Progress Report July 18,1983,I talked with Gerry Hutterer on the progress of the drilling.The well is at 672 feet.The crew has encountered lost circulation and the well has been killed and shut-in to test the fluids.There is steam at approximately 52 P.S.I.in what Gerry has termed the steam cap plumbing of the fumerole field. Temperatures should be very high in the well.Good sign but not the big one yet.Will cement off and proceed on.Roman is there for the chemistry. The crew has a BOEcal replacement helicopter which will be replaced by A-Star later this month.People are recovering from the crash satisfactorily.New safety precautions are being taken such as use of walkie talkies to minimize time for rescue,etc. Dick Yarder will leave for Dutch Harbor Tuesday, July 19,1983.Gerry gives the impression that the drilling progress is going well and that time will be made up as they go deeper.We are about 600 feet behind schedule which could be made up rather easily with proper conditions. The contract Amendment No.6 is ready for signature by Eric Yould.The transmission line person for Republic is Jean Bissiaier.He will work with our people on the cost estimate. Republic appreciates the input very much. I gave a briefing to Ted Bond at DMEM.He indicated that they would like to be present when we cement back the casing to 1,500 feet.I anticipate one week from now.Gerry will have been informed by the time you read this memo. Mike Economede's amendment has been changed to show the existence of Amendment No.1.Thank goodness for accounting.It has been mailed to Juneau. The Acres contract Amendment has not been approved but is to go to the contract review committee Thursday. =3_oPPrej>CoderOF ==File Code:-2'7 9 3-VE Tu.pate&2.Los9543/020 DeJong Memo July 21,1983 Page 2 I sent Ron Maj a copy of the draft Unalaska report.He is with the Corps of Engineers and is working on the hydroelectric project there.He was promised to work with the Acres and Republic projects on the recon work.I suggest we send out a letter of introduction to everybody when the contracts are all approved. The script for the geothermal film is under review.Your copy is in your possession. DM/ad 9543/020 MEMORANDUN -State of Alaska TO:Patti DeJong DATE:July 21,1983 Director,Project Evaluation -FILE NO:: TELEPHONE NO: FROM:/(a SUBJECT:¥.Don Markle Unalaska Acting Project Manager Progress Report XP July 18,1983,I talked with Gerry Hutterer on the progress of the drilling.The well is at 672 feet.The crew has encountered lost circulation and the well has been killed and shut-in to test the fluids.There is steam at approximately 52 P.S.I.in what Gerry has termed the steam cap plumbing of the fumerole field. Temperatures should be very high in the well.Good sign but not the big one yet.Will cement off and proceed on.Roman is there for the chemistry.Z The crew has a BOEcal replacement helicopter which will be replaced by A-Star later this month.People are recovering from the crash satisfactorily.New safety precautions are being taken such as use of walkie talkies to minimize time for rescue,etc. Dick Yarder will leave for Dutch Harbor Tuesday, July 19,1983.Gerry gives the impression that the drilling progress is going well and that time will be made up as they go deeper.We are about 600 feet behind schedule which could be made up rather easily with proper conditions. The contract Amendment No.6 is ready for signature by Eric Yould.The transmissfon line person for Republic jis Jean Bissiafer.He will work with our people on the cost estimate. Republic appreciates the input very much. I gave a briefing to Ted Bond at DMEM.He indicated that they would like to be present when we cement back the casing to 1,500 | feet.I anticipate one week from now.Gerry will have been informed by the time you read this memo. Mike Economede's amendment has been changed to show the existence of Amendment No.1.Thank goodness for accounting.It has been mailed to Juncau. The Acres contract Amendment has not been approved but is to go to the contract review committee Thursday. Proj.Crea: Pie Cea:38.04.OF | 9543/020 J te:BSB.202.1 veuvong memo ;oe ._ July 21,1983 Page 2 wtI sent Ron Maj a copy of the draft Unalaska report.He iswiththeCorpsofEngineersandfsworkingonthehydroelectric project there.He was promised to work with the Acres and Republic projects on the recon work.I suggest we send out a letter of introduction to everybody when the contracts are all approved. The script for the geothermal film is under review.Your copy {1s in your possession, DM/ad 9543/020 INQe SY CF,VE"4 C.( CONTRACTOR REPUBLIC GEOTHERMAL,INC.ALASKA "POWER AUTHORITY PROVJECT__MAKUSHIN GEOTHERMAL NO. IRAN )| DATE.6/30/83SUBCONTRACTORPROPERTYINVENTORYSHEET4LOCATIONDUTCH_HARBOR-UNALASKA =PAGE OF =CCOUNT INVENTORY PART OR -[SUPPLIER INVOICE |PURCHASER NVOICE UNITNUMBERNUMBERITEMOESCRIPTIONSERIALNO.SUPPLIER NO.DATE NO.DATE PRICE CONDITION/REMARKS FLOWLINE &TESTING EQUIPMENT (cont.) -=d M9VS-44AangeeatyaecreenwoodMBVS-4 74\40 297.60 an 4 ea-Anderson-Greenwood MoVHU-44 pouge wane G CUT7=4991 75100 180.00 : ==nwoo =ci Shon”erson-aree 36|00 72.00 2 ea-Al06B Sample Collector 98!00 196.00 T €a-Victor SRK3BJ-58U Pressure 12509 'Regulator 1521 40 152.40 |ea-Hoke -5 vavile manifold125108613G6E 155}24 155.241ea-H -5-3 i 12512 vatca #osy o-way $000 pst 162]00 162.00 °CONTRACTOR FABRICATED &FURNISHED TOOLS &EQUIPMENT CHARGED TO PROJEC Arctic.Resources Drilling,Inc) 'N °112514 1 ea-Mayes 6'level -10141 53}16 53.16 12515 1 ea-Vulcan Chain Tongs -OT-13%171}32 171.32 12516 1 ea-Vulcan Chain Tongs -OT-47 189}32 189.32 Vleot/'!14518 3 ea-Steel mud tanks -4'x3'x8'783]33 2,350.004-38°) GRANU-an ATMA AA TATAL «¢AT GAA &2 (| Cw |( |CONTRACTOR REPUBLIC GEOTHERMAL,INC.| ALASKA 'POWER AUTHORITY PROJECT_MAKUSHIN GEQTHERMAL NO, nA | 6/30/83SUBCONTRACTOR-PROPERTY INVENTORY SHEET = LOCATION DUTCH HARBOR-UNALASKA PAGE.3 oF 4 "ACCOUNT INVENTORY PART OR *[SUPPLIER INVOICE |PURCHASER NVOICE]UNITNUMBERNUMBER(TEM DOESCRIPTION SERIAL NO.SUPPLIER NO.OATE NO.OATE PRICE CONDITION/REMARKS FLOWLINE &TESTING EQUIPMENT -||ea-flow test Tine for James methodw/bypass consisting of flwg components: 75'-455"0.D.sched 40 ASTM A-53 Gr B line pipe w/RF flgs and +>4"&3/4"pressure &temperatur¢taps 3 ea-2 James tube flow nozzles (2",3"&4"I.D.)w/%"press taps&4"RF figs 3,600]00 3,600.00 sory?OD.s049setpeePoroas"wll) 4 ea-4"SS orifice plates w/FFboresizes:1.375",1.750",7)Pn Para 2-600"&3.400" 6 ea-steel hold down straps Tor43"flowline Misc studs,nuts,gaskets,ringe, fittings &hoses for assembly"T2506 2 ea-4"cl 300 RF OS&Y steam service 12507 gate valves ;464]00 928.00 INSTRUMENTATION &SAMPLE COLLECTING FQUIPT:|.- 3 ea-lel-Iru GI-500R 50/300°F bi-,imetaldialtherm. '38]25 114.75-oolt ea-lel-fru GI-500R 50/40UUF bi- metal dial therm,381 25 38.25 4 ea-B82F Thermometer Wells 37)11 148.44 ¢ea-Ametek Tiq filled press gauge0/60 psi__891 00 178.00 2 ea-Ametek liq filled press gauge' Q/100 psi 4 P gs 891 00 178.00 -|ea-Ametek liq filled press gauge J ,.0/380 psi q Press gaug |89 00 89.00 ;1 ;1QU12508Wallace.&Tieggan series 30U U/.4794 00 475.00 wArIVAN Voian Dantan Mandal 9NIPA Ionan Flow 1176 1175.00 (( CONTRACTOR ___REPUBLIC GEOTHERMAL,INC.ALASKA*POWER AUTHORITY ' PROJECT_MAKUSHIN GEOTHERMAL NO. crn,DATE__6/30/83SUBCONTRACTORPROPERTYINVENTORYSHEETLOCATIONDUTCHHARROR-IINALASKA PAGE _@ or_4 "ACCOUNT INVENTORY PART OR 'ISUPPLLER INVOICE |PURCHASER NVOICE UNITNUMBERNUMBERITEMDESCRIPTIONSERIALNO.SUPPLIER [-yo,SATE me Tare |PRICE.|CONDITION/REMARKS T ea-WellThead compTete for températuregradientwellA-1 consisting of flwgTea-5'5"600 Fig'd csg headw/2"side outlets ;930 J00 930.00 :1 ea-4"x4"x3"600 fig'd flow tee .1,315 {00 1,315.00Miscadapterflanges,studs,nuts, rings &gaskets for assembly 1,750 }00 1,750.001ea-4"Barton 600 RTJ theu- 12501 conduit 2,484 |00 2,484.00 ea-3"Clas s 000 RTJ wedge gata12504bySignevat9°9 1,08700]_1,087.002ea-2 2000 ao thd"d wedge gate valves 74175.149.50 1 ea-55"csg wiper plug 50100 50.00 - °LUBRICATOR AND GIN POLE EQUIPMENT é-section 2-3/8 0.D.x 18”overall length steel Jubricator assembly w/ unions,2 x3.swage top &btm con-nections,+"FPT pressure bleed tapsw/needtlé Valves,adapter Tranges&ftgs 450}00 450.00 T ea-d2-section 3&"0.D.x 30"overal length steel runged gin pole assembl ; = 1;with helicopter lifting bale,well-'}|head mounting brackets,&Jubricator lifting arm,winch &block 750100 750.00 ¢o nec En "pn |ATTACHMENT B(-C So ( |CONTRACTOR REPUBLIC GEOTHERMAL,INC.ALASKA 'POWER AUTHORITY PROJECT___MAKUSHIN GEOTHERMAL NO. - ; :DATE__6/30/83SUBCONTRACTORPROPERTYINVENTORYSHEETLOCATIONDUTCHHARBOR-UNALASKA :PAGE__!oF__4 "ACCOUNT INVENTORY PART OR *[SUPPLIER INVOICE |PURCHASER INVOICE UNITNUMBERNUMBER{TEM OESCRIPTION SERIAL NO.SUPPLIER NO.DATE nO.SATE PRICE |CONDITION/REMARKS TUBULAR GOODS TOTAL $VALUE 200'-(10 jts)7"-23#K-55 R-1 csg : .13154,4ft 2,708.00200"-(10 jts)o%"-15.5%K-55 R-1 cSg , : w/eplqs turned to 5.875"12}00J{ft 2,400,002200'-(105 jts)13s"smls A-106 R-1 ; line pipe w/API cplas Lh96Aft 45312,00 WELLHEAD EQUIPMENT &CSG HDWE 1 ea-Welihead complete for strat testwellST-1 consisting of flwg componests:1ea-/"600 csg head w/2"side12505outlets a 715100 715.00 . 1 ea-7"600 csg flange T_T.aa |ea-/"600 Tig'd csg expansionspoolw/bit quide &stop |ea-6'x6'x4"600 filg'd flo tee g¢Tow 2,300]00 2,300.00 5 ea-335"x7"Centralizers 1]ea-HQxNQ bit guide Misc adapter flanges,studs,nuts,rings &gaskets for assembly _: = |j1z511 U ea-6HK 600 G-08 RTI Power :/7,036/00]7,036.00 12502 b Saino vane Meese gate |1455100]1,455.00 12503 1 ea-3"600 RF swab gate 600}00 600.00 .FEeS14Q00 Pst thd'd wedge 74|75 149.50 1 ea-7"csg wiper plug | 501 00 50.00 aan -wAPF ee ATTACHMENT A ((( [CONTRACTOR REPUBLIC GEOTHERMAL,INC.ALASKA 'POWER AUTHORITY ' PROJECT__MAKUSHIN GEOTHERMAL NO. ot DATE.6/30/83SUBCONTRACTORPROPERTYINVENTORYSHEET|LOCATION DUTCH HARBOR-UNALASKA PAGE__1 oF 1 j CCOUNT INVENTORY PART OR 'ISUPPLIER INVOICE {PURCHASER NVOICE UNIT|NUMBER NUMBER ITEM OESCRIPTION SERIAL NO.|SUPPLIER [yo DATE mo.6D oare |PRICE.|CONDITION/REMARKS 12501 7000 psi wkn reeseValve Geoth Trim __Widway Fsg BM10274|5/83 2,484100}New 4"-600 R Valve G T Valve Svcs1250250ersH/piow Tee Valve Geo,Trim 710F-1 Inc 55447.|5/20/83 1,455{00}_"3"-600 RF Swab Gate Geo.Trim125032000psiW/P 710F-1 "55447_|5/20/83 gonloo}"3"-600 RTJ Flow Tee Valve Geo.Trim ,12504 200 psi WAP SOO RT FIGS DOG 710F-1 .=55447 _|5/20/83 _1,087]00"csg hea "ldway 5 "12505 W/P w/2 ea 2"screwed side outlets'Tool BMI391 |5/83 715 {00 ;Valve Svcs '12506 4"-300 RF Flowline Valve 610F-1 nc.55447 |5/20/83 464100 12507 4" 300 RF Flowline Valve 610F-1 "155447 |5/20/83 464100}_" 0-100 ress ga.-Wallace &Tiernar Alaska '12508 Model 62C-BA-O10 AHO1064 Instr 501423 |5/13/83 475100 : :Inert Gas Pressure Regulator Model Big 3 " 1 12509 SR3BJ-580/0781_1365 Victor.37962 Alaska A-26171N_5/83 152104 12510 Hoke-5 Valve Manifold ,8613G6E alaska 501658 |6/27/83 sloa|" WKM 6°600 RIJ Geothermal Master I 12511 Valve 705474 WKM 1176373 5/31/83 7,036/00]"i 12512 HAICO-5 way Valve 3000 psi 254 THaska |cores |6/27/83 162/00]_" 12514 Mayes 6'Level | 10141 Anes tre!|206776 |6/3/83 53il6," - 1:.National 1 ]ple2sis Vulcan Chain Tongs OT-13%Supply Co.|75376 |5/17/83 171/32}" 12516 Vulcan Chain Tongs OT-47 "75376 _|5/17/83 189/32]" 12517 Steel Mud Pit (4'x3'x8')--Arctic 060 5/31/83 783}33]" 12518 Steel Mud Pit (4'x3'x8')-- "060 5/31/84 783}33]" °12519 Steel Mud Pit (4'x3'x8')--m1 ":060 5/31/83 783]33]" "12513 Barton Flow Recorder &Manifold 202A Inet a 501658 16/27/83 1,012]00 " ane ers 03 |WR AAMALES =#94 Uy ,Cncl 1 wea eh| Co MPEESP RS «3090 AY (fect 2 sel ters)»Piel:20 00/f4¥Cit|ad |He ->--___>od$ee oigas |Roum.--"1.UG bief-4 B /2,250 - :7A 300.ty,Ane Cab a)2050.hs 14,30i;¢5 Couels HEWC [yews fuele 910.|L5,74°, |0.4.CERAM FUE L999.f6,44 5,All COMME ZSES Ge VE 'of §aes pa]500.R /,20 9. o,.Aid Hees ItftLX S204;iat 4.08 /..Heicopioh We Guer 15 Hes ea we)WPS.A4,0l? 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' i ' t yoo ! \ | : : : i . 1 | ' i A \ : FS Da | | !i 'i Ay ®wlon |! _ ' : SVAaQnS |& I | | | Pi ] : WNAN SQ HL||| td t | dt dd Seeenee : : a oe PE yd i : ie]! bo 4 | | | bf! to le } ios 4 ! 1 i \ ' :I a { te\ ' Lj Ls : 3 . : || : pot fond g f : : no : ! || 'a . ee: po ; ; oe te - cw te ereewSES tt ee see RRR RAR RRA RERE SRR ARSS an ..cen unees eee &xAS .wees ' :|Ca rity ats =: \Gane uf ae .|[||3%(oh .yeerT |wee ta at,eg ey gs a gqo gg i Kot anlee 4Loreeast 252°Lore 2052 Io 132.UB ,290 5%,555__3 2,299 !64 000!G1 300 |G Csy¥= ,Tydbaest ao*. : .wa [Vasemort0O}fo)so 8 oO |p |o fe) | ">Finck 4 Giw)laso 257 265 org 2,242 5 TS 52251 L.b00 120 42>°2 veal _ _ ______-|!LL tf i }__: ."Tt on alTort250252LUT[ols BKB SSF 54r5 G20 GI tO G2 e 5 a it| ;f aN20.awaotal 250 cal 2+A LS\2 4FU1t 23%VEG TA ta zo {loi nN.'v -a )62 ' )YY orndume,Cost sf Artoel <La iseenT dommom fa ste ple»el owett |")CSro)crolided)we New anelusn .ale ney Pik Scramdamt,Bowe "Te bs AYNaN Cad oll |xqBNareen&y a re b Vevehe "©";|:|3 3 8 r 22 5 -vonThwn7 99,AG bequr-w (aq |_ t * M42 a Se 2000 268 |Qoor -20079) , - , , ;!:'Wierdsales Breast |559 Larry ean 64 IFS 704 72,364 222Y S300 F490 ZBI Nola s GeeCrogedey 2!Reece Zo _; '4 || CoG :cn Fatt ''aee °e nee ee °|| -ae ei bYCotS56ot)Gary IID OUP 22238 2283 Pp Y2 ero 9232 NP Ole {i nH -_-_a TT a -!i en - ;- Tote LSU bed}.LE2L ©159,FOU D227 Pree [esa PPO Gere Whore |:J ae -r °oo .om 7 |Forel [ute use ny 04 GIF S90 ge AT GS”OPE Mee ee ee r 7 L.i if ct i 7 "|: '4 |Trt \: ;Deseo 3G N ah nwa=493,ol 00((herent Cost of ower at Unaladka =OY dee ||\':, .1 |(44 Fel est =fo,FIL fan -8046 Ww N52 |C10%Joye.©©DC getane MyyenDrotwibetarnnoyeYDallowsProa\be YA et tc r ft ta.pare>yp parcity °Cre News Coby ee til Vy ueae|at.|\Vat,Pececnst aty Na Py Yo eas rf on Pla +Py meaner, a nn Baa Se ce vow \Capa ut !|;|el WSR a ee Abs (4a 48}1g e6 94 (1979 441 | Baal ook Loeccest 2500 LOS WeTQ Ilolad ferns Ssts SerFo |bowp &I$o Gs GY ' Sc RE Se So OD ek ae *a -|ro.mrgoe hy 7 Be _; |{ 7 Sylar 4 wie?. amor T ©©©oO o 4200 "200 |Y200 ¥r00 Yro0eremms7TH }LJ "Fittayxi?)[29 15%UWI los 223 0 o |fo,0.oO Oa mM -___-tim --Rawyedtes ----4-0 ©Or Co Cr ttt tot 0 YRo 12-3 jor LES 22%2G5 1%278?4o20 Mure |M20 Hero iedo Doe WA yore!z90 wdd 2A 2512 34 3799 |363)350%a 24 c 2 >4 5 u 2 o 4 om DU ary weet?f Ase aA k Sele---e ey wang?Ya :Wo,280 musthaah={9%or SR PeapearrneaA j ff \sIeeeRe"SF IO oe vd.fyor 't |2 ares?waseen &Tuthest 2 aww). pot a on it ae1442.[443 Aq AAS (196 AGb (i14___AA 2000 22 f 2002=2609TethsalesforecastGFTBGos?Y Gry 15 J 40,46 238 235 3Y +50 F6,tr0 Fo 453 -Yes b2 2,,x ZWweR TT "9 }Ve "FY ar {5 FS S54 >+2 %Y BO3y [6,700 11,209 13453 ry ene : oe cmenet '';: on 8 j . :{oAeeN Yoo (200 Y200 Yo Yeo Yea Yea] Yloo Yreo (Pag 2Froy oe -! aete y)56 1ey 32 |iA AhheA SA Ln EES eole . os ny -_--_--}_-_||Wega try yio Ab nn Sn Cae fre type fee eke . Tats Yee 2 NAY.SOP."suk 5333 95O2_ITY So.Sten 1d 55 BS,ARO AOL wk d |.ierrs|3315 324%3270 BANG 32D BNAD.-BATF FAM Bint Eseeei;y ;my {ie >if {>le : -)li Docanld Ne t eo tryaenesen4woeVRTareh =*0,4 44 000:FN Ae a,oe (Or OT)°:'' Srre \)xtrove (.0, cy LA Sa ZO wf,Lc 000,Dood Cy "er 4 \aos)C-c (o"r As plat 7 Weng Vs 8 DIM: *be Den oda Cw '\a?Phew,OW ta Vowey en (f-on Baw)"ue hot we bee 7 -on -.!ete 'et we f.we meee gy Femme pé Be,eSVerySOee Ph wer ne:-os.37 3 0.sy \.--2.La teek Pat é >--ae -7 ny a as _- coe thal ga 52 Ftoy 26tG SET}Dis j Pays -284g a O14 900 -ee!. .t ot SA TT 545s S155 Sass a res STS 2 1 :2 2A Pd 2.3 2 2S ve R24 AD 234}2EAY 214 2UO¥2320 piT=to444,000 a ¢fers Sn oy 5 yur Gecthenwal test Gas T _/ it\ot v Be -Loe Ce 73 . aoe TIS 000 lena,eal, *0.jo fessNS 9 :Ace le "-”an |a mk f iZz\>f "[a (-9)5 Sy La.sd 5 \2 ann (4 eA fy INGes od [ Vo \O fons a "4 ad |} 3 ?>»A vec }i (Vana,Cn fyuren ane Quadra Fxdk :Oh,a pane Say | Te -b (6:07)Ge fe O 5 ™(.co eh saad phe e oO r ™M fe-prem "q a |fy vrs |unrhn che LA NCO,|Co ra ™Re a re al won pe <fiA_ft?Vee LL.om Fa-clunre}.) meAifafeeayvb;4TeBSAyNe4}eyteeevl,.eebrosSreeadSefapoetat"MalWesaithSed"572 Handbook of Geothermal Energy Table 10-10 Base Load Busbar Cost Estimates for New Generating Capacity in the U.S.A.TeTEoatFata(1981 $)- :een 4 Total Installed Annual gen- "*-power power erat- - -_aageieplant plant Well or ing Refer- costs,costs*,O+M,fuelcost,cost,ences Resource Type S/ikW ¢/kWh e/kWh-¢/kWh_s¢/kWh (see below) Nuclear 1200 2.9 0.1 0.4 3.4 1.2.10 Oil 600-800°*1.5-1.9 0.1 6.0 7.6-8.0 1.2 ($36/bbl) Coal .600-1000**1.5-2.4 0.2 1.2 2.9-3.8 1.2I($30/ton) Hydrothermal (vapor)t 300 0.8 0.1 1.3 2.1 1,3 Hydrothermal (liquid)tt . Flashing 500-800 -1.2-1.9 0.3 1.7-2.7 3.2-4.9 1-3 Binary fluid 550-950 =1.3-2.3.0.3 1.5-2.5 3.1-5.1 Geopressured§875-750 =-2.1-1.8 0.4 1.8-3.8]|4.3-6.0 4-7 (incl.Methane at 40 SCF/bbl) Hot Dry Rock 550-950 1.3-2.3.0.3 1.8-4.2 3.4-6.8 8,9 cogfeaoeandsABikThe above data are adapted from estimates provided by the following references: .Ramachandran et al.(1977)-7.Bloomster and Knutsen (1976) .Milora and Tester (1976) .Holt and Ghormley (1976)9.Tester,Morris,Cummings and Bivins .Greider (1973)(1979) .Wilson et al.(1975)and Wilson (1977)10.Rossin and Rieck (1978) .Samuels (1979)RAMnkwn-*Based on a 17%annual fixed charge rate;80%load factor (7000 hr/yr at capacity). **Higher capital costs include more advanced pollution abatement systems. +Current projections for The Geysers (see ref.1 above). ¥4150-200°C resources with well flow rates from 100-300 Ib/sec;reinjection required: 0% non-condensable gases. $40,000 bbl/day production,155°C,2000-psi geopressured resource. \lIncludes credit for methane recovered. 8.Cummings and Morris (1979)a would be only - $/kW (thermal major concern the user.Fluid if sites are loca may have som¢ sured resource locations... Worldwide De Koenig (197 Roberts and } (EPRI,1978)« opments.In Ti for electric and based on quest the constraints significant gro' This is perhap: Of the over: than 0.3%curl not increase sij cited in Table energy will be capacity consu to numerous ¢€ EPRI,1978)t produced elec in liquid fuel c least nine spe ment.These 1 Imperial Valle Hot Springs, Falls,Oregon Hill,New Me the exception development electric capaci the present ti development period 1980-2 NG2 .radALASKAPOWERAUTHORITY745 i,i Economic Analysis for Alaska Power Authority Reconnaissance and Feasibility Studies STANDARD PROCEDURES AND SAMPLE COST CALCULATION-FY 1982 Introduction: The Power Authority approach to plan formulation and economicevaluationincludesthefollowingkeyelements: 1}.A forecast of electrical requirements over a planning period. 2.Formulation of two or more complete plans that meet those requirements. 3.A comparison of the present worth cost of each of the plans. A plan may be comprised of one or more components and will typically include conservation or load management measures,waste heat utilization facilities,and electrical generation facilities.While the planning period is normally confined to 20 years,plan costs are calculated over an economic evaluation period which may extend beyond the planning period.The length of the economic evaluation period is related to theeconomiclifeofthelongestlivedalternativeunderconsideration.The present worth of plan costs are adjusted downward in the event that aplanoffersnon-electrical benefits in addition to meeting the forecastedelectricalrequirements. A Hypothetical Plan: Assume that the electrical energy and capacity requirements over the 20-year planning period have been forecast,and assume that Plan "C",like two or more other plans,has been formulated to meet the forecasted requirements over the planning period. Further,assume that Plan "C"consists of the following components: 1.Continued use of existing diesel generators as needed initially for generation and subsequently for standby.The existing diesels will reach the end of their economic life in the seventeenth year of the planning period and not be replaced. 2.Installation of a waste heat recapture system with facilities to supply therefial energy to a nearby building.This system is installedinthesecondyearoftheplanningperiodandhasaneconomiclife of 10 years.The capital costs,including installation,are estimated at $500,000,all of which are incurred in a single year,These facilities are not replaced. 3.A set of wind generators is installed in the third year of the planning period,with a economic life of 15 years,and which are used to displace diesel generation.These are replaced as needed by identical units.The capital costs,including installation,are estimated at a total of $1,120,000,all of which is incurred in a single year. Page 1 of 3 4,A hydroelectric project is constructed that comes on line in the ninth year of the planning period and,for the remainder of the planning period,satisfies the entire peak load and that portion oftheenergyrequirementsnotprovidedbythewindgenerators.The project requires a four year construction period and has a economic life of fifty years.The ca ital costs of this project are estimatedat$1.0 million for the Firsthyear,and $2.0 million each for the next three years.Certain project facilities will have to be replaced every 20 years;the cost of these items is $0.5 million. Standard Procedures: 1.Assume zero general inflation. 2.Assume real escalation of petroleum fuels at 2.6 percent annually for twenty years. 3.The interest rate (for purposes of present worth calculations,for interest during construction calculations,and for interest and amortization calculations)is 3 percent. 4.Operation,maintenance and fuel costs are assigned to the year in which they occur. 5.Capital costs are treated in the following manner. (a)Calculate the investment cost as of the project's on-line date.The investment cost is the sum of the capital costs over the construction period plus interest during construction at 3 percent.For a project with a one-year construction period, investment cost can be assumed to equal the capital cost. (b)Calculate the equivalent average annual cost of the investment over the project's economic life using an interest rate of 3 percent.(This is the annual uniform interest and amortization payment.) (c)Assign the equivalent average annual cost to each year from the on-line date to the end of the planning period. Replacement costs are handled by establishing a sinking fund to --finance replacement of major items that have an expected economic life less than the project's economic life.The average annual replacement cost is calculated using the 3 percent interest rate. 7.Economic Life is set out as follows: Gasification and Waste Heat Recapture Equipment =10 years Solar,Geothermal &Wind Turbines =15 years , Electric Transmission Lines =20 years Diesel Generation =20 years "Gas Turbines =20 years Rankine Cycle Turbines =25 years Combined Cycle Turbines =30 years Steam Turbines =30 years Hydroelectric projects =50 years Page 2 of 3 10. 11. 12. 13. 14. 15. Since inflation is assumed to be zero,and since there is no escalation beyond the planning period,yearly plan costs beyond the planningperiodarethesameasthecostsofthelastyearoftheplanning period if we assume that demand remains constant and units are replaced as required.Yearly plan costs are therefore assumed uniform until the end of the economic analysis period.The end of the economic analysis period is coincident with the end of the economic life of that project under consideration in any plan having the longest economic life.In our example,there is a hydroelectric project,with an economic life of 50 years,brought on line in the ninth year;therefore,the end of the economic analysis period is 58 years from the start of the planning period(as long as there is no other project in any other plan with a later date.)The period of economic analysis is uniform for all plans. Costs downstream of the busbar that are common to all plans can be ignored. Establish a reference date for the economic analysis.The reference date will normally be the first year of the planning period. All costs over the economic analysis period are discounted at a rate of 3 percent to the reference date.Discounted costs are summed to give the present worth of plan costs. Display the cost information in tabular form as shown in Table l. If a plan offers some benefit in addition to meeting (or decreasing) the forecasted electrical requirements,than those non-electrical benefits are to be addressed,but they are the subject of a separate calculation.The benefits are assigned to the year in which they occur and are discounted in the same way the costs are,thereby giving the present worth of non-electrical benefits.For instance, in the case of Plan "C",the waste heat utilization component saves fuel oi]that would otherwise be consumed for space heating. Display the non-electrical benefit calculations as shown in Table 2., The present worth of a plan's non-electrical benefits,if any,are treated as a credit that offsets,dollar for dollar,the present worth of plan costs.In the case of Plan "C",for instance,the present worth of Plan "C"non-electrical benefits are subtracted from the present worth of Plan "C",costs to give the adjusted present worth cost of Plan "C". Page 3 of 3 Plan Component 1.Diesel Generation O&M Fuel Waste Heat Utili- zation Capital Cost O&M Wind Generation Capital Cost O&M Hydroelectric Capital Cost O&M Replacement Total Cost Discounted Cost// Table l.Estimated Costs of Plan "C" Total Present Worth of Plan Cost8/-$10,572,000 Page 1 of 2 Yearsl/ i 2 3 4 i)6 7 8 9 15,000 12,000 12,000 12,000 12,000 12,000 12,000 4,000 100,000 ,107,000 70,000 75,000 81,000 88,000 96,000 106,000 "0- 59,0002/59,000 59,000 59,000 59,000 59,000 59,000 59,000 5.000 5.000 5,000 5,000 5,000 5.000 5,000 *0- 0-94,000¢/94,000 94,000 94,000 94,000 94,000 94,000 -0-6.000 6,000 6,000 6.000 6,000 6,000 6,000 -0--0--0--0--0--0--0- 283,0002/ -0--0--0--0--0--0--0-31,000,-0--0--0--0--0--0--0-19 ,0008/ 186,000 247,000 251,000 257,000 264,000 272,000 282,000 496,000 175,000 225,000 223,000 222,000 221,000 221,000 223,000 380,000 te) Table 1.Estimated Costs of Plan "C"(continued) Yearsi/ 21 thru10ud1213141516wv1B1920ae 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 -0--Q--0--0- -0--0--0--0- 0--0--0--0--0--0--0--0- 59,000 -0--0--0--0--0--0--0--0--0--0--0- -0--0--0--0--0--0--0--0--0--0--0--0- 94,000 94,000 94,000 94,000 94,000 94,000 94,000 94,000 94,000 94,000 94 ,000 94,000 96,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 283,000 283,000 283,000 283,000 283,000 283,000 283,000 283,000 283,000 283,000 283,000 283,000 31,000 31,000 31,000 31,000 31,000 31,000 31,000 31,000 31,000 31,000 31,000 31,000 19,000 19,000 19,000 19,000 19,000 19 ,000 19,000 19,000 19,000 19,000 19,000 19,000 496,000 496,000 437,000 437,000 437,000 437,000 437.000 437,000 433,000 433,000 433,000 433,000 369,000 358,000 307,000 298,000 289,000 280,000 272,000 264,000 254,000 247,000 240,000 5,392,000 1/= Planning period is 20 years. 2/ Economic evaluation period is 58 years. The costs for the last year of the planning period is used for each of the remaining years of the economic evaluation period.- 3/ 4/ 5/ This annual cost is based on an investment cost of $500,000 amortized over 10 years at 3 percent. This annual cost is based on a $7,295 3000 investment cost that includes interest during construction. over 50 years at 3 percent.I -This annual cost is based on an investment cost of $1,120,000 amortized over 15 years at 3 percent. It is amortized 8/this annual cost is a sinking fund established to insure that replacement costs equal to $500,000 are available every 20 years of project operation. ?/Reference year is year zero.This row is summed to give the unadjusted present worth of plan costs. 8/p,W.Years 1-20 P.W.Years 21-58 TOTAL ou5,180,000 5,392,000 10,572,000 Page 2 of 2 ya 2/ Table 2.Estimated Non-Electrical Benefits of Plan "C" Year Benefit Category 1 2 3 4 5 6 7 is]9-58 1.Space Heating Fuel Displacement , Benefit (1)-0-25,000 17,000 18,000 18,000 19,000 20,000 20,000 -0- Discounted,)enefit -0-23,000 16,000 16,000 16,000 16,000 16,000 16 ,000 -0- Total Present Worth of Non-Electrical Benefits -$158,000 Notes:(1)As with the treatment of fuels in the cost calculations,the value of fuels displaced is estimated on the basis of 2.6 percent annual real escalation. (2)Same reference year as assumed in the cost calculations.This row is summed to give the present worth of Plan "C"non-electrical benefits. «CONTRACTORS ENGINEERS CCO/PYDEVELOPERS MORRISON-KNUDSEN COMPANY,INC. EXECUTIVE OFFICE TWO MORRISON-KNUOSEN PLAZA P.O.BOX 7808 /BOISE,IDAHO 83729/U.S.A. PHONE:(208)345-5000 /TELEX:368439 AREGe my July 15,1982 Joe f ran ALAS 23 BVsares .Soom Saigo Py Ms.-Patty DeJong Alaska Power Authority 334 W.5th Avenue Anchorage,Alaska 99501 Dear Ms.DeJong: Enclosed for your information is a copy of the paper we prepared for the Geothermal Resources Council.The paper presents a summary of the factors affecting geothermal development on Unalaska.It also addresses the sensitivity of geothermal power costs to various resource conditions (e.g.,temperature,flow,location).We approached the economic analysis in this manner because of the current lack of definitive resource data and the uncertainty related to projected power costs on Unalaska.The results of the economic models may aid in decision-making processes related to the risks and costs associated with additional resource exploration and development. We compared the geothermal power costs to an equivalent diesel system, assuming the 1990 diesel power costs would be 300 mills/kwh.Instead of trying to select a realistic escalation rate for diesel costs,we cal- culated the escalation rate at which the diesel power costs would be equal to the geothermal power costs.For comparison to the geothermal costs presented in Table 1,the estimated levelized power costs for an equivalent diesel system would be: 340 mills/kwh (2%escalation rate) 420 mills/kwh (4%escalation rate) 505 mills/kwh (6%escalation rate) If you assume,for example,that power costs on Unalaska (levelized over the next 30 years)will be 340 mills/kwh,only the most optimistic of the geothermal development cases we considered would be competitive. The paper has been accepted by the Geothermal Resources Council for presentation at the Annual Meeting in October.If you have any comments on the paper or information you would like to see presented,please let me know.I hope the information we have developed will be of use to you in your planning activities for Unalaska. MORRISON-KNUDSEN COMPANY,INC. Ms.Patty DeJong July 15,1982 Page Two Thank you for your assistance. Sincerely, oS S.G.Spencer /laa Attachment @}732 "4 a| AN ANALYSIS OF GEOTHERMAL RESOURCE DEVELOPMENT ON UNALASKA ISLAND,ALASKA S.G.Spencer,G.A.Long and W.Chapman-Riggsbee Morrison-knudsen Company,Inc. P.QO.Box 7808 Boiacaeeerccres *ABSTRACT (oc:st "A rapid expansion in the seafood industry and Projected oil,gas and mining developments have resulted in a shortage of power on Unalaska Island.Currently,all power is supplied bysmalldieselgeneratorsatacostof340mills/ kwh for the local utility system.Available data indicate the potential for a significanthightemperaturegeothermalresourceonMaku- shin Votcano,west of the town of Unalaska.A summary of the considerations affecting the development of the Makushin resource to supply power to Unalaska is presented.A preliminaryeconomicanalysisofvariousresourceandde-velopment assumptions indicated that geothermal power can be competitive with diesel power even though capital investment is high. "INTRODUCTION Unalaska Island is located in the eastern Aleutian Islands,1300 kilometers by air south- -west of Anchorage.General concerns about rising'energy costs and uncertain fuel supplies are 'magnified on the Aleutians,where transportation-and logistics contribute to an expensive and:Vulnerable energy picture. 'The situation is complicated by boom-town growth:aS a resuit of expanding seafood industries,oi] and gas exploration and seafloor mining ventures.;Villages in the Aleutians are faced with outdated _energy production and transmission facilities,energy demands which exceed capacities and few,_if any,alternative energy resources.In manylocations,improvements in living and economic conditions are severely constrained by insuffi-cient energy supplies. Most of Unalaska Island is uninhabited.The town of Unalaska on the northeast coast consists of the traditional Aleut village of Unalaska and the settlement of Dutch Harbor (Figure 1).UnalaskaisoneofthefewdeepwaterportsintheAleu- tians and serves as a transportation link to the western Alaskan mainland,the North Slope and the western Aleutian Islands. Unalaska has recently experienced a major popula- tion growth to become the largest non-militarysettlementintheAleutians.The expansion of the Boise,Idaho 83729 .a seafood industry in the last decade resulted ina population increase of 290%.The 1980 census in- dicated a permanent resident population of 1322, which increases to an estimated 5000 during the peak fishing season.Recent socioeconomic assess- ments project a population in the year 2000 of 13,000 to 17,000 with moderate oi]and gas and bottom fishing development (BLM,1981). ENERGY _USE There is no central system which supplies the to- tal energy needs of the city of Unalaska.The city utility has two 600 kw and two 300 kw diesel generators which provide electricity to residen- tial and small commercial users on the main is- land.The estimated average demand for the sys- tem is 300 kw,with a current peak demand of 450 kw.Individual diesel generators supply power to fish processors and dock facilities on Amaknak Island.In 1979,the processors had a combined total installed capacity of 12,250 kw,with a non- coincidential peak load of 7460 kw.Experience in other Alaskan communities has indicated that pro- cessors will utilize central power generating sys- tems if they are available and economical. Only a rough estimate of the total diesel fuel use on the island can be determined.At the 1980 level of seafood processing,an estimated 11,000,000 liters are consumed annually for pro- cessors'energy requirements.An estimated addi- tional 4.9 million liters are used annually for residential space heating,small commercial needs and the city utility. Power demand projections for Unalaska are varied. A 1979 electrification study projected a peak de- mand of 21 MW in 1995 and a total demand of 105,000 MWH for residential,small commercial and large industrial users (Retherford,1979).These Projections are based on an energy growth rate of 10%per year through 1985 and 7%per year there- after.The 8LM leasing report for outer continen- tal shelf oil and gas development projected total capacity requirements of 50 MW in the year 2000 under base case development,and 56 MW with mod- erate oi]and gas development (BLM,1981).These Projections are summarized in Figure 2. Unalaska is faced with major changes in its energysystem,due to (1)the need for repair and _ at . .= ° aq .Spencer et al.9 3 02 cera ceaw ce:a 4 _opencereCale ne . vs 'improvement of the existing generating and trans-Due to the limited nature of the existing data,mission facilities,(2)the lack of sufficient an assessment of the resource potential on capacity to supply the present needs of large Makushin is difficult at this time.Based on the industrial users or meet projected future resi-*locations of the fumarole fields and geologic dential,commercial or industrial requirements,=-field mapping conducted by the State of Alaska, =_and (3)the community's total dependency on it is reasonable to project a fault/fracture con- .Oil-based fuels.Several alternatives for trolled resource with temperatures at depth in themeetingUnalaska's future energy needs are pre-range of 200°to 230°C. a »sently being considered,including large diesel . a ;generators,gas turbines,hydroelectric and geo- There is a reasonable probability of a deeper 2 i thermal.--regional thermal anomaly underlying the Makushin"y volcanics.This is evident by the existence of nae i Current utility rates for electricity in Unalaska extensive fracture systems with southeast trendsee|-are 340 mills/kwh,of which 135.9 mills are pre-and identification of younger intrusive bodies -sently subsidized by the State of Alaska.These underlying the Makushin volcanics.Exploration :rates were increased in 1981 from 170 mills/kwh funded by the Alaska Power Authority and beingtoprovideabalancedutilitybudget.Estimates conducted by Republic Geothermal,Inc.this year :of total cycle costs for the fish processors .will provide much more definitive informationparangefrom130to200mills/kwh.With future :about the extent and nature of the Makushin Peg system improvements,including new generating geothermal resource. og equipment,the city utility hopes to bring rates aS -down to about 290 mills/kwh.LOGISTICS pas i : ry GEOLOGY AND GEOTHERMAL RESOURCE One of the primary considerations in the develop- aa : :ment of geothermal resources for power generation =Surface manifestations of geothermal resources on Makushin is logistics.Not only is Unalaska have been identified at two locations on Unalaska Island a remote location with difficult access,A Island:Summer Bay and Makushin Volcano.The -Makushin Volcano is one of the remotest areas on "4 Summer Bay warm spring occurs near the base of Unalaska Island.The only maintained roads on the hes the exposed Unalaska Formation in a boggy swamp island are in and around the town of Unalaska. Ee 6 km east of the town of Unalaska.The spring There are remnants of a road partway up Makushin discharges an gstimated 4 Imp at a surface tem-.Valley on the east flank of the volcano and ano-a perature of 35°C.The preliminary quartz ther road in marginal condition runs from Drift-|(adiabatic)geothermometer for this gpring in-wood Bay on the north side of the volcano to 2 dicates a resource temperature of 60°C.within two kilometers of the lower fumarole fields. ;d There is an unused air strip at Driftwood Bay aed The Makushin Volcano resource shows greater which could be utilized to mobilize equipment and=a potential for development than the low tempera-crews for resource development.Service to theatureSummerBayresource.The Makushin Volcano commercial airport at Dutch Harbor (vintage WWII) 2 is a thick pile of unaltered and little-deformed is currently limited to small propellor aircraft. =lava and pyroclastic rocks which overlie the vol- &:canic and sedimentary rocks of the Unalaska INSTITUTIONAL CONSIDERATIONS !Formation.The broad volcanic dome is more than Re ;1800 meters high and 16 kilometers wide.These Lands on the istand of Unalaska are controlled Pe rocks,which consist of basalt and subordinate either by the Bureau of Land Management or by the Ee ;andesite,are designated the Makushin volcanics.Ounalashka (native village)Corporation.ThePrd|Locally,they are unconformably capped by basal-Qunalashka Corporation was entitled under the Kg ;tic flows and pyroclastic rocks that retain their Alaska Native Claims Settlement Act (1971)to<3 :constructional forms.The thickness of the select a total of 46,600 hectares,including ='Makushin volcanics is highly varied but probably Makushin Valley.Although the village corpora-St .does not exceed a few thousand meters.The tion's stock cannot be sold for 25 years,theay_formation is of Pliocene (?)}and Pleistocene age;land conveyed to the corporation is surface real.Es 'the bulk of the rocks are probably late Pleisto-estate that can be sold with no restrictions. :cene (Drewes,et al,1961).The Ounalashka Corporation has established a ea 'policy of leasing rather than selling their land, it :Eight fumarole fields have been identified on and became the first village corporation in Alaska 3!Makushin Volcano (Figure 3)at elevations ranging to pay a dividend to its stockholders. Ex from 430 meters above sea level to the summit of oe4 the yolcano.Several faults striking between The Aleut (regional)Corporation,in general,owns N 40°W to N 70”W have been identified in the the subsurface rights under land held by village :vicinity of the fumarole fields.Chemical analy-corporations in the Aleutians.According to ='ses of fumarole samples indicate low TDS fluids Alaska state law,geothermal resources are defined ee with relatively high concentrations of silica and as "the natural peat of the earth at temperaturesmdsulfatesandlowchlorideconcentrationsgreaterthan120°C,measured at the point whereoat(Motyka,et al,1982).the highest temperature resources encounter,enter or contact a well or other resource extraction device...(Reeder,et al,1980)."Under this definition,rights to geothermal resources with wgbohegediss,!Q{yKes.BORCRA en Nee '>toeseysrgretbeAaisi'4.aayiy2 SeameeA'LoBRLogy."a Lutddseaithe'8a7Sp epMLR ara se mae WA YE en mae temperatures above 120°C on Native lands are 'Aleut Corporation has not yet established a policycontrolledbytheregionalcorporation.The for geothermal leasing or development. The State of Alaska is actively involved in cee supporting power developments.In 1981,the State put $500 million into energy projects on 6B.Spencer et al.ieo an initial diesel power price of 300 w----.--Mills/kwh in 1990,escalated at the breakeven rate. The total geothermal investment varied signifi-cantly with the options considered.A breakeven of the investment for the case 8 is shown in Table 2.Capital costs for the power plant wereagrantbasis.The State also supports power ________based on similar plants in the lower.48 statesdevelopmentswithloansatlowinterestrates,_providing the opportunity for creative financing. ECONOMIC ANALYSIS :To determine if geothermal power could be compe- .titive with other energy alternatives on 'Unalaska,a preliminary economic analysis was 'performed.Because of the current uncertainty "regarding the resource potential on Makushin, 'several power development options were consi-'dered.The results of the economic analysis provide an initial assessment of the sensitivity of the cost of geothermal power on Unalaska to 'resource temperature,well production,plantdesignandlocation.Fourteen development options were analyzed (Table 1). The economic analysis developed the required mill rate per kilowatt-hour of electricity sold to recover operating costs,loan principal payments 'and interest payments.This rate was compared 'to the cost of supplying an equivalent amount of 'power with diesel generation.Rather than escalate the cost of diesel power at an assumed (and probably erroneous)rate,a "breakeven" escalation rate for diesel generation was"determined.This escalation rate ranged from a low of 1.8%for case 13 to a high of 6.7%for case l.If diesel costs escalate at a higher :rate,the geothermal power plant is more econom- ical. The analysis of the geothermal options was based on the following assumptions: 6 an annual discount rate of 10% o financing by a tax-exempt entity at 10% interest o seven years for well field development and plant construction (on-line in 1990) Oo investment and operating costs escalated at 10.5%in 1982 and declining to 7.5%by 1988 o a 10 MW plant producing a total of 65,7000,000 kwh annually o interest on debt rolled over during construction o debt is repayed over a 20-year term beginning in 1990 and included a construction cost factor of 2.5 for the remote Makushin location.Costs for roads,transmission lines and wells were based on .recent estimates at comparable locations by theAlaskaDivisionofGeologicalandGeophysical Surveys and Morrison-Knudsen.Average (escalated) costs for geothermal power for each option are shown in Table 1.It should be emphasized that the variation in the rates is more interesting than the absolute value for this preliminary analysis. CONCLUSIONS Available data on the geothermal resource poten- tial on Unalaska Island indicates that there is a promising potential for economic power develop- ment.The economic analysis of the fourteen development options indicates that while invest- ment costs for a 10 MW power plant near Makushin Volcano look very high,geothermal can be compe- titive with diesel generation. The geothermal power costs are particularly sen- sitive to the number of wells required to produce 10 MW and to the power plant location.At indi- vidual well flow rates of 115,000 kg/h and 225,000 kg/h,the costs are less sensitive to the resource temperature and steam fraction than at lower production rates. ACKNOWLEDGEMENT A portion of this study was funded by the U.S. Department of Energy through the Alaska Division of Energy and Power Development. REFERENCES Bureau of Land Management,1981.St.George Basin Petroleum Development Scenarios Local Socioeconomic Systems Analysis,OCS Techni- cal Report No.59. Drewes,H.,G.D.Fraser,G.L.Snyder and H.F. Barrett,1961.Geology of Unalaska Island and Adjacent Insular Shelf,Aleutian Islands,Alaska,U.S.Geological Survey Bulletin 1028-5,p.1439-1453. Motyka,R.,M.Moorman and S.Liss,1982.Assess- ment of Thermal Spring Sites,Aleutian Arc, Atka Island to Becharof Lake,AOF-144. Reeder,J.W.,P.L.Coonrod,N.J.Bragg and D.R.Markle,1980.Alaska Geothermal Implementation Plan,U.S.Department of Energy. Spencer et al.--2 Ain os :-Soeeeee:STs "Ag QT aSemeenadwaxes$0 7 eM,BASE CASE'piarusons L a oaes, UNALASKA a /. athe |ao 4 //ISLAND i 4 /:z rf- 2 aan "77°B30 4 RETHERFORD FIGURE 16.ts 3 3 T T T Tj19801985199019952000 :eat ct FIGURE 2.ELECTRIC POWER CAPACITY :" ° PROJECTIONS : Table 2 Investment -Case 8(1982S)i é Wells (5)$20,500,000Ee) Ras :Plant and Engineering $20,340,000SBety.PL MarBenin Brine Handling and Treatment $6,600,000eeanoPermittingandLand$600,000 : Transmission $6,200,000 Roads and Bridges .$_5,600,000 Tota $59,840,000: a Ns__okuahin,:.oP, .FIGURE 3.FUMAROLES AND MAPPED FAULTS, °MAKUSHIN VOLCANO Table 1 . Development Options -10 MW Power Plant, Plant Levelized 8.230°C -Of steam -115,000 kg/h on Makushin 385LocationMillts/kwh*Resource --o 9.230°C -0%steam =225,000 kg/h on Makushin 358 1.200°C -Of steam -45,000 kg/h**on Hakushin §35 10.230°C -10%steam -45,000 kg/h on Makushin 440 2.200°C =O%steam -115,000 kg/h on Nakushin 399 11,230°C =10%steam -115,000 kg/h on Makushin 370 3.200°C -0%steam -225,000 kg/h on Makushin 357 12.230°C =10%steam -225,000 kg/h on Hakushin 335 4.200°C -108 steam -45,000 kg/h on Makushin 450 13.230°C -0%steam -115,000 kg/h Makushin Valley 345 3 (no brine treatment) .-'kg/h on Makushin 3705.200°C 10%steam -115,000 kg/us 18.230°C =0%steam -115,000 kg/h on Makushin 446.200°C -10%steam -225,000 kg/h on Makushin 345 (significant brine treatment) 7.230°C -OF steam =45,000 kg/h on Makushin 493 *10%discount rate . **total production per well fF Lbs riows an LypwAaWve &Oy se Audi Ee5Aclouwnhts (CHL).,-So7AccountontGl)Cost f[Sehadade.Zon fro / Accounkinn Cleo.|DemyLede sasil Sgehorns 1/5 [82 ITEMS OG STAGESmA . 1.ow Vv VI vit TOTALS £.Vv Republic Labor 5 804)-$-53,486\$68,052 |$55,642 $26,832 $-28g,/9167(incl.OH &G&A)(es 23¥4/9 SUlor,') Dames &Moore C °5 030)(3,850)(16,680)12,060 1,540 .59/160Labor=-" Travel (4,800 )5 9,200 2,600 231850 -Other whet?600!1,200 200 34700 Pheteguenmcteyt -=pes soeF Drilling " -480 ,000 -480],000 Helicopter _-7 22,464 |64,9:928 -137,248 -224,64019,So!2204ped.Environmental _"350005 ---3,000 Studies LZ 220- ake.samp '"30,1608)25,500 102 ,036 -15 rae opboot 4750 | 7 Chemical Analyses -GSS.(7,000)-(15,000 )221,000 a) Prof.Liability --32,400- ----ae 400Insurance**OO 7 Geophysics -"59,283 _.-59 {283 or Equipnent.-Gd D ---9 {000 G t 1 aC , -11,652 -171302 | 4CorommuncatTons40045250"4Expediter2,000 3,000..."2,000 4,000 2,000 13,000 ||slaBEDGTuO-a (260)NC a (7 sSUBTOTALS28,098 261,547 94,432 813,038 48,172 1,345,287 Ja, Fee 10,527 28,770 10,388 89,434 5,299 )444k oReexeEs TOTALS $138,625 $290,317 $104,820 $902,472 $53,471 $1,489,705 ts,_ofa A554 240,524 fola Ae {O07 TasyreeTeEfremStageqrtoStageLy.pyc.us *k Not subject to fee..©OUT nll,mall ao om Pune Lk a Wy O0GG,S Work "wy Prowds al Vie cers ew Gwar analy +0 }oh =tVbOVEay)yA <$3,422b=ALE \ .: . 4 &Dibty A 900 sod chs wiv lU-S,000,(D-re a sen Ew Do ,|a Ven O (VOU fo one =|\ | Indirect Rates |Cor f Department FY 1979 (1)FY.1880 (1)FY.1981(2)Proposal (3) 55aie 95.18 -$05.36 124.00 130.0077 :[Land 141.00 184,97 178,00 178.00 Engineering 91.28 106.45 111.00 111.00 Exploration 172.51 27.50 142.00 (142.00) Senior Management 165.62 $6.32 97.00 115,00 Word Processing 234.64 336,15 147.00 162.00 Project Support 94.23 88,66 72.00 75.00 \_operations -74.45 56.00 56.00 Note:Republic's fiscal year ends June 30.Al}rates are based ondirectlabor. {3 Per DCAA audit report dated November 4,1981.tg Republic's 198]rate audit is scheduled for January 1982.\ 3)Based 198}rates and Republic's fiscal year 1982 budget. CONSOLIDATED STATEMENTS OF INCOME Fer the veart ended June 30,1991,1550 and 1978 REVENUES: Contract services (Note 1)200 0.00000...cence Drilling (Note 1) Operator and management fees (Nate 2}terest and otherCainiloss)on sale of assets...... COSTS AND EXPENSES: Contract services .... Drilling o 0.0.0... Geothermal and industrial supplies ... General and administrative,net of §2,638.000, $2,257,000 and $2,121,000 charged to others in ISSi,1950 and LQ7Q,respectively (Note 2) Interest (Note 1) Income before provision for Income taxes... ROVISION FOR INCOME TAXES (Note 4): Current - NET INCOME ESRNINGS FER CAPITAL AND GAFITALEQUIVALENTSHARE(Note 1}. "7 Geothermal!and industrig]supplies .....002.... a ee 2) Surrendered leases 20000 cece ec eee 2 a eS ee a eS OS ee a ve oY LSS}lead E79 $6,075,904 $7,004741 §L826,6272,503,871 2,129 142 4,559,468 $33,953 872,497 21,856458,057 337,450 166,4571,607,305 606,069 213,505 (5,269)313,436 490.000 UL772,821 11,287,235 7.378.003 4177543 6,066,312 1274401.2 166,89)1,501,202 3,850,158 T3106 707,546 154,019 2.088 ,008 1,414,403 826,253 -353,5474,478 281,598 22,0109,841,621 Q,97L 761 8,310,417 1,$11,000 1,315,474 1,067,586 2,600 9,700 _ IZL,G00 104,500 1,200 751,400 82,500 285,000 62,18,500 90,800 937,000 195,000 457,000 S 974000 §LIfdT4 $710558 $.05 tt $.08 The accompanying notes are an imiepral part of these statements. PAGEGOLAREBPUALICGEATHEURAL.INC.YIN PROETY AND LOSR HY BEPANTAENT MtfH PERTOO ENDED G6"30a)tt, Cy 4 REPOOT Tedl FOR COWPAaY SGTR REPUBLIC GEQTHRER MAL»LMC ngsaE RO DATE QTee 3B) a L VALHES EXFCESSEU IN AHOLE OSLLANS y! +.& eT RO INTO WANE UO CORO MRATE TUNARATErnOETGR PORATTEM THEBETEssDEPT,ot DEPT,02 CEPT,oF DEPY,G4 DEPT,05 OEPT,06 * ¢a WEAR LER OT "7 EPISES ATO GO FEATS SOT TE STITT 2784VACATIONEXPENSE-339L,67 00 .3085.8 ”6293,21 0260.017 $330,959 , +{PAYROLL BUROEN 8924.79 206 -22207,68 :35068,68 23361,29-13040,03 'wo"EMPLOYEE REMEF EVR EBT O08 360 TERST LIT - STIROTIA VEHIT II -8627.627 "TwSURANCE $7929.88 200 $466,05 (3642,92)$582,988 1203,82 ' 7)MUILOING KENT 379668,1F 206 20273,39 200 299 206 'uf EGUUPRENT RENT es Wes ey 7 oa --308:myers reas <2 7S)oeres panda LOL e+Reema "4 REPAIR &MAINTENENCE _,ST67O,12 .»3o m 322608 eye ESOT,23021 ,40 ' %UTILITIES .SELTI.b2 ',40007 bd AGG i Ne BOT 400 rf wo FELEPHORE :SOSTYLO6 299 Ze Tes TESTES 2507.96omyPHDCOBUPPLIES&Syt U2718,97 290 734,13 259,34 1199,88 4.42 " =TERPORARY HELP 00 20d 240,04 o90 200 1375.99 2efOFFICE”SUPPLE "§7 bk]see oeumnnm 112 ;meena {SUISSE SRE Pavone 42h)es a AY RMI NSINITTTS399 Te "7a)PORTAGE B46,76 s ee 9 GO:Ex LS98LTS |ST yeme Per 44,79°: a]vEROR COSTS "abe SOSt7 a?-et 20.aea BAG,51.ot Mp tet ty ete Hy ytelty os Ter is,ee 'ylate*al 7.58 "Ha”FIECD SUPPLIESAse yaF,eT (oy ysT<er He25 ds ew 308 oa QUES,PUB &PROF GEV T3589,44 509 92T3.92 9329,63)$9634.03 6658,32 " uw _-CACCOUNTING FEES . 5325,00 1025.00 wie +t RT)te;ms Keeat FEES 7 casas rte eeeSep aS VR eaeateCape!op edtWar steror oer 4 v:so... .afiX i)'eae Vv ;a ry 4A COMPUTER reyeri es BBD OT et Ae ne ayOi:Hes ORENAR oe'357,7)Gea $26.00 is 5,95 n»AUTO EXPENSES 2aST3,455 "aver Ly.6 %sereneee rer 1 a9 3:233aTAKES&LICENSES £35835,21 3388,82 (aw)166,85 060 004 8 . »TRAVEL LOOGING MEALS yro23,00 139,587 34866,69 1144906 7274S 549,83 »nf"OUTSEDE COMBULYART ETE Ee TOBE Sy arhy Herrrnnae em pyr FURY MOF EY OT ET 7 B00 8GaMECRUCTINGCOBYS™:8.ce AOOTT,TP:ore en xay hs Be aeasssui nie tot)EAETNS Biss meh 7278,92 eo BST$S,92 |"ym nf ENTEREST _ekrte!2qpse,39”And gases sen au ARAM sual eos VUE ae hey oc bi fat Pes i cee TET SOS a ao"OEPAECTATIOR™1Saz7¥69"679,55 S8S529 aren LO ROPEL EE Se CRORES EE sf rs PATENT 29624,06 200 280 200 250 5 e0 ” % -_PROPGAAL CRIT 73507 200 rT)200 060 096 aolOI:1 1.1 1 SO CACO CELE C1 LOSE PPT AIO NST PAE eeeORNATE PON TETSU ENO Fo GEN RNAY eo Paat gay ;.aehaee "SPACE ALLOE,CSSTAST AST I ag ;gi is Veae BOGE VG PE SES862:paris TOPES.G2°A937 IG ad »INTERDEPT eS PES F20,03 By oo nn Fe)14 BORSA ebb TIT BLOBS Sh fyCERES EGG AES :2535,47 |«EXPENSES RECOVERED TEs8s TON LOTT "SE TOTES OF Yorse.az S32 297°ae eter $111 66278,07ouSNTERDEPTRECOVERFO(46%,60)<9 (169b06,22)(ATHO8 LEG)(62665,05}(231653,92)ied 2 TOTAL "08 _932964,74 208 +00 ote 209 a ;be nanae ce Ngee cee cmamet be ameaemm ntti taruaanitiay Sei aiean wee we annaepaiaet 8 camer megnes sepgammemnir ipa pened cet ene ot one°i .le s :.a a "Thee;:wowoo-werent nnn wee -_-am at Fd) "«w afc Soren Toso =Torte 17berbinieersy oatarmenia {.* ,° : ry cy og 8 nearer Me at wee rete or ceretnnenenen oe torre megeeyennenmancnmnnnsinnnntennans 5 es vee nee +ym mimermaeeneaesen emcees +wer canoe fo Mt a a °vars hal . 'le mecane eee eae eeet nee ena Fee e a -_view eed Ww GOML @FRPUBLTUD BENTHERMAL,INC,YTD PROFIT a0 LC9S Hr DEPARTHENT 2FINE be PEQIND ENDED Dh&-3G-83 PAGE Y . REPORT Thad _faa Cheeky art WEPUGLIC GFATHERMALS Tec Me 4 RUN DATE OF aagedy c Fer eemene scammeranntionag 7 VALUES EXPRESSED TN WHOLE DOLLARS ts, bYom pec UN Tt WARE CHIEF EXEL)ACCHUNTING™"""'WORD”PROCESS ""OFFICESUPFORY "OPERATIONS ERRORS"TOTAL __t :DEeT.O7 DEPT.@8 REPT.10 ner,12 DEPT.60 1. aUP SALARIEST OT =62964674 |FRTLOS,S9 TT OTOTS.IZ |ATSTBRLGS TT OT SagasSST Tt ey sl VACATION EXPENSE (2bha.33)6o8321 354,25 14066,35 oya2.3y Oe ariSotare a coet{pavROLL QUROEN =MEST@ABS 25028,GR 5172.48 25862.88 46216.43 500 aiedee a) a P4PLOYER BEMEFITS 33028.78 SOTO Lae TTS SMM aS TO BB TRB LI GDL og ke nw INSURANCE 13644.82 2027.04 40 8529.18 11295 ,46 *Oo 202525.53 ' a AUILOING WENT +00 209 200 200 wr "30 165674.27 vO ROOT PERT RENT 5 |SaRcaERaPa L731 RE TT ORO LT Oe baanatesewlREPAI®&MAINTENENCE Ci ee 730,53 637519. anineet |525.00 oe.280 ogeae se *UTILITIES 06 oe:be.,ee Q . . -me ag *« ; a oo TELEP HOWE -"anb9,39 7.59 se ee grag 39171002 fa ss PHOTO SUPPLIES &SVC 564.98 00 00 49.59 17763 "to T2IZZLGS h «TEMPORARY HELE 58,88 aist.te "99 "39 699.52 °00 eaters " PRLCE SURPLY WOVE TT UTS OE EBT ESPINTO GOT NIB ATO TG Us -tae|Peet re CR aay gga sagasee Hi rt Mare vertetet eat TS.oo ..tte ;o vege lt or 1 Th Bey Ltd weet .ie We ae f. .an : FLECD SUPPCYES B-SVC 20 +08 vanes bleSA Sa Raa ae aaa eee Le fhHale,908 st7earen fu »DUES,PUA &PROF DER 13991,09 2504.04 399,19 11405258 Disa ee oo rttes3 : "ACCOUVTTNG FEES eT)$7475.96 506 "2025.00 saa 208 astse oe"EGAFEEST TTOD TOE DERE Oe Fr -s euros "99 ha . f ADVERTISING .od,SBESLO2 |.ne as Seahts eam aR oo taereeayCOMPUTER.ww Zo7r.op it eeea oe FP ata 2beT,Sints "ae sn . oS m CKUtH EXPCUSER VOLTS Oo VTE oa :aU geen,cng nas eo cia _|* w «TAXES &LICENSES 106 .08 Oe *e eesaeen . a»TRAVEL LRDGING BEALS L2rs3.64 1030.98 $956.63 7387.34 sasee cay MCUOUTSLSE COMAULTANT67 ET oeY cetceeree 2S RRS or]Sayeray veto ”"|inenest caste besezead Ramen CTT (0)SeOCMbER 7 Oh Casey QUORO TR lc coe THROES,a tethreay .angTeseag " ee . .oo aan 5 en Y?9 53.Toe Ay :i t ,oh rae i cy ' . DEPRECYATIQN SEG TE saggy ye US SS ROH a gees ioe gi ths2 8wee tg omnes:" PATENT 208 290 00 '° »PANPOSAL CORTS 240 200 500 08 "O "30 eet? xPToTHEeR OTE BRAND TTT RO TE BIBT OO NTT OTTGOS REET AY Gececn ree lean aanu|CORP.SPACE ALLO."gusrtza7 |t.eorntyeh -abaaT7 |ie gee T0783 m ay2e9 37 pe gen 9 oe aadanedt " wY TNTEROERT pe Cy TC17C07 Dr CTY peer yore mene P1007 eT Tae T aarzne 'en . Evens y ae coveree Td24958-ed Sees ay crzes,pp UISeRanE LSBYUSSeT ig chazezeo ses * us 8 t ECOVERED (26014250 > -f t sare:+50)a8 (0572.a sada (10426221)<4 Ch227240.6a}r oN men yf en <n a ".” .-b nee mneneee+en vate onenes Sue se mens eae . . : a _ee | at '. alc wee me le wee ote mgetee we eee pore Sh ot te meme ens cen mm eueees nae nage SE ae a eee " 2 45 ' ' . | * tee!vs qa 4 A i oe ee St mec ae dete at cements eae tam |Mepe ot eon#wenn:seer cet ate eenae ee eee : * " :7 -:meee Spencemrecottaee ne cumaaee 2+sate mame eaammnene«omni » 0 bemnuao sO one an Oo rte Bo ;:b « se omens Le me meee Ome wom .indwownee:ae ew ¢:2 woes gd Pr 'hed RECONCILIATION OF FINANCIAL STATESMENGéATODETAILOVERHEADBREAKDOWN Consolidated G&A Subsidiaries GaaA Surrendered Leases Capitalized Interest Cost Peooveries Net Departmental P &L 1,075,050 74,475 1,149,525 (286,018) (39,541) $_922,966 HECEIVED DEC 22 198] REPUBLIC GEOTHERMAL,INC. 11623 EAST SLAUSON AVENUE,SUITE ONE ALASKA PCWER AUTHORITY SANTA FE SPRINGS,CALIFORNIA 90670 TWX .910.586.1696 (213)945.3661 December 18,1981 Patty DeJong Project Manager Alaska Power Authority 334 West 5th Avenue Anchorage,Alaska 99501 Dear Patty: Pursuant to our telephone conversation of 17 December 1981, I am submitting the following detailed budget for Phase I activi- ties related to the Unalaska Geothermal Exploration Project. Please note that the bottom line is $9 above our original bid.This is due to errors created by rounding numbers dif- ferently in calculations done at different times.(We will stick with our $690,279 figure). I hope that this breakdown into stages,work classification categories,Republic labor and overhead figures,Dames and Moore labor and overhead figures,direct costs,contingency charges, G &A charges,and the Republic fee is detailed enough to permit the generation of a cost plus fee contract.If it is not,let me know and I'll try to do better. Sincerely, G.W.Huttrer Exploration Manager GWH:mvg STAGE I Man Hours Cost II Man Hours Cost III Man Hours Cost IV Man Hours Cost Vv Man Hours Cost SUB Man Hours TOTAL Cost 10%G&A SUBTOTAL 15%FEE TOTALS SUMMARY -PHASE I BUDGET 10%CONTINGENCY REPUBLIC DAMES &MOORE DIRECT ON D &M AND LABOR &O/H LABOR &O/H Costs DIRECT COSTS TOTAL 290 64 NA NA 354 $23,098 $5,740 $7,200 $1,294 $37,332 616 240 NA NA 856 35,992 21,980 53,100 7,508 118,580. 88 312 NA NA 400 5,206 25,030 39,000 6,403 75,639 590 40 NA NA 630 34,918 3,850 173,200 17,705 229,673 968 192 NA NA 1,160 57,636 16,685 7,700 2,438 84,459 2,552 848 NA NA 3,400 156,850 73,285 280,200 35,348 545,683 15,685 7,328 28,020 3,535 54,568 172,535 80,613 308,220 38,883 600,251 25,880 12,092 46,233 5,832 90,037 $198,415 $92,705 $354,453 $44,715 $690,288 STAGE I Man Hours Cost II Man Hours Cost III Man Hours ,Cost IV Man Hours Cost Vv Man Hours Cost TOTAL Man Hours Cost SUMMARY -PHASE I,REPUBLIC GEOTHERMAL,INC.LABOR &O/H LABOR CATEGORIES SR.TECH.STAFF TECH.STAFFTECH.MGMT.SEC./CLERICAL @ $89/HR.@ $65/HR.@ $51/HR.@ $21/HR.TOTAL 210 62 --18 290 $18,690 $4,030 --$378 $23,098 176 132 176 132 616 15,604 !3",'87580 -eB,976 2,712 35,992 26 --53 9 88 2,314 "00 a 2,703'©,8 189 5,206 44 264 264 18 590 3,916 17,160 13,464 an 378 34,918 334 194 202 238 968 29,726 12,610 10,302 4,998 57,636 oy a im)Soy enya 2,betes a , v! . 790 652 695 415 2,552 $70,310 $42,380 $35,445 $8,715.$156,850 STAGE I II III TOTAL Man Hours Man Hours Cost Man Hours Cost Man Hours Cost Man Hours Cost Man Hours Cost Cost SUMMARY -PHASE I,DAMES &MOORE LABOR &O/H LABOR CATEGORIES TECH.MGMT.SR.TECH.STAFF SEC./CLERICAL @ $96.25/HR.@ $78.75/HR.@ $27.50/HR.TOTAL 40 24 --64 $3,850 $T,890 "==$5,740 176 64 --240 16,940 5,040 ==21,980 120 160 32 312 TI,550 12,600 $880 25,030 40.----40 3,850 ====3,850 136 40 16 192 13,090 3,150 445 16,685 512 288 48 848 $49,280 $22,680 $1,325 $73,285 e* STAGE Iii TOTALS SUMMARY -PHASE I,DIRECT COSTS one§, TOPO.GROUND ENVIR-CHEM.GEO. TRAVEL MAP,TRANS.HELI.ONMTL CAMP.ANAL.PHYS.OTHER TOTAL $7,000 --------------$200 $7,200 2,900 $50,000 ------------200 53,10 4,900 --$2,500 $10,000 $3,000 $18,000 ----600 39,000 4,600 --5,000 20,000 -15,000 $3,000 $125,000 600 173,200 ----------- 7,000 --700 7,700 $19,400 $50,000 $30,000 $3,000 $33,000 $10,000 $125,000 $2,300 $280,200 REPUBLIC GEOTHERMAL,INC.and DAMES &MOORECONSULTINGSERVICESPRICELISTS December 1981 ,oe RGI 'DAMES &MOORE Category Ss Price*Price**:-- Technical Management s=t $89.00/nr g96.25/nr Senior Technical Staff =-65.00/nre ss tC«S:s«S8 S/n Technical Staff _oo 82,00/nr oo Support.Staff .._.oe :,i _34.00/hr a ..CBsecretarisi/Clerical ca 21:00/ne.°|a 27.50fox - Graphics 2 2 00/n , Expenses Os a i _Actual Costs -7 dGeneralAdministrativeChargeoe108ofcosts:aa =oot°onyen rood Fee a ,a .FEYof Costs and GEA ee . *Hourly rates are based on 'the.actual salaries paid to those -- employees expected to perform in these categories plus a factor foremployeebenefitsanddepartmentoverhead.The stated rateswillbeineffectuntilJune1981,at which time they will be adjusted -Bootstoreflectanycostchange.eres oa! **k Hourly rates are those 'that will be effective 'from January Le 1982throughDecember31,1982. be ..ID/nc ¥Ye =BO,begAnON (oad AGA)© Re gee |(ALASHA POWER AUTHORITY 333 WEST 4th AVENUE -SUITE 31 -ANCHORAGE,ALASKA 99501 Phone:(907)277-7641 (907)276-2715 July 6,1981 \ Mr.Lloyd Pernela Director Division of Energy &Power Y OsDevelopment, NSO Department of Commerce & Economic Development 338 Denali Street,7th Floor Anchorage,Alaska 99501 SUBJECT:RSA's with DEPD Dear Lloyd: We have recently received requests for reimbursement on three RSA's with DEPD.I am hesitant to approve these invoices for payment unless I know what has happened with the funds.Some specific concerns follow: 1. Unalaska Geothermal,RSA 08-8101.The original RSA was effective through July 31,1981 in the amount of $100,000.To date we have paid invoices totalling $24,118.20.The current invoice is for $13,665.18. The only written documentation we have received on this project to dateisaxeroxcopyofa"rough draft only"report by John Reeder of the Division of Geology and Geophysical Surveys entitled,PreliminaryAssessmentoftheGeothermalResourcesoftheNorthernParkofUnalaskaIsland,Alaska,dated February 1981.The report is intriguing and shows promising geothermal potential on Unalaska,Island.However, other than several telephone logs of conversations with Don Markle the record stops there.We would like a written update on the progress of the project to date and the recommended course of action with the remaining FY 81 funds and the $5 million FY 82 appropriation to the Power Authority for Unalaska Geothermal.Don has provided good verbal reports to us on this project,but we need something of substance for the record.We also need a projection for the amount of funds that will be utilized by July 31,1981. 2.AVEC Wood Gasification,RSA 08-8119.The RSA is effective through October 1,1981 in the amount of $125,000.Billings paid to date total $77,995.78.The current invoice is for an additional $8,974.76.To date we have received one copy of an Environmental Assessment Report on the Proposed Nulato Wood Energy Project by Environmental Services Limited dated August 30,1980.We have also received progress reports 1 through 5.Progress Report 5 is dated January 9,1981 and it is the last file documentation we have on the project. Froj.CoveF's Code:SeesO38. Mr.Lloyd Pernela July 6,1981 Page Two At the present time we desire a written update on project status and estimate of total expenditures from the RSA. 3,Kotzebue Geothermal,RSA 08-8105.The total value of this RSA as amended is $37,500 and extends through November 1,1981.Billings previously paid total $32,899.72.The current billing is for $1,501.23. Our files are well documented on this project with reports by Energy Systems,Inc.,recommendations from DEPD,and numerous letters and phone logs.However,we are curious as to the nature of the $1,501.23 (is it travel,personnel,contractual,etc.)as we thought there would be no additional expenditures after the ESI report and follow-up work was completed by DEPD.Please provide a brief summary of the nature of the billing and a projection of costs to be billed against this RSA. Unless vetoed by the Governor,we intend to pursue a cogeneration/district heat feasibility study for Kotzebue with FY 82 appropriations. 4.We also have RSA's with DEPD for Skagway Wind and Unalakleet Wind.The last file documentation we have on these projects is a March 5,1981 proposal by Wind Systems Engineering to the City of Skagway and February 26,1981 contract between Wind Systems Engineering and the City of Unalakleet. Please let us know the status of the above projects so we may update our records or close out our books as appropriate. Sincerely, Eric P.Yould Executive Director