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Unalaska Background Reports 8-90 to 12-91
a -_- Page No. 08/24/90 UNA UNA UNA UNA UNA UNA UNA UNA 001 002 003 004 005 006 007 008 Z-r1al.BG Ss! 229 Co}Sree Ss Gro.Jenmuser ALASKA ENERGY AUTHORITY LIBRARY CATALOG SYSTEM Das 2... LIBRARY CATALOG Bie. UNALASKA GEOTHERMAL PROJECT TECHNICAL PLANNING MEETING PROCEEDINGS FEBRARY 1 1982 ANCHORAGE ALASKA.1982.266 p.Transcript of meeting with Republic Geothermal Inc.and others. KEYWORDS:Unalaska,geothermal energy. Republic Geothermal,Inc.UNALASKA GEOTHERMAL EXPLORATION PROJECT PHASE IA FINAL REPORT.Alaska Power Authority,1982.1 vol. (microfiche). KEYWORDS:Unalaska,geothermal energy. Reeder,John W.,et al.MAKUSHIN VOLCANO GEOTHERMAL RESOURCES. Alaska Dept.of Natural Resources,Div.of Geological and Geophysical Surveys AND Alaska Power Authority,1982.1 vol. (microfiche). KEYWORDS:Unalaska,geothermal energy,Makushin Volcano. Republic Geothermal,Inc.UNALASKA GEOTHERMAL EXPLORATION PROJECT PHASE IB FINAL REPORT FIRST DRAFT.Alaska Power Authority,1983. 2 vol. KEYWORDS:Unalaska,geothermal energy. Republic Geothermal,Inc.UNALASKA GEOTHERMAL EXPLORATION PROJECT PHASE IB FINAL REPORT.Alaska Power Authority,1983.2 vol. (microfiche). KEYWORDS:Unalaska,geothermal energy. R.W.Retherford Assoc.PRELIMINARY EVALUATION OF GENERATION EQUIPMENT AND UNDERGROUND DISTRIBUTION LINE DESIGN.1 vol. KEYWORDS:Unalaska. Republic Geothermal,Inc.UNALASKA GEOTHERMAL EXPLORATION PROJECT PHASE II FINAL REPORT DRAFT.Alaska Power Authority,1984.1 vol. KEYWORDS:Unalaska,geothermal energy. Republic Geothermal,Inc.UNALASKA GEOTHERMAL EXPLORATION PROJECT ELECTRICAL POWER GENERATION ANALYSIS FINAL REPORT.Alaska Power Authority,1984.57 p.(microfiche). KEYWORDS:Unalaska,geothermal energy. Page No. 08/24/90 UNA UNA UNA UNA UNA UNA UNA UNA 009 010 011 012 013 014 015 016 230 ALASKA ENERGY AUTHORITY LIBRARY CATALOG SYSTEM LIBRARY CATALOG Acres American Inc. ALTERNATIVES UNALASKA. (microfiche). KEYWORDS:Unalaska. Republic Geothermal,Inc. PHASE II FINAL REPORT. (microfiche). KEYWORDS: Republic Geothermal,Inc. EXECUTIVE FINAL REPORT DRAFT. Unalaska,geothermal energy.KEYWORDS: Morrison-Knudsen Co. RECONNAISSANCE STUDY OF ENERGY REQUIREMENTS AND Alaska Power Authority,1984.1 vol. UNALASKA GEOTHERMAL EXPLORATION PROJECT Alaska Power Authority,1984.1 vol. Unalaska,geothermal energy. UNALASKA GEOTHERMAL EXPLORATION PROJECT Alaska Power Authority,1984.33 p. GEOTHERMAL POTENTIAL IN THE ALEUTIANS UNALASKA. Alaska Dept.of Commerce and Economic Development,Div.of Energy and Power Development, KEYWORDS: Morrison-Knudsen Co. KEYWORDS: Alaska Power Authority. KEYWORDS:Unalaska. Republic Geothermal,Inc. REPORT. KEYWORDS:Unalaska. Republic Geothermal,Inc. EXECUTIVE FINAL REPORT. (microfiche). KEYWORDS:Unalaska. Republic Geothermal,Inc. EXECUTIVE FINAL REPORT. KEYWORDS:Unalaska. 1981. Unalaska,geothermal energy. GEOTHERMAL ENERGY IN RESOURCE UNALASKA ISLAND. Alaska Power Authority, 1 vol. THE ALEUTIANS AND UNTAPPED 1981.4p. Unalaska,geothermal energy. UNALASKA/DUTCH HARBOR RECONNAISSANCE STUDY FINDINGS AND RECOMMENDATIONS.1985.199 p.(microfiche). UNALASKA GEOTHERMAL PROJECT PHASE III FINAL 1985.1 vol.(microfiche). UNALASKA GEOTHERMAL EXPLORATION PROJECT Alaska Power Authority,1985.26 p. UNALASKA GEOTHERMAL EXPLORATION PROJECT Alaska Power Authority,March 1985.35 * Page No. 08/24/90 UNA 017 UNA 018 UNA 019 UNA 020 UNA 021 UNA 022 UNA 023 UNA 024 231 ALASKA ENERGY AUTHORITY LIBRARY CATALOG SYSTEM LIBRARY CATALOG R.W.Retherford Assoc.1979 CITY OF UNALASKA ELECTRIFICATION STUDY. September 1979.198 p. KEYWORDS:Unalaska. Alaska Power Authority.UNALASKA GEOTHERMAL PROJECT FINANCIAL ANALYSIS.April 1988.40 p. KEYWORDS:Unalaska,geothermal energy. Motyka,R.J.,et al.FLUID GEOCHEMISTRY AND FLUID MINERAL EQUILIBRIA IN TEST WELLS AND THERMAL GRADIENT HOLES AT THE MAKUSHIN GEOTHERMAL AREA UNALASKA ISLAND ALASKA.Alaska Power Authority,July 1985. 155 p.(microfiche). KEYWORDS:Unalaska,geothermal energy,Makushin. Alaska Dept.of Natural Resources,Div.of Geological and Geophysical Surveys.ENGINEERING GEOLOGY TECHNICAL FEASIBILITY STUDY MAKUSHIN GEOTHERMAL POWER PROJECT UNALASKA ALASKA.Alaska Power Authority, September 1986.2 -7l.(microfiche). KEYWORDS:Unai:°"ology,geothermal energy,Makushin. R.W.Beck and Assoc.LOAD FORECAST AND POWER MARKET ANALYSIS CITY OF UNALASKA ALASKA.Alaska Power Authority,January 1987.120 p. (microfiche). KEYWORDS:Unalaska,populations. Dames and Moore.UNALASKA GEOTHERMAL FEASIBILITY STUDY FINAL REPORT. Alaska Power Authority,June 1987.2 vol.(microfiche). KEYWORDS:Unalaska,feasibility,geothermal energy. Powers Engineers,Inc.UNALASKA GEOTHERMAL PROJECT FINAL REPORT. Alaska Power Authority,December 1987.251 p. KEYWORDS:Unalaska,geothermal energy,site selection, transportation. Power Engineers,Inc.UNALASKA GEOTHERMAL PROJECT FINAL REPORT DRAFT. Alaska Power Authority,November 1987.279 p. KEYWORDS:Unalaska,geothermal energy,site selection, transportation. Dames and Moore.UNALASKA GEOTHERMAL PROJECT PROPOSAL RFP NO. APA-86-R-O015.July 1986.319 p. Page No.232 08/24/90 ALASKA ENERGY AUTHORITY LIBRARY CATALOG SYSTEM LIBRARY CATALOG KEYWORDS:Unalaska,geothermal energy,proposal. *UNA 025 Dames and Moore.UNALASKA GEOTHERMAL FEASIBILITY STUDY DRAFT REPORT. Alaska Power Authority,January 1987.3 vol. KEYWORDS:Unalaska,feasibility,geothermal energy. Dames and Moore.UNALASKA GEOTHERMAL FEASIBILITY STUDY DRAFT REPORT. Alaska Power Authority,March 1987.1 vol. KEYWORDS:Unalaska,feasibility,geothermal energy. Dames and Moore.UNALASKA GEOTHERMAL FEASIBILITY STUDY DRAFT REPORT. Alaska Power Authority,June 1987.vol.2 KEYWORDS:Unalaska,feasibility,geothermal energy. *UNA 026 U.S.Army Corps of Engineers,Alaska District.UNALASKA ALASKA DRAFT SMALL HYDROPOWER INTERIM FEASIBILITY REPORT AND ENVIRONMENTAL IMPACT STATEMENT.November 1983.235 p. KEYWORDS:Unalaska,environmental impact,feasibility,Pyramid Creek,Shaishnikof River,small hydro. U.S.Army Corps of Engineers,Alaska District.UNALASKA ALASKA FINAL SMALL HYDROPOWER INTERIM FEASIBILITY REPORT AND ENVIRONMENTAL IMPACT STATEMENT.June 1984.275 p. KEYWORDS:Unalaska,environmental impact,feasibility,Pyramid Creek,Shaishnikof River,small hydro. U.S.Army Corps of Engineers,Alaska District.UNALASKA ALASKA FINAL SMALL HYDROPOWER INTERIM FEASIBILITY REPORT AND ENVIRONMENTAL IMPACT STATEMENT.July 1984.253 p.Prelianinary Dale KEYWORDS:Unalaska,environmental impact,feasibility,Pyramid Creek,Shaishnikof River,small hydro. *UNA 027 R&R Court Reporters.TECHNICAL PLANNING MEETING PROCEEDINGS UNALASKA GEOTHERMAL PROJECT.Alaska Power Authority,February 1982.267 p. KEYWORDS:Unalaska,geothermal,Republic Geothermal Inc., transcript. *UNA 028 Power Engineers,Inc.PROPOSAL TO PERFORM AN INDEPENDENT COST ESTIMATE OF THE UNALASKA GEOTHERMAL PROJECT FOR THE ALASKA POWER AUTHORITY RFP NO.APA-87-R-034.August 1987.277 p. KEYWORDS:Unalaska,proposal. *UNA 029 R.W.Beck and Assoc.PROPOSAL TO PERFORM A LOAD FORECAST AND POWER MARKET ANALYSIS FOR THE CITY OF UNALASKA/DUTCH HARBOR.July 1986. 95 p. KEYWORDS:Unalaska,Dutch Harbor,proposal. Page No. 08/24/30 UNA UNA UNA UNA UNA UNA UNA 030 031 032 033 034 035 036 233 ALASKA ENERGY AUTHORITY LIBRARY CATALOG SYSTEM LIBRARY CATALOG Lankford,Stephen M.,Hill,James M.STRATIGRAPHY AND DEPOSITIONAL ENVIRONMENT OF THE DUTCH HARBOR MEMBER OF THE UNALASKA FORMATION UNALASKA ISLAND ALASKA.U.S.Dept.of Interior,Geological Survey, 1979.15 p.Bulletin 1457-B. KEYWORDS:Unalaska,Dutch Harbor,geology. Drewes,Harald,Fraser,G.D.,et al.GEOLOGY OF UNALASKA ISLAND AND ADJACENT INSULAR SHELF ALEUTIAN ISLANDS ALASKA INVESTIGATIONS OF ALASKAN VOLCANOES.U.S.Dept.of Interior,Geological Survey, 1961.99 p.Bulletin 1028-s. KEYWORDS:Unalaska,Aleutian Islands,geology. Unalaska Geothermal Drilling.PETROLOGY AND GEOCHEMISTRY OF QUATERNARY VOLCANIC ROCKS FROM MAKUSHIN VOLCANO CENTRAL ALEUTIAN ARC.Alaska Dept.of Natural Resources,Div.of Geological and Geophysical Surveys,July 1985.122 p.Blueline Drawings Attached. KEYWORDS:Unalaska,geothermal,Makushin Volcano. Unwin,Scheben,Korynta,Huettl,Peat,Marwick,Mitchell &Co.CttY OF UNALASKA ELECTRICAL RATE-AND LOADPROJECTION-SPUDY-19-82--2060. Unalaska (City),July 1982.209 p. KEYWORDS:Unalaska,aviation,land management.Aic port Thote-Plan Unalaska Air pect ]482-2000. Arthur Young and Co.CITY OF UNALASKA ELECTRICAL RATE AND LOAD PROJECTION STUDY.November 1984.98 p. KEYWORDS:Unalaska,energy cost,energy demand. Campbell,Don A.,Economides,Michael J.DATA FROM STRATIGRAPHIC TEST WELL NO.1 MAKUSHIN VOLCANO UNALASKA ISLAND.Republic Geothermal, Inc.AND Univ.of Alaska,Fairbanks,February 1984.28 p. KEYWORDS:Unalaska,Dutch Harbor,geothermal,Makushin Volcano. Dames and Moore.OFFSHORE RUNWAY EXTENSION AT UNALASKA AIRPORT ALASKA SITE DESIGN AND COST STUDIES FOR FEASIBILITY ASSESSMENT.Alaska Dept.of Transportation and Public Facilities,September 1980.293 p-.-Blueline Drawings Attached. KEYWORDS:Unalaska,aviation,design,feasibility,site selection. Pagé No. 08/24/90 UNA UNA UNA UNA UNA UNA UNA UNA 037 038 039 040 041 042 043 044 234 ALASKA ENERGY AUTHORITY LIBRARY CATALOG SYSTEM LIBRARY CATALOG Unalaska (City).ALEUTIAN REGIONAL AIRPORT PROJECT DOCUMENTATION. February 1982.101 p. KEYWORDS:Unalaska,Aleutian Islands,aviation. Tryck,Nyman &Hayes.CITY OF UNALASKA RECOMMENDED COMMUNITY DEVELOPMENT PLAN.Unalaska (City),November 1977.188 p. KEYWORDS:Unalaska,community profile,findings and recommendations. R.W.Beck and Assoc.ELECTRIC RATE STUDY FOR THE CITY OF UNALASKA ALASKA.October 1985.106 p. KEYWORDS:Unalaska,economics and finance,energy cost,energy demand,utilities. Dames and Moore.1982 ENVIRONMENTAL BASELINE DATA COLLECTION PROGRAM FINAL REPORT.Republic Geothermal,Inc.AND Alaska Power Authority,February 1983.101 p.Blueline Drawing Enclosed. KEYWORDS:Unalaska,environmental impact,Makushin Volcano. Energy Stream,Inc.OVERVIEW PYRAMID CREEK HYDROELECTRIC PROJECT. January 1985.22 p. KEYWORDS:Unalaska,hydroelectric power,Pyramid Creek,small hydro. Dames and Moore.FINAL REPORT GEOTHERMAL DRILLING STUDIES NEAR UNALASKA ALASKA.Alaska Dept.of Commerce and Economic Development,Div.of Energy and Power Development,November 1980. 13 p. KEYWORDS:Unalaska,geothermal,Summer Bay. Geophase,Geotherma.GEOTHERMAL POWER GENERATION WITH TWO-PHASE FLOW TURBINES APPLICATION TO THE MOUNT MAKUSHIN RESERVOIR UNALASKA ISLAND ALASKA PROPOSAL FOR A TECHNO-ECONOMICAL FEASIBILITY STUDY. 28 p. KEYWORDS:Unalaska,economics and finance,environmental impact, feasibility,Makushin,proposal. Nye,C.J.,Queen,L.D.,et.al.GEOLOGIC MAP OF THE MAKUSHIN GEOTHERMAL AREA UNALASKA ISLAND ALASKA.Alaska Dept.of Natural Resources,Div.of Geological and Geophysical Surveys,1984. Page No. 08/24/90 *UNA 045 *UNA 046 *UNA 047 *UNA 048 *UNA 049 *UNA O50 235 ALASKA ENERGY AUTHORITY LIBRARY CATALOG SYSTEM LIBRARY CATALOG Report of Investigations 84-3,Maps Attached. KEYWORDS:Unalaska,geothermal energy,Makushin. Queen,L.D.LITHOLOGIC LOG AND HYDROTHERMAL ALTERATION OF CORE FROM THE MAKUSHIN GEOTHERMAL AREA UNALASKA ISLAND ALASKA.Alaska Dept. of Natural Resources,Div.of Geological and Geophysical Surveys, October 1984.Report of Investigations 84-23. KEYWORDS:Unalaska,geothermal energy,Makushin. Alaska Dept.of Fish and Game,Habitat Div.PRELIMINARY ENVIRONMENTAL ANALYSIS OF THE UNALASKA GEOTHERMAL POWER PROJECT.Alaska Power Authority,December 1986.66 p.Blueline Drawings Attached. KEYWORDS:Unalaska,environmental impact,geothermal energy. Alaska Dept.of Fish and Game,Habitat Div.ENVIRONMENTAL ANALYSIS OF THE UNALASKA GEOTHERMAL POWER PROJECT.Alaska Power Authority, April 1987.121 p. KEYWORDS:Unalaska,environmental impact,geothermal energy. R.W.Beck and Assoc.CITY OF UNALASKA ALASKA LOAD FORECAST AND POWER MARKET ANALYSIS.Alaska Power Authority,November 1986.107 p. KEYWORDS:Unalaska,energy demand,energy plan,feasibility, Makushin Volcano. Reeder,J.W.,Alaska Dept.of Natural Resources,Div.of Geological and Geophysical Surveys.PRELIMINARY ASSESSMENT OF THE GEOTHERMAL RESOURCES OF THE NORTHERN PART OF UNALASKA ISLAND ALASKA.February 1981.41 p.Draft. KEYWORDS:Unalaska,findings and recommendations,geothermal energy. Reeder,J.W.HYDROTHERMAL RESOURCES OF THE NORTHERN PART OF UNALASKA ISLAND ALASKA.Alaska Dept.of Natural Resources,Div.of Geological and Geophysical Surveys,October 1982.20 p.Open File Report 163. KEYWORDS:Unalaska,geothermal energy,Makushin Volcano. Dames and Moore.GEOTHERMAL DRILLING STUDIES NEAR UNALASKA ALASKA. Alaska Dept.of Commerce and Economic Development,Div.of Energy and Power Development,November 1980.14 p. KEYWORDS:Unalaska,geothermal energy,Summer Bay. * Page No. 08/24/90 UNA O51 236 ALASKA ENERGY AUTHORITY LIBRARY CATALOG SYSTEM LIBRARY CATALOG Economides,M.J.,Campbell,D.A.DATA FROM STRATIGRAPHIC TEST WELL NO 1 MAKUSHIN VOLCANO UNALASKA ISLAND.Univ.of Alaska,Fairbanks AND Republic Geothermal,Inc..28 p. KEYWORDS:Unalaska,geothermal energy,Makushin Volcano. REPORT GENERATION INSTALLED AT PROCESSING FACILITIES IN UNALASKA DATE:8-15-90 BY:JERRY LARSON ON SITE INTERVIEWS AND INSPECTIONS WERE CONDUCTED 6-7-90 AND 6-8-90.LOAD INFORMATION WAS OBTAINED FROM ALL BUT THREE PROCESSORS,OFFSHORE SYSTEM,INC,AND UNISEA/GREATLANDS,AND WESTWARD SEAFOODS.TO DATE THE DATA FORMS I LEFT TO BE FILLED OUT HAVE NOT BEEN RECEIVED. ALYESKA SEAFOODS,INC. MR STEVE TATE,CHIEF ENGINEER ANSWERED ALL QUESTIONS I HAD AND GUIDED US ON A TOUR OF THE GENERATION FACILITY.THE (4) OLDER CAT D398,600 KW GENERATORS WERE IN GOOD SHAPE AND ON LINE AT TIME OF VISIT.N.C.CAT MECHANICS WERE IN THE PROCESS OF INSTALLING A NEW D3600 2.6 MW GENERATOR TO OPERATE WITH THE 3 YEAR OLD D3600.FUEL CONSUMPTION RECORDS SHOW THE OLDER CAT UNITS GET 10 KWH/GAL.AND THE D3600 UNITS GET 15 KWH/GAL.THIS FIRM USES THE JACKET WATER AND STACK HEAT AS A PART OF THEIR PROCESSING.THERE IS NO INTEREST IN BUYING CITY POWER.THEY ARE INVESTING $15 MILLION IN PLANT UPGRADES,BOTH PROCESSING AND GENERATION, WITH A PROJECTED RETURN ON INVESTMENT IN 1 YEAR! ALASKA PRESIDENT LINES,INC. MR.MIKE REDMAN,OPERATIONS SUPERVISOR,ANSWERED ALL QUESTIONS ASKED AND SHOWED US THRU THEIR POWERHOUSE. THE PLANTS ARE 15 YEARS OLD,AND OLDER,AND HAVE NO SERVICE RECORDS.THEY WERE UNABLE TO DETERMINE HOW LONG AGO THE UNITS WERE OVERHAULED OR IF THEY EVER HAVE.THE PARENT COMPANY,EVIDENTLY,ROTATES THE PERSONNEL IN AND OUT OF DUTCH HARBOR ON A SEASONAL BASIS.THIS COMPANIES MAIN FUNCTION IS MOVING REFRIGERATED CONTAINER CARGO ON THEIR SHIPS,TO VARIOUS PORTS AROUND THE WORLD.THIS SHORE BASED OPERATION IS NOT VERY WELL RUN.THE OPERATIONS SUPERVISOR IS VERY INTERESTED IN BUYING POWER FROM THE CITY,BUT THE FINAL DECISION WILL HAVE TO COME FROM TOP MANAGEMENT.HE HAS BUDGETED $119,000 FOR O&M THIS YEAR,BUT STATED THOSE COSTS WILL BE EXCEEDED. EAST POINT SEAFOODS MR.LEWIS SEUTZ,SUPERVISOR,SHOWED US THRU THE POWER HOUSE AND FILLED IN ALL THE INFORMATION HE HAD RECORDS ON. THIS IS AN OLD FACILITY,THAT CONCENTRATES ON ONLY CRAB.ALL GENERATORS ARE OLD AS IS THE SWITCHGEAR.THE MANAGER HAS RECOMMENDED TO THE OWNER THAT THEY GO ON CITY POWER, BUT THE OWNER,AGE 83,LIVING IN SEATTLE,HAS NO INCLINATION TO CHANGE THE WAY HE DOES BUSINESS.THIS IS ASMALL LOAD BUT DOES REPRESENT A NEAR TERM POTENTIAL CUSTOMER. ICICLE SEAFOODS,INC. MR.TOM SANDEL,CHIEF ENGINEER,ARCTIC STAR,SHOWED ME THRU THE GENERATION ROOM.THE UNITS ARE OLDER,BUT VERY WELL MAINTAINED,CLEAN,AND NEAT.MR,SANDEL PROVIDED ME WITH A REPORT HE MADE FOR HIS MANAGER ON SELF GENERATED POWER VSUNALASKA CITY POWER.THE RESULTS SHOW IT IS CHEAPER FOR THAT FIRM TO SELF GENERATE.A COPY OF THE R EPORT IS ATTACHED FOR REFERENCE.ICICLE IS CONSIDERING RELOCATING THEIR PROCESSING SHIP TO ST.PAUL,AS IT IS 2 DAYS CLOSER TO THE FISHING GROUNDS. UNISEA/GREATLANDS THE NEW CENTRAL GENERATION AND PROCESS HEAT FACILITY WAS UNDER CONSTRUCTION AT THE TIME OF INSPECTION.MR.TOM SPENCER,PLANT ENGINEER,SHOWED ME THE PLANS FOR THE ULTIMATE FINISHED FACILITY INCLUDING,(6)2.6 MW FAIRBANKS DIESELS.AS THERE IS ALSO CONSTRUCTION GOING ON TO EXPAND THE PROCESSING EQUIPMENT,A LOAD PROFILE IS NOT AVAILABLE. MR.SPENCER WAS GIVEN A DATA FORM TO FILL OUT WHEN HE HAS A BETTER IDEA WHAT THE REAL LOADS WILL BE.THIS FACILITY PROCESSES ALL PRODUCTS AND AS SUCH ONLY SHUTS DOWN FOR TWO 2 WEEK PERIODS DURING THE YEAR FOR MAINTAINANCE.THE EXPECTED LOAD IS IN THE 3 TO 5 MW RANGE.THERE ARE TWO LARGE BOILERS INSTALED IN THE UTILITY BUILDING AND BOTH WILL BE NEEDED DURING STARTUP.AFTER THE JACKET WATER AND STACK HEAT SYSTEM IS COMMISSIONED,ONLY A PARTIAL USE OF ONE BOILER WILL BE NEEDED.THIS AGAIN IS A TOTAL ENERGY POWER PLANT.THE PROJECTED PAYBACK FOR THE NEW CONSTRUCTION IS ESTIMATED AT 6 YEARS. WESTWARD SEAFOODS NO ONE WAS AVAILABLE,ON SHORT NOTICE,TO DISCUSS THE NEW LOADS EXPECTED FOR THEIR FACILITY.I LEFT MY CARD AND A DATA FORM WITH THE SECRETARY,TOOK A FEW PHOTOS,AND LEFT. THE PLANT IS BARELY OUT OF THE GROUND AND THE NEW 2.6 MW WARTSILA DIESELS ARE STILL WRAPPED IN TARPS.RUMOR HAS IT THAT WESTWARD EXPECTS A LOAD OF AROUND 5 MW AND HAS NO INTENT TO TIE TO CITY POWER. CITY OF UNALASKA MR ROE STURGULESKI,DIRECTOR OF PUBLIC WORKS,ANDI HAD A MEETING TO DISCUSS MY IMPRESSIONS OF THE PROCESSOR FIRMS. WE SHARE THE FEELING THAT FOR THE CITY TO ENGAGE INTO A 20 YEAR TAKE OR PAY CONTRACT WITH ORMAT GEOTHERMAL WOULD BE A VERY SPECULATIVE DECISION.ALTHOUGH I WAS NOT ABLE TO REVIEW THE ORMAT PROPOSAL,IT EVIDENTLY HAS PROPOSED ANNUAL SALES OF 87,000,000 KWH AT $.10 KWH DELIVERED TO A CITY BUS BAR ON AMAKNEK ISLAND.MOST OF THE LARGER PROCESSORS CAN COMPETE WITH THAT COST.IN FACT,ONE PROCESSOR STATED THEY WOULD SELL DIESEL GENERATED POWER FOR $.09 KWH.THE OTHER MAJOR CONSIDERATION IS THAT ORMAT WANTS A 20 YEAR SALES CONTRACT AND THERE ARE NO PROCESSORS WILLING TO SIGN A 1 YEAR CONTRACT,AND CERTAINLY NOT A 20 YEAR. AS MUCH OF THE ELECTRIC LOAD IS JUST BEING CONSTRUCTED,IT IS TOO EARLY TO ESTABLISH WHAT THE REAL LOAD PROFILE WILL LOOK LIKE.ALSO THERE IS MUCH UNCERTAINTY AMONG THE PROCESSORS AS TO THE EXTENT OF THE BOTTOM FISHERY,OR IF IT WILL BECOME REGULATED WITH TONNAGE RESTRICTIONS. POLITICALLY,IT MIGHT BE POSSIBLE TO GET MORE FACILITIES TO TIE TO THE CITY SYSTEM,HOWEVER,IF THE BOTTOM FISHERY DECLINES,THE PROCESSORS WILL CLOSE OR QUIT.EITHER WAY,THE CITY UTILITY WOULD BE IN A BAD CONTRACTUAL POSITION. .eo)7 Kidder,Peabody &Co.aViea |(randfacerporated RECEIVED MEMORANDUM NOV 04 1991 ALASKA EXER SY AUTHORITY TO:Participants in An Introduction to Risk Analysis forEntrepreneursandInvestors FROM:William P.Short III DATE:October 30,1991 RE:Trends in the American Geothermal Industry Enclosed please find a copy of the paper "Trends in the American Geothermal Industry”that was written from the speech that I gave at the Geothermal Resources Council's conference titled "An Introduction to Risk Analysis for Entrepreneurs and Investors.”I have had the opportunity to circulate draft copies of the paper for comments to members of the geothermal community as well as incorporate answers to the questions raised by you at the conference.The principal criticisms of my speech are listed below and my responses to each are on the following pages: (1)low growth assumptions for additional geothermal power plants; (2)the absence of a discussion of geothermal's low Operating Expensesversusothergenerationtechnologies'Operating Expenses; (3)the dismissal of significant geothermal resources on Hawaii sufficient tojustifythedeepsea,HVDC cable link from Hawaii to Oahu; (4)the downplay of societal and/or environmental adders or set asides intheawardingofpowersalescontractstogeothermalprojectsbyelectric utilities; (5)the domination by conservation,repowering and co-generationtechnologiesintheawardingofnewpowersalesbyelectricutilities;and (6)my generally negative,pessimistic,conservative,narrow-minded,know-it-all,East Coast,investment banker attitude. Ca.6 Kidder,Peabody &Co. lo corporaced (1) (2) n -2- My near-term and long-term growth forecast for the geothermal industry is as follows: Near-Term Long-TermGrowth,MW |Growth,MW |Totals,MWState/Region (1991-1994)|(1994-1999)|(1991-1999) California 125 225 350 Nevada 75 250 325 Hawaii 25 50 75 Alaska 10 0 10 Pacific Northwest 10 30 40 Other Pacific Southwest 0 0 0 Totals 245 555 800 Calculating the compound annual growth rate of geothermal power plants,the geothermal industry should experience a growth rate of 7.4%in the 1990s, using 883 MW as the base.Using 2,564 MW (the combined amount of QF plant and steam field)as the base,the growth rate slips to only 3.1%.This growth rate I believe is rational and reflects the competitive environment in which geothermal energy competes. Regarding Operating Costs,I have added a paragraph on Operating Costs on the top of the 35th page and compared geothermal Operating Costs to fuel and Operating Costs for gas-fired combined cycle power plants.My conclusion is not very encouraging for the industry except for geothermal power plants located at The Geysers and in Nevada.Our industry has to lower its Operating Costs. There will be no more Standard Offer #4 contracts and the fixed price energy period for these existing contracts will end for the first power plants in 1996. (3) (4) -3- My position on geothermal development on Hawaii has not changed:island- only development on Hawaii,no HVDC cable to Oahu in the 1990s.As you know,on June 12,1991 a well blew in at Puna Geothermal Venture which confirms a significant geothermal discovery.Despite this good news,PGV has spent approximately the past four months trying to recover its suspended construction and drilling permits.This discovery well and the others drilled by PGV and the University of Hawaii highlight the "living hell”that awaits the developer of the geothermal field and power plants for the HVDC cable.This does not mean that there will be no geothermal development on Hawaii in the 1990s;only that it will be limited to 100 MW,serving only the electricity needs of the island of Hawaii.Since there will be easier places to do business than Hawaii,I believe that the geothermal industry will take the path of least resistance to profits and not aggressively push "Oahu”geothermal development until the next decade. Quotas and subsidies are my words for set asides and adders.If the American public perceives set asides and adders as what they really are--quotas and subsidies,there will be no set asides and adders.In any case,American industry (i.e.,large commercial and industrial electricity users)will oppose these "price increases”as unjustified given the lack of scientific proof to confirm (a)that global warming is caused by "greenhouse”gases,(b)that CO is a "greenhouse”gas and (c)that,if COg is a "greenhouse”gas,the economic and environmental impact has been overstated.The geothermal industry should not expect that it will receive any meaningful assistance from government; Kidder,Peabody &Co. (5) (6) incorporated -4- instead,the industry should concentrate its efforts on lowering its capital and operating costs and making itself the economic choice of new base-load generation given the status quo. My paper suggests conservation and,to a lesser degree,repowering and co- generation as the preferred ways for electric utilities to add generation in the 1990s.Conservation is a harder issue to define.You cannot be against it,it is cheap and it does not pollute.Its only problem is that you cannot see it,smell it, etc.One person has called it "vapor-watts.”Nevertheless,electric utilities have embraced it and,until it fails,the geothermal industry has got to learn to live with conservation as its major competitor. Lastly,I like to think of myself as having a positive,optimistic,realistic,open- minded,know something,East Coast perspective of a West Coast business, investment banker attitude.On the serious side,this paper will be published in the October issue of the Geothermal Resources Council Bulletin.You may decide that some of my conclusions are not correct,inaccurate or just plain wrong.For example,I believe that I have laid out a reasonable growth scenario for the geothermal industry for the 1990s.Some critics insist that my forecast is low,conservative and reflects my well-known "attitude.”Unfortunately,I have not seen a comparable study from a member of the geothermal community.I welcome your estimates of 1990s growth:by year,by state,by electric utility and by geothermal company.This paper and its publication in the Bulletin provide that forum for such a discussion.I look forward to reading your response in the letters-to-the-editor section of the Bulletin. enclosure TRENDS IN THE AMERICAN GEOTHERMAL ENERGY INDUSTRY An Introduction to Risk Analysis for Entrepreneurs and Investors William P.Short III Vice President Kidder,Peabody &Co. Incorporated June 12,1991 (THIS PAGE INTENTIONALLY LEFT BLANK] Abstract This paper discusses the trends in the American geothermal energy industry.Thegeothermalenergyindustrybeganin1960asasellerofgeothermalsteamtoelectricutilitieswhichusedittogenerateelectricityandevolvedintoanindustrywhich generates and sells electricity directly to electric utilities.In 1984 the industry, which was principally composed of subsidiaries of oil and gas companies,was located at The Geysers and sold geothermal steam to Northern California electric utilities. By 1990 the industry had restructured itself such that on new projects it was a seller of electricity to electric utilities located principally outside of Northern California.A majority of the major geothermal industry players were now independent geothermal and/or alternate energy companies.In the 1990s the industry faces significant competition.In order to prosper,the industry will probably consolidate into fewer major players,lower the price of its product,continue to receive tax subsidies and obtain economic subsidies.It is expected that the geothermal industry will be merged,in substance,into the unregulated portion of the electric utility industry. Foreword The value of the geothermal industry emanates from the contracts to sell the industry's output to electric utilities.An excellent geothermal resource has little value without a contract for the sale of its output while a mediocre resource may find its value greatly enhanced with the proper contract.This paper uses the differentformsofcontractsbetweenelectricutilitiesandgeothermalenergycompaniesasa basis to trace how the geothermal industry developed,determine what are its principal features today and project where it is headed in the future. [THIS PAGE INTENTIONALLY LEFT BLANK] 1955-1990,Foundation and Development (THIS PAGE INTENTIONALLY LEFT BLANK] The geothermal industry can be characterized as having two development phases intheUnitedStates.These are (1)a sale of steam or brine phase and (2)a sale of elec-tricity phase.The former began in the late 1950s and continued until the early1980s.The latter phase officially started with the passage of PURPA in late 1978 butactuallydidnotbeginuntiltheearly1980s.The sale of electricity phase continuestodayandisexpectedtodominatecompletelythefuturedevelopmentofthegeothermalindustry. There are four major types of sale of steam/brine contracts -Pacific Gas and Electric("PG&E”),Sacramento Municipal Utility District ("SMUD”),Utah Power &Light("UP&L”)and Dravo Corporation ("Dravo”).These contracts are named for the pur-chaser of the steam or brine.The first three of these contracts are named for the electric utility while the fourth is named for a private company.The first two con-tracts involve the sale of steam while the latter two are for the sale of geothermalrine. The first sale of steam contract was negotiated between Magma Power ("MGMA”)and PG&E in the late 1950s for the development of The Geysers,a dry steam field.Since an electric utility was under no legal requirement to purchase geothermal ener-gy,it was necessary that the geothermal energy company offer its fuel to the utilityatadiscounttootherfuelsalongwithlimitedguarantiesofquantityandqualityandflexibleoperatingrequirementstotakethegeothermalsteam.Since geothermalpowerplantsdonotneedaboilerandthedrysteamis"ready-made”for a turbine,thecapitalcostsofgeothermalpowerplantswerelessthanthoseoffossilfuel-fired steamplants.The result of the PG&E contract for the electric utility industry was that itgotagreatcontractforacheap,clean long-term energy source.The result for thegeothermalindustrywasthatitwasabletoestablishitself. Clearly,the electric utility industry got the better side of the economics of this agree-ment.The price of steam could be no more than the weighted average of PG&E'snuclearfuelcostandtwo-thirds of the price of fossil fuels.The contract had no mini-mum takes but minimum deliveries which,if not met,could require the geothermalenergycompanytopayfortheunamortizedcostofanunderutilizedgeothermalpowerplant.The amount paid for steam was based upon PG&E's generation of elec-tricity,not upon steam delivered.Thus,the contract had little to no incentives forPG&E to be efficient.PG&E built inexpensive power plants,which did lead to lowerelectricitypricesforratepayersbutconsumedupto40%more geothermal steam thanotherutilities'geothermal power plants. The PG&E contract contained clauses which adjusted annually the price paid forsteam.Initially,the steam sales price was two mills per KWh.During the first halfofthe1980sthecontract's price went up to nearly forty mills per KWh.Starting in1985whenthepriceofnaturalgasdroppedandDiabloCanyonwentintocommercialoperation,the price for stearn declined by 60%over a two-year period.Currently,thepriceis16.72 mills per KWh.The contract's pricing formula had no floor.Like oilandgasproperties,geothermal fields have great operating leverage.When the priceofsteamroseand/or the amount of production increased,the value of the steam fieldwentupgeometrically.When the price of steam fell and/or the production declined,the value of the steam field changed accordingly in the opposite direction.ThisfeatureofthePG&E steam sales contract would later greatly influence the value and wealth of the geothermal industry. Besides MGMA,Unocal,Aminoil (predecessor to Phillips Petroleum)andGeothermalResourcesInternational,Inc.("GEO”)signed contracts with PG&E. Currently,there are eighteen PG&E plants operating at The Geysers,representingapproximately1,300 MW of generating capacity. Geysers Steam Prices 50 -(Mills/K Wh) 40 |.--Pacific Gas and Electric seeee Sacramento Municipal 30 L Utility District 20 +nsOneae 10 + 0 as a OC MR 1970 1974 1978 1982 1986 1990 Despite such successful development of The Geysers with the PG&E contract,thegeothermalenergycompanieswerestymiedtryingtousetheirGeysersassetsasthebasisfornon-recourse loans.Over the thirty-year life of The Geysers,no geothermalenergycompanyborrowedonanon-recourse basis solely using geothermal steamfieldssellingtoPG&E as collateral for a loan.Two principal reasons were the lack ofaminimumtakeandtheextremevariabilityinthesaleofsteamprice.With thequestionsaboutthedeclineintheproductionofgeothermalsteam,it is doubtful ifthereeverwillbeanyfinancialinstitutionswillingtolendonanon-recourse basis. The PG&E contract was copied by the California Department of Water Resources("DWR”),which signed three contracts with three separate entities to purchasegeothermalsteamorbrine-a partnership of MCO Resources,Entex and GeothermalKinetics,Inc.("GKI”)for the Bottle Rock plant,GKI for the Rorabaugh plant and apartnershipofMCOHoldings,GKI and DWR for the CUI Venture plant.The BottleRockplantwasbuiltbutlatershutdownduetoalackofgeothermalsteam,theRorabaughplantwasnevercompletedandlaterabandonedandconstructionoftheCUIVentureplantwasneverstarted. The other major sale of steam contract was between SMUD and Aminoil (successor toSignalOil).This contract was the outcome of a decision by Aminoil to negotiate asteamsalecontractbetweenitselfandanelectricutilityotherthanPG&E.Thecontractwassignedin1979.Although the SMUD power plant did not commencecommercialoperationuntilSeptember1983,the initial price was premised upon the1979steamsalepriceofthePG&E contract (16.58 mills per KWh)subject to anescalationclause.The escalation in price was determined by a combination ofgeneral(75%of the increase)and energy inflation (25%of the increase).Despite thelargedeclinesinenergyprices,the price has slowly edged up although not as fast asthePG&E contract's price did in the 1970s and early 1980s.Presently,the price paidforsteambySMUDishigherthanPG&E's.The contract called for minimum takesbytheelectricutilityandpricedthesteamindollarsperthousandpoundsdeliveredtotheutility,not on the amount of electricity the utility generated with the steam.The contract encouraged SMUD to be prudent with its consumption of steam.ThepowerplantbuiltbySMUDwasveryefficient,utilizing thirteen to fourteen lbs.of steam to make a KWh whilea typical PG&E plant's conversion rate was twenty lbs.of steam per KWh.In addition,the SMUD power plant was more reliable,operatingatanaveragecapacityfactorinexcessof90%while the typical PG&E plant averagedapproximatelya70%capacity factor. The stability of the SMUD sale of steam contract price,the minimum take and theefficiencyoftheSMUD-type power plants positively impacted the value of theassociatedgeothermalsteamfields.For example,each of The Geysers'steam fieldownerswithsuchaSMUD-type contract has been able to complete non-recourseprojectfinancings.Similar contracts were signed between Northern CaliforniaPowerAgency("NCPA”)and Shell Oil (predecessor to Grace Geothermal)andbetweenCentralCaliforniaPowerAgencyandGEO.The current generatingcapacityofpowerplantswiththesecontractsisinexcessof350MW. In 1980 UP&L and Phillips Petroleum ("Phillips”)negotiated the first sale of brinecontractforthedevelopmentofatwentyMWpowerplantatRooseveltHotSprings,near the town of Milford,Utah.This contract had more similarities with the SMUD contract than it had with the PG&E contract.For example,it had a fixed base pricewithanescalationclausetiedprimarilytoinflation.It was a contract for the sale ofbrinedeliveredtotheutility,not the power generated with that brine by the utility. The tenor of the contract was to insure that both UP&L and Phillips would togetherbenefitorsufferfrompositiveornegativedevelopments,respectively,to the project.The price for the brine,equivalent initially to 37 mills per KWh,was higher thanUP&L's cost of its avoided fuel,coal.However,as more geothermal power plantsweretobeplacedinserviceatRooseveltHotSprings,the brine sales price would beadjusteddownward.If Phillips completed wells that were considerably moreproductivethanwhatthecontractspecified,the price of brine would be adjusteddownwardtocompensatepartiallyUP&L for efficient development by Phillips of thefield.On the other hand,if Phillips completed wells that were less productive thanwhatthecontractspecified,the price of brine would be adjusted upwards. The drawbacks to this contract were that geothermal brine was priced higher thanthepriceofcoal,the plant's operating costs on a cents per KWh basis were in excess ofthoseoperatingcostsforUP&L's large coal-fired power plants and UP&L hadnumerous,less expensive alternative sources of electricity.Not surprisingly,UP&LhadlittledesiretoexpandRooseveltHotSprings.With UP&L's avoided cost ofelectricitylow,Phillips had inadequate financial incentives to construct QF plants.as a result,no additional geothermal power plants were built at Roosevelt Hotprings. In 1983 Dravo signed a contract to purchase brine from Chevron Resources for thedevelopmentoftheHeberFlashplant,a 47 MW double flash plant constructed nearHeber,California in the California portion of the Imperial Valley.This contract wasthefirstsaleofsteam/brine contract between two non-electric utilities.The paymentforthebrinewasapercentageoftheelectricityrevenues(50%for the first five yearsdroppingto48%thereafter).The contract specified minimum deliveries of a suitablequantityandqualityofgeothermalbrinethatwouldensurethatthepowerplantwouldoperateataminimumcapacityfactorof70%.Failure to operate at this outputwouldinvokepaymentstoinsureaminimumlevelofcashflow. The Dravo contract was structured to permit a lease financing of the power plant.Accordingly,the contract was intended to give assurances to the lessor of the powerplantthatleasepaymentswouldbemade.There were concerns that the technologywouldnotworkortheresourcewouldproduceinsufficientgeothermalenergy.Dravo was required to obtain technology insurance.Since Chevron Resources was notconsideredtohavesufficientsubstancetoperformtheguaranty,a Chevron USA (theprincipalsubsidiaryofChevronCorporation)guaranty had to be given.The Chevronguarantydidhaveitsprice-a significantly high percentage of the electricityrevenueswereallocatedtothefielddeveloper.Once the Standard Offer #4 contract'sforecastedenergypriceperiodexpiresin1996,the value of the power plant's lessorandlesseepositionswillsignificantlydeclinerelativetothevalueofthepositionoftheownerofthefield. Besides being the last sale of steam/brine contract signed,the Dravo contract repre-sented the end of the progression of steam/brine contract development.Initially,theelectricutilitiesgotthebettersideofthesecontracts.With each new type of contract,the geothermal energy companies were able to improve their position.With theDravocontract,it can be argued that a geothermal energy company had gained themajorityofthevaluederivedfromaproject.Had the geothermal industry continuedtocontractwiththeelectricutilityindustryforsteamorbrine,today it wouldprobablybesubstantiallysimilartotheindustrythatexistedinearly1980s. The geothermal industry has sold power to electric utilities under four principaltypesofpowersalescontracts.There are Standard Offer #2 and #4 contracts inCaliforniaanddemonstrationandcompetitivebiddingcontractsinNevada.WithrespecttotheCaliforniacontracts,the Standard Offer #2 contract had fixed capacitybutvariableenergypayments.The energy payment would rise or fall with oil andlaternaturalgasprices.In early 1982 80%of the projected present value of futureelectricrevenuesfromaStandardOffer#2 contract were estimated to be from energypayments.By 1983 this number had declined to approximately 65%.Today thisnumberisapproximately50%.Since capacity prices have been relatively constantoverthisperiodoftime,the present value of energy revenues has declined by 75%over the course of the 1980s while overall contract revenues have declined by 50%.Itisthemagnitudeofthesedeclinesinrevenues,first in 1982 and later in 1986,thatmadetheStandardOffer#2 contract an unacceptable agreement for projectfinancings. Actual Avoided Energy Prices (cents/KWh) Pacific Gas and Electric Be Southern California Edison 6 4 2b Litcpypi dette peti pe pittt teeter eee ee tet ptJ|!i |\I |I {| 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 The Standard Offer #4 contract was developed as a response to the decline in energypricesinlate1982andearly1983thatinturnledtoastandstillinthedevelopmentofQFplants.The contract had fixed capacity payments for up to thirty years,forecasted energy payments for ten years (variable thereafter based on actualavoidedcosts)and bonus capacity payments.Provided that the technology andresourceriskswereacceptable,a financial institution would commit to financing aQFplantsincethepriceoftheelectricitywasknownforthelengthofthefinancing(generally ten years). The results were that the Standard Offer #4 contract's success exceeded everybody'sexpectations--electric utilities,CPUC,CEC and the alternate energy companies.Due to a fear of an oversupply of electricity at above market prices,on April 17,1985theCPUCsuspendedtheavailabilityoftheStandardOffer#4 Contract.However,by that time in excess of 15,000 MW of contracts were executed.Today over 9,300MWofthesecontractsforQFplantsarebeingperformed.Thirty-one Standard Offer#4 contracts were signed between electric utilities and geothermal energycompanies,representing approximately 950 MW of potential geothermal powerplants.Twenty-six of these contracts,representing approximately 750 MW of powerplants,are being performed.Nearly all of these QF plants were financed as non-recourse project financings,either during construction,upon in-service or as arefinancing. The geothermal industry sells power in Nevada to Sierra Pacific Power Company.("Sierra”)under two forms of contracts --demonstration and competitive bid.UnlikeCaliforniautilities,no two contracts had the same price,terms and conditions sinceSierraselectedthelowestbidders,and,based on these individual bids,negotiatedseparatecontracts.The one common item was that each contract had an initial pricethatescalatedovertimebyindependentfactors.The typical contract has a fixedcapacitypaymentforthelifeofthecontractandanenergypaymenttiedtoanescalationclause.The demonstration contracts had initial prices of 5.8 cents perKWh.In the latest competitive bidding contests,the initial prices for electricityaveraged5.0 to 5.5 cents per KWh.Competitive bid contracts have been awardedwithinitialpricesaslowas4.6 cents per KWh. Over the past several years,Nevada utilities have engaged in competitive bidding ofpowersalescontractswithalltypesofgeneratingtechnologiesandfuelsbeingallowedtoparticipate.The awards have been made based on "best value”to theratepayer,a combination of price (lowest power costs)and non-price considerations(location near to load centers,etc.).Although consideration has been given tointernalizingsocietal/environmental costs into the awarding of contracts,this hasnotchangedtheawardingofanycontractsbySierra.There have been no mandatedsetasidesforgeothermal!or other alternate energy technologies.The results havebeenquiteencouragingforthegeothermalindustry.Of Sierra's competitive biddingcontestsfornewgenerationsources,geothermal companies have been awarded atleastonecontractineachcontestand82MWoutof107MWinthelastcompetitivebid.Currently,Sierra purchases 46 MW of electricity from geothermal energy com-panies and has 23,39 and 64 MW of geothermal power plants scheduled to begindeliveriesofpowerin1991,1992 and thereafter,respectively. Both the demonstration and competitive bid contracts were financeable.Providedthatageothermalenergycompanycouldconvincealenderthatitsprojecthadsufficientgeothermalresourceandwouldadequatelycoveroperatingexpensesanddebtservicepaymentsinitsfirstyearofoperation,it had a reasonable chance ofobtainingfinancing.In later years,if debt service was constant,operating expenses would grow less than what revenues would increase;thus,net cash flow wouldincreasewithtime.By optimizing debt service schedules,it has become possible,atinitialelectricitypricesbetween5.0 and 6.0 per KWh,to construct and operateprofitablygeothermalpowerplants.Nevada geothermal power plants and theirassociatedfieldshavebeenfinancedwithacostofupto$3 million per MW. Hard evidence of change to the geothermal energy industry began to appear six yearsafterthepassageofPURPA.In 1984,the first commercial scale geothermal QF plantwasplacedinservice,Santa Fe Geothermal #1.As of 1990,the geothermal industryhasstructureditselfintoasegmentoftheindependentpowerindustrywithatotaloftwenty-eight commercial-scale QF plants in commercial operation.Before PURPAthegeothermalindustryconsistedtypicallyofoilandgascompaniestryingtosellgeothermalsteamorbrinetolocalelectricutilities.Since geothermal energy cannotbeeasilytransported,the local electric utilities were monopsonies.If utilities did notwanttobuygeothermalsteamorbrine,they were not under any obligations.Consequently,geothermal energy companies had to offer geothermal steam or brineatadiscounttofossilfuelstoinduceelectricutilitiestobuildpowerplantstoconsumegeothermalenergy.Generally,the electric utilities got great deals -electrical energy below the cost of electrical energy generated with fossil fuels,capital costs below that of conventional steam plants and a wide latitude in decidingwhentotakegeothermalenergy. With the passage of PURPA the geothermal industry began to change.First,thelocalelectricutilitiesmustpurchaseelectricity(with a few minor exceptions)fromgeothermalenergycompanies.However,PURPA did not spell out exactly what formofcontractwouldbeexecutedexceptthatthelocalelectricutilitywouldinterconnectandpurchaseelectricityatitsavoidedcosts.Thus,how a particular electric utilitystructuresapowerpurchaseoffertothegeothermaland/or alternate energyindustriesgreatlyinfluenceswhethertheseindustriesareabletocontractforandeventuallyfinanceQFplants. Second,electric utilities actually have to bid for their new electricity sources.Withrespecttogeothermalenergycompanies,Southern California Edison ("Edison”)purchased the output of several geothermal energy companies with facilities locatedoutsideofitsserviceterritory.Basically,the geothermal energy company turneddownthelocalelectricutility's bid and accepted the Edison offer,either paying fortransmissionlineaccess(Chevron Resources with the Beowawe Power Plant), building its own transmission line (Oxbow Geothermal's Dixie Valley power plant)oracombinationofthetwo(the Imperial Valley geothermal producers).In the future,geothermal energy companies should expect that larger electric utilities (i.e.,urban)will be the buyers of their output rather than smaller,local ones (i.e.,rural). 1984,The Past [THIS PAGE INTENTIONALLY LEFT BLANK] In 1984 nearly all geothermal production was at The Geysers and the vast majority ofthatproductionconsistedofgeothermalenergycompaniessellingsteamtoelectricutilities.Elsewhere,there was virtually no other operating capacity.With theexceptionofseveraldemonstrationprojectslocatedintheImperialValleyinCaliforniaandbinarypowerplantsinNevada,there were no other commercial-scalegeothermalpowerplantsinoperation.The only non-Geysers geothermal facility wasasteamfieldatRooseveltHotSprings,operated by Phillips (predecessor to ChevronResources),selling geothermal brine (not steam)to UP&L.The geothermal industrycanbedescribedsimply:99%of the installed production was at The Geysers,1%atRooseveltHotSprings,Utah;95%of the industry's production was from steam fieldswhile5%was from QF plants.Major participants were subsidiaries of large oil andgascompanies.There were a handful of small independent geothermal energycompanieswithanymeaningfulamountofoperatingcapacity. Geothermal Properties -Circa 1984 (MW) Steam Field QF Plant Total() The Geysers 1,482 80 1,562 Non-Geysers Areas -Imperial Valley Essentially DemonstrationProjects(i.e.,Nothing)0 0 0 Coso Hot SpringsNothing 0 0 0 Nevada Nothing 0 0 0 Utah Roosevelt Hot Springs 20 _0 20 Sub-Total Non-Geysers 20 _0 20 Grand Total 1,502 80 1,582 {)Geothermal Steam Field and QF Plant are not additive;for illustration purposes only,they have been shown added together to indicate the total production of geothermal energy. At the end of 1984 the geothermal industry's operating properties had an estimatedtotalvalueslightlyinexcessof$2 billion.This value was roughly 99%at TheGeysersand1%at Roosevelt Hot Springs,Utah as there were no commercial-scalepowerplantslocatedinNevadaorelsewhereinCalifornia.Examining thegeothermalindustry's value by differentiating between steam field and QF plant,thevalueswereroughly85%steam field and 15%QF plant.One QF plant,representing5%of the industry's production,accounted for 15%of the industry's value.Despitetheindustry's attempts to put new facilities on line outside of The Geysers,operatingcapacityandvaluewereclearlycenteredatTheGeysers.Although the industry didnotrealizeditatthistime,The Geysers and the sale of steam type contracts were atorneartheirhighwatermarks. Value of Geothermal Properties -Circa 1984(2) ($Millions) Steam Field QF Plant Total The Geysers $1,706 $320 $2,026 Non-Geysers - Imperial Valley Essentially Demonstration Projects (i.e.,Nothing)0 0 0 Coso Hot Springs Nothing 0 0 0 Nevada Nothing 0 0 0 Utah Roosevelt Hot Springs 20 0 0 Sub-Total Non-Geysers 20 0 20 Grand Total $1,726 $320 $2,046 (2)Includes the value of the working interest as well as the value of any royalty interests in excess of the standard federal royalty;consequently,the value of the working interest may be considerably less than value of a geothermal property. In 1984 there were only two publicly-held geothermal companies,MGMA and GEO.Compared to the electric utilities which purchased or would purchase their electricityorsteamoutput,both of these companies were small in terms of market capital-ization. Value of Geothermal Companies -Circa 1984 ($Millions) Market Value Book Value Magma Power Company - Debt $0.5 $0.5 Preferred Stock 0.0 0.0 Common Stock 105.9 35.6 Total $106.4 $36.1 Geothermal Resources International - Debt $72.5 $72.5 Preferred 12.7 12.7 Common Stock 36.0 55.6 Total 121.$140.8a Some economists believe that stock market values are one criteria that may be usedtojudgethevalueofacompany's assets.Applying this theory,the market price of acompany's stock plus the value of its debt and preferred stock reflects the value of itsassetsafteradjustmentforworkingcapital,assuming that the public has access to allrelevantinformation.Calculating the market value for the public geothermalenergycompaniesindollarsperMW,one finds that MGMA's stock appeared to befairlypriced,if somewhat cheap,in light of the asset sales of power plants thatoccurredinthegeothermalindustryduringthistime.GEO's stock appeared to beoverpricedconsideringtheassetsaleswhichoccurredatTheGeysersduring1984. Value of Geothermal Companies -Circa 1984 Geothermal Assets' Market Value MarketValue ($Millions)($Millions/MW) Magma Power Company $110.2 $3.242 (3) Geothermal Resources International $117.8 $2.142 (4) (3)Assumes 34 MW of geothermal power plant in production. (4)Assumes 55 MW of geothermal steam field in production. (THIS PAGE INTENTIONALLY LEFT BLANK] 1990,The Present [THIS PAGE INTENTIONALLY LEFT BLANK} Between 1984 and 1990 the industry underwent dramatic changes.In California,there was the appearance and disappearance of the Standard Offer #4 Contract(1984-1985),the development of the last of the steam fields (1988)and the firstexampleofsignificantdeclineingeothermalproductionatTheGeysers(1987).InNevada,the first competitive bid power sales contracts were won by geothermalenergycompaniesincompetitionagainstotherformsofgenerationtechnologyandfuel(1988).Outside of these two states,there was no development of commercial-scale geothermal power plants. The Geysers was still the largest geothermal field in the industry,consisting of 70%of America's production but down from its near monopoly in 1984.Outside of TheGeyserstherewasnowsignificantproductionelsewhereinCalifornia:in theImperialValley(at the Salton Sea,Heber and East Mesa KGRA's),Coso Hot SpringsandMammoth.All of these regions'power plants were QF plants,representing 24%of all capacity and 71%of all QF plant capacity.In Nevada,seven geothermal fieldswereinproduction,two selling electricity to Edison and the balance to Sierra.Thesepowerplantsaccountedfor4%of the industry's installed capacity and 13%of QFplant's installed capacity.In Utah,there was no change in the number of operatinggeothermalpowerplantsbutratherUP&L's Blundell plant had been re-rated to 25MW.The trend was quite clear -current development was in QF plants,locatedoutsideofTheGeysers. Although these were significant changes in the development of the geothermalindustry,these developments pale against the changes that occurred in the value ofthegeothermalproperties.From a value of approximately $2 billion in 1984,thevalueofoperatingpropertiesrosetoapproximately$3 3/4 billion,for a compoundannualgrowthrateof11%.When one examines where this growth in value occurred,a very different picture appears -significant decline in value at The Geysers whilephenomenalgrowthinvalueelsewhere.Specifically,The Geysers'steam fieldsdeclined68%in value despite a 15%increase in installed plant capacity.Thisdeclinecanbeattributedtotwomajordevelopments:a rapid,nearly 60%,decline inthePG&E sale of steam price (1985-1987)and a less rapid but still significant declineinreservoirpressureandcorrespondinggeothermalproduction(1987-present).ThislatterdeclinehasbeenassociatedwiththeoverproductionandoverdevelopmentofTheGeysersfield.The decline in The Geysers'value was partially offset by theconstructionofadditionalQFplantsatTheGeysers,which now made up in excess of44%of the value but only 8%of The Geysers'production. Elsewhere in California but outside of The Geysers,two large geothermal fields hadbeendeveloped,Coso Hot Springs and Salton Sea.Combining the value of the QFplantsonthesefieldswiththevalueoftheQFplantsatEastMesa,Heber andMammoth,the geothermal industry had created nearly $2 3/8 billion in new value inaperiodofjustsixyears.In Nevada,significant geothermal development had alsooccurredwithover110MWofQFplantinoperationwithavalueapproximatelyequalto10%of the industry's total.This growth is particularly significant when oneconsidersthat42%of these facilities were built as a result of competitive biddingcontracts.In Utah,there had been no growth in either steam field or QF plant but agrowthinvaluesincethesteamfieldcontractatRooseveltHotSpringscontainedescalationclauseswhichroseovertimedespitetheoveralldeclineinenergyprices since the start of the 1980s. Geothermal Properties -Circa 1990 (MW) Steam Field QF Plant Total(5) The Geysers 1,656 147 1,803 Other California - Imperial ValleySaltonSea 0 208 208 East Mesa 0 102 102 Heber 0 47 47 Coso Hot Springs 0 240 240 Mammoth 0 27 27 Sub-Total Other California 0 624 624 Nevada - Steamboat 0 20 20 Dixie Valley 0 50 50 Empire 0 3 3 Beowawe 0 15 15 Desert Peak 0 9 9 Stillwater 0 12 12 Soda Lake 0 3 3 Utah - Roosevelt Hot Springs 25 0 25 Sub-Total Nevada and Utah 25 112 137 Grand Total 1,681 883 2,564 5)Geothermal Steam Field and QF Plant are not additive;for illustration purposesonly,they have been shown added together to indicate the total production ofgeothermalenergy. These changes in value had a great impact on the fortunes of the owners ofgeothermalassets.At The Geysers,the value of certain steam field holdings declinedupto72%.Only those owners that built QF Plant with Standard Offer #4 contractshadhighervalues.If a geothermal power plant was without a Standard Offer #4contract,it suffered a similar fate to that of the owners of steam fields.ForgeothermalenergycompanieswithfacilitieslocatedoutsideofTheGeysers,thegrowthofvalue,not the decline in value,was the rule.In fact,of the six largestgeothermalcompaniesin1990,five of them (MGMA,California Energy ("CE”),Oxbow Geothermal,Calpine and OESI)had in 1984 neither sizable operatingrevenuesnorleasepositionsatTheGeysers. Value of Geothermal Properties -Circa 1990(6)($Millions) Steam Field QF Plant Total The Geysers $540 $430 $970 Other California - Imperial ValleySaltonSea 0 810 810 East Mesa 0 350 350 Heber 0 150 150 Coso Hot Springs 0 960 960 Mammoth 0 100 100 Sub-Total Other California 0 2,370 2,370 Nevada - Steamboat 0 60 60 Dixie Valley 0 200 200 Empire 0 10 10 Beowawe 0 40 40 Desert Peak 0 20 20 Stillwater 0 40 40 Soda Lake 0 6 6 Utah - Roosevelt Hot Springs 40 0 40 Sub-Total Nevada &Utah 40 376 416 Grand Total $580 3,176 3,756 (6)Includes the value of the working interest as well as the value of any royalty interests inexcessofthestandardfederalroyalty;consequently,the value of the working interestmaybeconsiderablylessthanvalueofageothermalproperty. As in 1984,in 1990 there were still only two publicly-held geothermal companies,MGMA and CE.GEO still existed but was operating under Chapter 11 of theBankruptcyCodeanditssecuritieshadbeendelistedfromtheAmericanStockExchange.The value of our "average”geothermal company was approximately $550millionforafive-fold increase in just six years. Using the same methodology as was used to determine the value of a MW in 1984,itcanbedeterminedthatthesecuritiesmarketswerevaluinggeothermalpowerplantswithStandardOffer#4 contracts between $4 and $5 million per MW.ComparingthesepricestothesalespricesofQFplantattheendof1980sandstartof1990s,thesecuritiesmarketshavetendedtooverpricethecommonstockofgeothermalenergycompaniesbyasmuchas25%above the trading value of their geothermal assets. Value Of Geothermal Companies -Circa 1990($Millions) Market Book Value Value Magma Power Company - Debt $97.2 $97.2 Preferred Stock 0.0 0.0 Common Stock 518.2 192.6 Total $615.4 $289.8 California Energy Company,Inc.- Debt $285.8 $285.8 Preferred Stock 4.7 4.7 Common Stock 195.3 55.1 Total $485.8 $345.5 Value Of Geothermal Companies -Circa 1990 Geothermal Assets' Market Value Market Value ($Millions)($Million/MW) Magma Power Company $496.1 $3.937 ™ California Energy Company,Inc.516.5 4.919 ® (7)Assumes 74 MW of owned geothermal power plants plus 52 MW for royalty income from other geothermal power plants. (8)Assumes 120 MW less 15 MW for additional royalty burden due to the Navy. During this period there were many significant developments in the geothermalindustry.Some of the major ones have already been discussed,such as:the decline intheuseofthesaleofsteamcontract,the emergence of the sale of electricity contract,the decline in the value of The Geysers and the growth in value for the owners of QFplants.There were other fundamental changes.Because The Geysers is America'sonlydrysteamresource,the shift in development to hot water resources was logicalbutonlycouldhavebeenaccomplishedwiththeperfectionoftechnologiestohandlesuchresources,such as:binary for resources with temperatures below 400°F,crystallizer-reactor clarifer for hyper-saline brines and double flash for resourceswithtemperaturesabove350°F. The composition of the industry changed.Numerous geothermal companies left theindustryorgreatlyreducedtheiractivities,including Amax,Amfac,Arco,Aminoil,Burlington Resources,Chevron Resources,Dillingham,GKI,GEO,GraceGeothermal,Kennecott,MCO Holdings,MCO Resources,Occidental Petroleum,Phillips and Republic Geothermal.This was not exclusively a one-way phenomenon.Resource companies like Calpine (successor to Freeport-McMoRan),OxbowGeothermalandOrmat(predecessor to OESI Power Corporation)entered thebusinessduringthisperiod. These were not the only newcomers.Unregulated electric utility affiliates madetheirappearance.Among them were Mission Energy (affiliate of Southern CaliforniaEdison),Constellation Development (affiliate of Baltimore Gas &Electric),DominionEnergy(affiliate of Virginia Electric Power Company),Community EnergyAlternatives(affiliate of Public Service Electric &Gas of New Jersey)and ESI(affiliate of Florida Power &Light).Collectively,these utility affiliates own equityinterestsinnineteengeothermalQFplants,representing 520 MW of generation.Ofthe803MWofQFplantsdevelopedduringthisperiod,utility affiliates are involvedinapproximatelytwo-thirds. [THIS PAGE INTENTIONALLY LEFT BLANK] 1991-1999,The Future [THIS PAGE INTENTIONALLY LEFT BLANK] The geothermal industry in the 1990s has both near-term and long-term opportu- nities for growth.However,it is expected that the industry's rate of growth will be considerably less than the rate experienced over the last six years.Development of prospects will be centered at producing geothermal resources which will tend to con- centrate development primarily in California and Nevada,secondarily in Utah and Hawaii and at isolated sites elsewhere.Major competition will be from conservation, cogeneration and self generation.The geothermal industry must adapt to the chang- ing business environment by lowering its cost of power to market prices,obtaining economic subsidies,continuing tax subsidies and permitting non-regulated electric utility affiliates to invest alongside geothermal companies in their new projects. Regarding the near-term growth opportunities for geothermal energy,there are anumberofoutstandingpowersalescontractswaitingtobeperformedthathavebeengrantedtogeothermalenergycompanies.A fair number of these contracts havepricesandothertermsandconditionswhichwillpermitfinancingofpowerplants.However,a larger number of contracts have either too low a price for power or nodownsideprotectionagainstpricedeclines.These features may make these powerplantsunfinancable.Lastly,there have been several competitive bidding contests forelectricity,of which the geothermal industry has won only a small percentage of theawardsorevenplacedonshortlists,except those conducted in Nevada by Sierra. Reviewing the status of power sales contracts which have not been performed,therearefourStandardOffer#4 contracts and eight Standard Offer #2 contracts,totaling253MW,outstanding with California electric utilities.All of these are for thepurchaseofelectricitybyEdisonexceptonewithSanDiegoGas&Electric("SDG&E”).Economically differentiating between the type of contract,none of theStandardOffer#2 contracts will probably be performed (with the possible sole excep-tion of the Freeport-SDG&E contract)while all of the Standard Offer #4 contractswillprobablybeperformed. Several California municipal utilities have conducted competitive bidding contestsfornewgeneratingsources.For the geothermal industry,the results have not beenencouraging.No power sales contracts have been awarded to a geothermal company.In 1989,NCPA received 67 bids for power with deliveries beginning 1996.Fivecompaniesmadetheshortlist.None were geothermal energy companies.In 1990,SMUD conducted a competitive bidding contest for additional electricity sources withpowerdeliveriesstartinginthemid-1990s and continuing through 2000.Nogeothermalcompanieswereawardedanyofthepowercontractsfordeliveriesbefore2000.A 100 MW block of power was reserved for geothermal and other renewablegenerationtechnologiesbeginningin2000.No award of any portion of this block hasbeenmadeyet.In 1990,LADWP conducted two competitive bidding contests.Onefor600MWfromallsourceswithdeliveriestostartnoearlierthan1996andonefor the development of its Coso Hot Springs'acreage with deliveries to begin in 1994.Todate,no award has been made on either competitive bid.Two geothermal companies,CE and Oxbow Geothermal,have been placed on the short list for the 600 MW bidalongwithelevenothers,including several gas-fired cogeneration projects,while CE,Calpine and Oxbow Geothermal are the short-listed finalists for the Coso award. Regarding outstanding power sales contracts with Nevada utilities,presently thereareeightcontractswithgeothermalcompanieswaitingtobeperformed,two each atBradyHotSprings,Steamboat Springs,Carson Basin and Empire,totallingcollectively100MWofcontracts.Assuming a capital cost not exceeding $3 millionpermegawatt,all of these projects should be financeable,provided adequategeothermalresourcesareavaiable. Outside California and Nevada,the only opportunities for near-term growth are theislandsofUnalaskaintheAleutiansandHawaii.Both of these opportunities areuniquesinceoilistheavoidablefuel,the local electric utilities have relatively lowefficienciesandtherearefewgeneratingalternativestogeothermal.However asislands,geothermal development will be limited to approximately these islands'baseloads.Thus,on Hawaii approximately 60 MW of geothermal development is possiblewhileonUnalaskathepotentialisintheneighborhoodof15MW.Again,assumingacceptablebaseelectricitypriceswithappropriateescalationclauses,these projectsarefinanceable. There has been a significant discussion about an undersea 500 MW,HVDC cable linkfromHawaiitoOahu.This project has inherent faults.Hawaii does not havesufficientprovengeothermalresources(i.e.,nearly 700 MW of production at thepowerplantwillbeneededtodeliver500MWtoOahu)to make this project'selectricitycompetitivewithpowergeneratedonOahu.Combine this with cabletechnologyriskandsignificantenvironmentalandpoliticalconcerns,the result isthatsuchaprojectwillnotbedevelopeduntilthe21stcentury. Regarding the long-term growth opportunities for geothermal energy,the future forthegeothermalindustryismoreoptimisticthanseveralyearsagobutbynomeansarethereassurancesthatthegeothermalindustrywillgatherasizablenumberofcontractsormegawatts.Examining the CEC's Electricity Report-1990 and updatingitforsuchdevelopmentsasthecollapseoftheEdison-SDG&E merger,it appearsthattheneedsforadditionalgeneratingcapacitywilloccurwithSDG&E in 1993,small Northern California cities in 1995,Edison in 1996,small Southern California cities in 1996,SMUD in 1996,Los Angeles Department of Water and Power("LADWP”)after 1999,the cities of Burbank,Glendale and Pasadena ("BGP”)after 1999 and PG&E after 2000.Since it takes approximately one year to conduct asuccessfulcompetitivebiddingprocessandanadditionaltwoyearstoconstructapowerplant,the actual bidding process must start three years before the anticipatedneed;thus,SDG&E must start now;small Northern Galifornia cities,next year;Edison,small Southern California cities and SMUD in 1993;and LADWP,the BGPcitiesandPG&E after 1997.Accordingly,geothermal companies that win any ofthesecontractswillnotreceiveanycurrentbenefits,but,at least,it will be knownwhichcompanieshavepowersalescontractsandtheopportunitiestogrowduringtheSs. Predicting long-term geothermal growth outside of California,Nevada utilities areexpectedtocontinuetoleadintheissuanceofpowersalescontractstogeothermalenergycompanies.This is based upon the continued growth in population and theminingandgamingindustries.Geothermal companies should be awarded aminimumof25-35 MW of contracts per year by Nevada utilities.Only on the islandofHawaiiisthereareasonablelevelofcertaintythatageothermalenergycompanywillgatheranadditionalcontract.Once Puna Geothermal Venture I ("PGV I”)isincommercialoperation,an additional 25-30 MW contract should be awarded to bringtheisland's geothermal production to approximately 80-100%of the island's baseload.With a load growth of five to ten MW per year,the island of Hawaii should bethesiteforthedevelopmentofathirdandfourthgeothermalpowerplantinthemid-1990s and the late-1990s,respectively. Outside of California,Nevada and Hawaii the prospects for long-term geothermalgrowtharenotverybright.Generation surpluses in the Pacific Northwest and thebalanceofthePacificSouthwestshouldkeepgeothermaldevelopmenttominimallevelsuntilthemid-to-late-1990s for Oregon,Washington and Idaho and the late-1990s for Utah,Arizona and New Mexico.In summary,the growth in geothermal QFplantsinthe1990sislikelytobenomorethantheperiodof1985-1990 (i.e.800 MW); 350 MW in California (of which 75 MW have existing Standard Offer #4 contracts),325 MW in Nevada (of which 75 MW of the existing 100 MW contracts will beperformed),75 MW in Hawaii (PGV II through IV)and 50 MW elsewhere (10 MW atUnalaska,10 MW at Surprise Valley and the balance to be decided). Geothermal development is also limited by the availability of proven geothermalresources.If there is insufficient evidence to classify a geothermal field's resource asproven,that geothermal field probably will not be developed in the 1990s.Examining the producing and proven but not producing geothermal resources,thereisafairnumberofsuchresourcesinCaliforniaandNevada,but only two in Utah andoneinHawaii.The Pacific Northwest and the balance of the Pacific Southwest do not have geothermal resources at a stage of development which will permit anysignificantgeothermaldevelopmentuntiltheendofthe1990s.Proven geothermalfieldswillprobablybetheonlysitesofpowerplantprojectsinthe1990sgiventheoverlayofalackofnear-term need for additional generation sources,the lack ofprovengeothermalresourcesandthelackofriskcapitaltocommittogeothermalexplorationanddevelopmentprograms. The price of fossil fuels,in general,and oil and gas,in particular,is most likely toremainstableand,on an inflation-adjusted price,actually decline over the next tenyears.Even the oil and gas industry has optimistically forecasted oil and gas prices.All of these predictions called for steady increasing petroleum prices -be it the 1982forecastoffrom$31 per barrel in 1982 to $59 per barrel in 1991,or the 1991 forecastof$20 per barrel in 1991 to $30 per barrel in 2000.The reality is that the avoided fuelpricesofEdisonandPG&E have been quite stable over the past five years,havingdeclinedinrealtermsandgonedownevenfurtheronalevelizedbasis.It can beconcludedthatthefuelcomponentofthepriceofelectricityisnottheenormousunknownorexpensethathasbeentalkedaboutbytheindustry.Combining stablefossilfuelpriceswithlowcapitalcostgenerationtechnologiesthatconsumethesefuelswillleadtoleastcostelectricityprices.It remains to be seen if the consumingpublicwillbeasenthusiasticasthegeothermalindustryisforpayingmoreforelectricityonbothacurrentaswellasalevelizedlifecyclecostbasis. Society of Petroleum Evaluation EngineersOilPricesPredicted ($/BBL) 60 Y82 Y83_yg4 Lo Y85.90 yoY86Y87Sea 89 20 b Y88 0 |||J l I l l ||l l l l |]|J 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 The geothermal industry is a capital intensive industry competing against severalgenerationtechnologieswithsignificantlylowerinstallationcosts.The three of thelowestcosttechnologiesareconservation,repowering of existing power plants andnaturalgas-fired combined cycle.Each of these technologies costs about a quarter ofthecapitalcostofthetwoprincipalgeothermaltechnologies,flash and binary.Ofthesecompetingtechnologies,conservation uses little to no fuel,repowering ofexistingpowerplantssignificantlyimprovesairqualityandisgenerallylocatednearloadcentersandnaturalgas-fired combined cycle,when coupled with offsets such astheScrapProgramthatUnocalhasemployedinitsLosAngelesRefinerycogenera-tion facility,improves air quality,is located near load centers and costs less thangeothermalpower.The geothermal industry cannot successfully compete against theconservationeffortsofelectricutilitiesforeconomic,political and environmentalreasons.Similarly,repowering of existing generating stations will be nearly impos-sible for the geothermal industry to compete against if these stations are located inloadcenterswithpoorairquality.The geothermal industry can expect to be onlypartiallysuccessfulagainstnaturalgas-fired combined cycle power plants.Providedthatthesefossil-fired QF's incorporate 100%or greater emissions set asides,thegeothermalindustrywillnothaveanenvironmentaladvantage.Unless geothermalpower's price is equal to the price from natural gas-fired combined cycle,there will benoeconomicadvantage.Lastly,most new geothermal generation will be locatedawayfromloadcenters(with the exception of Nevada);thus,transmission line accessandelectricnetworkstabilitywillbemajorimpedimentstogrowth. Capital Cost of Electric Generation($/KW) 4,000 (1)Natural Gas Boilers 3,952 (2)Coal Boilers (3)|Atmospheric Fluid Bed (4)Natural GasC.C. (5)Repowered Boilers C.C. 000 (6)Geothermal Flash3,000 --(7)Geothermal Binary (8)Hydroelectric 2,398 (9)Biomass (10)Conservation 2,000 --:i 2,099 |Base Capital Cost [|Range of Capital Cost 1,000 + 0 (1)«((2)(3)«64 O)CiSY s§-s)-s (8s B.-s«10) The geothermal industry's response to the low capital cost of fossil-fired generationtechnologiesisthatgeothermal!power plants have low operating and vitually no fuelexpenses.Upon examination,the geothermal industry's plant operations and main-tenance and general and administrative expenses ("Operating Costs”)are notsignificantlylessthanacogenerationplant's Operating Costs and associated fuelexpense.For example,for flash plants in California,Operating Costs averageapproximatelyfourcentsperKWh(ranging from 34 to 44 cents per KWh);for binaryplantsinCalifornia,34 cents per KWh (ranging from 3 to 34 cents per KWh);for drysteamplants,24 cents per KWh (ranging from 2 to 24 cents per KWh),for flashplantsinNevada,2}cents per KWh;and for binary plants in Nevada,2 cents perKWh.Equivalent gas-fired cogeneration costs are four cents per KWh (ranging from34to44.cents per KWh).The lower Operating Costs of the geothermal industry maynotbesubstantialenoughtoovercometheburdenofcapitalcostsofthreetofourtimesthecheapestcapitalcostfossil-fired technologies.In fact,flash plants inCaliforniahaveessentiallythesameOperatingCostsasnaturalgas-fired combinedcycleplants'Operating and fuel costs.Since all of these costs are subject to inflation,over time the "relative”advantage of geothermal's lower Operating Costs may notovercomeitscapitalcostdisadvantageunlessfossilfuelpricesescalateatratesofatleastthreetimesfasterthanOperatingCosts. The geothermal energy industry faces significant competition from conservation,cogeneration and self-generation technologies.By far,conservation represents thegreatesteconomicandenvironmentalthreattofurthergeothermaldevelopment.The following graph shows the current conservation record and forecast for PG&E fortheyears1980through2000.By the end of the 1980s,PG&E had avoided approxi-mately 500 MW through conservation and expects to conserve an additional 1,500MWinthe1990s.This graph does not include additional savings from load man-agement and other Demand Side Management ("DSM”)programs,which PG&Eestimatesinthe1990swouldavoidanequivalentadditional500MWofgeneration.Based upon conversations with Edison officials regarding their conservation effortsandCECofficialsaboutotherCaliforniautilities'efforts,it is estimated that an equivalent additional 4,000 MW of new generation can be avoided through conser-vation,load management and DSM efforts during the 1990s.If this occurs,theresultsmaybelittletonogrowthinelectricdemandandfew,if any,additional powersalecontractsbeingletbyelectricutilitiesoverthenexttenyears.In summary,conservation will be the electric utility industry's preferred way to construct powerplantsforthe1990s. Pacific Gas and Electric CompanyConservationRecord,1980-1990,and Forecast,1991-2000 (MW) 2,000 1,955.3 1,647.5 1,500 |1,479.2 1,810.4 1,138.1 '313.21,000 a goat (313. 1,006.2646.6 500 496.6 533.2 754.4 x 382.654.1 $82.3 169.7 222.7 479.8 499.3ony.22.8o|Lf J}Lt J tf tf ft ||ft ft ft tl 1980 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 2000 Many people are not cognizant of examples of conservation,cogeneration and self-generation significantly reducing,if not eliminating,load growth.Below is a graphoftheindustrialandcommercialloadsofPG&E and Edison for the period of 1980through1990.The rates of annual load growth for these utilities'commercial loadsarereasonablysimilarastheyarefortheirrespectiveindustrialloads.Theseutilities'commercial loads grew at compound annual growth rates of 3.5%and 5.6%,respectively,while their industrial load growths are flat to negative.These resultsbegthequestion.Can electric utilities get their commercial and residentialcustomersinthe1990stodowhattheirindustrialcustomersdidforthemostpartontheirowninthe1980s?The electric utility industry believes that the answer is yes.If the response is of the same magnitude as it was for the industrial load in the 1980s,the outcome will be no load growth and no new contracts for power for theindependentpowerindustry,including the geothermal energy industry.The electricutilityindustrybelievesthatitcaninvestutilityfundsinconservationassets,avoidgeneratinggrowthandbeallowedtoearnareturnofcapitalaswellasarateofreturnonitsinvestment.If the public utility commissions accept this logic andermitelectricutilityinvestmentinconservation,one can expect to see significantlyargercapitalexpendituresinthisareabythelatterhalfofthe1990s.Conservationmakeseconomicsensetousers;thus,if the electric utilities do not serve this market's needs,other private companies will surely attempt to fill them. Pacific Gas and Electric Company and Southern California Edison Company Industrial &Commercial Loads,1980 -1990 (thousands of MWhs) 30 Southern California Edison Pacific Gas and Electric -------Commercial Load ---Commercial Load --==-Industrial Load a=Industrial Load 148 15.0 , .15.0 10 J !i 1 !!!|I _J 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 There will be macro changes in the geothermal industry over the next decade.Theseareindustryconsolidation,the lowering of the price of geothermal power,the con-tinuation of tax subsidies,the possible implementation of economic subsidies and thefurtherdominationoftheindustrybynon-regulated electric utility affiliates andtheirbusinesspractices.From approximately ten large geothermal companies in1984theindustryhasconsolidatedintosixlargegeothermalcompanies-Unocal andCalpineatTheGeysers,MGMA,OESI and Unocal in the Imperial Valley,CE at CosoHotSpringsandOxbowGeothermalandOESIinNevada.If these companies fail togrow,further consolidation will occur,probably resulting in an additional one or twogeothermalenergycompaniesexitingtheindustrywithinthenextfiveyears. The geothermal industry will not survive unless it can lower its costs of power to thecurrentclearingpricesasdeterminedbycompetitivebiddingcontracts.This price ispresentlyapproximatelyfivetosixcentsperKWhwithoutsubsidy,set asides andinternalizingexternalitiesintotheultimatepriceofelectricity.In Nevada thegeothermalindustryalreadyiscompetingatthisprice. The geothermal industry must concentrate on maintaining,if not increasing,its taxbenefits,such as energy tax credits,five year MACRS tax depreciation and intan-gible drilling cost deductions.These tax "subsidies”are essential if this industry is tosurvivefortheyprovidelowercostcapital,especially for those companies whichutilizedleasingorpartnershipsasameanstofinancetheirprojects.Regardingeconomicformsofsubsidy(set asides,internalizing into electricity prices societaland/or environmental costs),the geothermal industry,if it cannot lower its electricitypricestothecurrentmarketrates,must receive these subsidies in order to survive. The non-regulated electric utility affiliates have changed the composition of theindustry.Due to public service commissions'onerous regulation of utility rate-baseinvestments,electric utilities have committed surplus capital and,some cases,expertise to the alternate energy industries,including the geothermal energyindustry.The result is that the electric utility industry is the largest source of equitycapitalforthegeothermalindustry,lowering the hurdle rates of and lengthening thetimeperiodconsideredforinvestments.Combining these developments with the factthatthegeothermalenergyindustry's product is electricity,the businesscombinationofageothermalenergycompanyasa50%partner with a non-regulatedelectricutilityaffiliatewillcontinuetobetheexpectedformofownership. The geothermal industry at the beginning of the 1980s could be described either as analternativetotheoilandgasorminingindustry-almost exclusively oil and gas inCaliforniaandalmostexclusivelymininginUtahandNevada.These two industries,as geothermal role models,have fallen by the wayside.The electric utility industryhastakenoverthegeothermalindustry.The industry no longer thinks about poundsofsteamorbrine,down hole temperatures and permeability when geothermalpropertiesaredescribedbutrathermegawatts,power sales contracts andtransmissionlineaccess.The geothermal industry will continue to rest on afoundationbuiltbytheseindustries.However,the future development of thegeothermalindustrywillbedeterminedbyitsabilitytogenerateprofitablyelectricity.The geothermal industry will turn more toward the power markets andawayfromthegeothermalreservoirsasthesourceofgrowth,value and wealth. ALASKA ENERGY AUTHORITY LEER OF TRANSMITTAL'701 East Tudor Road P.O.Box 190869 Anchorage,Alaska 99519-0869 -.-ox Fi :- (907)561-7877 Phone--..a l a/\e [:im (907)561-8584 Fax RE >as Hos BARD UNALAGKA-GoectrieraAl- TO.2,io,Parck+Alssee TATE S AxX22 Aretic "Revo.,Suite!Z10 -a A McHORAGE |AK 99503-A5)¢ GENTLEMEN: '"WE ARE SENDING YOU So attached (O Under separate cover via ”:a <__the following items: O Shop drawings .0 Prints -..Of Plans --©Samples D.Specifications O Copy of letter O Change order .O COPIES DATE - NO. ..."DESCRIPTION ONE!Nevidal Haesor FaActeuty”Demapanp STony EaxanAu Covey , 'From Cy A Dunalaslean¢ THESE ARE TRANSMITTED as checked below: -O For approval ;O Approved as submitted UL)Resubmit:____m__copies for approval - ee your use O Approved as noted .O Submit__.___-_-copies for distribution .€As requested .Returned for corrections O Return_____+=_-_corrected prints (]For review and comment O FOR BIDS DUE 190 O PRINTS RETURNED AFTER LOAN TO US REMARKS mene Butllhetxl. ve SIGNED:=tt x: If enclosures are not as noted,kindly notify us at once. CITY OF UNALASKA POUCH 89 LETTER OF TRANSMITTAL UNALASKA,ALASKA 99685 DATE JOB NO.mlalayFROM:ADMINISTRATION L__]PARKS,CULTURE @ RECREATION L__]_[AT7ENTION Tze4.FROM:PUBLIC SAFETY [PUBLIC WORKS ba]RE YN ".Cos aS eM LOVeCcf10_(Stent PeteAEC RECEIVED Dec Ud It GENTLEMEN:ALASKA ENERGY AUTHORITY WE ARE SENDING YOU [J]Attached LC]Under separate cover via the following items: 0)Shop Drawings O Prints CD Plans UO Samples D Specifications 0D Copy of letter 0 Change order O COPIES DATE NO.DESCRIPTION \Wis \Harton Gack at Demamo SS rea, THESE ARE TRANSMITTED as checked below: QO)For Approval DO)Approved as submitted OO Resubmit copies for approval QO For your use O)Approved as noted O Submit copies for distribution 0 As requested (1 Returned for corrections 0 Return corrected prints 0 For review and comment Oo (FOR BIDS DUE 19 (C PRINTS RETURNED AFTER LOAN TO US REMARKS "Trt 4 SEY UN SQ AMATie om Ties 1 Tu ncuss< ot HS ESsHueErr. ,A LLconvtotes2MWA:SIGNED:[fre 44 If enclosures are not as noted,kindly notify us at once. Harbor Facility Demand Study A component of the Harbor Management Plan for the City of Unalaska by ResourcEcon In association with: Northern Economics,and Ogden Beeman &Associates November 1991 fore,Racyi5::1.0 2.0 3.0 4.0 5.0 Table of Contents Introduction 1.1 Executive Summary 1.2 Methodology Existing Facilities 2.1 Descriptions and Specifications 2.2 Summary of Harbor Use 2.3 Facility Use Patterns Harbor Use 3.1 Vessels 3.2 Shoreside Users Factors Affecting Future Demand 4.1 Fishery Management 4.2 Onshore -Offshore 4.3 Community Development Quotas 4.4 New Processing Facilities in Unalaska/Dutch Harbor 4.5 Potential Cargo Developments 4.6 Resource review -Abundance of the Fisheries Resources Capacity Analysis/Utilization Rates 5.1 The Concept of Berth Occupancy as a Measure of Need 5.2 Presentation of the Data 5.3 Discussion of the Data 5.4 Recommendation for Expansion Authorization 5.5 Economic Limitations 6.0 Appendix:data base Unalaska/Dutch Harbor:Facility Demand Stud 1.0 Introduction The Harbor Facility Demand Study is part of an ongoing effort to develop an Unalaska Harbor Management Plan.The Harbor Management Plan was initiated to assist in:resolving permitting issues,managing shorelands and tidelands within municipal boundaries and facilitate marine development in an environmentally acceptable setting. The Harbor Facility Demand Study was prepared for two purposes.These are: e Federal permitting agencies (Corps of Engineers,Fish and Wildlife Service,the Environmental Protection Agency and the National Marine Fisheries Service)are required to assess the public need and alternative sites during the review of permit applications for proposed projects involving dredge and fill,navigable waters and wetlands.These agencies feel they have limited current information on the extent of harbor facilities (docks,boat harbors,onshore storage space,fish processing facilities,fuel storage and other marine industries)and demand for future harbor facilities to help them with their assessments.A Harbor Facility Demand Study was identified as one of the major data gaps to be filled as part of the process of preparing the Unalaska Harbor Management Plan. e The City of Unalaska has been asked to review socioeconomic profiles and forecasts of future economic growth that have been prepared for various state and federal government studies.The City is concerned that the majority of information contained in such studies is inaccurate and underestimates the potential growth and demand for harbor facilities. The City was interested in sponsoring an inventory of existing harbor facilities,their current use levels,and an assessment of trends and future demands in order to plan for future harbor uses and activities and anticipate capital project needs. Completion of this project will assist state and federal agencies in assessing the public need and alternative sites during the review of permit applications for proposed projects involving dredge and fill,navigable waters and wetlands.Information contained in this study will save time and effort during the permit review process.It will provide the City of Unalaska with a current data base on existing harbor facilities including the damand for future facilities.The information will be used to develop the management guidelines for the Harbor Management Plan and anticipate capital project and community expansion needs.Finally,the inventory and forecast will be useful to the private sector in assessing expansion needs and opportunities. 1.1 Executive Summary The Bering Sea fishing industry operates in an extremely fast-paced mode in an increasingly complex regulatory environment.The industry is evolving so quickly that information several years old does not adequately portray the current status.Dock usage in Unalaska/Dutch Harbor is largely a function of fisheries activity in the Bering Sea and,to a lesser extent,the Gulf of Alaska.That fishing activity,in turn,is bounded by a dynamic and complex regulatory situation. Fisheries are changing so quickly even management agencies are having difficulty in keeping abreast of new regulations they promulgate,new developments and entrants into the fisheries and the constantly changing resource status. page 1 Potential for New Fisheries Lessened With the Bering Sea groundfish resources now harvested and processed by the domestic industry,the potential for major new expansion will be limited.There will be constant shifting, between areas and species,but changes will be of lesser magnitude than those that have taken place over the past ten years.Some processing companies contacted during this study indicated an interest in currently underutilized stocks of arrowtooth flounder and yellowfin sole. Under the current management regime of the North Pacific Fishery Management Council (NPFMC),increasing quotas to expand these fisheries will be extremely difficult.In 1986,the NPFMC instituted a Bering Sea groundfish harvest cap of 2.0 million metric tons.Since the cap was implemented,the Council has resisted at least six attempts to raise the cap.Unless this situation changes,harvest quotas for species such as arrowtooth flounder cannot be increased without reducing the quotas for more desirable species. Resource Base Relatively Stable The resource base that supports the fishing industry in Unalaska/Dutch Harbor should be reasonably stable for the next several years.Pollock abundance is showing a declining trend, particularly for pollock stocks in the Aleutian Basin and banks near Bogoslof Island.This decline may be the result of overfishing in international waters in the 'donut hole'but may also be the result of changing oceanographic conditions.Even with declining abundance of pollock,quotas will remain close to current levels due to the conservative management regime.Crab harvests in the Bering Sea are being supported largely by a single species,opilio tanner crab.Although the opilio abundance continues to be strong,past experience has demonstrated a cyclic harvest in all species.The good news is that the cooler water conditions potentially associated with a decline in pollock and Pacific cod may favor increasing populations of king and bairdi tanner crab in future years.In summary,continued cyclic fluctuation can be expected.However,since the fishing industry in Unalaska/Dutch Harbor can adjust to changing abundance,stock fluctuations may result in shifts between species harvested and fishing fleets making the harvests, but may not result in decreased overall revenues. Analysis Shows Additional Berthing Space Needed Analyses show the need for additional dock expansions to accommodate existing use levels. The capacity analysis indicates that the Ballynoo expansion should take care of current demand levels for cargo.Existing fuel dock space (including the Ballyhoo expansion)should take care of existing fueling requirements.There is an unmet demand for moorage space,estimated to be an additional 975 feet over the current dock space available.During interviews with fishermen, those having vessels under 125 feet noted difficulty in finding moorage.They commented that access to the Spit dock was frequently blocked by large vessels,making it difficult for smaller vessels to raft alongside.At current use levels,there appears to be adequate dock space at the processing facilities within the community.However,the need for an additional 550 feet of new service docks is indicated at current use levels. Some of the needed dock facilities are currently being constructed or being considered for development.American President Lines (APL)is considering 600 feet of new dock on both sides of their existing dock.The Ballyhoo dock scheduled for completion in November 1991 will allow Sealand to increase container shipment through Unalaska/Dutch Harbor to the Pacific Northwest and Pacific Rim Countries.The Ounalashka Corporation's Margaret Bay development may include a new 800 foot dock if it is warranted.Offshore Systems Inc.(OSI)recently completed page 2 two new crab pot servicing docks near the head of Captain's Bay that added up to 400 feet of berthing space.Walashek Industries is in the process of rebuilding their dock,adding an additional 100 feet.If all of these projects are completed,they will provide 1,900 feet of additional dock space.This is more than the capacity analysis indicates is necessary to service existing use levels,but these facilities may not meet the existing deficits in moorage space and service docks. Potential for Change There are many factors that may affect fishing patterns,quotas and seasons within the Bering Sea fisheries.These factors may act in combination or singly.Factors potentially changing the length of the groundfish seasons include:reducing the number of factory trawlers eligible for the fishery due to the 'reflagging'decision;a trend toward shorter seasons due to increased harvesting and processing capacity;achievement of bycatch caps closing areas or fisheries,and; additional Marine Mammal Protection Act provisions that reduce areas open to trawling. The decision of the North Pacific Fishery Management Council to pass a shoreside groundfish allocation for the Gulf of Alaska and the Bering Sea will have a major impact on the community if it is implemented as passed by the Council.The number of shore-based trawler deliveries to shore plants in Unalaska/Dutch Harbor would likely double.The number of factory trawler visits could decrease by approximately one-third. Community development quotas,if implemented by the NPFMC,would reduce the amount of pollock and blackcod to both existing shorebased plants and factory trawlers ._Individual _transferrable quotas (ITQ's)for all groundfish and possibly crab stocks,have the potential of reducing the number of vessels participating in these fisheries.ITQ's could reduce the number of vessels in port during peak demand periods at the beginning and end of major fishery seasons. Potential for New Demand Processing industry representatives contacted during the study indicated that it was unlikely for another large shore plant to locate in Unalaska/Dutch Harbor.The existing plants have sufficient capacity to harvest the amount of groundfish likely to be processed onshore.However,if factory trawlers are forced out of the groundfish fishery due to onshore-offshore quotas or the reflagging issue,they could locate in Unalaska/Dutch Harbor (or other sites within State waters)and function as shore plants. There are a number of potential developments that may bring additional cargo through Unalaska/Dutch Harbor.These include: e additional container shipments from Kodiak,Cook Inlet and Prince William Sound e the growth of freight transshipment to support resource development areas in Western Alaska (e.g.Red Dog mine) e the potential entry of TOTE into Unalaska/Dutch Harbor e additional cargo handling or cold storage facility development adjacent to the Ballyhoodock page 3 development of the Arctic freight route to Europe over Soviet waters At this point these remain potential developments,but successful development of any one of them could have a large impact on volume of freight through the community. 1.2 2.0 2.1 Methodology The study team spent a total of 14 days in Unalaska/Dutch Harbor in June 1991, collecting data and conducting interviews with dock facility owners and users.One major task was to develop a computer data base from the harbormaster's records on daily use by facility.The study period covered the period from June 1,1990,through May 31, 1991.Vessels using each facility were tallied by day for the entire twelve month period, and entered into an Excel 3.0 spreadsheet for analysis. Field interviews were conducted with each facility owner or operator in Unalaska/Dutch Harbor.An interview protocol was developed by the study team to ensure that the necessary information was obtained from each interview.Questions included a description of dock facilities,physical dimensions,priority users of the facility,uplands available for expansion,typical times for servicing vessels using the facility,operating hours,seasonal and daily distribution of vessels using the facility,expected changes over the next five years and other information. Data collected in the field employed in developing the use profiles for the different facilities and provided the basis for the analysis capacity for each of the facilities. Existing Facilities During the course of this study,21 dock facilities were identified and analyzed.This includes only dock facilities currently being utilized,and did not include areas such as the shore where the Barge Inn was located before it moved out of the community.The locations of the dock facilities are shown in Figure 2.1. Descriptions and Specifications Alyeska Seafoods Alyeska Seafoods primarily processes crab and pollock,although the plant also processes smaller quantities of Pacific cod,salmon,blackcod and other species.There is a total of 910 feet of dock space around the perimeter of the plant. The docks receive landings by fishermen delivering to the plant,landing of supplies delivered to the plant via coastal freighter and shipment of product via tramper.Besides delivering fish to Alyeska,fishermen use the dock to take on water and supplies and to rest between trips. With completion in recent years of their surimi plant,fish meal plant and dock extension for the fish meal plant,Alyeska has utilized most of the available space within the bounds of their property.They have some upland storage and warehouse space near the plantthatisusedtostoretenderingequipment,pumps,etc. page 4 '.ramen UNALASKA BAY Hog Galand Summer Bay Nateckin Bay Devrlfisk Point Captains Bay 4 Figure 2.1ea'Locations of Dock Facilities Cg Map by ResourcEcon,1991 a&WwWND15. 16. Legend Tanner Landing -OS! osi PAFS (Crowley) Westward Seafoods Walashek DOT Small Boat Harbor Galaxy Dock Unisea , Royal Aleutian Seafoods East Point Seafoods Alyeska Seafoods Americal President Lines .Delta Western Ballyhoo Magone Martne Trident Seafoods Petro Marine Delta Western Marcencos Iclcle Seafoods Spit Dock American President Lines American President Lines (APL)utilizes their dock facility to: provide for APL container shipments to overseas destinations,lease dock space for the Sealand ships and barges,provide dock space for the Sea Trader (a coastal barge delivering supplies to the Pribilof Islands)and the Investigator (a shuttle barge to Akutan and in the summertime to Bristol Bay).The company also provides dock space to the factory trawler Alaska Ocean,which docks about every four weeks during fishing periods to offload frozen processed product,fueling,crew exchange and taking on supplies. Most of their activity is directly related to fishing industry activities. The APL facility is open 24 hours per day.Ships can dock anytime,but if they dock at night,they typically wait for the day crew to come on duty for loading or unloading.The dock has fuel available via a pipeline from Delta Western.Water is also available to ships at the dock.Vessels like the Sea Trader take on about 150,000 gallons per trip. APL has approximately 5-7 acres of upland storage adjacent to the dock that is used for a staging area for shipping containers.The company has plans to build an additional 600 feet of dock -300 feet on each side of the existing dock.A schedule for this addition has not been determined. Ballyhoo Dock The Ballyhoo Dock is owned and operated by the City of Unalaska.It is open 24 hours per day;office hours are 8 hours per day with staff coverage 16 hours per day.The dock offers fuel,cargo handling and berthing for vessels.Fueling and cargo handling are the priority uses of the dock.The current dock is 413 feet in length, with a berthing capacity of 650 feet.A major expansion is currently underway that will extend the dock approximately 731 feet.The new facility is scheduled for completion in November 1991. Petro Marine currently provides fuel to vessels at the existing dock and will also provide fuel to the new dock.Sealand will have priority use for large portions of the new dock several days each week.Two days per week,Sealand will have priority use for the entire new portion of the dock for the Sealand ships.Three days per week,they will have priority use for up to 400 feet of the new dock for their barges. Department_of_Transportation,Small Boat Harbor The Alaska Department of Transportation and Public Facilities (DOTPF)built the Unalaska Small Boat Harbor.The State-owned harbor consists of three sets of float systems;A,B and C.Float A has three finger floats 62 feet long.Float B has three finger floats 40 feet long.Float C has four finger floats 40 feet long.With space between the floats added on,the small boat harbor has a total of 1675 feet of mooring space,with a few slips for vessels up to 85 feet. A DOTPF representative indicated they would like to lease the facility to the City of Unalaska on a long term lease,with a token annual fee.What they require is the City to agree to operate the facility in accordance with its designed capacity.The City has not been willing to assume responsibility for operation of the harbor to date. DOTPF contracted with Munson Marine in August 1989 to complete some repairs and to install lighting to the floats.Since DOTPF does not have staff to collect use fees,there are currently no charges for use of the facility. page 6 East Point Seafoods East Point Seafoods has a dock off their processing plant and also has the floating processing ship East Point moored permanently.Facilities are utilized primarily to take deliveries of shellfish and fish from fishermen.They also take deliveries of supplies at the dock from Coastal Transportation. Currently,the company only processes crab.Boats delivering to the company have priority use of the dock.They will occasionally allow other vessels to tie up to the dock for a fee if space is available.They have capacity of up to 10 vessels,tied up three abreast. The total dock length at East Point seafoods is 420 feet,including a recently completed dock extension.They currently have no plans for additional expansion.However,the company is not fully utilizing the East Point barge and at some point may consider an expansion to more fully utilize that space. East Point Seafoods plant operates one shift,fom 7 AM to 11 PM.All dock activity happens during this period.Crab season currently lasts from November through June. During the off season,the plant is closed for maintenance and repairs. The plant has a water intake for processing water and a water outfall for wastewater. They also own adjacent uplands utilized for warehouse,storage and housing. Galaxy Dock Universal Seafoods owns the Galaxy dock but does not use it extensively because the dock is located on the opposite side of Expedition Island from the main docks and facilities.This makes it difficult to efficiently use the dock.Unisea makes the dock available to several firms that sell to Unisea.These firms use the dock for loading and unloading supplies,crab pots and processed product. Greatland Seafoods Greatland Seafoods was a subsidiary of Universal Seafoods that has not been merged into Unisea.See the discussion of Unisea for information on these docks. Icicle Seafoods Icicle Seafoods moors the barge Arctic Star to finger piers at the head of Dutch Harbor.The vessel typically processes crab in Dutch Harbor until June,then is towed to Bristol Bay to process salmon.They also process herring in the Togiak fishery and some blackcod and Pacific cod. During the crab season,the plant operates 24 hours per day,with activities distributed evenly around the clock.Crab vessels take between 18 to 24 hours to offload their catch, rest and head back for the grounds.Average turn-around time for crab vessels is 1.5 days. Processing activities are controlled entirely by the fishing seasons.At the beginning of the crab seasons,there is a lag for seven to ten days before boats begin making deliveries.At the end of the season,it takes three to four days for boats to make their last delivery. Fishing vessels delivering crab or other species tie up to the outside of the barge.It is 265 feet long,and in addition to the processing plant has housing for workers,storage, galley and other related uses.The plant has an outfall line across the spit and a water page 7 nsintake line for processing water.The company has 4.68 acres directly adjacent to the finger docks that are utilized as a supply and storage area.They also sublease 6.8 acres at the head of the bay to Marcenco for crab pot storage. At the time of the field interviews (June 1991),Icicle Seafoods was in the process of being sold to Ocean Trawl.However,that sale fell through and Icicle will continue to be operated as they have in the past.Any changes to current operations or expansions will be determined by the Icicle management. Maqone Marine Magone Marine provides ship repair,welding,mechanical repairs,diving, salvage,hydraulic repairs and other repairs for fishing vessels and processing companies. The company currently operates out of two floating barges,moored in Dutch Harbor. They moved to this site in October,1990,after moving several times since the company was started in 1978.In addition to office space and shop space,the barge provides housing for 12 workers. The two barges are each 260 feet in length.Taking into account the bow areas that are not useable,they have about 400 feet of dock frontage.They utilize this dock space to moor vessels that are under repair.The available dock space is fully utilized by repair customers.When necessary,they can raft vessels several deep to provide space. The facility's office hours are 8 AM to 5 PM.The shop operates as needed to take care of repairs and projects.During the peak fishing seasons,they run a night crew and operate 24 hours.On average,the company estimates that 75 percent of work is completed during the day and 25 percent during the night.Activity is directly related to fishing seasons. Marcencos Marine Construction and Engineering (Marcencos)operates from Delta Western's pot dock at the head of Dutch Harbor.The company provides storage,loading and unloading for crab pots.The dock is used almost exclusively for vessels either loading or unloading pots.They occasionally allow customers to use the dock for other reasons,if no other use is scheduled. The Marcenco dock is 220 feet in length,and can handle vessels up to about 260 feet. The dock receives occasional use by one of the coastal freighters to offload freight. Regular hours for the pot dock are from 8 AM to 6 or 8 PM.But if the demand is heavy, they put on an additional shift to work 24 hours.During the busiest parts of the year (prior to the opening of king crab season),they operate 24 hours per day for two to three weeks.The activity for pot storage is directly related to fishing seasons.Activity begins two to three weeks before the beginning of the season and lasts at least a week after the end of the season. Qunalashka Corporation The Ounalashka Corporation recently announced plans for development of Margaret Bay in a joint venture with Alaska Diversified Industries.Phase 1 of the development will provide space for a hotel,restaurant,office space and retailspace.Phase 2 of the project will be sited along the existing roadway,and will includeofficespace,a retail mall and possible hotel space and other retail service buildings.Phase 3 of the project will provide more industry-oriented services,warehouse space,outdoor covered storage,etc.Phase 4 of the project includes waterfront properties that page 8 would be available to a shoreside processing company to locate and/or other marine- related businesses.The dock frontage,when built,will be a standard piling dock approximately 800 ft x 30 ft.If there is no additional demand for marine-related facilitiesafterthecompletionofPhase3,Phase 4 will be reallocated to additional retail space. Offshore Systems,Inc.(OSI)OS!provides fuel and lubricant sales,water,telephone, warehouse space,equipment rental,freezers and cold storage,expediting,storage, loading and unloading gear.Many of the support services are provided to promote fuel sales.Typical turn-around times for vessels calling on OSI are:factory trawlers -three days,trawlers -one day and longliners -2 days.The facility is open 24 hours a day. Approximately 75 percent of the activity occurs between 6 AM and 6 PM with the remaining 25 percent during the evening hours.Activity is closely associated with fishing openings. OSI is constructing two new docks near the head of Captain's Bay to service a 7 acre crab pot storage area.The facility,known as Tanner Landing,is located approximately one and one-half miles south of the fuel transfer and multi-service facility.The new docks will provide a total of 400 feet of berthing space for vessels loading and unloading crab pots.The company is also considering additional expansions.One expansion would increase the size of their cold storage from 75,000 square feet to 280,000 square feet. Another potential expansion is an 800 foot dock located south of the existing multi- purpose facility.Feasibility studies have been completed for this development and permits have been obtained,but timing for actual development will be dependent on demand. Pacific Alaska Fuel Service (PAFS)PAFS is a subsidiary of Crowley Maritime.Their facility,in Captain's Bay,provides fuel,lubricants,water,warehouse space,outside storage,equipment rental and labor to the fishing fleet.They also lease a 60-person camp facility which is operated by Boatel.Boatel provides lodging and meals at the camp.Two customers with three vessels each have priority use of the PAFS dock facility. Typically,these vessels call about twice per month,equaling approximately 12 visits per month.Turn-around for vessels is approximately two to three days.Other users can tie up to the dock when space is available (for up to three days)if they purchase fuel. The dock is fully utilized during fishing seasons,but during closures,occupancy goes down by approximately one-third.The facility is open 8 AM to 2 AM unless a vessel requires servicing,in which case they operate 24 hours.Planned expansion being considered includes additional warehouse space and indoor storage. Petro Marine Petro Marine leases docks in five locations to provide fuel and related items to the fishing fleet.Space is leased at the following docks:Marcenco's pot dock,Trident Seafoods,the old Resoff Dock now commonly called the Petro Marine dock,Ballyhoo and Westward Seafoods.The company also has two barges that it uses to lighter fuel to vessels.They utilize three tank farms (Petro Marine,Ballyhoo and Westward)that provide fuel to the docks.Additional services include lubricants,waste oil handling,spill cleanup and some minor services such as mail and vehicle storage. There are no priority users for fuel at the Ballyhoo,Petro Marine or Marcenco docks,but the Trident Seafoods and Westward Seafoods docks are reserved for their own vessels. page 9 Fueling time varies by type of vessel.Factory trawlers typically take about 6 hours, trawlers take about 4 hours.Crabbers and longliners take 3 hours and 2 hours, respectively to fuel.The facilities are open 24 hours per day.About 90 percent of vessels calling for fuel arrive between 6 AM and midnight,and only 10 percent arrive between midnight and 6 AM. Petro Marine will be expanding their services to supply fuel from the new portion of the Ballyhoo dock.They are also considering building a warehouse behind the Ballyhoo facility for equipment storage and office rental. Royal Aleutian Seafoods Royal Aleutian Seafoods operates a processing barge tied between two finger piers in lliuliuk Harbor.They take deliveries over the side from fishermen and process crab and finfish.They only provide dock space alongside the barge to vessels delivering product to the plant.During the peak crab season,the plant operates seven days per week with two shifts.During slower periods,the plant operatesoneshiftbetween12to16hoursperday.The company has a small shortage yard adjacent to the finger piers. Trident Seafoods Trident Seafoods operates a multi-purpose 280 foot dock in Dutch Harbor.The main purpose of the facility is to provide service to vessels fishing for Trident Seafoods and to expedite people and supplies to the company's Akutan plant.They have a small amount of warehouse space on the dock and Petro Marine provides fuel on the dock.A small forklift is available for general lifting and two 40 foot Sealand freezer vans on the dock store bait for fishermen. There are currently no plans for extension of the dock that is owned by Delta Western, but repairs are planned to fix storm damage.The company has land across the road that they may develop with a modular housing unit.The project concept would provide housing for 18 to 20 Trident workers on their way to and from the Akutan plant.However, it is not clear whether current zoning regulations would permit housing units on this site. Trident's office hours are 8 AM to 5 PM,but vessels come and go as they choose. Activity is generally tied to fishing seasons. Unisea Unisea utilizes their dock facility for loading and unloading fishing vessels and shipping product via tramper.Processing facilities include the Unisea barge,and the G1 and G2 surimi plants.The Unisea focuses on crab,halibut,salmon and other species while the surimi plants focus on pollock. Unisea just completed the G2 surimi plant as its latest expansion and has no further plans at present.At some point in the future they may consider replacing the Unisea barge with a shore facility,but no decision has been reached.Other facilities at Unisea include housing for processing workers and administrative staff and warehousing.Unisea also operates the Unisea Inn and the Ballyhoo restaurant at the airport Offloading the smaller (delivering around 100 tons of pollock)trawlers takes three to six hours.The larger trawlers (delivering up to 400 tons of pollock)take from 12 to 24 hours to offload.Crabbers tie up a minimum of 12 hours,and can stay up to 36 hours.In addition to dock space,Unisea provides water,electricity,phones and cable television to fishing vessels.The plant operates 24 hours per day,so activity at the dock is evenly spaced out over the 24 hour period.Activity at the plant is directly tied to fishing page 10 reeCc.seasons.From November through June,they process crab.From January through March,they process pollock during the roe season.From June 1 through September, they process pollock.From the latter part of September to the end of October is a slow period,used for plant maintenance. With shorter fishing seasons,Unisea is looking to other species (specifically arrowtooth flounder and yellowfin sole)to try to keep the plant busy. Walashek Industries |Walashek provides ship repair services including welding, mechanical,diesel and other repairs.They have a 350 ton marine ways in the main facility.They are also landlord for a number of other businesses at the head of lliuliuk Bay,including two restaurants,several service shops and apartments.The 75 x 33 foot Walashek dock is used by vessels being repaired by the facility.The dock was originally about 175 feet long,but was damaged about five years ago.The company is in theprocess'of securing permits from the Corps of Engineers to rebuild the dock. The first priority for use of the dock space is for vessels under repair.Second priority is for vessels having work done by any of the businesses who rent space from Walashek. Turnaround time for vessels in for repair varies from one day to three weeks.The facility is operated 24 hours per day.Alongside the ways and landward of the dock,there is a rock bank about 175 feet long that is utilized for docking staff-owned vessels. if new regulations favor shoreside processors,Walashek anticipates more catcher boats to harvest the additional quota.That shift will mean additional tax revenue to the community and perhaps more business for local service companies. Western Pioneer Western Pioneer provides fuel,warehouse space and marine supplies (including cables and gear,groceries,guest housing,liquor store,retail office space,net repair,pumps and electric motors).Most of these services are provided through their subsidiaries:Delta Western,Alaska Ship Supply and Gourock Trawi.Delta Western also provides some net storage and pot storage.Western Pioneer has two water outtfalls which are "grandfathered in".Icicle Seafoods uses the original SeaAlaska outfall for its processing barge and the processing ship Blue Wave uses the outfall that was originally used by Resoff. The company owns several docks in the area and leases them to other companies. Docks are leased to Marcencos,Petro Marine and Trident Seafoods.The Alaska Ship supply dock and the Delta Western fuel dock are used by the company or their subsidiary. The company is planning to reconfigure and reconstruct the fuel dock,and construct a new 400-600 foot dock from the Trident dock to Alaska Ship Supply.The company has had these expansion plans for several years,but they are not yet a priority development. 2.2 Summary of Harbor Use Vessel use at the various dock facilities was determined through analysis of data collected daily by the harbormaster's office.Figure 2.2-1 shows total vessel counts made by the harbormaster'sofficeovertheJune1,1990 to May 31,1991 period.These counts are based upon a daily page 11 coFigure 2.2-1 Total Vessels At Anchor At Dock 7/31/90 9/29/90 11/28/90 Date page 12 1/27/91 3/28/91 5/27/91 survey of all dock facilities in Unalaska/Dutch Harbor.The survey is generally made in the morning,so vessels that are in port for less than 24 hours can be missed in the count. The count of vessels at anchor is incomplete for several months at the beginning of the period. The count of these vessels does not appear to be reliable until September,1990.The downward spikes are due to holidays,illnesses and other situations caused by the absence of harbormaster's staff. Several items are apparent in viewing Figure 2.2-1.First,is the higher vessel count in the last six months of the period compared to the first six months.This is due to the seasonal pattern of openings and closures for major fisheries.Second,is the fluctuation in late October or early November,probably associated with opening the Bristol Bay red king crab fishery,and the closure of this fishery in mid-November.The holiday season tie-up during Thanksgiving,late December to early January is the other major fluctuation that is readily apparent. 2.3 Facility Use Patterns Figures 2.3-1 through 2.3-21,included in Appendix A,show vessel counts for each facility as tallied by the harbormaster's office.Without the data collection by the harbormaster's office that provided the basis for this analysis,the study would have been much less successful.Some of the changes in the daily use are brought about by the same factors that influence the total harbor use patterns (e.g.regulatory openings or closures,holidays).Others are a function of the type of facility and services provided. No attempt is made to identify the changes in daily use patterns for each dock.Information for certain docks is provided where the number of vessels may be skewed.For example,the Eastpoint barge is always moored at the Eastpoint dock.This barge is counted in the daily survey and as a result,the number of active vessels using the dock is overstated by one vessel each day.The Icicle dock also has a processing barge that is counted each day in the harbormaster's vessel count.The number of active vessels using this dock is also overstated by one vessel.When using these data for calculations of occupancy rates,the study team made the appropriate corrections to the data file. The harbormaster's office did not start counting vessels at the Magone Marine dock until about early December 1990,when they began operation in that location.The permanently moored construction barges,which are part of the Magone Marine facility,are counted daily.During the field interviews,one vessel was noted as moored inside (landside)of the barge Magellan.This vessel was undergoing extensive,low-priority repairs.The vessel was counted daily,but the mooring space would not have been used by any vessel actively fishing.in addition one small boat which was repaired at Magone Marine and then blocked up on land was also counted in the harbormaster's daily totals.Figure 2.3-10 reflects the total vessel count but the active vessel counts should be revised to account for these anomalies.The revised figures were used in the calculations determining facility occupancy rates. The harbormaster's office includes the berth used by Peter Pan's seafood processing ship,the Blue Wave,in the count for the Marcenco dock.As aresult,the active vessel count is overstated by one for the period when the Blue Wave was in port.In 1991,the Blue Wave was in Dutch Harbor from January 4 through May 13. page 13 During the first few months of the survey period,the harbormaster's staff did not survey the Captain's Bay facilities on a daily basis.The records show that OSI often provided a fax with names of vessels in port,but comparable data for PAFS was not found.Data for the first several months should be considered unreliable for these two facilities. A processing barge is also permanently moored to the Royal Aleutian Seafoods dock and is included in the vessel count for that facility.The Walashek dock count includes vessels that are out of water being repaired on the marine ways.At least half of the time the daily count includes a vessel at this facility. Westward Seafoods commenced operations in March,1991.Vessel counts before that date are associated with construction.The increasing daily count is probably normal for new processing plants and may increase further as the plant reaches full capacity. 3.0 Harbor Use Harbor facilities provide a link between seagoing vessels and infrastructure located on shore. Different types of vessels have different use patterns and may require different facilities and services.Similarly,shoreside facilities may have different land and infrastructure requirements. The following sections briefly describe the findings of our field research and interviews for the different vessel types and shore facilities. 3.1 Vessels Fishing vessels represent the largest number of users in the harbor.Cargo ships and barges, and government ships are other users.The fishing fleets operating from Unalaska primarily harvest groundfish and crab.Herring,salmon,and other species are caught in the area. However,the number of vessels participating in these fisheries is extremely small in comparison to the groundfish and crab fleets and are not significant to this discussion. Fishing vessels primarily call at port to unload their catch,refuel,and replenish their stores.The frequency of port visits and services or facilities required can vary by type of vessel.Hook and line vessels (predominantly longliners)are generally the smallest type of vessel calling at Unalaska.They remain at sea for periods of 7 to 10 days and remain in port for a period of 2 to 3 days.The relatively small size of these vessels allows them to accomplish fueling and replenishing in a matter of a few hours.Unloading their catch and obtaining bait and ice averages 6 to 12 hours.The balance of their time in port is spent at moorage doing minor repairs and/or rest for the crew.These vessels are not as self-sufficient as larger ships and consequently demand more assistance from processors and other vendors (e.g.,laundry services,expediting,and meals while in port).The additional requirements can result in longliners spending as much time at the dock face as larger vessels.Generally these smaller boats do not have to wait long periods of time for a berth,since they can slip between larger vessels or use the side,or inside of the dock to tie up. Crabbers spend 7 to 20 days at sea between port visits,with port calls lasting from 2 to 4 days. Unloading their catch takes 1 to 2 days and most vessels attempt to replenish their supplies and undertake minor repairs while unloading is taking place.Refueling takes about 5 hours.Water and other supplies are also taken on during this time.Sometimes crab pots are loaded or unloaded while refueling is underway,but if done separately,moving crab pots to or from the page 14 me vessel can take 2 to 6 hours.The goal of most vessel owners is to reduce the number of docks they must call on and maximize the services received at each in order to minimize the time spent in port.Crabbers reported waiting as much as three days at the end of a season to unload crab pots.Waiting periods of up to 1 day were reported prior to a season. Shore-based trawlers usually spend 2 to 3 days at sea with an average stay of 1 to 2 days in port.Most of the time in port is taken unloading catch at the processing plant.Given the frequency of port visits these boats do not need to refuel every visit.But,when necessary the fueling will take about 4 hours.Repairs and replenishing are generally undertaken while the vessel is offloading its catch.These boats generally do not have to wait for a berth since the processor attempts to schedule their deliveries,but they may have to wait to be offloaded. Catcher/processors exist in the groundfish and crab fleets.These vessels are generally much larger than catcher boats and have additional requirements while in port.They spend 14 to 28 days at sea and 3 to 4 days in port.Fueling takes 6 to 18 hours,and resupplying the vesseltakesabout6hours.Repairs are often made during the refueling period.Offloading the processed product takes 12 to 36 hours,and is often done over the side direct to trampers. Vessels that deliver to shore require dock space to move their cargo over the side and fill containers. These vessels also require large amounts of boxes and packaging,and other supplies used in processing.The materials require warehousing while the vessel is at sea.The larger catcher/processors use dock space for extended periods of time and their size precludes breasting of other vessels.Smaller catcher/processors can use most of the docks in the harbor area,but the larger vessels are restricted in the docks they can use because of draft and load restrictions.As a result,larger vessels can experience waiting times of 30 to 36 hours.One skipper who was interviewed stated that about 20 percent of the time they wait 6 hours for a berth and 15 percent of the time they wait 30 hours.The balance of the time they do not have to wait.If a dock is managed exclusively on a scheduled basis,waiting times are less.For example,scheduled boat waiting times at Ballyhoo dock are typically less than two hours. 3.2 Shoreside Users Processing plants are a primary provider of dock facilities in Unalaska.These plants provide dock space to ensure efficient use of contracted vessels,and to offer minimal or no waiting time for independent fishing vessels seeking to sell their catch.The processing facility must be located close to the dock in order to minimize the distance and time involved in moving the catch from the vessel to the processing line.Fish pump technology limits the distance fish can be effectively moved,and moving product by fork lift or other means over long distances increases processing costs.Plants also use areas of the harbor for water intake and processing waste discharge. The support industry encompasses a wide range of services including fuel companies,shipyards, net and electronic repair services,expediters,and a number of other firms.Docks owned by the marine repair and shipyard services are used almost exclusively for those purposes.Other firms may be employed as subcontractors,or perform other repair services for the vessel owner, but the repairs preclude most other activities.In contrast fuel companies permit a number of other vendors to use their docks.This multiple-use concept reduces the time vessels must spend in port and,according to fuel vendors,offering additional services results in higher fuel sales. page 15 iDedicated fuel docks can be minimal structures since fuel is moved in pipelines and lube oils and other related supplies can be handled with small trucks and require modest dock space. However,loading dunnage,nets or gear,food,and other supplies from a number of vendors concurrently requires a substantial amount of dock space in proximity to the vessel.The size of multiple-use docks is larger than a single vendor might require,but results in a fewer number of docks.Fuel tanks,warehouses,offices,and other facilities could be located off the dock,and could even be located quite a distance from a dock.Vendors located at the dock have quite a competitive advantage since a vessel owner or captain will often tie up for fuel then visit the adjacent warehouse to obtain food and other supplies.Driving to other locations to do this same activity would not be as efficient and could extend the time the vessel is at the dock face and result in longer queuing times for vessels. Cargo can be handled on any dock,but efficient cargo handling requires large amounts of dock space,adjacent uplands,and,often,specialized equipment.Cargo is received at the processor docks and other docks in the community,but the Ballyhoo and American President Line docks are the primary cargo docks in Unalaska.These docks typically have deeper draft than other facilities to handle the very large vessels which may call,and are constructed to handle extremely heavy loads.Efficient handling of containerized cargo requires container parking areas that are in close proximity to the dock to minimize transit time and cost to and from the staging area. Large catcher processors can use these docks,but priority use by scheduled cargo vessels reduces their attractiveness to the fishing fleet. Government entities also need water related facilities.in some instances the agency may provide .docks for use by commercial vessels,but needs also exist for recreational facilities,air transportation,waste discharge,and other uses.Appropriate shoreline and water areas need to be reserved for future growth of the community. 4.0 Factors Affecting Future Demand There are numerous factors that will affect future demand for dock facilities in Unalaska/Dutch Harbor.Many of these factors are directly or indirectly related to the fishing industry;others may affect future transshipment of cargo through the port.This section reviews some of these factors. 4.1 Fishery Management Fishery management decisions relating to groundfish are made through recommendations by the North Pacific Fishery Management Council (NPFMC)and obtain the force of law through the Secretary of Commerce.Current issues potentially changing groundfish season duration 41 (a)Reflagging decision -results from a recent decision in federal court,Southeast Shipyard Association vs.U.S.District of Columbia.The ruling throws into doubt the manner in which the U.S.Coast Guard has been enforcing the U.S.Anti- Reflagging Act of 1987.The implications of the decision are not yet fully defined, however,it has the potential to reduce the number of factory trawlers allowed to fish within the U.S.fisheries conservation zone (FCZ). The U.S.Coast Guard has asked for a clarification of the court interpretation of thelaw.The possibilities range from a very liberal interpretation in which the Coast page 16 (b) Guard will not allow any new vessels that were rebuilt outside of the U.S.into the fishery but will not take action against the fleet already in the fishery;to a more severe interpretation where all vessels that were extensively rebuilt outside the U.S.or fishing companies having over 50 percent foreign equity ownership,will not be allowed to continue in the fishery. The exact number of vessels potentially affected is unknown.An industry estimate suggests 15 to 37 factory trawlers out of the total fleet of 64 may be restricted from further fishing in U.S.waters.If the number of factory trawlers is reduced and the NPFMC establishes an effective moratorium on new entrants to the groundfish trawl fleet,the length of the fishing season would be increased by a factor of 23 to 58 percent,assuming the quota remained constant. Another potential effect of this decision would be to encourage displaced trawlers to enter the longline and crab fisheries,making those fisheries more crowded. Displaced factory vessels would also have the choice to operate as shore plants, taking deliveries from catcher boats.The affected vessels might also be able to operate in international waters,such as the area in the Bering Sea known as the 'Donut Hole'. Trend toward shorter seasons-Prior to 1988,there was no restriction on domestic pelagic (midwater)or bottom trawling for pollock.In 1988,the pollock season intheBeringSeaextendedthefullyear-365 days. In 1989,there were limitations imposed on bottom trawling due to prohibited species closures.The Bering Sea was closed to bottom trawling in regulatory Zone 1 on September 3,after 246 days of fishing.Incidental harvest of red king crab by the trawl fleet exceeded the number allowed.Pelagic trawling was open all year. After May 30,1990 (150 days of fishing),regulatory Zones 1 and 2 were closed to bottom trawling.After June 30,1990 (181 days)the entire Bering Sea was closed to bottom trawling.Pelagic trawling was allowed until October 15,1990 (286 days if fishing)when the quota was taken,ending fishing for the year. In 1991,the 'A'pollock (roe)season in the Bering Sea ran from January 1 through February 22 (53 days).However,bottom trawling experienced an early closure after only a few days of fishing.The second part of the season began June 1 and ended September 4 for directed pollock fishing for pelagic trawlers (an additional 96 days).The bottom trawl vessels were closed for the year on June 8.The 1991 pollock season for pelagic trawlers lasted a total of 149 days,with the bottom trawl season much shorter. There is a trend to shorter and shorter seasons,due to more vessels and more effective fishing effort.This makes quick refueling and unloading more critical for fishing vessels since owners must attempt to maximize the time spent on the fishing grounds. In addition,some trawl vessels gear up for an alternate fishery after the pollock fishing has ended.Potential alternate fisheries are longlining for Pacific cod and page 17 4.1 (c) (d) blackcod,and pot fishing for Pacific cod or crab.During our June interviews with fishing vessels in Unalaska/Dutch Harbor,two skippers of trawl vessels were in the process of converting to longline fishing.If this practice becomes more widespread,the vessels involved will create additional demand for warehouse or shoreside storage (for their gear),increased fuel stops during the summer months, and more fish deliveries to area processors. Bycatch closures of groundfish -Increasingly,bycatch of prohibited species such as halibut,herring,crab and salmon are limiting the groundfish fisheries. Particularly at risk are the bottom trawl pollock and Pacific cod fishery in the Bering Sea and the fishery for yellowfin sole,rockfish and other species.The potential impact of groundfish closures due to prohibited species caps is shorter seasons and less fishing activity for the port. There is a very complex and dynamic regulatory system dealing with trawl bycatch.It is difficult for fishery managers implementing the regulations to keep up with open and closed areas and gear types.The task of keeping up with the regulations is even more difficult for fishermen and processing companies. Unalaska/Dutch Harbor has concerns on both sides of the bycatch issue.The community depends on crab and to a lesser extent halibut fisheries,and cannot afford to have the resource harmed by excessive trawl bycatch.On the other hand,the community needs the groundfish fishery in orderto continue to operate. One of the most restrictive bycatch limits is for herring,a species which provides very limited commercial benefit to the area.There is a small food and bait fishery for herring in Dutch Harbor,but it has been under attack through the Board of Fisheries regulatory process by fishermen from elsewhere in Western Alaska and has been so severely restricted that it may not continue. Management measures intended to reduce or prohibit bycatch of crab,halibut and herring have already caused major closures in the groundfish trawl fishery.In addition,salmon bycatch measures are starting to be considered by the North Pacific Fishery Management Council.Without innovation on the part of fishery managers,the groundfish fisheries may end up in regulatory gridlock at some point in the future. Marine Mammal Protection Act provisions -The drastic decline in Stellar sea lions and other marine mammals in the Bering Sea and Aleutian Islands can lead to major problems for the groundfish industry.In the most recent development in this long controversy,Greenpeace sued U.S.Commerce Secretary Robert Mosbacher,seeking to close the Gulf of Alaska pollock fishery to protect the Stellar sea lion.The State of Alaska has also entered the lawsuit as an intervenor. U.S.District Court Judge John Coughenour ruled against the Greenpeace suit, however the case is being appealed.A group of trawl fishermen who fish the Gulf of Alaska established a fund for future environmental litigation called the Sea Lion Legal Defense Fund to finance legal representation on this issue.The group has invited the participation of trawl fishermen from the Bering Sea under the assumption that a similar suit will be filed next year to reduce the pollock quota in the Bering Sea. page 18 4.2 On July 13,1991,National Marine Fisheries Service closed to commercial trawl fishing additional areas around known Stellar sea lion rookeries within the Gulf of Alaska and Aleutian Islands.The intent of the closures is to provide protection to the sea lions and their food supplies.Fishing is closed within 10 nautical miles of fourteen sea lion rookeries.Most are located along the Alaska Peninsula,but two,located on Ogchul Island and Adugak Island,are in close proximity to Unalaska/Dutch Harbor. The potential exists for this controversy to lead to major closures for groundfish trawling,particularly if the species continues to decline.tf the Stellar sea lion is elevated to endangered species,far reaching management measures are likely to be enforced to protect the species. Onshore -Offshore At the June 1991 meeting,the North Pacific Fishery Management Council passed a groundfish allocation in the Gulf of Alaska and the Bering Sea.They also reaffirmed their intention to enforce a moratorium on new entrants into the factory trawl fleet operating in the Bering Sea and Gulf of Alaska.The action addresses the allocation of the allowable harvest quota for pollock.In the Gulf of Alaska,100%of the pollock is allocated to vessels delivering to a shorebased processors.The onshore deliveries of Pacific cod are set at 90%of the total allowable harvest. In the Bering Sea,the quota will be phased in over three years from its date of implementation,with the following proportions of the allowable catch of pollock: onshore offshore 1st year 35%65% 2nd year 40%60% Srd year 45%55% The NPFMC also allocated 50%of the Bering Sea/Aleutian Island pollock reserve (207,000 metric tons in 1991)to a community development quota program.According to a representative of the Alaska Factory Trawiers,this allocation could make their effective allocation of the pollock quota about 51%of the total,down from the current level of over 80%. Likely impacts from this decision will be shortened seasons for the factory trawlers.The purchases of fuel and other services from Unalaska/Dutch Harbor by factory trawlers may decline,but the impact will depend on resolution of other measures,such as the reflagging decision and fisheries management decisions implemented in the future.At current capacities and operating methods,lengthened seasons for vessels delivering to shorebased plants would be expected.However,this may be a short-lived trend.Since each shoreplant does not have an individual quota,there will be strong pressure to maximize production and increase capacity to capture more of the harvest quota.The long term effect will be a trend for shortened seasons for vessels delivering to shore based plants. Vessels delivering to the major surimi plants in Unalaska/Dutch Harbor will need more fuel and support services to facilitate their additional fishing time.Shore plant(s)in Akutan will page 19 4.3 4.4 4.5 be competing with the Unalaska/Dutch Harbor plants to harvest the shorebased share, as will the developing shorebased facilities in the Pribilofs. Community Development Quotas The impact of this regulatory issue is unknown since implementation of the idea has not been completed by the regulatory agencies.At issue is 50 percent of the pollock reserve from the Bering Sea and Aleutian Islands.This is 15%of the total allowable catch. Therefore,in 1991,the potential amount that could be directed to community development quota would be over 103,500 metric tons (or 228 million pounds).Since Unalaska/Dutch Harbor is likely to be excluded in the criteria which will define communities eligible for award of the quotas,the net effect of this quota will be to remove some part of the pollock quota that may have been contributed to activity in Unalaska/Dutch Harbor. In the September meeting,the North Pacific Fishery Management Council may take action on a Sablefish management program that includes award of community development quotas for that species.The program as currently outlined allocates up to 20 percent of the fixed gear allowable harvest in the Bering Sea/Aleutian Islands to western Alaska communities.The sablefish community development quotas will be allocated to disadvantaged western Alaska communities according to some criteria,yet to be determined. New Processing Facilities in Unalaska/Dutch Harbor Processing company representatives suggested they did not anticipate any new major companies would be locating in the Unalaska/Dutch Harbor area to process groundfish. However,smaller processing facilities would still be a possibility. At some point,the barge UniSea could be replaced with a shore facility.The barge East Point is not currently fully utilized by East Point Seafoods and could be replaced in the future.Also,the development plans for Margaret Bay provide space for an onshore processing company to locate.Icicle Seafoods had plans for constructing a plant in the area but may have postponed or canceled those plans. If some factory trawlers are excluded from the fishery due to the "reflagging'court decision or the reduction in offshore processing,there would be nothing barring those vessels,or other factory trawiers,from anchoring ashore and acting as shorebased processors. Potential Cargo Developments There are a number of potential future developments that may cause increased freight shipments through the port of Unalaska/Dutch Harbor.While it is not possible to quantify the amount of additional traffic that may arise from these developments,they should be included in overall consideration of port use.These developments include: a)additional container shipments via Sealand from Kodiak and Anchorage. page 20 b)growth in support of Western Alaska development (eg.Red Dog mine).Growth in the local economy from potential developments such as geothermal energy or new activities resulting from establishment of a free trade zone may also increase cargo shipments. C)Totem Ocean Trailer Express (TOTE)announced in July they purchased a new ship which is being refitted over the next 13 to 15 months.Over the next 3 to 5 years,company representatives indicate that new TOTE sailings to communities like Kodiak and Unalaska may occur if growth in the economy warrants. d)new development at the Ballyhoo dock (eg.Mitsui building an adjacent container dock or location of a cold storage facility). e)The State of Alaska,in cooperation with Unalaska/Dutch Harbor,is investigating shipments of product to northern Europe via the Arctic ocean.A test shipment was planned for the summer of 1991,to send Pacific cod to Norway utilizing a Soviet icebreaker escort.The test did not take place as planned,but the State will continue to develop the concept,evaluating transit time,shipping procedures and quality factors for the frozen product. Supporters of the concept hope to develop a shipping route to northern Europe across the top of the Soviet Union.The incentive for interest in the route is decreased travel times and distances.For example,from Unalaska/Dutch Harbor to Hamburg,Germany via the Panama Canal is 10,400 miles.From Unalaska/Dutch Harbor to Hamburg,Germany via the northern sea route is 4,200 miles (Fridtjof Nansen Institute,November 1991).Potential cost savings and reduced sailing times for the northern sea route need to be balanced with potential increased capital costs,cargo insurance and higher risks.At this point, the feasibility of the route is not yet known,but its development has the potential to increase surface shipping through the port of Unalaska/Dutch Harbor. 4.6 Resource review -Abundance of the Fisheries Resources Fisheries are the economic cornerstone of Unalaska/Dutch Harbor.Residents and fishermen are well aware of the cycles of resource abundance in the Bering Sea and how those changes can affect their community.They have witnessed the crash of the crab fisheries for king and bairdi crab in the early 1980's.They have watched as other fisheries have come and gone,like the shrimp fishery in Kodiak and the Alaska Peninsula.Salmon fisheries in adjacent areas such as the Alaska Peninsula and Bristol Bay have been at high levels for several years,yet in the mid- 1970's participants in those fisheries were unable to make a living.Local residents,businesses and regulatory agencies look to fisheries resources (particularly groundfish)with one major question:will the fishery continue or are we headed for another crash?Regulatory agency representatives have made comments indicating that they do not want to see facilities built for fisheries activities that will not exist in 5 or 10 years. The most important fisheries to Unalaska/Dutch Harbor are the crab fisheries and the pollock trawl fishery,although other fisheries also contribute to the area (halibut,Pacific cod,salmon, yellowfin sole,rockfish and others). page 21 A graph depicting the rapid growth and subsequent decline of the king and bairdi crab fisheries is shown in Figure 4.2-1.Biologists have no definitive explanations for the decline of king and bairdi stocks.It was probably due to a combination of a number of factors including predation by abundant year classes of Pacific cod and pollock,and oceanographic conditions.OneoceanographicfactorwasadistinctwarmingtrendinwatertemperaturesintheBeringSeathat began in 1976 and continued for several years.While that warming trend may have been detrimental to crab stocks,it may have been a major factor in the radical growth in demersal fish populations,such as Pacific cod and pollock.We are currently experiencing a period of cooling water temperatures,which may shift the oceanographic conditions to again favor benthic organisms such as king and tanner crab. Figure 4.2-1 also shows the surge in landings of opilio tanner crab,beginning in 1985.The 1991 quota was set at 315 million pounds,more than double the 1990 catch.Preliminary data show a 1991 harvest of 328.6 million pounds of opilio.While current indications show continued strong populations of opilio,1990 trawl survey data indicate a decline in opilio stocks that will start to occur within the next couple of years. The growth of the pollock fishery in the Bering Sea/Aleutian Islands is shown in Figure 4.2-2. This figure covers the period from 1977,when pollock was harvested entirely by foreign fishermen,through 1990.The total harvest has shown a steady increase during that period.The pollock harvest in the Bering Sea,by area,is shown in Figure 4.2-3 for the period from 1964 through 1990.The most significant change in pollock harvests in recent years was abrupt rise of harvests from the Aleutian Basin (the 'Donut Hole')beginning in 1986,followed by a rapid decline in 1989.It is believed that pollock harvested in the Aleutian Basin are the same stocks as the Bogoslof Island area (regulatory area 515 -to the north and west of Unalaska/Dutch Harbor)pollock.Available biological data indicate that pollock in the Aleutian Basin migrate out from the shelf areas.Since the Aleutian Basin biomass has declined,we can expect the Bogoslof pollock stocks are expected to reflect that decline. Bering Sea Crab Harvests by Species:1966-1990 millions of pounde year Ml king oreb «=baira![EE opilio data trom ADF&G Figure 4.2-1 page 22 Eastern Bering Sea/Aleutian Islands Pollock Harvest:1977-1990 millions of metric tons 0014 LAVA BA ES10007P,Wa: WY 600 Y Y Z "LAYYyy,33200AVAYZ VA HB °zZ 4 Yi,33 w77)«wW7D tet teSS 085 WET)1080 yeer Hl joreign (ZZ \oint venture Hii domestic -*total Source:data from NMFS Figure 4.2-2 Bering Sea Pollock Harvest by Area:1964-1990 thoueandsofmetriotons y,f=S i 4 ae A A A A A A A AE SD A A MS A SE AmphimyhmphmphAompbmaghmohDenghnnghharpmpgYDAAAAAAAAAlhyaaaaae -i=or la Ee"TerrYrYl eerreetom”oi1064 1068 72 wre 1980 1084 7088year HE Aicutions P22)megectet EEA Aleutian Basia ESY sastorn Bering Sea Source:Unpubilehed data,NMFS,1901 Figure 4.2-3 page 23 Results of preliminary research (Wespestad,1991)indicate that the Aleutian Basin pollock abundance increased during the early 1980's and peaked in 1985 at around a 5 million metric ton biomass.There has been a fairly sharp decline in biomass abundance of Aleutian Basin pollock since 1985.While the resource can be expected to decline gradually over the next several years,there are no data to indicate a collapse in stocks which would decimate the fishery.The harvest quota for pollock in 1991 was set at 1.2 million metric tons in the Eastern Bering Sea and 100,000 metric tons in the Aleutian Islands.The harvest quota for the Aleutian Islands will probably be just under 100,000 metric tons for 1992 and the Eastern Bering Sea quota will remain at 1.2 million metric tons. Resource Summary -The 'bottom line'on resource abundance for both poliock and crab is that fisheries harvests will be relatively stable in the near term (and perhaps the long term).The data do not show either major new stocks which have not been previously utilized,nor point to a collapse in the resource abundance in the species that form the basis for fisheries activities in Unalaska Dutch Harbor -pollock and king and tanner crab.Although some people are pessimistic,the pollock resource is being managed conservatively,and current levels should be sustainable over the near-term future.' Processing company representatives and fishermen contacted during the course of this study talked of expansion into currently underutilized fisheries resources (eg.yellowfin sole,Atka mackerel).The resource abundance exists for this expansion.However,the North Pacific Fishery Management Plan for groundfish in the Bering Sea and Aleutian Islands included a ceiling of 2 million metric tons for total annual groundfish harvest.According to a March 1991 report by the General Accounting Office,the cap was implemented in 1984 and has survived six .attempts to raise the quota established.To increase the quota for arrowtooth flounder or Atka mackerel,for example,under current regulations it would be necessary to reduce the pollock or Pacific cod quota.Since these are higher-valued species,this action would not make economic sense. 5.0 Capacity Analysis/Utilization Rates The purpose of this chapter is to review the existing use and occupancy of the port facilities in Unalaska/Dutch Harbor.Based on this review of present use,and an estimate of future demand, recommendations regarding future expansion are made. 5.1 The Concept of Berth Occupancyas a Measure of Need The most commonly used measure of port facility demand is berth occupancy.in the preparation of this report,a "berth”was defined as the space occupied by one vessel when carrying out the designated activity.In come cases,this space may be the length of a dock face. In other cases,it may be the length of a dock face plus an additional length between the end of the dock and a mooring dolphin where a vessel can tie up while carrying out the designated activity. To define existing berth occupancy,the harbormaster's vessel count was used.If a berth was occupied at the time of the count,it is assumed to be occupied for 24 hours although there may be several vessels making up that occupancy.If a berth was vacant at the count,it is assumed to be vacant for 24 hours.In this way,the berth occupancy count at one time during the day should be a correct indication of overall occupancy of the facilities.This concept is used in page 24 national and international port planning and is referred to in standard references to port planning. For example,"Port Development"(1985)published by the United Nations. In conventional port facility planning,berth occupancy is calculated on an average basis by calculating the percent of time a berthing space is occupied by a ship.For example,a one-berth port facility with a ship at berth 182 days per year would be said to have 50%berth occupancy. For larger port facilities,it is common practice to take the entire length of the available berthing spaces and divide them into the length occupied by ships thus arriving at berth occupancy stated in percent. By means of queuing theory and mathematical modeling,a relationship can be established between berth occupancy and the waiting time for ships awaiting service,given the number of berths from which the ship has to choose.For example,randomly arriving ships to a single berth with 50%occupancy would expect to spend 0.75 hours waiting for a berth for every hour at the berth.However,if there were five berths to choose from,the occupancy of all berths could reach 85%before the waiting time would reach 0.75 hours for every hour at berth. Expressed another way,a five berth facility would have a capacity almost nine times (5 x .85 or 4.25 divided by 0.5)of the capacity of a one berth facility at the same level of waiting (called queuing)which in the example is 0.75 to 1.0.The berths under consideration can be all in one place or separated as long as the vessel can use any of the berths. For example,if a vessel only could use one fuel dock with one berthing space,it would be faced with the one berth case and expect very high waiting times if occupancy was high.However,if .the vessel could choose any one of,for example,five fuel docks with one berth each,it would be faced with five berth cases and much lower waiting times at the same level of occupancy. The use of berth occupancy and berth length is a standard methodology in port planning.In this analysis,it has another advantage.Resulting recommendations on expansion can be expressed in terms of berth length which can be translated into waterfront land requirements.Since the waterfront land is generally the most valuable,and the most closely regulated for environmental and other purposes,it is a measure most helpful to planners and regulators.Therefore,the analysis of the Dutch Harbor port is carried out in terms of berth occupancy of existing facilities at existing (1990-91)levels of demand. 5.2 Presentation of the Data The methodology for determining the berth occupancy for Dutch Harbor utilized the harbormaster daily vessel count for each dock and interviews with dock and vessel owners.The vessel count was for the period June 1,1990 through May 31,1991. The harbormaster count was then used to determine the daily average for vessels at berth as shown on Table 1:Berth Occupancy,columns two and three. Table 2:Summary of Dock Interviews is data from Owner/Operator Interview forms.Total berthing space is also utilized in column four of Table 1:Berth Occupancy. The average vessel length was determined from the dock and vessel interviews and National Marine Fisheries fleet data. page 25 om 92eBedCc"CS SS |S &S eos Sources:Harbormaster's Dally Survey,ResourcEcon,&Ogden Beeman &Assoc.,Ine. ae CoO GS OS Bm es So ot om Table 1:Berth Occupancy Harbormaster's .Ave. Count Daily |Dock Ship = Dock Name Total Average Length _Length _%Occupancy Type -Magone 1516 5.19 .400 |150 |195%Services Marcenco (Pot)988 2.80 275 |100 |102%Services Trident 1950 '5.54.283 105.206%ServicesWalashek885=2.54 150 110.186%Services _ Alyeska Seafoods 2257 .6.41 910 .135 |95%Processing - East Point Seafoods 1503 |3.27 420.100 |78%Processing |Galaxy 346 0.99 180 |100 .55%Processing - Icicle 1088 ©2.29 »220 |100 104%Processing -Royal AAleutian 980 ©1.92.300 :100 64%ProcessingUnisea+Greatland 3158|8.65 1610.130 |70%Processing - Westward Seafoods 321:2.07 650.130 -41%Processing -'SmallBoat Harbor 6549.1866 1675 80 56%Moorage'Spit.5343,«14.80.975 130 197% MooragePAFS(Crowley)756 |2.15 410.150 |79%Fuel.DeltaWestern (Ak Ship Supply)847,2.40.383 |150 |94%FuelDeltaWesternFuel_1269 |3.62 -500 |150 |108%Fuet Os!,1986 8.50.1185285 107%FuelPetroMarine614001,074.2700180 97%FuelAmericanPresidentLine8892.83:337 225 169%Cargo _Ballyhoo 797 |225 413.225.-122%Cargo Marcenco (Pot)Dock .Source:ResourcEcon /Ogden Beeman &Associates,Inc. pe CS Ge Pe cP obs ke ee ed oe tore seg Table 2:Summary of Dock Interviews ,Ave.' Daye Dock Dock USAGE ;_In Facility Length Oraft Primary Secondary Port Comments American President Lines Dock 337 40 Cargo Containers,and unloading factory trawlers into containers'Ballyhoo Dock 413 35 "Cargo,Fuel 00%fueling &cargo,20%fuel only,20%repairs &other'Delta Western {Alaska Ship Supply)383 30 Fuel :Supplies Delta Western Fuel Dock 500 35 Fuel _Offshore Systeme,Inc.Docke 1155 25 Fuel ;Pot storage 3 approx.100 calle/month,currently building 800°of add'l dock Pacific Alaska Fuel Sales (Crowley)410 35 Fuel 3 12 vieite/month @2-3daya(otheres @ 3 days) Petro Marine 270 20 "Fuel ;0.13 -, "Small Boat Harbor 1675.6-20 Moorage Spit 975.20-35 'Moorage Always boate tled up_Alyeska Seafoods Dock 610.«6-35 'Processing ___Ship out bycontainer East Point Seafoods 420 30 Processing 2.5 .Crab only,8 voseols'Galaxy Dock 180.20 Processing ---RunbyUnisea Icicle Foode Dock 220 20 Processing 1.6 265°selfcontained crab,salmon sherring,and cod processing barge,20 veesels deliver,containers out'Royal Aleutian Seafoods _300:20 Processing _Crab mostly,floating processor,340°veseal moored to 2 20 'wide piers"Unisea Dock +Greatland 1610 :25 Processing =-sCsCE:«C0.8 :Ship out by trampere,14 pollock vesoels,+crabbers &afew longliners,60-70%captured by harbormaster'Westward Seafoode (650:40 Processing -=_Fuet/Supplies.1 Trawlers =4hre/500,000 Ibe.,4.6 hre ave for ship;crab 1 day @ 200,000 to 300,000 Ibe/day Trident Dock 283 |27 'Services ==-=s-s Fuse :3 "Ave 5 boats at dock,varies from 1 to 11'Walashek Industries _180 :33 Service”re "Ship repair Magone Marine Dock 400°20 Services 'ship repair,2 260°barges,take up to §boats deep978:'Services Crab pot storagefor 234 vessels,30,000 pote,2.8 hre/100 pote a)%Occupancy is calculated in column six of Table 1.Berth Occupancy is calculated as follows: Daily Average x Average Ship Length Dock Length%Occupancy= Figure 5.2-1 is a bar chart representation of the Berth Occupancy results. 5.3 Discussion of the Data The data compiled and described above will be discussed for its significance in harbor planning and expansion. Cargo:Cargo is presently handled at Ballyhoo and the American President Lines docks. Ballyhoo serves as a multi-purpose dock for the receiving and delivering of waterborne cargo. It also accommodates ships for fueling and taking on supplies.However,the main function of each of these facilities is considered to be their cargo handling activities. The Ballyhoo facility is showing berth occupancies in the range of 122%.This would suggest that vessels will have to wait one hour for each hour at dock.The liner (scheduled)services to these facilities probably enjoy a preferential user agreement of some sort So they are not forced to wait.Other users are either waiting or simply using the berth on an opportunistic basis;that is,if it is available when they need it,they will use it.The APL dock shows occupancies of 169% -which is probably attributable to two vessels sharing use of the dock by hanging over the ends of the useable berthing area,or by rafting abreast. From the perspective of port planning,an annual average of 75%berth occupancy for multi-user cargo berths is considered a practical maximum.This level of occupancy is rarely achieved by cargo facilities in the lower 48 states and would far exceed occupancies achieved at,for example, multi-user container facilities.The addition to the Ballyhoo dock and shift of the Sea-Land service to it from APL will tend to reduce the occupancies at APL and show increasing occupancies at Ballyhoo to offset the dock expansion. Fuel:The six berths primarily operating as fuel docks range in occupancy from 79 to 97%.This indicates that the system is near capacity and we would expect either long waits or calling ata dock of secondary choice during busy periods in the harbor.This expectation is validated by the vessel operator interviews.Vessels have some flexibility in making a fuel stop so,to a certain extent,they can schedule their stop around other activities to avoid waiting time. Based on the calculated berth occupancies,and the interviews with users,it appears that there are sufficient fueling outlets for the existing traffic,atthough waiting for berth is likely to occur at busy periods. Moorage:The small boat harbor is apparently underutilized but its limitations make it of little use for the commercial ships calling at the harbor.The spit dock shows approximately 200% occupancy which indicates,on average,there are two vessels moored side by side at the spitdock.This means at peak periods they are breasted out three or four deep.This circumstance is inconvenient for the user and also compounds the difficulties of using the spit dock for purposes other than straight moorage.The occupancies of this facility,and the overall lack of page 28 Services Processing Moorage Fuel =]Cargo 6ce6edE=3 ee coy re ow Figure 5.2-1 Occupancy Magone Marcenco (Pot) Trident Walashek Alyeska SeafoodsEastPointSeafoods GalaxyIcicle Royal AleutianUnisea+Greatland Westward Seafoods Small Boat Harbor SpitPAFS(Crowley)Western Pioneer Delta Western Fuel OSI Petro Marine APL Ballyhoo source:ResourcEcon and Ogden Beeman &Associates,1991 Rates L_.___.,a 0%50%100%150%200%250% percent occupancy space in the harbor for moorage,on-board repair and loading supplies suggests that additional capacity is required. Processing:The processor docks show quite a range in occupancies.This could be explained by policy or business decisions made by the owner.For example,occupancies in the 50 to 75% range would indicate a desire on the part of the operator to have available space for arriving ships wanting to unload product.Occupancies over the 75%range could indicate processors serving a captive market or perhaps using a degree of scheduling of vessel arrivals to keep waiting time at a reasonable level.It also could indicate use of the available berth for purposes other than unloading product;e.g.layup,supplies or repairs. In general,it can be said that the existing situation represents a maximum utilization of facilities. Increased traffic will result in longer waiting times for access and result in economic penalties to the user. Services:The four service facilities show occupancies averaging in excess of 100%.To make this possible there has to be breasting out of vessels.For service activities this is inherently inefficient.The data on berth occupancies,combined with the interviews with users,suggest that the service sector of the harbor is underbuilt for today's market.Growth in the number of ship calls will only worsen the situation. 5.4 Recommendation for Expansion Authorization _Based on the above discussion and analysis,the following allowances for facility expansion can be justified.This assumes that Dutch Harbor intends to continue in its role as a regional port facility to efficiently serve its users. e Cargo.20%expansion for existing use.Further expansion as warranted by growth of ship calls. @ Fuel.No expansion for existing use.Further expansion as warranted by growth of ship calls. e@ Moorage.No expansion for small craft.Up to 100%expansion of spit dock or similar facility at a different location. e Processing.No expansion for existing use except for existing facility expansions to match berth capacity to plant capacity.Further expansion as warranted by growth of fishery. e@ Services.50%expansion for existing use.Further expansion as warranted by growth of ship calls. In the context of the above,a reasonable approach to harbor planning would be as shown in Table 3.The existing linear feet of berth by use category is shown along with the expansion. warranted by existing use.Where expansion is warranted to serve future growth,the expansion can be derived by multiplying the existing berth length by the expansion expected. page 30 annTable 3 Harbor Planning Guide Recommended Allowable Expansion (ft) Existing Berth Length Existing UseCategory(ft) Cargo 750"f°) Fuel 2,718 0 Moorage 2,650 9757 Processing 4,290 0° Services 1,108 550 Total 11,753 1,525 "Will expand to 1481 ft based on current Ballyhoo expansion ®Could be new multipurpose facility including fueling *Except for expansion of existing facilities to match plant capacity '§.5 Economic Limitations In the final analysis,facility expansion in Dutch Harbor will be driven by,and limited by,economic forces.Because land and facilities are very expensive,and facilities take time to plan and construct,it can be argued that the supply of facilities will tend to lag demand.The 1990-1991 "snapshot"of Dutch Harbor utilization described in this report would indicate that supply is lagging demand. Because of the economic limitations,it is reasonable to assume that the marketplace itself will tend to limit development very close to,or under,that which is required.For example,it isunlikelythatadockownerwouldallowafacilitytobesignificantlyunderutilizedinthishighcostandhighriskenvironment.By prevailing standards,the facilities at Dutch Harbor are experiencing very high occupancy rates and heavy utilization. For these reasons,a somewhat liberal approach to facility expansion is warranted if thecommunitywishestoproviderequiredservicestotheregionalfishingindustry.A decision tosignificantlylimitexpansionofexistingfacilities,or to block development of facilities to serve existing and forecast use,would be a policy decision to force users to find a new base of operations in the area.For these reasons,the "Recommended Allowable Expansion"figuresshowninTable3shouldbeconsideredaminimum.Further,they should be considered somewhat interchangeable between categories since many facilities actually fall in several categories and there will be a tendency for available berth space to be utilized for whatever needispresentinthemarketplace. page 31 |Hamat|6.0 Appendix:data base Figures 2.3-1 through 2.3-21 show daily vessel counts for each facility.These counts were obtained from the harbormaster's office records and formed the basis for calculations of facility occupancy.A computer record of this data base is on file with the City of Unalaska. page 32 xs2£00"----80Figure 2.3-1 Alyeska Seafoods Dock 18 T 16 7 14 4 12 4 10 +tlh fl64''Nh ul Ve i2 0+''''', 6/1/90 7/31/90 9/29/90 11/28/90 1/27/91 3/28/91 §/27/91 Date page A-1 -..roodesacog<-_=-s©Figure 2.3-2 American President Lines Dock ull ra rhmH&3cocs&7/31/90 9/29/90 11/28/90 1/27/91 3/28/91 §/27/91 Date page A-2 i3Figure 2.3-3 Ballyhoo Dock - 6/1/90 7/31/90 9/29/90 11/28/90 Date page A-3 1/27/91ivibiNT3/28/91 5/27/91 Pypeg<--=-oO-s0£00Figure 2.3-4 Delta Western Dock 9; 8 3 7+ 6 5 |5 4 44 3!| °||i i;Wy 0 +}''+t 6/1/90 7/31/90 9/29/90 11/28/90 1/27/91 3/28/91 §/27/91 Date page A-4 Figure 2.3-5 Delta Western Fuel Dock p 3)|a 74 i ¢] 5y J .|||Cc 3 4 oO ui 2)|n 14 t 0 '''+' 6/1/90 7/31/90 9/29/90 11/28/90 1/27/91 3/28/91 §/27/91 .Date page A-5 cSooo<-_=-Oo 3c020Q0ow Figure 2.3-6 Eastpoint Seafoods Dock J okty "=6/1/90 7/31/90 9/29/90 11/28/90 Date page A-6 1/27/91 3/28/91 §/27/91 Figure 2.3-7 Galaxy Dock D a i 34 | y |2 4 _-_- Cc ° u 14 tg .;I.,- 6/1/90 7/31/90 9/29/90 11/28/90 1/27/91 3/28/91 5/27/91 Date page A-7 meeeea3FoC5 3acog<=©OFigure 2.3-10 Magone Dock 16 ; 14 | |i 10 4 ;My6+ :| 23 0 :+:+'' -6/1/90 7/31/90 9/28/90 11/28/90 1/27/91 3/28/91 §/27/91 Date page A-10 3&S3Ga--3£00-<-=-sOoFigure 2.3-11 Marcenco (Pot)Dock 10 + 9 4 8 4 7 4 'iff5+ 44 3 4 2 4I]|WU ll | 0 ul __|._ 6/1/90 7/31/90 9/29/90 11/28/90 1/27/91 3/28/91 5/27/91 Date page A-11 |Figure 2.3-12 ”Offshore Systems,Inc.Docks raed--3cC00<--=o©nvOoa4---OAWNWAUANAWO-ae 7/31/90 9/29/90 11/28/90 1/27/91 3/28/91 5/27/913 } a) 0 oe5«-3con<--_--fOPacific Alaska Fuel Sales (Crowley)Dock Figure 2.3-13 8 'l 6 5 44 0 'uN ''''--', "6/1/90 7/31/90 9/29/90 11/28/90 1/27/91 3/28/91 Date page A-13 5/27/91 ° worg|hedBs|aotaeSSrmSSfcFafsCS<--=-»O-a£00Figure 2.3-18 Trident Dock 187 16 ||14| 12 ; 10 ; a ||6.|4 fH ur hy2 if 0 '¢''-. 6/1/90 7/31/90 9/29/90 11/28/90 1/27/91 3/28/91 §/27/91 Date page A-18 CONFESSiaP|}aca|be4tapice"LJensacono"--=-®OWy AY Figure 2.3-19 Unisea Dock hh |'i ul Mina 6/1/90 7/31/90 9/29/90 11/28/90 1/27/91 3/28/91 §/27/91 Date page A-19 e-3co0<-----8OGyFigure 2.3-20 Walashek Industries 1+||0 ,++''+ 6/1/90 7/31/90 9/29/90 11/28/90 1/27/91 3/28/91 5/27/91 Date page A-20 -1conta4WERITILTaf«aej=ercaeCEJ _-*3cON<-----9©ayoeoO&1HMNFigure 2.3-21 Westward Seafoods Dock Ee14 0 't ':+ 6/1/90 7/31/90 9/29/90 11/28/90 1/27/91 3/28/91 5/27/91 Date page A-21 et -_ wey 7 'KPMG Peat Marwick" 2495,Natomas Park Drive Telephone 916 925 6000 Teietax 916 641 3199 Sacramema,CA 95833'2936 April 30,1991 Ms.Polly Prchal City Manager City of Unalaska Post Office Box 89 Unalaska,Alaska 99685 Dear Ms.Prchal: KPMG Peat Marwick is pleased to provide this letter report to the City of Unalaska (City) describing our initial findings related to the economic feasibility of developing a geothermal electric power plant (plant)on Unalaska Island.As directed by the City,the assessment of economic feasibility is being conducted in two phases.Phase I,which culminates with this report,is a preliminary analysis of potential energy demand,commercial interest in the plant and the issues surrounding the economic feasibility of the geothermal project (project.)The objective of Phase I is to compile,analyze and present existing operational and economic information to assist the City in determining whether a detailed feasibility study should be conducted. Phase II,which will commence at the direction of the City,is a detailed economic feasibility study that will specifically evaluate the financial components of the project and its relative strength over ume.The Phase II study would also provide an analysis of the project's proposed ownership,operating structure and financing approach and describe the City's role and potential risks in the project.Should the City determine to proceed with this portion of the study,Phase II would provide information to support negotiations with the plant developer,major power customers,and the financial community. The remainder of this letter is divided into the following sections: Project Background And History Development of the Geothermal Project Demand For Geothermal Power Other Factors Affecting Future Demand For Energy Potential Development and Financing Structures Next Steps for the City Each section builds on the preceding one.-AleneCNG|N I Mell ¢. as]1 1 Mamner Fren 5°(b/h[>|prerory48d,awd>|/WISAVOMA KPMG-Peat Marwick Ms.Polly Prchal City of Unalaska April 30,1991 Page 2 PROJECT BACKGROUND AND HISTORY Geothermal power on Unalaska Island (Island)has been studied for more than 10 years. To place the feasibility study in the context of the larger evaluation of geothermal power on the Island,this section introduces:the City of Unalaska and its power needs;past studies on geothermal power;the proposed geothermal project;and the scope and approach of the Phase I study. The City Of Unalaska The City of Unalaska is located on Unalaska Island in the Aleutian Islands.Approximately 800 miles southwest of Anchorage,Alaska,the Island is located between the Bering Sea and the Pacific Ocean in close proximity to the major east-west shipping lanes connecting the United States and Japan.The industrial portion of the City is built around the sheltered,deep water port of Dutch Harbor. Due to its natural protection and geographic location,Unalaska has been a nautical and transportation center for over 250 years.Over the years,Unalaska has been involved in the Russian settlement of Alaska,the Klondike and Nome gold mushes,the sealing industry, the war in the Aleutians during World War II,the King Crab industry,oil exploration and, most recently,the bottom fishing industry. The Bering Sea is home to one of the world's richest fisheries,and the Island supports one of the largest fishing and fish processing industries in the world.The on-shore infrastructure of Unalaska encompasses state-of-the-art fish processing plants,and shipping, maintenance and repair capabilities that support a large and mobile fleet of fishing and processing vessels that operates in the surrounding waters.The primary catches for the area are Pollock,Cod and various species of crab.Salmon,halibut and other types of fish are also caught but make up a small portion of the industry.Pollock represents the largest percentage of the total fish catch. The Pollock industry has grown dramatically over the last ten years as the popularity of fish products made from processed Pollock has grown throughout the world.Pollock is processed into a paste called surimi which is sold to Japan,Korea,Norway,Canada and numerous other countries.The processing of Pollock requires a significant capital investment.Three major on-shore processing plants have been built in Unalaska within the last decade.In the last three years,over $225 million has been invested in processing plants and related businesses. KPMG)Peat Marwick Ms.Polly Prchal City of Unalaska Apmil 30,1991 Page 3 The Island's on-shore fish processing,transportation and service industries require a large amount of electrical energy that fluctuates significantly based on fishing seasons.Recently the City estimated the Island's power requirements from a low of approximately 7 megawatts of electricity when no fish processing is occurring,to a high of over 20 megawatts during the height of the fishing season. Electricity is currently generated using diesel engines at four large power plants and numerous smaller ones.The City electric utility maintains a power plant which provides power to approximately 3,000 residents and a number of commercial businesses.The three major fish processors:Alyeska Seafoods;UniSea;and Westward Seafoods;each generate their own power as do a number of smaller processors.The two container shipping companies on Unalaska,American President Lines and Sealand,also generate electricity. Past Efforts To Study Geothermal Power Due to the large number of independent diesel generators on the Island and the Island's vulnerability to the changing price of oil,the City and State have considered for a number of years how to provide a more stable source of energy to commercial and residential users.One alternative studied extensively by the State's Alaska Energy Authority © (Authority)is geothermal power. In 1981,the Alaska Legislature approved a $5 million appropriation to the Alaska Energy Authority (previously the Alaska Power Authority)for exploratory drilling and geothermal testing at Makushin Volcano,14 miles west of Unalaska.The testing was conducted from 1982 to 1985,and a test well on the eastern flank of the volcano located a large field of geothermal fluid.Based on the test well results,experts have estimated that the Makushin geothermal field could provide a stable source of energy to the Island for over 500 years. In the years 1986 to 1990,the Authority and City staff conducted various analyses to evaluate the general economics of generating geothermal electric power for the Island.The analysis included: m=Estimates by engineering firms of the cost of developing and operating a geothermal plant m Engineering forecasts of the demand for electricity on the Island weenyKPMG.Peat Marwick Ms.Polly Prehal City of Unalaska April 30,1991 Page 4 m Engineering estimates of the cost of interconnection of the Island's main power plants m Discussions with existing power plant engineers regarding their power needs m=Economic analysis and comparison of costs to diesel generation An important concept underlying the economic analysis is that geothermal plants provide a constant source of power and are most suitable for providing a continuous base load of power.Therefore,the base load which occurs evenly year-round in Unalaska is more critical to assessing the economics of geothermal power than the peak energy requirements associated with high fish processing activity. Overall,the previous studies indicated that a geothermal project in the '/to §megawatt range (or smaller)would likely not be cost effective in comparison to diesel power. However,at higher volumes,the cost of geothermal power more closely compared to the cost of diesel generation.As the Island's base load was thought to be less than 7 to 8 megawatts of continuous energy,the studies indicated that growth on the Island or a more cost-effective geothermal plant was necessary., The Proposed Geothermal Project In March 1990,Ormat Energy Systems,Inc.(OESI),a Delaware Corporation headquartered in Sparks,Nevada,provided a preliminary proposal to the City and the Authority to develop a geothermal plant on Mount Makushin.OESI has a technology developed by a related Israeli company that allows power to be generated from steam created through heat exchange with geothermal fluids.The system reinjects geothermal fluid into the ground providing a completely closed system.Based on their experience with other projects,OESI believed that their technology would support an economic project. OESI purchased the rights to the Makushin geothermal field from Battle Mountain Gold,an international mining company,who had previously secured them from the Aleut Corporation. OESI's original preliminary proposal to the City assumed that the plant would be built to provide 10 megawatts of continuous power,and the original kilowatt-hour cost estimates assumed that all power would be sold.The City and Authority were concerned that this assumption could not be supported by the Island's base load demand as identified in previous studies.Also,it was unclear whether the Island's major independent power Mn TarnKPMG-Peat Marwick Ms.Polly Prchal City of Unalaska April 30,1991 Page 5 generators would elect to switch to geothermal power administered by the City for their base power needs,and whether these companies would be willing to enter into long-term power purchase agreements. To assist in evaluating these key assumptions and other issues associated with the financial feasibility of the project,Peat Marwick was retained by the City for this study which was jointly funded by the City,the Authority and OESI. Scope And Approach Of The Phase I Study As described earlier,the objective of Phase I of the study was to review and analyze the issues surrounding the project's economics to assist the City in determining whether the effort and expense of a full feasibility study was warranted.To this end,Phase I had a number of specific goals: 1.To compile a concise understanding of the history and economic issues surrounding the geothermal project. To develop an estimate of current base load energy requirements on the Island based on interviews with operating and senior management of the major power producers. To determine commercial interest and key criteria for utilizing geothermal power based on meetings with senior management of major power producers. This included reviewing with management the potential for entering into long- term power purchase contracts. To review the project's proposal with OESI representatives in light of the Island's estimated base load. To compare the general cost of geothermal power,including City delivery costs,to estimated costs of diesel generation to determine if costs are similar enough to warrant further study. To review other issues related to project economics and risk including air quality permit requirements for diesel generators,the stability of the fishing industry,regulatory issues related to the Bering Sea fishery,and potential project financing structures. KPMG)Peat Marwick Ms.Polly Prchal City of Unalaska April 30,1991 Page 6 Phase I was conducted through a series of interviews performed primarily on-site in Unalaska,Anchorage,Juneau,and Seattle,as well as a review of available information and past studies.Among the parties interviewed were: City Officials,City Management and Public Works staff Corporate and operating representatives of Alyeska Seafoods,UniSea, Westward Seafoods and American Presidents Line Corporate management of OESI Members of the Alaska Energy Authority Staff members of the North Pacific Fishery Management Council State fisheries representatives | State Department of Environmental Conservation,Air Quality Management staff United States Environmental Protection Agency,Region 10 staff Investment bankers associated with financings performed by the Alaska Energy Authority. These interviews were augmented by a number of reports,data and other information that has been prepared over the last decade.The results of this review have been compiled into this report and summarize the key factors associated with economic feasibility of the project proposed by OESI. DEVELOPMENT OF THE GEOTHERMAL PROJECT The geothermal project under consideration includes the following major components: 1.Development of a number of production and reinjection wells on the eastern flank of Makushin near the site of the original test well eeKPMG-Peat Marwick Ms.Polly Prchal City of Unalaska April 30,1991 Page 7 2.Construction of a 10 megawatt geothermal plant at the top of the Makushin Valley which would receive geothermal fluid piped from the production wells; 3.Construction of transmission lines down the Makushin Valley to Unalaska Bay and under the bay to the City 4.Development of an access road to follow the transmission lines and a rail spike or dock on Unalaska Bay 5.Installation of the equipment necessary to interconnect the existing major power plants into an integrated grid administered by the City's electric utility OESI proposed to develop,own and operate the wells and plant,and piovide 10 megawatts of continuous power to the City delivered at the "bus,”or plant.The OESI proposal included components 1 and 2 above.The OESI proposal did not include the cost of the transmission lines,access road or the cost of interconnection of the existing power plants (components 3,4,and 5).The proposal also did not discuss who will be responsible for maintenance of the transmission lines and road after construction is complete. Based on review of the OESI proposal,the power plant would use either OESI's standard binary configuration relying on heat exchange or,alternatively,a flash technology.The proposal briefly stated that the flash technology may increase the reliability of the power plant.We understand that OESI's current project estimates are generic and they have stated that the technology used will not have a significant impact on project economics. OESI proposed to finance their portion of the project 80%with tax-exempt revenue bonds and 20%with internal equity.Under the proposal,the City would buy electricity from OESI at a cost equal to the plant operating costs,plus debt-service on the bonds,plus necessary well and equipment reserves,plus a negotiated profit.The City would then sell electricity to its existing customers and the major processors and shipping companies. Capital Cost Estimates During recent discussions with OESI,updated capital and operating costs were obtained which differ in some regards from the preliminary proposal presented to the City.OESI's current estimate of the total capital cost for the development of the wells,construction of the plant,development of necessary bond reserves and financing costs is $57 million. This assumes that the plant will be operational in 1993.Under the proposed 80%/20% eyKPMG:Peat Marwick Ms.Polly Prchal City of Unalaska April 30,1991 Page 8 debt/equity financing plan,the source of the $57 million would be $45,600,000 in tax- exempt debt and $11,400,000 in equity provided by OESI. We understand that the capital cost of the transmission lines,access road and rail spike/dock have been generally estimated for the Authority at approximately $8 to 10 million.However,more definitive engineering estimates will be needed in the future.It has been proposed that the State will pay for these costs under a one-time capital contribution.No estimates have been developed for the costs of interconnection of the grid network.As noted earlier,these costs are not included in OESI's $57 million estimate. Annual Operating and Debt Service Costs The annual cost of the project to the City would equal the purchase of power from OESI plus the cost of City administration of the network.For the purpose of this analysis,it is assumed that backup power,to be used if the geothermal plant fails,will be provided through a City administered grid which includes the four major existing power plants on the Island. In 1993,which is the first year of proposed operations,OESI estimated the total operating and debt service costs as shown in Table 1. ams wy KPMG.Peat Marwick Ms.Polly Prchal City of Unalaska April 30,1991 Page 9 Table 1 ESTIMATED ANNUAL COSTS TO OESI IN 1993 (In 000's) Operations and Maintenance (1) Debt Service (2); Well and Equipment Reserves Retum to OESI Total OESI Revenue Requirement - "@-"Based ona 7.5%interést rate and a ia ar term. Source:OESI Based on the OESI revenue requirement and the assumption that 75 million kilowatt-hours of power will be sold in 1993 from the 87 million kilowatt-hours available (86%),the total cost per kilowatt-hour sold would be 12.37 cents,excluding the cost of administration and delivery.Analysis of the 75 million kilowatt-hours sales estimate is provided in the next section. The City's estimated budget for the electric utility for next year,excluding diesel fuel purchases,is $1.6 million.This total includes labor and maintenance for the power plant, primary and secondary line repair and improvements,administration,insurance, depreciation,vehicles,interest and general expenses.Based on discussions with utility staff,these annual costs would not increase significantly if the geothermal plant and five to ten large industrial customers were added to the current system. eKPMG:Peat Marwick Ms.Polly Prchal City of Unalaska April 30,1991 Page 10 Currently,approximately 38%of the electric utility's revenues are derived from large industrial customers.Assuming that the budgeted operating costs of the City utility will not change with the addition of the geothermal plant,and assuming that the City's total revenue from industrial customers will not change significantly,the industrial revenue contribution equates to approximately one cent per industrial kilowatt-hour ({$1,600,000 x .38]/61,000,000).This analysis assumes that no additional capacity will have to be purchased by the City for backup power. Combining the OESI cost of power to the City's delivery cost results in a total of 13.37 cents per kilowatt-hour in 1993.Based on analysis of fixed and variable costs and assuming a five percent inflation rate,OESI expects the total cost per kilowatt-hour toincreaseapproximatelytwotothreepercentperyearoverthelifeoftheproject.This cost estimate does not include annual transmission costs or depreciation of the cost of system interconnections. DEMAND FOR GEOTHERMAL POWER To assess the demand for geothermal power,two factors must be considered:(1)the total base and peak load on the Island;and (2)the portion of that load that current power generators are willing to shift to the City and geothermal power. To evaluate these two factors,the Island's power requirements were reviewed based on discussions with operating and management representatives of the major power generators. These included:the City,Alyeska Seafoods,UniSea,Westward Seafoods and American Presidents Line. Base And Peak Load On The Island Each major power generator was asked for its estimate of power usage using the following definitions:base load -the minimum load used year-round;and peak load -the power required during high processing activity.All major power generators except Alyeska provided power usage estimates.Westward Seafood,which began operations within the last two months,provided engineering estimates. The results of our survey are shown in Table 2.Power usage for Alyeska and Sealand was estimated based on responses from similar operations. zee KPMG-Peat Marwick Ms.Polly Prchal City of Unalaska April 30,1991 Page 11 TABLE 2 ESTIMATED BASE AND PEAK LOAD REQUIREMENTS (In Continuous Megawatts) Base Load Peak Load City So _2.3 -2.5 2.8-4.1 Alyeska Seafood,Inc.=.8 -1.0 3.5 -4.6 UniSea oo 2.3 -2.5 4.5-5.4 -Westward Seafoods ,8 -1.0 4.0-5.0 -American Presidents Line Do,.1.0-2.5 "Other Commercial ProcessorsSource:City of Unalaska According to one of the major processors,assuming the current fishing seasons were to remain constant,the base load would occur for approximately 65 days a year.The low end of the peak load would occur approximately 150 days a year when processing was underway but Pollock was out of season.The high end of the peak would occur the other 150 days a year which would represent Pollock season. Geothermal Power Pricing While the total base and peak loads on the Island are significant,they are currently provided by a number of independent and relatively new power plants.To determine the relative interest in geothermal power,the corporate representatives of each of the major power generators were asked if they would be interested in entering into a long-term contract to purchase base load power if:(1)the price was competitive with diesel generation;and (2)the price was fixed over time with adjustments only for inflation. bo Late heetetiten|KPMG:Peat Marwick Ms.Polly Prehal City of Unalaska April 30,1991 Page 12 The City,UniSea,Westward Seafoods,and American President's Line all expressed interest in the project assuming a competitive cost of power.Alyeska Seafoods appeared less interested,however,they indicated that they would review the pricing arrangements at the appropriate time to determine whether they were cost beneficial.We were unable to talk with Sealand regarding their interest. Using the base load projections shown earlier in Table 2,a rough approximation of kilowatt-hour sales was calculated based on the potential interest in the project.Assuming _7 megawatts of continuous sales and estimating the sale of the remaining 3 megawatts of capacity during 50%of the year,a total of 75 million kilowatt-hours of sales is generated. This estimate was used by OESI in the cost of power calculation shown previously. Based on various discussions with processor representatives and City electric utility staff, the Island's cost of generating electricity with diesel fuel appears to range from 9 to 14 cents per kilowatt-hour in 1991 dollars.These estimates are highly,dependent on the price of fuel and how internal overhead and capital costs are accounted for.With the exception of the City,we did not have access to the information necessary to evaluate these cost estimates during the Phase I study. The cost estimates provided for diesel generation are generally similar to the cost of geothermal power,after the 1993 geothermal cost estimates are adjusted to 1991 dollars. Adjusting the estimated 1993 cost of geothermal power of 13.37 cents per Kilowatt-hour to 1991 dollars,based on 5%inflation per year,yields a 1991 cost of 12.13 cents.This estimate is within the range of the current processor cost estimates. OTHER FACTORS AFFECTING FUTURE DEMAND FOR ENERGY The preliminary review of the cost of diesel and geothermal power shows that costs are generally comparable based on the current power cost and demand structures.However,it is not clear that the operating assumptions underlying these estimates will remain constant over time.Several factors can potentially impact the cost and demand for power on the Island in the coming years including the: m Length of the Pollock fishing season =Specific allocation of fish processing between on-shore and offshore processors =Potential cost increases due to air quality management regulations tenetBits|KPMG.Peat Marwick Ms.Polly Prchal City of Unalaska April 30,1991 Page 13 Each of these is discussed below. Length of the Pollock Fishing Season The Bering Sea Pollock fishing fleet and fish processing industry currently has more capacity than is required to handle the 1.3 million metric ton quota established by the North Pacific Fishery Management Council (Council),The industry has seen tremendous capital investment in recent years as a predominantly foreign fleet was replaced by a domestic fleet in compliance with the Magnuson Fishery Conservation and Management Act of 1977.Additionally,significant capital has been invested in shore-based processing plants in Unalaska to take advantage of the growing market for surimi throughout the world. This increase in catch and processing capacity created a high demand for the Pollock resource.By regulation,the Pollock season is ended when the quota is reached. Therefore,each boat is motivated to catch as many fish as possible as quickly as possible. Over the last three years,this increase in competition has required the Pollock season to be shortened from twelve months to an estimated five months for the current year. Many industry representatives believe that this type of fishing activity cannot be sustained over a long period of time.First,the overcapitalization will likely create winners and losers and many operations will be forced out of business.Second,many believe that this type of fishing is not beneficial to the Pollock stock in the Bering Sea as too many of the younger fish are taken by volume-oriented vessels.If the season were shortened to a greater degree or if the overcapitalization were to affect shore-based processors,the impact on the demand for base power on the Island may be affected over time.These specific issues warrant detailed review in any additional study of project feasibility. On-shore/Off-shore Allocation One alternative for managing the Bering Sea Pollock fishery that is under serious consideration by the Council is specific allocation of fish processing to on-shore and off- shore processors.One popular proposal is to split the total allowable catch of Pollock 50% to on-shore processors,and 50%to off-shore processors.As on-shore processors currently process substantially less than 50%of the Pollock catch,a large increase in shore-based processing would likely occur.Importantly,Westward Seafoods recently began operations expanding the area's on-shore Pollock processing capability by over 25%. KPMG.Peat Marwick Ms.Polly Prchal City of Unalaska April 30,1991 Page 14 It is not clear what the Council's ultimate recommendations will be,however,they will certainly impact the industry at Unalaska to some degree.The Council is scheduled to release their recommendations soon and these findings should be further evaluated in any future analysis of project feasibility. Air Quality Permits The major processors are currently working with the Department of Environmental Conservation to evaluate the need for special Prevention of Significant Deterioration (PSD) Permits.Any air quality emitter with emissions of more than 250 tons of certain criteria pollutants (nitrous-oxides,oxides of sulfur etc.)must file this permit.The major plants,if Tun at capacity,have the capability to emit 10 times the permit level. The PSD permit is not a limit on air emissions,rather it is a threshold over which an emitter must take certain actions.These include:, =Development of detailed atmospheric impact data based on sophisticated models =Implementation of a cost effective program for controlling emissions m Filing and reportingon permit conditions Processors will incur costs to administer the permit process,develop necessary data and implement emission control technology.However,based on discussions with the processors,the Department of Environmental Conservation and the EPA,it appears that the permits will be granted in the near term and processor operations will not be significantly impacted or made substantially more costly. A second air quality issue relates to the total degradation of air quality in the area.Federal air quality guidelines specify how much degradation can occur in pristine areas like Unalaska.The amount of degradation is called an increment and all pollution sources contribute to the increment.If this increment were to be reached,significant changes would be required of industry.However,many local residents believe that the wind is so strong in the area that the increment will not be reached under current industrial loads. Bp ap haasjonKPMG:Peat Marwick Ms.Polly Prchal City of Unalaska April 30,1991 Page 15 POTENTIAL DEVELOPMENT AND FINANCING STRUCTURES To identify the role of the City in the proposed development and financing of the geothermal plant,this section describes potential operating and financing structures for the project.These structures were jointly identified by the Authority,the Authority's Investment Banker and OESI. Operating Structure The proposed operating structure includes the following components: OESI builds,owns and operates the geothermal plant and controls the geothermal source A grid interconnecting all major power generators and other commercial users is developed on the Island The City signs a 20-year agreement to purchase a specified amount of power from OESI.Power is purchased at a price equal to the total OESI plant costs (operations,debt service,profit,and reserves)divided by the specified amount of power which must be purchased (for example 75 million kilowatt-hours per year).The contract is a take and pay contract and includes OESI guarantees to provide power or pay Processors and shipping companies sign 20-year agreements to purchase fixed amounts of base load power and certain amounts of peaking power from the City at specified prices.The price is established by the City to equal the cost of purchasing power from OESI plus City administration.Major processors continue to maintain their power plants to provide for peak power needs In conjunction with the major processors,the City develops and maintains a system to provide backup and peaking power to meet the needs of other Island users The City's electric utility administers the grid and all power sales . KPMG Peat Marwick Ms.Polly Prchal City of Unalaska April 30,1991 Page 16 Perhaps the single largest assumption in the operating structure is that the project economics will be attractive enough to motivate the major processors and shipping companies to enter into 20-year power purchase contracts.These contracts are critical to support the underlying financing and reduce the risk to the City.Should the processors be unwilling to enter into long-term contracts,the project,as envisioned,may not be possible. Financing Structure The financing structure as envisioned by the Authority would include the following: m The $57 million capital cost associated with well and plant development would be financed 80%by tax-exempt revenue bonds issued by the Authority and 20% by OESI equity m The revenue bonds would be secured by:' Project revenues supported by the City's contractTheunderlyingcontractsoftheprocessorsandshipping companies The moral obligation of the State of Alaska , Possibly,credit insurance provided by a bank =The bonds would require one year of debt service to be placed in reserve =Debt service would be paid before any profits to OESI =The cost of transmission lines,road,dock and major interconnections within the grid would be paid for by the State by special appropriation In the event that the City fails to fulfill its power purchase obligation to the extent that debt service cannot be paid in a particular year,the source of repayment would include: m=The debt service reserve fund m The State of Alaska by special appropriation approved by the legislature =Potentially,credit insurance This level of security should support a marketable financing. -rasRKPMG)Peat Marwick Ms.Polly Prchal City of Unalaska April 30,1991 Page 17 NEXT STEPS FOR THE CITY In summary,it appears that there is a large amount of support and interest for the geothermal project in Unalaska.This interest combined with the generally comparable costs of geothermal energy and diesel generation suggest that a more detailed study of the project is warranted.This study,which would become Phase II of the economic feasibility study,would encompass: Detailed power load forecasts of base and peak loads for the Island over time. We would propose that this task be performed by a well-recognized engineer and would encompass the potential changes in the fishing industry and the on- shore/off-shore processing regulations Finalization by OESI of technology assumptions,capital and operating costs Cost of service analysis of the City's administration of the new source and customer base including specific allocation of costs to industrial and residential users; Detailed evaluation of the cost of diesel power generation for each major power user and comparison of costs to geothermal energy costs Determination of the potential demand for the project based on detailed discussions and analysis with major users and the City Documentation of the project's specific operating and financing structures and determination of debt service costs,coverage requirements and reserve requirements Assessment of the most sensitive assumptions and analysis of changes in particularly sensitive assumptions Examination of all critical assumptions for the purpose of providing an opinion on the forecasts in the feasibility study Once complete,the feasibility study will provide a significant amount of information that can be used by the City to determine whether to proceed with development of the project and if so,to begin negotiations with OESI,processors and financing agencies. KPMG.Peat Marwick Ms.Polly Prchal City of Unalaska April 30,1991 Page 18 zs 2 32 8 8 We are very pleased to have this opportunity to assist the City in this important project. Should you determine to proceed with the project,we look forward to continuing our work on your behalf. Very truly yours, KENPotMorniick- By Ted.Comey FROM170LentPetre AEA T-0 LX 190367IONE4 OAL)<Vv A SEP 23 1991 ALASKA ENERGY AUTHORITYArkAK_IISLI-OPCG__ RECEIVED City of UnalaskaPouch89 Unalaska,AK 99685 (907)581-1260 _-PRIORITY:|)URLENT LD SOON AS POSSIBLE L NO REPLY NEEDED (subject 08 GOP ALLIES pate F//819/>Enatosed |WY,Dé Nteconrdea)AE CEM ACOA) Signed a a Y 'C RERISY J) Date // a Signed J INSTRUCTIONS TO SENDER 1.KEEP YELLOW COPY 2.SEND WHITE AND PINK COPIES WITH CARBON INTACT Reorder Iroquote®Form #426510 ©1087 roquets nduewies Corp.,2220 W.56th St,Chicago,IL 60636-1008 INSTRUCTIONS TO RECEIVER 1.WRITE REPLY 2.DETACH STUB,KEEP PINK COPY,RETURN WHITE COPY TO SENDER. ¥Lone vieon |SO FROM /- 0 het Petre _ey.Gity of Unalaska ey ,AEA - Unataska,AK SSSEoLx/IOL67 Cae 4661 9-ORe.cdsOE...TULH é Lt8e bgtdeas GSLI OP CF cee.WIES SAE in )-PRIORITY:.:40 <7 C)SOON AS POSSIBLE C)NO REPLY NEEDED [suviect , ,Date F//S 1 7/||Eni closed AW DOCU DAC AY Lhe Oe Ne ll,AEE if?We ten Lt ater)»fg | a \.,ew ;Ss,oe |sina (VL,7 Letv€r., Cc |RERDYoeee = 2 Date // ='\- L Signed -a.-J INSTRUCTIONS TO SENDER 1.KEEP YELLOW COPY 2.SEND WHITE AND PINK COPIES WITH CARSON INTACT Reorder Iroquote®Form #426510 INSTRUCTIONS TO RECEIVER 1.WRITE REPLY 2.DETACH STUB,KEEP PINK COPY,RETURN WHITE COPY TO SENDER.©108F ipequeis industries Corp.,2220 W.56th SL,Chicago,iL 60636-1008 PERCENTAGEWATER RECORDS City of Unalaska iLIiat y js Se CE GD SN SE GD SEN GN PORN GN COGS GUN GOOD ODUNU COGN GOED SOGGY ENING GD SOGUUN GOOD CON)HONUENE NSIS SOAS SN SN KN SN SNOW NOES AD SS SON FOROS NEN SGU $5 79 11 1 3 5 79 113 5 «7 «9 21 3 S$7 APRIL '88 -JULY '91 _a_WATER LOSS (%). ets era 1 MILLIONGALLONS200 150 100 50 WATER RECORDS City of Unalaska Js a rs, BRS Ge Og UNOS GEES ED ROU SUE CET VORSONY SUS GONE GOREN QUEEN CRSGD SSD NN FOGG GONNNNE CONUS CSOD QENTEN TEEN CS MIG SVU SOON COURS GN GIO GES QUE DU UN IU UD LI OSU OO 4 6 8 10 12 2 4 6 8 10 12 2 4 6 8 10 12 2 4 6 5790 13579 113 5 «7 9 1113 5 «7APRIL'88 -JULY 91 ee BA AG AN _=_WATER LOSS (MG) MILLIONGALLONS160 140 120 100 WATER RECORDS City of Unalaska |lia\r | aWid |nel ee . |ERS SR US SRE COURS CO NUN UDC EEN ES GODUD SUN CEUUEEN GUUS ORIEN CONEEOD SN SED)NOUUUEN CEN SEEN CONSCIOUS CONN CONN CS SUN CN QUEEN CEOS CUSED KHON ERE CUES KS GOS LUD CO DOO 4 6 8 10 12 2 4 6 8 10 12 2 4 6 8 10 12 2 4 6 5 7 9 11 1 3 579 111357911APRIL'88 -JULY '91 _g_WATER SOLD (MG) 1 3 5 7 Monthly Power Generation Ne)aKWHGENERATED(INMILLIONS)N-wmcs | v je A US OS SS NN NS ANS SOUS GES SN GEN EN PN SOR OOS ON SS OG AS SS GOS GE COURS A SN SN OD ON SS NO SO ES GA SO LSS OOS 789101112123 4567891011121234567 8 910111212345 67 891011121 2 JULY '87 -FEBRUARY '91 -g-KWH GENERATED KW3500 3000 2500 | 2000 1500 1000 POWER GENERATION May 1991 I l i !|ween !i !al L it I I |i !!J !!i !! 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 -g-LOW(KW)PEAK (KW) KWPOWER GENERATION JUNE 1991 2800 R 2200te 2000 1800 aepe Ae 1400 1200 |i !if I |i I I {i i {{i I sn a !i t it |I !\i i i I 123 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 _g-LOW(KW) @ PEAK (KW) KW2800 2600 2400 2200 2000 1800 1600 1400 1200 POWER GENERATION JULY 1991 PN"\Nf= EVsDPA] bemmmnen I i t i |i !i I i i i !!!I I |i i I I it i i i \I ! 123 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 _g-LOW(KW) @ PEAK(KW) NOV 14 791 @4!41PM CITY OF UNALASKA P.1/4 ww "ey aa ouCITYDFUNALASKA-%P.O.BOX 89 c UNALASKA,ALASKA 99685 ra(907)581-1281 5 Le iPaene;QO "R°°UNALASKA,AU ASKS,DEPARTMENT OF PUBLIC WORKS FAX #(907)581-2187 (907)581-1260 DATE:n/a ." crow: Kibe.Lith guisisle,,8 ; PAGES:(Ineluding Transmission Form)SpramaoaosI7matsishas-SPfPOMUrszsa+307b/g.P.O.BOX 89 UNALASKA,ALASKA 99685 NOV 14 '91 4:42PM CITY oF UNALASKA P.274ELECTRICALESTIMATE ATA Le WORK ORDER NO CITY OF UNALASKA LOC TION 4199'S Sud,Ye Aéveske Se2 Sods, PRIMARY LINE LINE VOLTAGE NO#OF PHASES |TOTAL [ENGIN ?F760 V.3 hase POEMSSEeeePRIMARYCABLEast]2 3Z 3300 |e660 BaeNgg ysNEUTRALGABLERZL3300.\33200 Li 38hCONDUITee/BOO |3300 Le BIESethMIELECakle.2%Lg wibel JL00 1206 EP tad ae COST FOR PRIMARY LINE SbF Se PRIMARY MATERIALS [ca]DESCRIPTION OR SIZE orf CO SantTRANSFORMERSf2000AVATeds50aMekBaemncceaeXEORMPADSBAGYLHbeJee XFORM_BUSHING aJONGTIONTBOX3SeoZeerCheas.ZLB ES J.BOX =:, _-mmar ee4-P.JUNGTION ee ee ELBOW,: DEAD.END.RECPT ae'GROUNDING:eaeaus |ay Mist,*Cawdedleae rm SZGOSTFORPRIMARYMATERIALS[casaEQUIPMENT|-ot'rot |sot|COST LABOR Ta OSTCASE60E$40.00 |sg |3599."]senceee$36.00 |22 794.°°|SuPeRrsonURETRUCK$50.00 |94 |4799."|Ut rom .LINEMAN ; Bea7 Rewlat |(po 2 16 |(6 OC.""|ET wore Coy eT, _.Wb Diver Ao"|Be see COST FOR EQUIPMENT]/9,6/2.°°COST FOR LABOR mack et fy fee |TOTAL PRIMARY LINE SAND WO|3 |75Ge.°°PRIMARY MATERIALS GRAVEL |95°38%|597,50 EQUIPMENT OTHER ;LABOR COST FOR BACK G05.BACK FILL MATERIALS NOTES DISEAENTS OTHER COST vom |TOTAL ESTIMATE COST ----[ae%._ LW LOCATION Zrgaus Sub. 14 Si 4:42PM CITY OF UNALASKA ELECTRICAL ESTIMATE P1374 WORK ORDER NO CITY OF UNALASKA Ze fuses.See seeks ctnees ee ee LINE VOLTAGE NO#OF PHASES |TOTAL LENGT-__ ?OV t i Phas [Foie tf |-_--+SIZE oe LEWaTH Tora come |CCSTPRIMARYCABLE3S4Y734op0\(220 aNEUTRALCABLE2%{AMO 4050 ={5bCONDUIT5"L AOCO |YOO aycad OA:-- + XO ,COST FOR PRIMARY LINE E4556 PRIMARY MATERIALS |.2¢,|DESCRIPTION OR SIZE fey COS!SFORMERS 4/|5000 AVA TheusSoeues 94,00"|8SaDSSHSVLHIb0Y| SHING LeIN"|BOX 6 |Selb Gus.i as Fas SEYE.BOO |SEE4-P:JUNCTION te,ELBOW ofOEAD.END RECPT ieGROUNDING"mus faMISt.&Gonues>;l@As.Sea POO OMS COST FOR PRIMARY MATERIALS $7/i (05." EQUIPMENT!-] opc°S wat COST LABOR rote |rae COSTCase,590 $40.00 |72 |yoga ""]been $35.00 |/6 1 355iha$36.00 |29 |/009.*°|sree $35.00 |25 5 75.UNE TRUCK $50.00 |72 |3600."|"rm $40.00 |/9co |78o2: .LOUK $40.00 |390 Ue. |ve own $33.00 [yo Pasi COST FOR EQUIPMENT]7089.'COST FOR LABOR gare BACK FL TIAL cost |TOTAL PRIMARY LINE aoe SAND ($00 |3°"|Fog."PRIMARY MATERIALS aGRAVEL3023.9?|woes*EQUIPMENT ef," OTHER LABOR fai,| CQGST FOR BACK 97 OS..*BACK FILL MATERIALS res "NOTES "ORS CCOUNTS _ |TOTAL ESTIMATE COST ---VOEWEE TE 3 Nov 4 'S1 84:43PM CITY oF UNALASKA ELECTRICAL ESTIMATE DATA Aya LU LOCA pa C WORK ORDER N®O ITY OF UNALASKA lz besTir-gk./Segioads. P.474 + TION Cp Tasie Bays Sah LINE VOLTAGE NO#OF PHASES |TOTAL LENGT=PRIMARY LINE _ i 500 V _hes -t : SIZE oro of UM tsa Foor Cost PRIMARY CABLE 35Av >3 $002 |(oem |ee)Be 708NEUTRALGABLEoyL£LO0 CELLO fe 8 FRCONDUIT5f£000 |£300 LP 8 Ole” )COST FOR PRIMARY LINE FEED PRIMARY MATERIALS |,2v4,1 DESCRIPTION OR SIZE sf:fostTRANSFORMERSATa!AVA PheusSohuch.VkMELT Del eee”XEORM PADS BYE /Year a FORM BUSHING - ONTBOX 7 SeeZiew Cas 2bc."|88EEO.”| See perheeNGTIONtl AD.END.RECPT ee,GROUNDING mamas iMisa.©Cowneerars er OOS COST FOR PRIMARY MATERIALS [773,722]EQUIPMENT -]pSSun |fs |COST LABOR a COSTfienee$40.00 |/60 |G4g0.°"|Seer $35.00 |/e 5 oeae$36.00 |47 |/yyo."|Sn $35.00 |250 375.UNE TRUCK $50.00 |/eov.|7000."|we rom $40.00 |250 2 (ance: 2 Moon $40.00 |502 (han.$33.00 Sk ee Cc FOR EQUIPMENT COST FOR LABOR mace fat TOTAL PRIMARY LINE SAND 2790 |e PRIMARY MATERIALS GRAVEL 3S ve EQUIPMENT OTHER LABOR COST FOR BACK S4 F213 BACK FILL MATERIALS NOTES DISCCOUMTS OTHER COST ve}TOTAL ESTIMATE COST --"4275..=: