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Makushin Geothermal Project Revisited 1996
"=F:A a aw sfu aff eff &IN=I a r mw. F : z - ' F t alia ie al'TN se ceeneeeeadbeeoPhewseeayaa th: MAKUSHIN GEOTHERMAL PROJECT REVISITED MARCH 1996 MAKUSHIN GEOTHERMAL PROJECT REVISITED March 1996 Summary ANEX,an Ansaldo /Exergy joint venture,has recently acquired the exclusive rights to develop the Makushin geothermal project.An ANEX-led consortium has reviewed the project's specifications,objectives and information provided by the previous developer/contractor.A new project plan has been developed,including the implementation of the Kalina Cycle technology,that summarizes the installation of a 14 MW,net,plant and transmission to the load center in Dutch Harbor,Unalaska. Based on current information ANEX believes that the total price to complete the project,including the confirmation and development of the resource,will be $90.1 million for completion in 1999.The split between the plant and resource is $74.8 M and $15.3 M,respectively.In addition,the new plan shows a significant reductioninoperatingexpenses.It is anticipated that this would have significant livenon ne size'Lo to,of the Rate Stabilization Fund.oe NOM4Uva neorntNOGUWS.\OS oidBackgroundLLradio Attempts to develop the Makushin geothermal project have been ongoing since the early eighties.Plans have been proposed that consist of constructing a binary power plant,in the 12-20 MW range,on the South Plateau of the Upper Makushin Valley and transmission routing along the Makushin Valley to Broad Bay then under water to a substation in Dutch Harbor,Unalaska. In early 1995 the previous developer submitted a plan that required approximately $35M to $40M more than available from AIDA.These additional funds would have had to come from other State and/or Federal energy-related agencies.This was not possible,primarily due to the downsizing of Government budgets at all levels.Shortly thereafter the land owner chose not to renew its lease with the developer who then discontinued work on the project. In October,1995 principals of ANEX.were introduced to the Makushin KGRA land owner,Kiiguusi Suuluta Land Co.(KSLC).It was ANEX'belief that implementation of the Kalina technology in a project carried out by a highly qualified team would result in substantial savings.On November 1,1995 ANEX secured an exclusive lease option from KSLC for use of the Makushin resource.Since then the option agreement has been updated to include a schedule of the royalty payments based on plant gross revenue.After securing its exclusive position in the project,the ANEX-led consortium began its technical due diligence process and cost estimation.A meeting was held in November in Anchorage to introduce the new consortium to AIDA. Project Team ANEX has assembled a team with outstanding credentials in all phases of geothermal project development,from reservoir engineering through plant construction.A summary of the consortium members follows: ANEX:A joint venture between Ansaldo Energia and Exergy Inc.,formed for the specific purpose of developing and constructing Kalina-design geothermal power plants,worldwide. Ansaldo Energia:Ansaldo is a world class,multi billion dollar company directly involved in the development and construction of geothermal power plants,and the supplier of turbines,generators and related machinery.They have been supplying equipment to the geothermal industry for seventy years, since the first geothermal plant was built in the Tuscany region of Italy. Exergy Inc:Exergy is a technology company that has developed and is now commercializing the Kalina Cycle for application to all forms of thermal power generation,including coal,gas,oil,geothermal,etc.It provides significant frthermodynamicandeconomicimprovementovertheconventionalRankine|steam cycle.The binary plant at Makushin will be Kalina Cycle System 21 wey whose performance is estimated to be 30%greater than that proposed by the previous developer. Walsh Construction Co:Walsh is part of the Guy F.Atkinson group.a company very highly regarded and experienced in major infrastructure projects. Walsh,itself is very active in power projects,including geothermal.They are keenly aware of the Alaska's unique requirements by way of the major role they played in the construction of power projects at Prudhoe Bay.Walsh will provide EPC services for the installation of the Makushin power plant, access road and transmission line,as well as for all the associated infrastructure. Power Engineers Inc:Power will provide all engineering services for the project.Their demonstrated skills and experience in binary geothermal design and specialty in transmission projects make them uniquely qualified for this project.Power has been involved in the design of the transmission line the inception of the project,and has worked with Exergy and Walsh in the design of a Kalina binary plant in Steamboat,Nevada. GeothermEx,Inc:GeothermEx is the premier reservoir engineering company,worldwide.They know more about the Makushin resource than any other geotechnical/reservoir organization,and will be responsible for all aspects of its development.Like Power Engineers,GeothermEx has been involved in this project since its beginning. Project Plan The overall strategy of the project is similar to the one described by the previous developer in April,1995 (1).Only the power plant's thermal cycle design stands out as a major difference in the execution of the project.ANEX plans to use the Kalina Cycle technology instead of the hydrocarbon Rankine Cycle as way to improve performance and economics. The power plant will be located on the Upper Plateau at an elevation of approximately 1200 feet.Its 14MW net output will be transmitted via a 6G9KV insulated cable along a "pioneer”road to be installed along the Makushin Valley.At Broad Bay the cable will be laid on the sea floor and routed directly to the City of Unalaska.It will be connected to a substation in Dutch Harbor. Walsh Construction Company's budgetary EPC turnkey proposal,schedule and cost detail are provided in Appendix 1.The total price is $74,836,000.This figure is based on certain assumptions pertaining to the soil stability along the Makushin Valley and slopes leading to the Upper Plateau.A geotechnical survey at the site will be fcompletedintheSpringof1996toconfirmtheseassumptions.Ta Vu veo:\we,: The development of the resource consists of three production and two injection wells. While ANEX believes that the power plant will require less than the estimated 1,500,000 Ib/h of brine from one well only,the plan includes three.One will be installed as a spare and the other 'extra'one is budgeted as a hedge against less than anticipated brine flow.The plan calls for the first well to be installed prior to full project mobilization to confirm the viability of the reservoir.As such it will precede the installation of the construction road and,consequently,will be installed via helicopter support. The Field Development Plan is provided in Appendix 2.GeothermEx estimates that the cost to complete this activity will range between $10,280,000 and $15,270,000. The latter price presumes the least favorable outcome during resource development and was used in the calculation of the total project price.Similarly,GeothermEx estimated the cost of the first production well.The estimated cost varies between Ay)$3,440,000 and $5,030,000 depending on the well depth,extent of delays and problems encountered,if any.In addition to the wellfield development costs thereisanother$575,000 shown for long term testing and modelliing.ANEX views this as an"option to be discussed at a later time. 1.Makushin Geothermal Company,Makushin Geothermal Project,Project Description,April,1995 F]ww Ve Operation and Maintenance Cost POQUH9 ]A O&M costs for the plant and resource have been recalculated from ee thestimates.The breakdown is as follows: -plant fixed O&M labor $921,000 Ry a Mowoonety-subcontracts,material and above ground "olwellfieldmaint.$952,000 e.-spares $250,000 feod C -below ground wellfield maint.$250,000 -well make over (new well every five years)$450,000 a (238 (2 Kod i Total $2,823,000 The power plant fixed and variable O&M costs are shown in Appendix 3.They are based on the previous contractor's schedule and input from operators of two binary plants currentlyin operation.The wellfield weis an "Teen provided byGeothermExinAppendix2.The Kalina Cycle emi Th i isistinguished from the conventional Rankine Cycle by the use of an(ammonia-water mixture)instead of hydrocarbons,e.g.,pentane,butane,etc.,as the plant's working fluid.The use of an aqua ammonia mixture allows the main heat exchangers in the plant,i.e.,the aqua ammonia vaporizers,to operate at a closer temperature to the brine than in the hydrocarbon plants.This makes the vaporization process more efficient.Equally as important,the Kalina plant is designed with a higher Prlevelofheatreation,meaning that_the heat within the plant is used more :effecti The net result of these two features provides the Kalina plant with a --=. substantial improvement in output per increment of brine delivered from the reservoir. A schematic of the design planned for Makushin is shown in Figure 1.The heat exchanger duty curves are presented in Figures 2.1 -2.6.The plant's heat and mass balance is listed in Table 1. It is significant to note that the 14MW net output of the Kalina plant requires 962,000 lb/hr of brine while the previous contractor,using conventional Rankine cycle technology,required 1,560,000 lb/hr of brine at the same wellhead and ambient conditions.The improvement is 38percent.This has the effect of reducing overallcapacitycostandwellfielddevelopmentcost.It also mitigates the risk of producing wells at flowrates less than originally predicted. The Kalina Cycle,while being new and innovative,is a process technology and,as such,does not require any new equipment or materials.Consequently,availability and reliability remain at least as high as mature binary technology currently in operation. Referring to Figure 1;heat contained in the geo fluid (brine)is used to vaporize an ammonia-water mixture containing 93%ammonia.The maximum temperature and pressure are within 290F and 400 psig,respectively.A fraction of the geo fluid reaching the well head is in vapor (steam)form.After seperating it from the liquid it is sent directly to a steam turbine where approximately one third of the plant's output is generated.The other two thirds comes from the ammonia-water vapor turbine. The plant's turbines are conventional multi-stage axial units used throughout the power industry.The ammonia-water vapor turbine and the steam turbine are virtually identical in design except for the mechanical seal specified for the ammonia unit.All heat exchangers are plain carbon steel in a shell &tube configuration.The recuperative units,downstream of the ammonia-water vapor turbine,are vertical in design to take advantage of the condensing behavior of the aqueous ammonia mixture. Steam Steam /Turbines Brine in * _30 41 43 42 |a THES 68 ff Brine out 46 67 47 44Evaporators-a-F |HE-4 66 =Qe 36 HE-3 Recuperators &Y Kalina Cycle CONCEPTUAL FLOW DIAGRAM SYSTEM 21 KCS21 i] 60 38 HE-2 21.«293 «$59 58%49 LEGEND -HE-6 Working solution HE-1}Ff &ES | Steam F : TER Brine x seooosecocexe Cooling water Py Os 3 Condensers 314235 50 Cooling Water/air FIGURE 1 onForopkKOUROo4ny8388FIGURE 2.1 KCS13V Heat Exchanger HE-1 pus cencccccc cud 29-14 77 723-59 Pe CSRS OC OO ame e em EE TER TARE HERR EOE EEOC ETE TE RENO TOOT E REE HTEEEE ESD E SOO OR ESO ESOS DEO E STEERED ESSE EES EDOM ODEO ESO DE EEDE REDE EER OED mm eenennerestueExergySource:1341.25 kv eff .89 % Load:12.0009 WW: Lost:1329.25 ki oHFEotMprHOVAONhy140 120 100 FIGURE 2.2 VyKCS13V Heat Exchanger HE-2 posseespeceseseseseaideeneeees Load:1163.74 KWtrdeceee Sersesrevesseedensscasarenenceenseesesensestonss re seeee 4 -_38-29 21-60 ::: Exergy Source:1594.61 kv eff 72.98 & :3 4 : .Py J on :430.875 kw :::ot 3 .::os :: ::?toe ::Wim osaanccessesatsivcscescece dececescseeesenwees need "::s ': .1 weerrerese Reem ecccceseee P «Ser eR IeeeeEePerrererrererrre ee Tere erate tterer = :::: ban eeccccaceneccncceescereselsnnenssesseesieestsey Mt rn sbescecenseeesel seneeesenees Alanon een enn cece soteeeeeeseeslaneeceneeenscesssetesssassupecees 4 Loe ccc e ce ween eect cee c cates Mae eeaerene Peper eeSeeTE ST as Cert Teresi yes Otee rere ree eee te Ter eere rere ree Ter Teeeerers est ereee creer etree eer eer eee eter errr reer rrr rer ery Pa cenenacccnsecnenancceseeMersessecsseresalencenesseesseteeraseneensennenanteessseeesseesteaesesssecessseeneresennecncenad ::°:::*.. ° .. ::of ::: :to ::: :te ::: :2.:::pee a ecceeevsacagesssescccesus eee ee EP ee Ieee CE eeTe ETO T eee Te trere ere rere rerererr errr eter rere rrr err rer ree eer rr Teer Ere er eee ree vere rir ie rir irersirr :yan S . ioe [am ::: 7 ::Lac eceesscceestesaseccce OO ance nccnnucnn tte cecencssssenebeneneeneeeeeed ceaeeeeee sees Se eeeeeeseeeseuneseeessseeesepeneeeeeetseeeceseseneeescsereceseal:::: :::: ed ::: ats ...eo Pen cacccceccaectewensceesenscasenenceeeenenesseenresnsseescones asenaesefeeasecenwecee Pocecccccncwendecsccacassnsccteecnes 4 0”::: y :: L t L L i.i L i lL.1 oHCoaMmHodvsaoasny170 BNfo)thfo)140 130 FIGURE 2.3 KCS13V Heat Exchanger HE-3 Exergy Source: Load: Lost: --36-38 77 60-66 1066.62 KN eff 86.73 % 925.038 ky:aL sya jeg ae 150 140 130 FIGURE 2.4 ae --_ KCS13V Heat Exchanger HE-4 -_8-44 __=77 66-68t H ! Exergy Source:6042.29 KY eff 82.26 %ee J"road:4970.53 Ki Lost:1071.76 kw Le eeecsessssesecseenessecsnecssecsscees Sssoseesssscesvecsas sessensaesecaceuetecesrgpetersessessecsecessensaecnedeaseeneccaseesse 2 a Ls cceccscesccesseecescsercscceceepreeeh To cossssnsnssessnceecsnscesnecsneefuescsaseceessssesesaneeesecssesssssnedsccessnsaneesee whowWdHRwwvwSBwes8ny300 100 FIGURE 2.5 KCS13V Heat Exchanger HE-5 --51-54 _=7 *68-30 Exergy Source:10845.2 kW eff 85.53 % Load:9275.42 kW :1569.8 kW! L scssescecsceceefecsesssacsssesesscssarecsucssecssssssctssessssesesesstessssesesseseeseveessp@%cssssversssstsresesse,csssesssedssssessssuesssves 2 SEPP TT CRETE TT ET TOPE TT TEEPE T TEST TTTe TTT Tere Tree Veeeseescecseeeeeenseoeesrer ges PPP ERTL ETT TTELULIT ETT LTLEPTTTTTTIPTT TTT Tre Ti TiT Trier eres a i i 0 50 100 Heat Duty MBtu/hr wheowHRwoveBowsny140 120 100 FIGURE 2.6 KCS13V Heat Exchanger HE-6 t T T T qT --48-49 7 23-58 Exergy Source:47.6464 eff 43.89 %:::::: :'Load:20.9132 ky::::: :: ee eeeSeevevccccee'Se ween Lesescccanes Peececcecees for wc cevcenstncccrcccenedenssacsecees'aeeaseeeeean'ween esceeee beoscad :'Lost:26.7332 kn:::::ts : :::::::ot : Soon Sneee eens Seeeeeeeeeey anes eeceeeesdb esneaseesedeensnoeeeees seeeeeeeees z ceceeeceees :cee eeeeveenceecoeeneestice neseenscbeeeeenseescbesceeeeecesneesem on eee eeseeseenee fesseeseseeesPeeeseeseeespeesseeesees Seeseeeeeees Seseeeeetees feeesesgePledeseeseneeeefeeeseeeereabeseenesssemesrenenenes See ::::::ad : ::::::of : ::::::of::EPPre OPPePererere re eT eer er renee ee ee ee eee eer eer reer errr ater errr ree eee reeresDeen ghnvenednenccceeeencnceeeeeeeasceneeeseesennennesteccsunsansssccerccnesece:::::od : 3 ::::Pe ; ::::Doe : :::::7 : : i.eee 'were ereanee Tretteeeececnseateeeeeeee ss'srsercences yas ewer eae eeSesesatrccerebesemesesereFees ease t ee FOE Eee eneeaseeseneeneser'Seonaseosases perce::::of:: ....4 .. :::eg ::SereCPPSeeeree reeeeeeeeee Bee etmenewccemeneccaees,PLO PPPTTITISETOSTSLETISIT IP STE TITEL TEST TELE TE TE EE EET ETE eee:::4:: ::cd :: ::Pad :: ::2”::: i eee eee ee eee eee ee cerry Fret ELEOe T TOP e SEPP ee See Perce lS See eee e eee eee ee ee eee ee ee ere re eee eee eee eee i Serieerrr re Tere rere eee hesced :*9”:: :7 :: :ow:::bs ecdecsencncscececePiccaneadeseaccacescnesenucsecscsenusseascsnsscecsueeehensseesuecsieteceeseetsdeeeseceseeececcetesssescrssseseetaseeeereneass Seeda:: of::: 7::: -/:::ere Peer See taesesseedeeeeetoeseenceseeeeseesfan ence eeehececcceescebewcescaccan PPP eee eee Seer errr ere eer eee eee eee errr eee eens - i j i I j iL i lL i TABLE 1 SYSTEM 13V CONTROL DATA 1995 Nov 28 13:55:28 KALINA CYCLE CONTROL DATA Tl 298 ATw 7 T4 150 AT3 5 T23 40 AT1 10 AT2 5 Te .975 Steam Flow 121365 ATE .85 Atrc 5 Cp kr 1.02 AT4 10 Brine Flow 962254 ATa pw} HEAT EXCHANGER PRESSURE DROPS AP 29-14 2 AP 68-30 10 AP 38-29 1 AP 30-dew 5 AP 66-60 10 AP 21-60 10 AP 36-38 1 AP 48-49 1 AP 66-68 10 KALINA CYCLE SYSTEM 13V POINTS 1995 Nov 28 13:55:28 i #P psiA x T°HBIU/Ib G/G30 Flow lb/hr Phase”| 21 364.52 .9390 52.94 4.01 1.0000 463,477 Lic 89° 60 354.52 9390 140.00 103.09 1.0000 463,477 SatLiquid 66 344.52 .9390 138.46 147.71 1.0000 463,477 Wet .8938 68 334.52 -9390 145.00 384.12 1.0000 463,477 Wet .3757 30 333.52 -9390 288.00 697.54 1.0000 463,477 Vap 49° 40 92.89 -9390 181.36 655.76 1.0000 463,477 SatVapor 36 92.89 -9390 166.81 619.54 1.0000 463,477 Wet .0312 38 91.89 -9390 145.00 574.92 1.0000 463,477 Wet .068 29 90.89 -9390 89.01 475.85 1.0000 463,477 Wet .1592 14 88.89 -9390 52.00 2.53 1.0000 463,477 SatLiquid 23°*Air 40.00 1.94 122.2601 56,664,799 59 .Air 55.95 5.82 122.1465 56,612,140 58 °Air 127.29 23.16 .1136 52,659 24 .Air 56.01 5.84 122.2601 56,664,799 41 64.95 Steam 298.00 1179.39 -2619 121,365 SatVeror 42 3.72 Steam 150.00 1014.07 2619 121,365 Wet .1109 43 3.72 Steam 150.00 1014.07 .2618 121,361 Wet .1109 44 3.72 Steam 143.46 111.22 -2618 121,361 Liq 7° 45 3.72 Steam 150.00 1125.86 .2328 107,903 SatVapor 46 3.72 Steam 150.00 1125.86 -0000 4 SatVapor 47 3.50 Steam 134.29 1122.32 -0000 4 Wet 0 48 3.50 Steam 134.29 112.25 2619 121,365 Wet .991 49 2.50 Steam 134.29 102.05 2619 121,365 SatLiquid 51 .Brine 298.00 271.32 2.0762 962,254 54 e Brine 150.00 120.36 2.0762 962,254 Exergy,Inc.Alaska 1995 Nov 28« Turbines:kw GAH AH AH isen "Jat-Amnm 30-36 10594.09 77.99 77.99 91.76 iteam 1 41-42 5880 .07 43.29 165.32 194.49 Steam 2 46-47 0.00 0.00 3.54 4.16 Total:16474.16 121.28 Turbine mass flow 58.40 kg/s 463477 Pt 30 Volume flow 4656.94 l/s 592050 Eeat in 80891.35 kw 595.53 Heat rejected 64618.84 kW 475.73 =Turbine enthalpy drops 16474.16 kW 121.28 Turbine Work 16062.31 kw 118.25 Feed pump AH 1.48,power 214.25 kW 1.58 Feed +Coolant pump power 790.86 kW 5.82 Net Work 15271.45 kW i-112.43 Gross Output 16062.31 kWe Cycle Output 15848.06 kWe Net Output 15271.45 kye Net thermal efficiency 18.88 % Second law limit 28.43 % Second law efficiency 66.40 & Specific Brine Consumption 63.01 Ib/kKW hr Specific Power Output 15.87 Watt hr/lb CS13V HXs:MN th ATs between streams HE-1 64.2915 T29-TS9 33.07 T14-T23 HE-2 13.4575 T38-T60 5 T29-T21 HE-3 6.06094 T36-T66 28.35 T38-T60 HE-4 32.1119 T43-T63 5 T44-T66 EFE-5 42.572 T51-T30 10 T54-T68 HE-6 .327348 T48-TS8 7 T49 -T23 Exergy,Inc.Alaska 1995 Nov 28« ATE=.85 £2/f1 =3.59698e-5 lb/hr £t*3/hr BIU/Ib BIU/1b BIU/Ib BIU/1b BIU/lb BIU/1b BIU/1b APPENDIX 1 Walsh Construction Company4cArRiVeEsnCemoaany February 12,1996 Hank Leibowitz Exergy,Inc. 22320 Foothill Blvd. Suite 540 Hayward,CA 94541 Subject:|Makushin Geothermal Project Genttemen: Over the past several weeks we have been preparing an estimate for the Makushin Geothermal Project on Unalaska Island,Alaska.Much of our estimate is based on information obtained fram engineering studies conducted by a previous project developer,We also had discussions with Mike Hartley from Peratovich,Nottingham &Drage,Inc.concerning the design of the access road and Power Engineers regarding the design of the transmission line.After raviswing ail the available information it is apparent to us that there still remains too much critical design and engineering data that is not available at this time to provide a firm price onthetotalprojectscope. We have,however,come up with a budget estimate that is based on assumptions and clarifications and schedule included with this letter.The budget price for the Turnkey Construction of the plant is $74,836,000.The divisional breakdown of this price is a part of the attachment. Please note that this price does not include costs for standby combustion turbine generators or any electrical distribution system for the city of Dutch Harbor.A complete firm price can be established once the geotechnical report has been completed for the access read and further design work is accomplished on the transmission line. Very truly yours, LSH CONSTRUCTION COMPANY ,ven Rona .Simms Vics President RES:;jo Attachment aa 10365 Old Placarville Road,Suits 210,Sacramento,CA $5827 Tel.(916)263-6200 Fax (916)363-6287 Be boua Copertuty Poyeyae ME Assumptions and Clarifications Makushin Valley Geothermal Project Dutch Harbor Unalaska,Alaska February 12,1996 The following is a scope of work with assumptions and clarifications used as a basis for arriving at a cost estimate for referenced project. °Civil,architectural,mechanical and electrical quantities for inside the fence work,are '4basedonquantitiesestablishedfortheSteamboatSpringsgeothermalprojectin Nevada.Those inside the fence quantities have not been adjusted for any differing siteconditions.-- ne ee nad °Mass excavation and reck excavation is excluded from our pricing.Soil conditions are assumed to be stable to suppert spread footings for all foundations,at the powerplant site. .Piles for foundations cr read work are excluded from our pricing.2)f .Pricing for road work,bridges and dock is based on,"pioneer”or temporary facilities only.These items will be used only during construction of the power plant. Roads,bridges,culverts and dock are quoted as an allowance item only and firm pricingwillbeestablishedbaseduponfinaldesignandgaatechnicalraports.Pioneer or 'tamporary roads are as follows: )Road will essentially follow the routing as shown on drawings as submitted to the US Army Cerps of Engineers,dated 7/94 with the following exceptions. a Road routing to be laid out to eliminate massive excavated areas as shown on drawings 7 of 30 and 8 of 30. a Road grading and fill will be placed to the minimum requirement for passage of vehicles carrying plant construction equipment and materials. 9 Bridges and culverts will be constructed to allow passage of vehicles carrying construction equipment and materials only,and will not be designed to comply with 50 or 100 year flood levels. )Pier at Nateekin Bay Port Site will be constructed for off loading of construction vehicles,materials and construction support supplies only and is net intended to be a permanent facility. "t- Assumptions and Clarifications February 12,1996 Makushin Valley Geothermal Project .Our proposal includes stripping 12”of topsoil from inside the fence line of the plant ara enly. °Our proposal includes steam/vapor turbines per the Ansaido quote dated 1/17/96 and assumes lubricating oils and auxiliary systems are included for a complete installation. °Our proposal includes vertical falling film recuperation heat exchangers as proposed for the Steamboat Springs project.Performance guarantees are assumed to be includedin Yoovendorprice._r Se Yrtvo 201 CQ .\Downhole pumps for the 2 ea.productian wells and 1 ea.re-injection wells ara excluded Vado!Sfromourproposal.Wellhead equipment and protection is excluded from our proposal. .Drilling of resource wells ig excludedfrom our proposal.Wells are assumed to be no further than 1000'of units.Permitting or costs associated with same are excluded fram our proposal. °Backup power units for Dutch Harber grid systam is excluded from our proposal. ,Upgrading of the Dutch Harbor grid system is excluded from our proposal. °All costs associated with permitting for the project are excluded frorn our proposal. °Transmission line from plant site to switchyard comnection at Dutch Harbor is to be 69 Kv,3-Phase,350 MCM insulated cable.Routing from powerplant to waters edge is to be direct buried,maximum 40”deep,following the"pioneer”read.Tranamission line crossing the bayis to be laid directly on the sea floor.See Wunof the sea floo'excluded frem our proposal.Was heoarulele. .Temporary Walsh/Commonwealth housing for staff andSO workers will be provided during road and powerplant construction only.Duration of camp facilities is in accordance with enclosed preliminary construction schedule only.No allowance has been made to house other personnel.Temporary camp will be constructed at or near the deck or bay area and is to be used for road and powerplant construction only. Facilities for well drilling is by others.Camp will be demobilized during bad weather months. 'Our proposal includes furnishing and installing concrete with reinforcing for equipment slabs,and foundations in accordance with drawings supplied for Steamboat Springs. *Our proposal includes inside the fence mechanical and piping systems in accordance with drawings supplied for Steamboat Springs. °Our proposal includes inside the fence electrical and instrumentation systems in accordance with drawings supplied for Steamboat Springs. -2- Assumptions and Clarifications February 12,1896 _Makushin Valley Geothermal Project °Our proposal includes a pre-engineered metal building containing space for control room,warehouse,maintenance area and living quarters for operation staff. .Our proposal includes a standard septic tank and leach field system at the plant site. .Our proposal includes 6'chain link fencing around equipment area at plant site. °Our proposal includes gravel fill around equipment area at plant site and staging area at temporary unloading dock.Yo Twore.[Our proposal includes upgrading of existing landing strip for emargency ute ony.Tero WOW r °Our proposal includes costs for engineering of power plant and equipment based onsimilarscopeofSteamboatSprings- °Our proposal includes costs for engineering of "temporary”or "pioneer”road,bridges, culverts and deck based on preliminary information received from Exergy.Final cost of engineering will be based on geotechnical survey furnished by others. °Our proposal includes cost for standard construction industry payment and performance bond and builders risk insurances. °Our proposal is contingent on acceptable contractural terms and conditions including payment terms,Kalina Cycle design,delays caused by others,geothermal source,etc. erne =Erfat RE iN (a?-T-a aaa ACTIUTE 1D SIAL FINES DUR FCT Gix FTO PPS fae PN TUN UCL PCT Pav CC Hin TTRPTAT PR pTLA UA FUG ERO RICT OV Der fa a SHEPRC OE aN ef ANT CEP HETPRAIECTPRELIMIUARY5RbhesRK)sei KS i rsLoHOWEStapeoo|oa attra|RG Ih peyitere |.Kg LLeT,Sony want PoC ||ates fae {x ck _|.._ 1000 LH NEUES a)unos (AV?«nn oe "fo]tele x _J 1095 aYD-_11001%7 6 0 |Ka a a MCPHEE RING aes 1010 INARY?_JOIURD t 0 _pe <1 4 Pram unin ;a keMeoeed[je Pb |_||a=ye ok _Ke mM _1060 HFEBIS__DINEYaD io |4 7 one ING PERMIT EK SPS .mens tats %, 165 NNN Hoc = |an mais ul &WOTIEE 10 PROCEED KeistStasan ;etch ]bY WOO LJUN NG 0.4UNIG a)ATYHOBILIZE 6RI Wiel SKY _.} Jb mK Ke __spe -|- teat dun as 11046 2.4 td./KML ISB _f.Ki ee <_|Tf.he Rs Tae140ISEP%ar ERA?69 oe on a Fates reas (BLS a af]Ks en Rh Shel -7HddSEPMNOCT9A24dLral|-|-|-,so RTS be -i SND SENSON kek |KKK"1520 RN?ayeava?7 24 AK Ke 'Joa BW MLL "a Pees BS KOSDX]aes fp p (Fi lees lean lene Sued eed Goeees Beard eel 2 -{-t-Pa Se er ISH)LWNy "SEPT (a KS x]Miarereturre nt ROX;= -eho es ae Sa ie KAS fx - xa -1ecta/__31uc147 1g .Sere "FREE "|_ites :SRD SEASON Re hs .,.<"20a ees nara on)_Jt.Siege EL RK GLY ie ciap [t RIS _ 2920 WRB TIWRER root |_ede HK Lf.rac SKBLY ty bork rN KS _2 trek unica ro|Tt REET _pas AV rebavivent po bleh _ 200 KR NEPA ro _{od KAY |bebe A ua rtes20StkeNER»9 _KL x shy TRAM SSLGT IGE 2050 eC)NUCIB Lo af RTS KS yw Het DEMIB TH SEASON ae &4 xe RK |10 NOUN nae eked _KK _RAR fll te ce _120 PR RA a)_(4 ke -|-}-|-fe <]ia x]ALY eaten Puen |4yaoPRAADSK<RRKEZ PK hmmmsthTua cua430INSRIEB6edBAS)(05 mend?W501UM HEP 9 KAAS Ke ee ;is ewe60caOPISfoPOLSPYreCuAh(C81 beeeienaesiaad 'a S t {A oe370LHA,KK _K KA KET]A==F lou "ut wineswadLAner0Kesdcfd]STEN S Amend?|1con_--stOCTA_MOA 2.0 _KR oA KS chaRI-UP ©16S)jm ORD THAL DATES _ tf of af ef s[e |2}of afiotast sal raf o4]es fue 17{sl 14]20/20]22]20]a4]25]2012720 J24]>9|a {a2 |s0]30:6]a6}97][30]0040 |42)49 _af LPL 2b Et SP SE TE Sf Qiiof taf a2]taf tat as (16)vz]wf1a feo]2s fez [29 -in an pee _|beepat ay sta]?afiofi tf2}afa[s]e{zal Inu EOL PO REAY fun fil PIGLCPUCT OPEC ion |Cap mare ay file bin PUGHEPWCT havptcl ira opera hen harbor ie PEC ECP e hocbeeliank Teen bPR ant nil Wich Phici havbee 176 1997 19%i) thi ds WS >mg eae |wate 7 bats Doty ube Bird Say WALSH COUSTRUCTION canerey asReactflawalmilaaWiaUSWINGEDIIIEANALPROJECT=Belt Both [Renal -«\Peellaiaisy Carairuction ScheduleicePrienitem,me annfm DIV2 DIV3 DIV4 DVS DIV6 DIV7 DIV 8 DIVS DIV 10 DIV 11 DIV 13 DIV 14 DIV 15 DIV 16 eT iid Walsh Construction Company Makushin Valley Geothermal Project Revised For Exergy on 1/24/96 February 12,1996 SUB-TOTAL SITE &CIVIL WORK SUB-TOTAL CONCRETE WORK SUB-TOTAL UNIT MASONRY SUB-TOTAL STRUCT.&MISC.STL. SUB-TOTAL WOODWORK SUB-TOTAL WEATHER PROTECTION SUB-TOTAL DOORS &HARDWARE SUB-TOTAL INTERIOR FINISHES SUB-TOTAL MISC.INTERIOR HARDWARE SUB-TOTAL CAPITAL EQUIPMENT SUB-TOTAL ENG.MET.BLDGS. SUB-TOTAL TURB.MAINT.&MACH.SHOP SUB-TOTAL MECHANICAL SUB-TOTAL ELECTRICAL TOTAL 22,021,508 2,930,933 40,483 1,356,973 113,351 68,011 150,595 523,843 53,437 19,398,414 2,202,248 161,930 8,430,727 17,383,486 74,835,939 wUUZ APPENDIX 2 we dE al eal Come ce -owe SUITE 201 5221 CENTRAL AVENUEGeothermeEx,INC.FicumoNo,CAUFORNIA 94804-3809 (510)$27-0a76 CABLE AOCDRESS GEOTHERMEX TELEX 709152 STEAM UD FAX (510)527-6154 To: Fax: From: Subject: MEMORANDUM Mr.Hank Leibowitz Date:February 9,1996 Exergy,Inc. (510)537-8621 Page:1 of 14 Subir K.SanyallL th xo , Resource Development Program for the Makushin Geothermal Project AS you have requested,this memorandum presents the preliminary program and budget for resource development in the Makushin geothermal field,for the proposed 15 MW power plant.This memo also presents an approximate estimate of the annual operation and maintenance cost for the field.The information contained herein is based On our previous studies and knowledge of the Makushin area,and on our best understanding of the planned structure of the project,and it is suitable for planning purposes.It does not,however,constitute a firm proposal by GeothermEx,nor does it represent a precise budget based on a final project plan. D 0 COs Resource development activities should consist of the following: Task 1:Design,drilling and short-term testing of a "confirmation”well Task 2:Design,drilling and short-term testing of development (production and injection)wells Task 3:Long-term well testing (interference testing)to obtain detailed information on well and reservoir characteristics and behavior under exploitation Task 4:Conceptual modeling and computer modeling of the geothermal resource,for selection of development well sites and drilling targets,and of forecasting reservoir performance SUITE 2015221CENTRAL AVENUEGeothermMEX,INC.Ficumono.cAuirORNA 942045829 (810)627-9878 CABLE ADDRESS GEOTHEAMEX TELEX 709182 STEAM UO FAX ($10)527-8104 4:esion,Drilling and Testingof a Co ation We As presently planned,it is intended that an initial well be drilled in order to confirm that it is feasible to drill production wells of sufficient capacity to supply the power plant.If the confirmation well is successful,then other project activities will -proceed,and the drilling operations for subsequent wells will be integrated into the overall project development.It is planned that the confirmation well he a "twin”of the ST-1 slim hole,which showed the most attractive resource characteristics Arh Table 1 shows the preliminary cost estimate for drilling a confirmation well,in advance of any other project development activities,using a fully helicopter-supported drilling operation.The cost estimate shown in table 1 is based on the following assumptions,which have adopted following GeothermEx's discussions with Exergy: "The well will be designed as a production well (figure 1),and drilled toa depth of 2,000 to 3,000 feet (table 2;figure 2). s The drilling operation will be entirely helicopter-supported,without any road access,in order to defer the cost of road building and additional permitting until a final decision to proceed with the project has been made. ™'Once the confirmation well is completed,the helicopter-transported drilling rig will be demobilized.This will avoid standby charges that would almost certainly be incurred while preparing for further project development,andadditionallywillallowalessexpensiverigtobeusedforJaterdrilling. Mobilization and demobilization charges have been included in the cost of the confirmation well. "Costs for short-term testing are included in table 1.The testing will consist of measurements of downhole temperature and pressure,a short flow test using the James method,and sampling of fluid discharged by the well.The flow test duration will most likely be limited by the ability to store and dispose of fluid at the site.A simple well test design will be used in order to minimize the cost of fabricating and transporting test equipment,but standard instrumentation and metering methods will be used for the testing. As shown in table 1,the cost of the confirmation well is expected to be in the range of $3.4 million to $5.0 million,with an expected cost of about $4.2 million. --:-ee eee eeeeteme eee re tw Doromes .owe SUITE 201 5221 CENTRAL AVENUEGeotnermeEx,INC.-Ricumono,caurornia 24804-029 (510)527-9876 CABLE ADDRESS GEOTHERMEX TELEX 709152 STEAM UD FAX (510)527-8144 All of the costs cited are based on GeothermEx's preliminary assessment of resource,drilling and logistical conditions,informal quotes,and our experience in - drilling operations.They are also consistent with plans that have been developed previously for drilling in the Makushin field.However,it should be noted that the location of the Makushin field will make drilling there an extremely complex -undertaking,requiring unique logistical arrangements that are much more extensive than those required for most geothermal drilling operations,particularly in the case of the helicopter-supported drilling of the confirmation well.Therefore,detailed planning of the drilling operation will be necessary in order to establish a final budget,especially fortransportandotheractivitiessupportingthedrillingitself. Dames &Moore's Anchorage office,which worked on the previous permitting effort for the Makushin project,has indicated to us that it should be possible to permit a single confirmation well without proceeding with the permitting for the entire project.Dames &Moore's proposed budget for performing the permitting work is about $15,500;this figure includes the cost of a recommended,but not essential,project meeting in Unalaska.Some additional costs would probably be incurred in acquiring and providing additional information needed by Dames &Moore for the permitting process, and for payment of applicable permit fees.The cost of permitting has been included in table 1. The time required to permit a confirmation well is estimated to be about 4 months;therefore,even if permitting proceeded immediately,it would be unreasonable to assume that a permit would be granted before some time in June.Delaying the start of the permitting process would likely lengthen the time required,because State personnel tend to become less available to review and approve submitted documents as summer begins. Planning,procurement,preparation,shipping and installation of the drilling rig,field camp,and other necessary elements of the confirmation drilling operation will also require considerable time.Parker Drilling,which owns the drilling rig that is the most attractive candidate for the helicopter-supported operation,has indicated that a minimum time of nearly 5 months would be required after a drilling contract is negotiated to modify,transport and install the rig before drilling could begin.Similar lead times are likely to apply to other major items such as a helicopter for equipment transport,and the field camp for site personnel.Although some planning and procurement could proceed concurrently with permitting,it would be risky to commit to firm schedules for shipping and operating until a permit is granted.Therefore,even if it is possible,it does not appear to be prudent to attempt to schedule drilling operations for this summer. -coe mere A He het wa EI hw S373b21 remus SUITE 2015221CENTRAL AVENUEGeothermeEX,INC.Fidonio,cALIFORNIA 94804-5829 (810)527-0878 CABLE ADDRESS GEOTHERMEX TELEX 709182 STEAM UD FAX (510)$27-8164 Task 2.Design,drilling and testing of development wells The additional production and injection wells needed to supply the power plant are to be drilled concurrently with other project development activities,once the initial well has confirmed the viability of the geothermal resource.Selection of surface -sites and drilling targets for the development wells will be carried out as part of Task 4, described below. The anticipated cost for development drilling is summarized in table 3.The costs show in this table are based on the following assumptions: The development drilling program will consist of 4 wells:2 producers and 2 injectors.Along with the confirmation well (to be used as a third producer),a total number of 5 wells will therefore supply the power plant. This number of wells has been forecast from the existing information regarding the Makushin geothermal resource.However,until at least the initial confirmation well is drilled and tested,the typical productivity per well cannot be known,and therefore there is no guarantee that it will not be necessary to drill one or more wells in addition to the 5 planned. Production wells will be of essentially the same design as the confirmation well.Injection wells will be of similar depth,but may be of smaller diameter.The average per-well cost for injection wells may therefore be slightly less than for production wells,due to reduced casing and cementing costs,and possibly some reduction in drilling time.However,this cost difference falls well within the range of uncertainty for the overall cost of drilling.The well cost shown in table 3 therefore serves as the typical expected cost for beth production and injection wells. Access by road will be available for all development wells,which can therefore be drilled using a conventional (i.e.non-helicopter-transportable) rig. All 4 development wells will be drilled consecutively.Costs of a single mobilization and demobilization to/from the Makushin field have been prorated among the wells,as have costs for moving between wells (3 moves total).No standby costs have been included. --<-Donspes +ow SUME 201 5221 CENTRAL AVENUEGeothermEX,INC. Ficumono CALIFORNIA saz0+-sez9 (510)327-4878 CABLE AOORESS GEOTHERMEX TELEX 709152 STEAM UO FAX (510)527-9164 -.Development drilling operations will make use of project construction facilities (camp,heavy equipment,transportation,communications)as- needed,with these items budgeted on a prorated basis. =A short-term flow test,similar to that for the confirmation well,will be carried out for each development well as it is completed.The duration and of each test will be chosen based on available fluid disposal capacity and other applicable constraints. oa The average cost of each development well is expected to be from $1.7 million to $2.6 million (table 3).Asa result,the overall drilling program is anticipated to cost between about $10.3 million and $15.3 million,with a "most likely”cost of about $12.7 million,as shown in table 3. Task 3.Lone-Tem Well Testing The short-term test conducted at the completion of each well will serve to estimate the initial capacity of the well.However,a long-term flow test is necessary to obtain more detailed information on reservoir characteristics,including the response of the reservoir to production and injection,and reservoir fluid chemistry.This information is essential for forecasting the performance of the wellfield over the lifetime of the power plant,and for planning and design activities such as the assessment of scaling or corrosion potential. A complete long-term -test-should consist of flowing one or-more productionwellsforaperioddamore,while monitoring pressure response in one or more observation wells in order to observe interference between wells.An injection well would most likely be required for fluid disposal during the flow period.Therefore,the long-term test should be programmed to take place during or after the later stages of development drilling,when sufficient wells are available.After the flow period is complete,downhole pressures should be monitored for a minimum of 30 days to observe reservoir recovery.Produced fluids would be sampled periodically during the test to monitor their chemical characteristics. The total cost of such a long-term is estimated to be approximately $275,000.This figure includes the cost of fabricating necessary test equipment,surface and downhole instrumentation,fluid disposal (including surface pumps and piping between wells).sample collection and analysis,and data processing and interpretation.It Dod 1 DIEde Litinetind SUITE 201 S221 CENTRAL AVENUEGeothermEX,INC.Fichwono CALIFORNIA 94804-5829 (619)827-9875 CABLE ACORESS GECTHERMEX TELEX 709152 STEAM UO FaX (S10)527-8164 is assumed that the same logistical support described for the development driiliag (fieldcamp,communications,etc.)is available during the testing period. Task 4,Conceptual Modeling and Computer Modeling of the Geothermal Resource In order to select appropriate drilling sites and well designs,provide resource information required for the plant design,and forecast the long-term behavior of the geothermal reservoir for field management purposes,it is necessary to develop and maintain an integrated model of the geothermal resource,based on all available data generated during the exploration and development process.This modeling task usually consists of two logically separate activities: =Development of a conceptual hydrogeological model of the geothermal system that describes the geological characteristics,temperature and pressure conditions,chemical characteristics,and natural patterns of fluid movement in the geothermal reservoir ba Development of a numerical computer model that quantitatively describes the physical characteristics of the geothermal reservoir in its natural state and under expicitation Conceptual modeling begins at the earliest stages of exploration,and is refined and extended as subsurface data become available from wells.It is used as the basis for planning additional exploration and development activities,including,most importantly,the selection of well sites and drilling targets.It is also essential for determining the overall resource capacity (available reserves)and for providing reliable information regarding fluid chemistry and other resource characteristics needed for plant design. Numerical computer modeling incorporates certain elements of the conceptual model,but also requires physical data (such as measured temperatures and transient pressure responses)obtained from testing activities in one or more wells.A well-designed mumerical model can permit the optimization of well spacing and siting, and prediction of field behavior and,to a degree,the behavior of individual wells during production. a ----aed 1 II eo de owe SUITE 201 §221 CENTRAL AVENUEGeothermEX,INC.-Richono,caLFOANA 94s0asa29 (510)527-9878 CABLE AODRESS GEOTHERMEX TELEX 709152 STEAM UD FAX (510)527-8164 The resource modeling task will include the interpretation of all available resource-related information,and therefore will be an ongoing task throughout the period of project development.Important aspects of this task will include: bd Review and interpretation of all data from surface investigations (geology, geophysics,and chemical surveys),and from temperature-gradient drilling -"and slim-hole drilling performed to date s If determined to be necessary for siting development wells,additional surface geological or geophysical surveys 2 Processing and interpretation of drilling and testing information obtained from the confirmation well,and from development wells «Selection of well sites and drilling targets,based on optimum sites defined by the conceptual model,and on suitability of access,environmental considerations,gathering system design,and other logistical factors sd Incorporation of well testing data,including the results of the long-term test, into the numerical computer model al Forecasting of reservoir and well performance under the conditions selected for plant operation The total budget required for this task is estimated to be about $300,000. This is sufficient to cover a moderate amount of additional exploratory field work (geological or geophysical surveys)if such work is determined to be necessary for well Siting.However,it is not sufficient for extensive new field surveys,or for any additional exploratory drilling.Such activities might have to be considered in the event that poor results were obtained from the initial development wells. Table 4 summarizes the budget for all of the tasks that make up the resource development program of the Makushin geothermal project. Q TI &MAINTENANCE COST To operate and maintain the production and injection wells as well as the gathering and injection systems,we estimate an approximate annual cost on the order of aoe eee QI foges o ewe SUITE 201GeothermeEx,Inc.Sr MENG CALIFORNIA 94804-5329 (519)527-9876 CABLE ADORESS GEOTHERMEX TELEX 709152 STEAM UD FAX (310)627-8164 $700,000.This cost also includes the cost of drilling make-up wells,which is estimated to cost about $450,000 per year.It should be noted that once the confirmation well is drilled and tested,this estimate can be refined considerably. Copeoe a ee wee wee _DSCSIEL Few SUITE 207 UEGeothermeEx,Inc.SIGUMGND CAUFOANIA 94804-5329 (510)527.9878 CABLE ADDRESS GECTHERMEX TELEX 709152 STEAM UD FAX (510)527-8164 Table 1,Cost Estimate,Confirmation Well at Makushin Geothermal Field Cost Category Low Expected High -1,Mobilization (drilling rig -excluding helicopter)450,000 500,000 600,000 2.Demobilization (drilling rig -excluding helicopter)300,000 350,000 400,000 3.Freight/transport (other than rig -excluding helicopter)250,000 300,000 350,000 4,Helicopter Support 1,000,000 1,200,000 1,400.000 5.Pad construction and maintenance 400,000 120,000 140.000 6.Drilling Cost Rig daily rate 325,000 470,000 600,000 Casing and wellhead 120,000 140,000 160,000 Cement and services 100,000 700,000 100,000 Mud and chernicals 30,000 45.000 60,600 Dewatering equipment 30,000 £0,000 75,000 Bits,stabilizers.ete.125,000 150,000 175,000 Drill pipe and collars (insp.,repair)10.000 20,000 30,000 Blowout prevention equipment 20,000 30,000 £0,000 Casing running equipment 20,000 25,000 30,000 Misc.rentals 18,000 22,500 30,000 Mise.services 20.000 25,000 30,000 Fuel 20,000 30,000 40,000 Water supply 20,000 35,000 50,000 Drilling supervision 40.000 45,000 §0,000 Wellsite geology -20,000 27,500 35,000 Mud legging 20.000 30,000 40,000 P/T &geophysical logging 40,000 ©60,000 70.000 Total drilling cost 975,000 1,305,000 1,625,000 7,Management,administration and accounting 150,000 175,000 ° 200,000 8.Engineering,testing and sampling 40,000 50,000 75.000 9.Permitting :15,000 20,000 25,000 - 10,Field camp 150,000 175,000 200,000 11,Communications 10,000 12,500 18.000 Total Estimated Cost:$3.440,000 $4,207,500 $5,020,000 25/98 Table 2.Antlcipated Drilling Schedute for Contirmation Well,Makushin Geothermal Field (Unalaska)GeatharmEx,Inc.1995 Low Expected High Depth |Orilling |Total |Depth |Drilling]Total |Oepth |Drilling]Total Activity (feet)Days |Days |(feat)Days |Oays |(feet)|Days |Days 1.Move In and rig up (Incl,rathole,mousehole,conductor)0 -0 Oo.:0 0 -0 2,Orill 26"hole 200 3 3 200';]3 3 200 4 4 3.Run and cement 20"casing 200 1 4 200 2 5 200 1 5 4.Drill 17-1/2"hole 1,500 3 12 1,500 12 17 1,500 16 21 §.Run and cement 1-3/8"casing (fogging optional)1,500 2 14 1,500 3 20 1,500 4 25 6.Drill 12-1/4"hale 2,000 6 20 2,500 10 30 3,000 14 39 7,Run 9-5/8"slotted tIner (optianal)2,000 1 21 2,500 1 3 3,000 2 41 8.Log/test well and complete 2,000 4 25 2,500 4 35 3,000 4 46 9.Rig down;demobilize or move rig ------n Aud 1 Oa Ee to < SUITE 201GeothermEx,Inc.ZZ ,GENAL Means 94804-5829 510)327-0876 -ABLE ACORESS GEOTHERMEX TELEX 709182 STEAM UO FAX (510)527-4164 Table 3.Cost Estimate,Development Wells at Makushin Geothermal Field Cost Category Low Expected High .1.Mobdilization/Demabilization (prorated for 4 wells)200,000 225.000 250,000 2.Moves between wells (prorated)-30.000 25,000 45,000 3.Freight/transport (other than rig)250,000 300,000 350,000 4,Pad construction and maintenance 80,000 400,000 120,000 5.Drilling Cost Rig daily rate 250.000 350,000 450,000 Casing and weilhead 120.000 140,000 160,000 Cement and services 100,000 100,000 100,000 Mud and chemicals 30.000 45,000 60,000 Dewatering equioment 30,000 £0,000 75,000 Bits.stabilizers,ete.;125,000 150,000 175,000 Drill pipe and collars (insp.,repair)10,000 20.000 30.000 Blowout prevention equipment 20,000 30,000 £0,000 Casing running equipment 20,000 25,000 30,000 Miso,rentals 15,000 22,500 30.000 Mise.services 20,000 25,000 30.000 Fuel 20,000 30,000 40.000 Water supply 20,000 30,000 30,000 Drilling supervision 40,000 45,000 £0,000 Weillsite geology 20,000 27,500 38.000 Mud logging 20,000 30,000 40,000 P/T &geophysical logging 40.000 60,000 70,000 Total drilling cost $00,000 1,180,000 1,455,000 7.Management,administration and accounting 125,000 150,000 175,000 8.Engineering,testing and sampling 40,000 §0,000 75,000 9.Permitting 5.000 10,000 10,000 10.Field camp 75,000 75,000 75,000 11.Communications §,000 §,000 5,000 Total Estimated Cost:$1,710,000 $2,130,000 $2,560,000 Total for 4 wells:$6,340,000 $3,520,000 $10,240,000 Total drilling budget (incl.confirmation well):$10,230,000 $12,727,500 $15,270,000 28/96 SUITE 201 GeothermEx,INC.Ricnwono,CALIFORNIA $4804.5829 (510)827-9876 CABLE ACORESS GEOTHERMEX TELEX 709182 STEAM UD FAX (S10)§27-8164 Table 4.Summary of Costs for Resource Development Program, Makushin Geothermal Project Ce eee} _-Estimated Cost Task Low High Expected 1.Design,drilling and testing of $3,440,000 $4,207,500 $5,030,000 a "confirmation”well - ae --_ 2.Design,drilling and testing of $6,840,000 $8,520,000 $10,240,000 4 development wells 3.Long-term well testing $275,000 $275,000 $275,000 4.Conceptual modeling and $300,000 $300,000 $300,000 computer modeling of the gecthermal resource Total:$70,855,000 $13,302,500 $15,845,000 -ee GeothermEx,Inc. Innovation,Experlence and Practical Solutions Company:EXERGY,INC. State;ALASKA Field:MAKUSHIN (UNALASKA ISLAND) Objective:DRILL A CONFIRMATION WELL TO 3,000"(MAXIMUM DEPTH) Date:01/31/96 arernannnnens FIGURE 1:DRILLING WORKSHEET DIRECTIONAL GEOLOGIC WELL HOLE CASING &HOLE CONTROL.LOGS TOPS DEPTH ©SIZE CEMENT MUD DEVIATION 4 ||:4 3;4Glacialo30til39°é_ tse |8 5Laher e 150°{L2 2a&290°os 223pe [?)Su ev 2°8N\Sm of gTeeee Single shets or x Ey 2 <drift shots #2 ye §every 90%to =e S 6 13-3/8°"casing 5 _a °depth;then rad a Eevery180°to 5 Intrusive Ss re} TD.Cerrect cal rock re hole direction ne](diarite,-- as needed If =etc.)q ° deviation L #s. exceeds a m 1500'In 39 L =specified Units.(max.>12 a 3 >4|g$63 ¢|3 3 5 &2 1 =SF #2 8uyTesv8| -Qow 37>9dFa=° 3 2i -a TD=3,0007Cmax? 1996,GeothermEx,Inc.PMSOWmisismeresemiatmsee DrilledDepth(feet)6 Figure 2.Programmed Drilling Time for Confirmation Well,Makushin Geothermal Flaid vidWLOL0 1.Move In/iig up §c0 2.Drill 26°hole - 3.Run/cement 20'casing 4.Orill 17-1/2*hole 5.Run/cement 13-3/8"casing @.Orill 12-1/4"hole 1,000 |7.Run 9-5/8"slotted lines apttonal) 8,Log/test and complete well 9.Rig down,move out dg 1,500 '..WV ' Ly 2,000 ®).-=f®. * AY " & a x2,500 + f of -Minimum Schedula . - e--Expected Schedtila '. 3,000 «@ =Maximum Schedule oe - 3,500 5 1a 15 20 25 30 36 40 §0 Time (days)GeothermEx,Inc.1995 APPENDIX 3 MAKUSHIN GEOTHERMAL PROJECT OPERATION &MAINTENANCE A.Operating Plan AA At wiskadl1.The operating staff planned for this project is as follows:(022) Plant Superintendent (enoAdministrativeAssistant Combination Operator/Maintenance Personnel Mechanical Maintenance I&E Technician Utility Person -_-echehehSYkkne)Total 2.The plant will be manned 24 hours per day by two Operator/Maintenance personnel (12 hour shifts).These Operators will work a rotating shift equivalent to four days on and four days off.The Operators will be expected to do plant preventive maintenance as well as contribute to regular plant maintenance.One full time Mechanical Maintenance person,one I&E Technician and one Utility Person will be on staff to support regular plant maintenance and unscheduled maintenance work on a 12 hour,four day work week.The Maintenance Mechanic will sleep on site and be available for call-in emergencies occurring during the night shift.The Plant Superintendent also acts as Operator during the day shift..It is expected that Operations and Maintenance personnel will remain at the plant during their four day shift schedule.The A shift Operator and Plant Superintendent will rotate 12 hour shifts with the B shift Operators for four days.At the end of the four days,A and B shift Operators will be relieved by C and D shift Operator. B.Plant and Field Operation and Maintenance Costs 1.Cost of Sales ($1996) °Salaries: Plant Superintendent (acts as Operator during day shift)$80,000 Administrative Assistant 31,200 °Hourly : (7)Control/Maintenance Operators @ $26/hr x 2184 hrs 397,488 (1)I&E Technician @ $32/hr x 2080 hrs 66,600 (1)Maintenance Technician @ $26/hr x 1040 hrs (1)Utility Helper @ $15/hr x 2080 hrs Overtime Subtotal Payroll Burden (30%) Total (Salary and Hourly) Subcontracts -Operations and Field Manager (600 hrs/yr @ $75/hr) -Compliance Manager (200 hrs/yr @ $60/hr) -Minor Road Maintenance and Material (using Plant Equipment) -Major Snow Removal -Work Boat -Outside Services Repair and Maintenance of Plant Equipment Vehicle Maintenance Transmission Line Maintenance Small Tools Fuel Rentals Permits (Routine Permit Renewals) Lubricants Shipping and Transportation Office Supplies,Telephone,Postage,Safety/Medical Travel Expense Education (Training) Miscellaneous Operating Expenses 27,040 31,200 15,000 708,528 212,558 $921,086 $45,000 12,000 25,000 25,000 40,000 75,000 125,000 25,000 30,000 5,000 10,000 15,000 10,000 5,000 20,000 60,000 50,000 25,000 15,000 °Dutch Harbor Office 25,000 e Wellfield Chemicals 20,000 °Above Ground Geo Resource Piping and Equipment Maint.75,000 Preventive and Major Repair °Below Ground Geo Resource Piping and Equipment Maint.150,000 No Major Below Ground Maintenance (well maint.) °Employee Benefits/Incentives 20,000 °Depreciation of Operator Owned Mobile Equipment 45,000 Total -Non Payroll $952,000 TOTAL PLANT OPERATING AND MAINTENANCE COSTS $1,873,086