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HomeMy WebLinkAboutUnalaska Geothermal Board Update 1993Board of Directors -Mir 3 August 27,1993 Alaska Aerospace Development Corporation (AADC).Resolution A93-2,approved bytheAIDEAboardonMarch19,1993,authorized the Authority to provide a loan in theamountupto$3.0 million to the AADC.The loan was contingent upon the Department ofDefense(DOD)awarding a matching grant application to the AADC for the purpose ofupgradingthelaunchfacilityatPokerFlattoacommerciallaunchsite.The Authority hasbeennotifiedbytheAADCthatthegrantfromtheDOD,in the amount of $1.1 million, was approved.Staff has indicated their readiness to transfer the funds to satisfy AIDEA'sparticipationintheproject.Brief board discussion was heard. Skagway Ore Terminal.Mr.Snell reported that staff was continuing their dialogue andmonitoringthesituationwithCurraghResources,Inc.An acceptable agreement withCurraghhasbeennegotiatedwherebyCurraghisfundingtheday-to-day operations and maintenance on the Skagway Terminal.Curragh continues to be protected under the Canadian bankruptcy act.Conditions look reasonable that Curragh will reemerge from reorganization and will continue to operate the project. Unalaska Geothermal Project.Project fact sheet included in the board packet for the board's review.No board action was required. South Central Alaska Coal Transportation Study/Export Coal Stabilization Altematives. Staff continues to assist the Governor's office in looking for a means of participating,in a business fashion,with the parties involved in the export of Usibelli coal through theSuneelfacilitiesinSeward.An outline of two preliminary altemative proposals for financial support of the current export contract is included in the board packet.Mr.Snellreportedthatoption"B"of the Analysis would not be beneficial to pursue.Option "A"was the favorable option.A request for formal action by the board may be presented ateithertheSeptemberorOctoberboardmeeting. DeLong Mountain Transportation Project Expansion.Memo from staff to the Board of Directors was included in the board packet.The memo was for information and - no board action was required. Federal Express Project.Mr.Snell advised that it may be appropriate to go into anexecutivesessiontodiscusstheconstructionstatusandthepossibilityofclaimsbeing filed by or against the Authority on the project.Mr.Rubini stated that it would be appropriate to adjourn to an executive session because the matters to be discussedincludedtheAuthority's involvement in potential litigation and the financial standing of the Authority. Mr.Lang disclosed that the company he was employed with,Anchorage Sand and Gravel, presently has a supply contract in place with Strand Hunt that represents less than 1%ofthebusinessoftheAnchorageSandandGraveloperation.Mr.Rubini did not believe that a conflict of interest existed that falls within the range of automatic or appropriateexclusionasamatteroflaw.He advised that it was a matter that should be presented to the board by a motion and the board should determine whether a conflict of interest did exist. Mr.Lang turned the chair over to Mr.Rexwinkel.Mr.Rexwinkel requested a motion withrespecttoMr.Lang's participation in board actions relative to the Federal ExpressProject.Mr.Porter moved that there was no conflict of interest.Mr.Walsh second the motion. Mr.Fuhs requested Mr.Snell's opinion on the matter.Mr.Snell stated that he believed that if there was a conflict of interest,it was a relatively minor conflict. -il- Board of Directors -Mit 3 August 27,1993 There being no further discussion,a roll call vote was held.Upon roll call vote,with Mr. Lang abstaining,the motion was approved.Mr.Rexwinkel returned the chair to Mr.Lang. Mr.Rexwinkel moved for an executive session to discuss the matters pertinent to FederalExpressthatmightaffectthefinancesofthecorporation.Mr.Walsh secondedthemotion.Upon roll call vote,motion was approved unanimously. 10:48 A.M.-EXE ESSION. 11:45 A.M.-BOARD MEMBERS RECONVENED FROM_EXE SESSION WITHALLMEMBERS PRESENT. Mr.Snell reported that the matters discussed were those of pending claims involving contractors engaged by the Authority for the construction of the Federal Express Hanger Facility and that no board decisions were made during the executive session. B.Next Meeting Date (Friday,September 24,1993) Staff suggested the next board meeting be scheduled for Friday,September 24,1993, subject to the board member's availability.Staff also suggested that a meeting of the Alaska Energy Authority board be scheduled for the same day.Board members will be polled for availability.Mr.Snell advised that a special board meeting may be required toreviewasubstantialloanrequestexpectedtobesubmittedfortheKodiakFishmeal Project. 8.BOARD COMMENTS fires mee Makushin Geothermal Project.Mr.Fuhs reported that the situation in Dutch Harbor was getting worse in terms of the problems of being able to supply electricity,as needed.Numerous projects were being held up because of the non-availability of electricity.TheproblemstemswithpermittingproblemsbeingencounteredwiththeEnvironmentalProtectionAgencyandtheDepartment.of Environmental Conservation.The Dutch Harbor community remains positive on the Makushin Geothermal Project.The Department of Commerce and Economic Development will continue to work through thisissuewithOESIandAIDEA.Mr.Fuhs stated that the need for the Makushin Geothermal Project was increasing.Mr.Snell reported that staff had met with OESI and it appeared that progress was being made. Mr.Rexwinkel requested that a general discussion of the board be scheduled to review theboard's policies on different types of loans and the terms on those loans.Mr.Snelladvisedthatstaffwasanticipating,at either the September or October board meeting,toreviewaccomplishmentstodateandupdatetheAuthority's strategic financing plan. Mr.Porter stated that he appreciated being a member of the board and appreciated theboard's indulgence as he became familiar with the issues brought before the board. Mr.Rexwinkel and Mr.Snell discussed proposed legislation that would require legislative approval.Mr.Snell reported that staff was reviewing the Export Program to determine iftherewereanystatutoryorregulatorychangesthatcouldbemadetomaketheprogram more usable.Cominco Alaska,Inc.has advised staff of their interest in expanding the port facilities at the Red Dog Port Site.Legislative approval may be required for that expansion.Staff anticipated requesting legislative approval for the Unalaska GeothermalorProject. -12- Board of Directors -Minutc_ July 9,1993 There were no objections to scheduling the meeting on August 12,1993.Board members will be polled for availability. Staff suggested Friday,August 27,1993 be the next AIDEA board meeting.Board meinbers will be polled for availability. 8.BOARD COMMENTS With reference to the Loan Activity Report (Item 7B),Mr.Nuriddin requested additionalinformationonwhatthetotalamountwasforguaranteesunderthesmallbusiness assistance program.General information was given by Mr.Snell.Staff will provide Mr.Nuriddin with an accurate report following the board meeting. Mr.Fuhs provided the board members with a clarification of AIDEA's role in theMIDREXproject.AIDEA participation was being asked for assistance in upgradinginfrastructure,the development of the docks and perhaps to upgrade the existing road notforbuildingtheproductionfacilityorthesteelmill. Mr.Snell reported on the Makushin Geothermal Project and advised that a meeting hadbeenheldwithrepresentativesfromthemajorindustrialusersofelectricityinUnalaska.The strength of the project has been improved because the ORMAT Energy Systems,Inc.(OESI)was intending once again,to take the lead in bringing the project to the point where a financable project could be presented to the board.During those discussions,apriceforelectricitywasgivenwhichreceivedlimitedacceptancefromtheprocessors.The study performed by the R.W.Beck company presented a range of possibleconstructioncostswhichalsocontainedafairlysubstantialcontingencyfee.OESI has advised that they will return with a firm construction price which will enable AIDEA togiveafirmpriceforelectricitywhichwillbebackedupbyaconstructionperformancebond. In addition,AIDEA has sent out an additional scope of work for feasibility evaluation to keep pace with the private sector efforts.Staff has forwarded the scope of work to theboard.Discussions have been held with the Alaska Energy Authority to obtain additional funds to proceed. 9.ADJOURNMENT There being no objections,Mr.Lang adjourned the meeting. Wlkool)William R.Snell,Secretary WRS/sh DOCSMS68 -15- Bb pe ate de Board of Directors-Minutes May 19,1993 The Alaska Energy Authority was dismantled.Substantial portions of their programs andprojectswillbetransferredtotheDepartmentofCommunity&Regional Affairs.Theownedfacilities,Bradley Lake,Four Dam Pool,Intertie facilities,would remain with AEA.AEA would act as a subsidiary of AIDEA.AEA will operate as a separate corporation but under the AIDEA Board of Directors.A clean up bill will be necessarynextlegislativesessiontoeffectthetransfer.The Authority was given the ability to do thefinancingforthevariousintertieprojects.A transition plan is being developed and wouldbeavailablefortheboard's review and concurrence at the next regularly scheduled board meeting.Two Authority board members,Mr.Fuhs and Mr.Blatchford,presently serve on the board of the Alaska Energy Authority. Updates on Development Projects.Provided as informational material. MarkAir Project.The Memorandum to the Board provides the current status of this project as they file for protection under bankruptcy. Curragh Inc.The Memorandum to the Board provides the current status of this project as they file for protection under bankruptcy. Illinois Creek Transportation Study -Final Report.The study has been completed.CIRIandEchoBayintendtogoforwardwiththeproject.A Reimbursement Agreement is in effect should the project be terminated. THE BOARD RETURNED TO Item 6B,Refunding Revolving Fund Bonds, 6.NEW BUSINESS B.Alaska Industrial Development and Export Authority Refunding Revolving Fund Bonds,Series 1993A (Lots 1-42) Resolution G93-2,Revolving Fund Bond Series Resolution Resolution G93-3,Capital Reserve Fund ResolutionResolutionG93-4,Providing for the Sale -$25,265,000 Mr.Snell reviewed the board's action taken during the March 19th meeting.At the meeting the Authority's board authorized staff to proceed with the sale of bonds to refund tax-exempt bonds issued in 1983.The new bonds will carry a lower interest rate.Mr.Snell introduced Mr.Gary Larsen,Senior Underwriter,Prudential Securities,Incorporated and Mr.Mark Gardiner,Financial Advisor,Public Financial Management,Inc. Mr.Larsen reviewed the bond market conditions over the past few days and explained that the attempt to go to market on Tuesday,the 18th,was unsuccessful because the markethadbeensaturatedwithalarge$700 million issue.On Wednesday moming,the marketopeneddownandafteradjustingyields,the order period began at approximately 10:30a.m.(New York time).Mr.Larsen advised that the underwriting was completed. Mr.Gardiner explained that they (Public Financial Management,Inc.)were also followingthemarketconditions."We have interest rates starting at a 3.5%coupon on the 1994 maturity,out to 6.2%on the 2010 maturity.That gives us an overall true interest cost onthisissueof5.99%which is well below the planned interest rate.We are very pleased with this level and recommend that the board accept this pricing.” Board of Directors -Minutes October 23,1992 a pilot format or some other type of format that would take the program forward.Mr.Jessee so instructed staff to comply.There were no objections. Healy Clean Coal Project.Mr.°'Snell reported that on Friday,October 16, 1992,the Department of Energy released the draft Environmental Impact Statement (EIS)for printing.He advised that there had been a substantial delay from the original project schedule in obtaining the draft EIS.Because of the delay,a meeting has been scheduled for the week of October 26,1992,in Seattle,Washington between the Department of Energy officials and other principal project team members to discuss the potential impacts to the project budget and schedule.Staff anticipates presenting an update at the November meeting. Unalaska Geothermal Project.Mr.Snell introduced Mr.Mike Hubbard of R.W.Beck and Mr.Dave Eberle of the Alaska Energy Authority.Mr.Snell advised that a preliminary feasibility analysis of the project had been completed. Mr.John Olson presented the board with an overview of the project and its current status.AIDEA Resolution No.A92-11 authorized staff to enter into a non-binding Letter of Intent with GEOlectric Power Company relating to the Authority's possible participation in the Project. Mr.Olson explained that the analysis basically showed that for a reasonable budget forecast for the development,a straight forward revenue financing at a bond interest rate of 6.5%would show a power cost that would be higher than the processors in the Unalaska/Dutch Harbor area were willing to pay in the past when the project was being administrated directly by the Alaska Energy Authority."There is a problem if we were to take this as a conventional financing in the sense that the costs are higher than the™nominal .12 cent per kilowatt hour figure that was considered then." GEQlectric Power Company continues to view the project as favorable.Mr. Olson stated that he thought the numbers showed the project still was within reach and GEOlectric Power Company felt there was hope that the venture could still be secured., Mr.Olson advised that staff's next step would be to obtain an executed Reimbursement Agreement between AIDEA and GEOlectric Power Company."We have a project that with some equityis still a possibility,but as a direct revenue finance issue,it does not look feasible."Staff is in very preliminary stages of the project.No board action is required at this time. Mr.Snell reiterated Mr.Olson's comments advising that,"We will be going forward in executing a letter of intent which is non binding and allows both parties to proceed with the project.But prior to proceeding,we will require that they execute a Reimbursement Agreement with AIDEA (in line with the Resolution A92-11). -15- Board of Directors -Minutes October 23,1992 Brief board discussion was heard.Mr.Snell and Mr.Olson reviewed the procedures for moving forward with the project.Mr.Snell emphasized having a Reimbursement Agreement in place prior to any further development of the project and there would be no further expenditures until a Reimbursement Agreement was executed. Directors Comment -Mr.Snell advised that staff had taken steps to schedule a meeting with the editorial board of the Anchorage Daily News after the release of an article in their Sunday,October 18,1992 newspaper ("AIDEA's Shifting Focus").The meeting was being planned for sometime during the week of November 23,1992.Board members were welcome to attend.Mr.Jessee and Mr.Nuriddin expressed interest in attending. B.Board of Directors -Form for Reimbursement of Expenses -Mr.Snell reviewed the form for reimbursement of expenses and proposed that they be used by the public board members for an accurate reimbursement of work performed on behalf of the Authority.There were no objections. C.Next Meeting Date -Staff suggested that the next meeting be scheduled:for Friday,November 20,1992 -at-9:00 a.m.as a teleconference.Board members discussed combining the'November and December meeting dates.Staff was instructed to poll the board for workable dates.There were no objections. 8.BOARD COMMENTS -Mr.Nuriddin complemented staff on initiating a meeting with the editorial staff of the Anchorage Daily News."It is incumbent on us (as board members)to take the extra measures to ensure that complete information is available to the public.Otherwise,our image and ability to do good things for our State will be crippled." Mr.Jessee thanked Ms.Rose Ragsdale of the Alaska Journal of Commerce for her recent article on AIDEA.Her article gave the public another view of what AIDEA does, Mr.Jessee and Mr.Rexwinkel discussed the Council of Development Finance Agencies Forum scheduled for October 16 &17,1992 in Chicago,Illinois. A preliminary agenda would be sent to Mr.Rexwinkel.Attendees may consist of Mr.Jessee,Mr.Snell,Mr.Rexwinkel,and Mr.Scott of the Alaska Permanent Fund. 9.ADJOURNMENT -Mr.Nuriddin moved for adjournment.Seconded by Mr. Blatchford.There being no objections,Mr.Jessee adjourned the meeting. XY (hebatOS:LLWilliamR.Snell,Secretary WRS/ss DOCSMS15 16- Wt.ALASKA INDUSTRIAL DEVELOPMENTABBYANDEXPORTAUTHORITY % 480 WEST TUDOR «ANCHORAGE,ALASKA 99503-6690 +(907)561-8050 *FAX (907)561-8998 1. BOARD OF DIRECTORS Teleconference Meeting July 17,1992 -9:00 a.m. Anchorage/Juneau CALL TO ORDER Mr.Jessee called the meeting to order at 9:10 a.m. ROLL CALL Roll call was requested.Directors present in Anchorage:J.Jack Jessee,Commissioner Darrel Rexwinkel,Acting Commissioner Paul Fuhs and Kaleem Nuriddin.Commissioner Edgar Blatchford arrived later during the meeting. Directors present in Juneau:None AIDEA staff present:William R.Snell (Executive Director),Valorie F.Walker (Deputy Director -Finance),John Delano (Acting Deputy Director --Credit),John Olson (Manager of Design and Construction) and Sharron Sigafoos (Administrative Assistant). Others attending in Anchorage:Peter Argetsinger and Cynthia Cartledge [Bond Counsel (Wohlforth,Argetsinger,Johnson &Brecht)], Jon Rubini [Counsel (Birch,Horton,Bittner)],Jan Sieberts,Kyle Taylor and Karen Skurla (National Bank of Alaska),Peter Diamandis, John Wanamaker and Al Meticka (International Microspace,Inc.),John Siberts (Alaska Science &Technology Foundation)and Jim Yarmon (Polaris Fund). AGENDA ADDITIONS --Mr.Snell requested that two Resolutions relating to a Geothermal Resources Development Project (A92-11)and Poker Flat Orbital Research Range (A92-12)be discussed as Items Dl and D2.There were no objections. 3.PUBLIC COMMENTS -There were no public comments. 4.PRIOR MINUTES -June 19,1992 Mr.Rexwinkel moved for the approval of the minutes.Seconded by Mr. Fuhs.There being no objections,the minutes were approved as written. 5.OLD BUSINESS -No old business was presented to the board. 'Board of Directors utes July 17,1992 time for the board to review the material.Since there would a large amount of material to consider,a policy decision may not take place until September. Staff was directed to advise the general public when inquires for refinances were made,that the board would not be considering any further refinancing issues until a clear policy has been established. AGENDA ADDITIONS Resolution A92-11,Geothermal Resources Development Project Mr.Fuhs reviewed resolution A92-11 for the board.Mr.Fuhs stated that he appreciated the board's review of the project and explained that he has been involved in the project for the past six years.The project is for a geothermal project near Unalaska,Alaska."The state and local government have invested about $7 million to improve the geothermal resource.It is very high grade and extensive.It is expected to provide electricity to the community for up to 500 years because the resource is so great." Mr.Fuhs explained that because of new Environmental Protection Agency regulations on air quality,the City of Unalaska can not put in additional electrical generation.The project is an alternative that does not add to air emissions.Present kilowatt per hour price is 18 cents.The project will reduce the cost to about 12 cents per kilowatt hour.This project is totally economics driven,no subsidies are involved. Mr.Fuhs referenced a meeting he attended on July 16,1992.Those attending included Riley Snell (AIDEA),Ron Garzini (Alaska Energy Authority),GEOlectric Power Company ("GEO Power"),The Aleut Corporation,Arctic Slope Regional Corporation and VECO International.Those investors were identified as companies interested in being private sector investors.The other investors would be principally Japanese corporations who operate in Dutch Harbor and would be the primary industrial users. Mr.Fuhs advised that bonds may be sold or equity positions may possibly be held by the state.During conversations with Mr.Snell and Mr.Garzini,it was determined that the use of AIDEA funds to help finance the project would be beneficial."This resolution will help the company,GEOlectric Power Company ("GEO Power"),put together its private sector investors and will also give the Alaska Energy Authority an additional tool in helping to put the project together.You could say it is a joint Alaska Energy Authority and AIDEA project." Resolution A92-11 approves AIDEA's commitment to perform a feasibility study and allow staff to work with the Alaska Energy 'Board of Directors -utes July 17,1992 Authority.Staff would return to the board with a proposal at a later time.The resolution also includes a commitment of up to $100,000.00 in assets of the Economic Development Account for staff to undertake a review of the feasibility of the project. Mr.Rexwinkel asked about AIDEA reimbursement of funds,Mr.Snell referenced Section 3 of the resolution which requires the execution of a reimbursement agreement prior to proceeding into the feasibility analysis.He explained the structure of the agreement would contain two features;1)if the project is not feasible or there is no role for the Authority,payment back to the Authority of the principal amount of funds extended will be triggered;2)if there is a commitment that tthe Authority is going to proceed into the development of the project with the participants,there is still the pay back provision but,it would be over a longer period of time. Mr.Rexwinkel moved for the approval of Resolution A92-11.Seconded by Mr.Nuriddin. Board discussion was heard relating to the construction time line; the project being the first geothermal project in Alaska;and the geothermal energy potential of Pilgrim Hot Springs near Nome. Mr.Fuhs advised that several lower grade geothermal projects existed in Alaska.Lower grade meaning a lower temperature fluid which requires a different technology to produce.Unalaska geothermal project is of a higher grade. Mr.Blatchford encouraged the development of geothermal energy in rural Alaska (i.e.Pilgrim Hot Springs).Mr.Snell stated that staff would work with the Alaska Energy Authority to explore other potential areas within the state. There being no further discussion,a roll call vote was called.Upon roll call vote,with all board members voting in the affirmative, Resolution A92-11 was approved. ADMINISTRATIVE NOTE:Mr.Jessee explained that during the process of interviewing candidates for the executive director position,ideas and comments had been solicited from the candidates relating to AIDEA.Mr. Jessee distributed the information sheets to each board member and requested their comments. Resolution A92-12,Poker Flat Research Range -International MicroSpace Inc. Resolution A92-12 relating to the Poker Flat Research Range was introduced by Mr.Snell.Individuals present at the meeting to discuss the project included representatives from International Microspace,Inc.("IMI")(Peter Diamandis,John Wanamaker and Al Sunday,October 9,1994 AIDEA approves feasibility study The Associated Press Board members of the Alaska Industrial Develop- ment and Export Authori- ty on Friday authorized the agency's participation in a feasibility analysis on the Makushin'geothermal project at Unalaska. AIDEA agreed to con- tribute up to $140,000 to- 'ward the $558,000 study,with fundsto be later re-imbursed by OESI PowerCorp.of Lake.Oswego,Ore.©oo.The.project,'tentatively set for start-up in late 1997, was proposed-as a clean,renewable source of elec-tricity féy Unalaska andDutchHarbor.;