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HomeMy WebLinkAboutUnalaska Geothermal Project Sen Murkowski 1994r.%ALASKA INDUSTRIAL DEVELOPMENT [_)*AND EXPORT AUTHORITY f=ALASKA.qm)=ENERGY AUTHORITY 480 WEST TUDOR ANCHORAGE,ALASKA 99503 907 /561-8050 FAX 907 /561-8998 June 15,1994 The Honorable Frank H.Murkowski United States Senate 706 Hart Building Washington,D.C.20510-0202 Attention:Mr.Joe Keeley Subject:Unalaska Geothermal Project Dear Senator Murkowski: In response to the recent telephone conversation between Mr.Keeley of your office,and Mr. Riley Snell,Executive Director of the Authority,enclosed is a report prepared by R.W.Beck which assesses a recent development proposal for the Unalaska Geothermal Project. The state legislature did not provide funds last session for drilling a commercial well and other activities that would have confirmed the steam production capacity of the field.As a result,no drilling activity is planned for this summer.We will be meeting with representatives of the project sponsor to determine if they have further interest in pursuing this project. One of the important aspects of project feasibility will be qualifying for the federal incentive of 1.5¢/kwh for geothermal energy production as provided in the Energy Policy Act of 1992.We have appreciated the information and assistance your office has provided on this energy production incentive program.: Thank you for your interest in the Unalaska Geothermal Project.We will keep you informed of developments following our meeting with the sponsor.If you have further questions,please let me know. Sincerely, Jokn B.Olson,P.E.\Députy Director (Development) JBO:bif c:aidea/bjf200 cc:William R.Snell,Executive Director David Eberle,Project Manager |x e : Jal ALASKA INDUSTRIAL DEVELOPMENT -;¥,AND EXPORT AUTHORITY 480 WEST TUDOR «ANCHORAGE,ALASKA 99503-6690 »(907)561-8050 »FAX (907)561-8998 PROJECT:Unalaska Geothermal Project DATE:January 21,1994 CURRENT STATUS:R.W.Beck and Associates has reviewed OESI's proposal and updatedforecastofUnalaska's projected growth and energy requirements.Counsel to the Authority isworkingtodeveloptheRequirementsContract.A draft Memorandum of Understanding has beendistributedtotheCityofUnalaskaandthefishprocessorsoutliningthetermsofthePowerSalesAgreement.A meeting will be held in early February between the parties to discuss interest in theproject. PURPOSE:Due to economic growth resulting primarily from expansions in the on-shore fishprocessingindustry,Unalaska's energy requirements are expected to grow substantially ThisprojectprovidesanalternativeenergysupplyfortheCityofUnalaskaandreducesitsdependenceonfueloil,which fluctuates in price. PROJECT PARTICIPANTS:OESI Power Corporation has rights to the geothermal leases (7,000plusacresunderleasefromBattleMountainGold,Ltd.)and in September,1991 entered into anagreementwiththeAlaskaEnergyAuthority(AEA)to finance and develop the project.OESI hasbeenjoinedbytheGeoelectricPowerCompanyandhavepresentedaproposaltoAIDEAforconsiderationinfinancing.Participants in the project include the City of Unalaska,who is the localelectricutility,and the fish processors,which currently provide most of their own power.TheAlaskaIndustrialDevelopmentandExportAuthority(AIDEA)has been authorized by the AIDEABoardtoundertakeareviewofthefeasibilityoftheproject. BACKGROUND:From 1982 through 1987 the AEA conducted a phased exploration andfeasibilityprogramintheMakushinValley,about 12 miles from Unalaska.Exploration wellsprovedahighlyproductive380degreeliquid-dominated resource at less than 2,000 feet deep.OESI has conducted considerable preliminary engineering,financial planning,permitting andtechnicalfeasibilitywork.OESI has presented a turnkey approach to the construction of thegenerationandtransmissionsystems;the risk for geothermal field development has been presentedasthestate's risk.The total construction and field development costs are approximately $98million.AEA will assist AIDEA with an evaluation of the report presented to AIDEA by OESI andGeoelectricPowerCompany.Potential geoelectric contract customers include UniSea,Alyeska Seafoods,Westward Seafoods,American President's Line,Sealand,Icicle Seafoods,and a proposed Qawalangin Tribe of Unalaska public cold-storage plant.Development of the project is dependent on the cost of the power to be generated and whether power sales agreements can besecuredwithmajorindustrialusers. SOURCE OF FUNDS:The financing envisions the sale of bonds being sold by AIDEA;to be repaid through user fees. ECONOMIC EFFECTS:The geothermal energy project would provide Unalaska and DutchHarboraclean,renewable source of electricity,reduce the dependence on diesel generation;providelongtermprotectionfromfluctuatingfuelcosts;and help overcome the air quality problemsassociatedwithcurrentemissions.The cost of power,however,from the system may be higherthanthecurrentdieselgenerationduetosubstantialcapitalcostsrequired. SCOPE OF PROJECT:The 11.5 megawatt power plant is comprised of four modular powergenerationunits.The project includes the power plant,a road,and transmission line. e ” gue ALASKA INDUSTRIAL DEVELOPMENTPgANDEXPORTAUTHORITY -- 480 WEST TUDOR *ANCHORAGE,ALASKA 99503-6680 +(907)561-8050 «FAX (907)561-8998 PROJECT:Unalaska Geothermal Project DATE:November 1,1993 PURPOSE:Due to economic growth resulting primarily from expansions in the on-shore fish processing industry,Unalaska's energy requirements are expected to grow substantially ThisprojectprovidesanalternativeenergysupplyfortheCityofUnalaskaandreducesitsdependenceonfueloil,which fluctuates in price. PROJECT PARTICIPANTS:OESI Power Corporation has rights to the geothermal leases (7,000 plus acres under lease from Battle Mountain Gold,Ltd.)and in September,1991 entered into an agreement with the Alaska Energy Authority (AEA)to finance and develop the project.OESI hasbeenjoinedbytheGeoelectricPowerCompanyandhavepresentedaproposaltoAIDEAforconsiderationinfinancing.Participants in the project include the City of Unalaska,who is the local electric utility,and the fish processors,which currently provide most of their own power.TheAlaskaIndustrialDevelopmentandExportAuthority(AIDEA)has been authorized by the AIDEA Board to undertake a review of the feasibility of the project. BACKGROUND:From 1982 through 1987 the AEA conducted a phased exploration andfeasibilityprogramintheMakushinValley,about 12 miles from Unalaska.Exploration wellsprovedahighlyproductive380degreeliquid-dominated resource at less than 2,000 feet deep.OESI has conducted considerable preliminary engineering,financial planning,permitting andtechnicalfeasibilitywork.OESI has presented a turnkey approach to the construction of the generation and transmission systems;the risk for geothermal field development has been presented as the state's risk.The total construction and field development costs are approximately $98 million.AEA will assist AIDEA with an evaluation of the report presented to AIDEA by OESI andGeoelectricPowerCompany.Potential geoelectric contract customers include UniSea,AlyeskaSeafoods,Westward Seafoods,American President's Line,Sealand,Icicle Seafoods,and a proposed Qawalangin Tribe of Unalaska public cold-storage plant.Development of the project isdependentonthecostofthepowertobegeneratedandwhetherpowersalesagreementscanbesecuredwithmajorindustrialusers. SOURCE OF FUNDS:The financing envisions the sale of bonds being sold by AIDEA;to be repaid through user fees. ECONOMIC EFFECTS:The geothermal energy project would provide Unalaska and DutchHarboraclean,renewable source of electricity,reduce the dependence on diesel generation;provide long term protection from fluctuating fuel costs;and help overcome the air quality problems associated with current emissions.The cost of power,however,from the system may be higher than the current diesel generation due to substantial capital costs required. SCOPE OF PROJECT:The 11.5 megawatt power plant is comprised of four modular power generation units.The project includes the power plant,a road,and transmission line. PROJECT STATUS:A feasibility study is being conducted by R.W.Beck and Associates whichwillincludeanupdatedforecastofUnalaska's projected growth and energy requirements.Counsel to the Authority is working to develop the form of the Requirements Contract.A mid- November meeting is planned with OESI,the processors,the City of Unalaska,and AIDEA to review the information available. ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITYAnewsAi 480 WEST TUDOR «ANCHORAGE,ALASKA 99503-6690 +(907)561-8050 +FAX (907)561-8998 PROJECT FACT SHEET PROJECT:Unalaska Geothermal Project PURPOSE:Due to economic growth resulting primarily from expansions in the on-shore fish processing industry,Unalaska's energy requirements are expected to grow substantially This project provides an alternative energy supply for the City of Unalaska and reduces its dependence on fuel oil,which fluctuates in price. PROJECT PARTICIPANTS:OESI Power Corporation has rights to the geothermal leases (7,000 plus acres under lease from Battle Mountain Gold,Ltd.)and in September,1991 entered into an agreement with the Alaska Energy Authority (AEA)to finance and develop the project.OESI has been joined by the Geoelectric Power Company and have presented a proposal to AIDEA for consideration in financing. Participants in the project include the City of Unalaska,who is the local electric utility,and the fish processors,which currently provide most of their own power.The Alaska Industrial Development and Export Authority (AIDEA)has been authorized by the AIDEA Board to undertake a review of the feasibility of the project. BACKGROUND:From 1982 through 1987 the AEA conducted a phased exploration and feasibility program in the Makushin Valley,about 12 miles from Unalaska.Exploration wells proved a highly productive 380 degree liquid-dominated resource at less than 2,000 feet deep.OESI has conducted considerable preliminary engineering,financial planning,permitting and technical feasibility work.OESI has presented a turnkey approach to the construction of the generation and transmission systems;the risk for geothermal field development has been presented as the state's risk.The total construction and field development costs are approximately $98 million.AEA will assist AIDEA with an evaluation of the report presented to AIDEA by OESI and Geoelectric Power Company.Potential geoelectric contract customers include UniSea,Alyeska Seafoods,Westward Seafoods,American President's Line,Sealand,Icicle Seafoods,and a proposed Qawalangin Tribe of Unalaska public cold-storage plant .Development of the project is dependent on the cost of the power to be generated and whether power sales agreements can be secured with major industrial users. SOURCE OF FUNDS:The financing envisions the sale of bonds being sold by AIDEA;to be repaid through user fees. ECONOMIC EFFECTS:The geothermal energy project would provide Unalaska and Dutch Harbor a clean,renewable source of electricity,reduce the dependence on diesel generation;provide long term protection from fluctuating fuel costs;and help overcome the air quality problems associated with current emissions.The cost of power,however,from the system may be higher than the current diesel generation due to substantial capital costs required. SCOPE OF PROJECT:The 11.5 megawatt power plant is comprised of four modular power generation units.The project includes the power plant,a road,and transmission line. STATUS:AIDEA will conduct preliminary financial feasibility analysis (scope of work is attached).The review will include evaluation of the terms of power sales agreements that are envisioned;the ability to sell tax-exempt bonds for the project;and the legal and regulatory issues associated with project development. 8/27/93 R.W.Beck and Assoctates 1.Coordinate assignments,responsibilities,and schedules of all parties involved with developing a briefing paper on the Unalaska Geothermal Project.All parties will be on a separate contract to AEA or AIDEA,but R.W.Beck will act as project coordinator. Collect written documents from all parties and assimilate into one complete briefing document.The document,in general,shall address the following Project issues: Financing Requirements Cost of Power Marketability Issues Procurement Issues Environmental Issues Contractual and Credit Issues Legal Issues The Project developer has advanced the concept of financing the Project with the use of a requirements contract instead of the take-or-pay concept originally envisioned by the State.The differences between the two types of contracts and the various risks associated with each will be described in the briefing document. The focus of this discussion should be with the requirements contract since a take-or-pay contract is not acceptable to the power users. Specific inputs into the briefing document by R.W.Beck will include the following: Project description and history of State participation Description of Project users Usability of Project output Verification of cost of power analysis provided by developer Determination of State financial assistance required,if any General description of existing avoided cost found in area Language on benefits on integrating existing diesel generators Support in risk analysis of Project financing Support in developing an outline of a power sales agreement General assessment of developer's tumkey proposal for completeness and reasonableness Language on IDB allocation request by the State PFM Provide written input to R.W.Beck for inclusion in the Unalaska Geothermal Project Report.Input shall summarize analysis regarding the structure of a requirements contract,an assessment of the marketability of bonds sold using a requirements contract as security,and the potential effects of this financing on other AIDEA/AEA bond issues.Specific issues to be addressed include: 1.What are the advantages and disadvantages of a requirements contract vs.a take- or-pay contract? 2.Would bonds issued for this Project and secured by a requirements contract incur an interest rate premium over those secured by a take-or-pay contract?If so,how much? 3.What effect would the additional security of the moral obligation of the State have on the Project bonds? 4.Would the pledge of the moral obligation to the Project bonds have an effect on future State financings using the moral obligation? 5.Would this Project financing have any effects on AIDEA/AEA's bond rating or future AIDEA/AEA bond issues? 6.What are the major aspects of a turnkey contract with the developer required for asuccessfulbondfinancing? 7.What are the major aspects of a requirements contract with the power purchasers required for a successful bond financing? 8.Under separate cover,provide a credit report to AIDEA regarding the financial health of the Project developer. Doug Mertz Provide written input to R.W.Beck for inclusion in the Unalaska Geothermal Project Report.Input shall summarize certain environmental and permitting issues as outlined below. 1.What are the existing air quality violations and problems found presently in the Unalaska/Dutch Harbor area? 2.What technologies may be used by existing diesel generators to remedy current air quality concerns?(Input from R.W.Beck.) 3.What are the overall benefits of the Project on air quality? 4.What air quality issues might need to be addressed in developing the Project? 5.Provide a list of permits and licenses that will be required in order for the Project to be built. Baldwin/Rubini Provide written input to R.W.Beck for inclusion in the Unalaska Geothermal Project Report.Input shall summarize certain legal issues that must be addressed in a preliminary fashion.These issues include: 1.wsResearch legality of AIDEA having a sole source turnkey contract with the developer.Provide written summary of issues researched and areas that may need to be assessed in greater detail.(AEA has previously performed some research on this issue.) Research issues on ownership and issuance of debt with regard to the recent legislation making AEA part of AIDEA. Can AIDEA/AEA issue debt and pledge the moral obligation of the State as additional security for the bonds? Based on the work of PFM,are there any other aspects of a turnkey or requirements contract required? oll pros oh oryhen@ 124 [Lar ® . ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY 480 WEST TUDOR *ANCHORAGE,ALASKA 99503-6690 »(907)561-8050 »FAX (907)561-8998 PROJECT:Unalaska Geothermal Project DATE:May 19,1993 SOURCE OF FUNDS:Up to $80 million to be financed through the sale of tax-exempt bonds sold by the Alaska Energy Authority (AEA)or AIDEA;to be repaid through user fees. PURPOSE:Due to rapid economic growth resulting primarily from expansions in the on-shore fish processing industry,Unalaska's energy requirements have grown dramatically.This project provides an alternative energy supply for the City of Unalaska reducing its dependence on fuel oil,which fluctuates in price. PROJECT PARTICIPANTS:OESI Power Corporation owns the geothermal leases and in September of 1991 entered into an agreement with AEA to finance and develop the project.OESI has since withdrawn due to unrelated financial difficulties,but Geoelectric Power Company is seeking to develop the project under a different financing structure.The City of Unalaska will purchase the generatedpoweranddistributeandsellelectricalenergytotheindustrialcustomersofUnalaskaandDutchHarbor. AIDEA has been authorized by the AIDEA Board to undertake a review of the feasibility of the project. BACKGROUND:From 1982 through 1987 the AEA conducted a phased exploration and feasibility program in the Makushin Valley,about 12 miles from Unalaska.Exploratory wells proved a highly productive 380 degree liquid-dominated resource at less than 2,000 feet deep.OESI Power Corporation owns the geothermal rights (7,000 plus acres under lease from Mountain Gold,Ltd.)and has entered intoanagreementdatedSeptember27,1991 with AEA to finance and develop the project.OESI did a largeamountofpreliminaryengineering,financial planning,permitting and technical feasibility work. Consultants for AEA have prepared load,geothermal resource and economic studies and are conducting a preliminary evaluation of OESI's feasibility report.Potential contract customers include UniSea, Alyeska Seafoods,Westward Seafoods,American President's Line,Sealand and Icicle Seafoods.Project development,however,is presently at an impasse due to the fact that major industrial customers have not yet negotiated power purchase agreements. ECONOMIC EFFECTS:The geothermal energy project would diversify Unalaska and Dutch Harbor'sdependenceonasingleenergysourceandwouldprovidelongtermprotectionfromincreasedfuelcosts.The cost of power from the system could be quite high,however,due to substantial capital costsrequired.A preliminary study of power costs is underway. SOCIAL EFFECTS:The project would provide a stable and dependable source of energy in this remote community. SCOPE OF PROJECT:The 10 -12 megawatt power plant is comprised of four modular power generation units based on the proprietary Ormat Energy Converter technology.The project includes thepowerplant,a road,a dock and transmission line and would be located approximately 12 miles fromUnalaskaintheUpperMakushinValley. STATUS:Three alternative methods to finance the project have been translated into Japanese and will be presented to Japanese fish companies (primary customers of the proposed project)through theDepartmentofCommerceandEconomicDevelopmentinthenearfuture. ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY 480 WEST TUDOR *ANCHORAGE,ALASKA 99503-6690 *(907)561-8050 »FAX (907)561-8998 PROJECT:Unalaska Geothermal Project DATE:February 8,1993 SOURCE OF FUNDS:Up to $80 million to be financed through the sale of tax-exempt bonds sold by the Alaska Energy Authority (AEA)or AIDEA;to be repaid through user fees. PURPOSE:Due to rapid economic growth resulting primarily from expansions in the on-shore fish processing industry,Unalaska's energy requirements have grown dramatically.This project provides an alternative energy supply for the City of Unalaska reducing its dependence on fuel oil,which fluctuates in price. PROJECT PARTICIPANTS:OESI Power Corporation owns the geothermal leases and in September of 1991 entered into an agreement with AEA to finance and develop the project.OESI has since withdrawn due to unrelated financial difficulties,but Geoelectric Power Company is seeking to develop the project under a different financing structure.The Cityof Unalaska will purchase the generated power and distribute and sell electricalenergytotheindustrialcustomersofUnalaskaandDutchHarbor.AIDEA has been authorized by the AIDEA Board to undertake a review of the feasibility of the project. BACKGROUND:From 1982 through 1987 the AEA conducted a phased exploration and feasibility program in the Makushin Valley,about 12 miles from Unalaska. Exploratory wells proved a highly productive 380 degree liquid-dominated resource at less than 2,000 feet deep.OESI Power Corporation owns the geothermal rights (7,000 plus acres under lease from Mountain Gold,Ltd.)and has entered into an agreement dated September 27,1991 with AEA to finance and develop the project.OESI did a large amount of preliminary engineering,financial planning,permitting and technical feasibility work.Consultants for AEA have prepared load,geothermal resource and economic studies and are conducting a preliminary evaluation of OESI's feasibility report.Potential contract customers include UniSea,Alyeska Seafoods,Westward Seafoods,American President's Line,Sealand and Icicle Seafoods.Project development, however,is presently at an impasse due to the fact that major industrial customers have not yet negotiated power purchase agreements. ECONOMIC EFFECTS:The geothermal energy project would diversify Unalaska andDutchHarbor's dependence on a single energy source and would provide long termprotectionfromincreasedfuelcosts.The cost of power from the system could be quite high,however,due to substantial capital costs required.A preliminary study of power costs is underway. SOCIAL EFFECTS:The project would provide a stable and dependable source of energy in this remote community. SCOPE OF PROJECT:The 10 -12 megawatt power plant is comprised of four modular power generation units based on the proprietary Ormat Energy Converter technology.The project includes the power plant,a road,a dock and transmission line and would be located approximately 12 miles from Unalaska in the Upper Makushin Valley. Qsus=(907)274-1056 FEB 0 5 1993 DUTCH HARBOR FISHERMAN Date Client No.7204Geothermal project may still'be possible By AnnTouza «224 Fisherman staff The Makushin Geothermal Power Project,which has lain dormant this past year,is showing signs of life again. Studies done by the state in the '80s found the 5,580-foot Makushin Volcano on Unalaska Island to be a "geothermal resource capable of producing a significant amount of energy.” In 1991 Ormat Energy Systems Inc.went to the Alas- ka Energy Authority with a proposal to develop a 14- megawatt,electricity-generating plant on the volcano, approximately 12 miles west of the city of Unalaska. Progress on the project came to a halt last spring when OESI and AEA were unable to negotiate long- term commitments from the major local seafood pro- cessing plants to buy electricity from the project. Last year GEOlectric Corp.,an offshoot of OESI, came forward with a new proposal:a joint venture with the Alaska Industrial Development and Export Authority and the AEA. Now the State Department of Commerce is try- ing to determine if there is enough local interest in the project to continue pursuing it. Last week the Unalaska City Council passed a resolution reaffirming the city's support for the pro- ject.The resolution will be attached to a letter from Gov.Walter Hickel to the parent companies of the three major processing plants,asking that a meeting be set up to discuss the project. Although several studies have shown the project is technically feasible,the question still remains whether it is economically feasible. A report prepared by engineering consultants R.W.Beck &Associates of Anchorage,estimates total construction costs would range from $63 mil- lion to $85 million. Annual operating costs could run over $2 million. Although it is believed that the project could sup- ply all of Unalaska's electricity for at least 30 years, the initial kilowatt rate may be higher than consumers are willing to pay. Project developers previously have projected a rate of about 12 cents per kilowatt hour.; Westward Seafoods,UniSea and Alyeska Seafoods in Unalaska currently have their own diesel- fired power plants for generating electricity. Greg Baker,vice-president and general manager of Westward,said these plants cannot be expected to commit to buying electricity at a higher price than they currently generate for themselves. Finding funding for construction also remains a major stumbling block. Brent Petrie,manager of planning and project devel- opment for AEA,said the state does not currently have any funding available for the project.But AEA and AIDEA may consider issuing tax-exempt bonds. Other financing schemes are being considered, including loans from the state,city,fish processors or other private third-party developers.Asking the pro- cessors to become partners in the project is another option. But Baker said this is "the wrong time to be com- ing to these plants asking for a multi-million-dollarinvestment.”, With the current situation,the project "could pos- sibly be economic,”Petrie said.It "is certainly wor- thy of further consideration.” As the community grows,the project will become more economically feasible,he added. If the project ever gets off the drawing table,it will be the first geothermal-generating plant in Alas- ka. ALASKA ECONOMIC REPORT;October 22,1992 General Business: AHFC has $147 million imearnings Alaska Housing Finance Corp.posted a $147 mil- lion profit for the state fiscal year ending June 30.$32 million of that is in a settlement of litigation with a mortgage insurer.The year's earnings means that AHFC may pay a $40.7 million "dividend"to the state's general fund,under an existing AHFC policy of paying half of unrestricted earnings back to the state.If AHFC''s board approves the dividend,it will be more than twice the amount paid last year.The State housing corporation is paying dividends as a return on equity investments made in AHFC from the state general fund.Dividends paid over the last two years have totalled $36.6 million. KK Autogenesis sales behind target Autogenesis,the Anchorage-based medical tech- nology firm,says its first-year sales are lagging, averaging about one-fourth levels,that were antici- pated.The company has estimated 100 sales a month of a new high-tech bone-treatment device,but have instead averaged 25.Company officials hope new reports on the effectiveness of their devices will boost sales,and hope to reach target levels by year-end. Autogenesis is being watched .as one of the first technology start-ups nurtured along by the Alaska Science and Technology Foundation and the Polaris Fund,a venture capital group working with state Sunds. AK Unalaska geothermal project hits snag An imaginative plan to harness geothermal energy for power supply to Unalaska is hitting snags:OESI. Power Corp.had proposed a $55 million project for power plant and connecting lines to Alaska Energy Authority,with an added $9-$10 million to be spent by OESIin geothermal field development.But OESI is apparently now out of the picture with a new firm, Geoelectric,organized by its principles.Geoelectric now proposes AIDEA come into the deal along with AEA.State officials also say their cost estimates for the project are $17 million over those putforth by the developers,and total $85 million.At that level,it would take a $25 million state grant to the project to make cost ofgeothermal power in Unalaska equal to costs ofpresent diesel-generated power. *x*x Chain expanion will bite local retailers Arrival of big national retailers like Kmart,possi- bly Wal-Mart Inc.,and expansion of discounters like Costco and Pace will see market share taken away from local retailers.Many of them will be unable to compete.In Fairbanks,commercial space brokers say they expect to see 300,000 sq.ft.of retail space on the market in the next two years as local firms lose out to the big chains.An Anchorage analyst projects 1 to 1.5 million million additional retail space leased in the next 18 months.But with population growth flat, that will have negative impacts on local retailers. Another wave of the future:Purchasing from internal or out-of-state suppliers.When Kmart subsidiary PayLess Drug Stores bought the Pay'n Save chain with 11 stores in Alaska,local suppliers who had done business with Pay'n Save lost out.Meanwhile, downtown Anchorage retailers,who get a lot of their business from visitors,don't expect to be affected much by the big chains.Retail analysts say what's driving the chain store expansion is lack of opportu- nities elsewhere.Right now,Alaska looks pretty good to them. aK KK Here's details on state loan to IMI Here's details of a proposed $3 million loan from the state-owned Alaska Aerospace Development Corp.to International Microspace,Inc.the company hoping to launch commercial satellites in Alaska. AADC would lend IMI $3 million to finance a $12.5 million federal launch contract in two payments, $1.25 million in February 1993 when the company gets defense department approval ofits rocket design, and $1.75 million when the company has demonstrated financial capability to the federal government and the rocket has passed inspections.IMI would repay the loan at prime plus 4.75 percent over six years,but with no payments on principal or interest in the first two years.The first part of the loan is secured by federal payments guaranteed under the contract. AADC also added a job-creation incentive,reducing interest on its loan by 25 percent for each full-time resident hired and .125 percent for each full-time consultant hired here.The company would reincor- porate as an Alaska corporation,use Alaska as a launch site for polar-orbit satellites and spend $3 million in Alaska between 1993 and 1998. ek Page 2 A'SHMENT "'B" ® ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY 480 WEST TUDOR «ANCHORAGE,ALASKA 99503-6690 «(907)561-8050 «FAX (907)561-8998 PROJECT:Unalaska Geothermal Project DATE:September 18,1992 SOURCE OF FUNDS:$80 million to be financed through the sale of tax-exempt bonds sold by the Alaska Energy Authority (AEA)or AIDEA;to be repaid through user fees. PURPOSE:Due to rapid economic growth resulting primarily from expansions in the on-shore fish processing industry,Unalaska's energy requirements have growndramatically.This project provides an alternative energy supply for the City of Unalaskareducingitsdependenceonfueloil,which fluctuatesin price. PROJECT PARTICIPANTS:OESI Power Corporation owns the geothermal leases and in September of 1991 entered into an agreement with AEA to finance and develop the project.OESI has since withdrawn,but Geoelectric Power Authority is seeking to develop the project under a different financing structure.The City of Unalaska will purchase the generated power and distribute and sell electrical energy to the industrial customers of Unalaska and Dutch Harbor.AIDEA has been authorized by the AIDEA Board to undertake a review of the feasibility of the project. BACKGROUND:From 1982 through 1987 the AEA conducted a phased exploration and feasibility program in the Makushin Valley,about 12 miles from Unalaska. Exploratory wells proved a highly productive 380 degree liquid-dominated resource at less than 2,000 feet deep.OESI Power Corporation owns the geothermal leases (7,000 plus acres under lease from Mountain Gold,Ltd.)and has entered into an agreement dated September 27,1991 with AEA to finance and develop the project.OESI did a large amount of preliminary engineering,financial planning,permitting and technical feasibility work.Consultants for AEA have prepared load,geothermal resource and economic studies and are conducting a preliminary evaluation of OESI's feasibility report.Potential contract customers include UniSea,Alyeska Seafoods,Westward Seafoods,American President's Line,Sealand and Icicle Seafoods,however,the project developer is presently at an impasse due to the fact that major industrial customers have not yet negotiated power purchase agreements. ECONOMIC EFFECTS:The geothermal energy project would diversify Unalaska andDutchHarbor's dependence on a single energy source and would provide long termprotectionfromincreasedfuelcosts.The cost of power from the system could be quite high,however,due to substantial capital costs required;a preliminary study of power costs is underway. SOCIAL EFFECTS:The project would provide a stable and dependable source of energy in this remote community. SCOPE OF PROJECT:The 10 -12 megawatt power plant is comprised of four modular power generation units based on the proprietary Ormat Energy Converter technology. The project includes the power plant,a road,a dock and transmission line and would be located approximately 12 miles from Unalaska in the Upper Makushin Valley.