NEWS BULLETIN

September 10, 2008 --- Vol. 14, No. 91September 2008

Mount Spurr geothermal lease sale nets $3.5 million for state

Today’s State of Alaska geothermal lease sale on 16 tracts on the south side of Mount Spurr, to the west of Cook Inlet, netted an estimated $3.5 million in apparent high bids. The 21 bids received from three bidders covered all 16 of the tracts on offer. Ormat Nevada, a geothermal energy company based in Reno, was the apparent high bidder on all but one of the tracts. That remaining tract was picked up by Chad Atterman.

Ormat Nevada outbid Iceland America on four tracts, with bonus bids of $1.5 million and $1.4 million on two of those tracts in the central part of the lease sale area.

Amy MacKenzie, attorney for Ormat Nevada, told Petroleum News that the company started approaching the Alaska Department of Natural Resources about a couple of years ago, to see if a Mount Spurr lease sale could be held. Rising energy prices and dwindling gas supplies in the Cook Inlet area made the prospect of a Mount Spurr geothermal development attractive.

“It’s the perfect storm of opportunities,” MacKenzie said.

Kevin Banks, director of Alaska’s Division of Oil and Gas, told Petroleum News that he was very pleased with the sale results. The division had been concerned that the lease terms required under state statutes and regulations might deter bids, he said.

“I am happy that we got that little bit of tug-of-war and that competition, and many of the tracts received more than a single bid,” Banks said.

MacKenzie said that it might take a couple of years to determine whether there is a viable geothermal resource for electricity generation at Mount Spurr and that field exploration would likely start in the summer of 2009. The lease sale area is about 40 miles from Beluga, the nearest point on the Southcentral Alaska electricity grid.

See full story in Sept. 14 issue of Petroleum News, available to subscribers online at noon, Friday, Sept. 12, at www.PetroleumNews.com


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