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Vol. 15, No. 29 Week of July 18, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Naknek well promising

Utility finds geothermal source in King Salmon well but still needs more testing

Alan Bailey

Petroleum News

Things are looking good for a geothermal exploration project near Bristol Bay in southwestern Alaska. The Naknek G-1 well, spudded in August near King Salmon and completed in mid-April to a depth of 10,433 feet, has found a source of hydrothermal energy, Naknek Electric Association General Manager Donna Vukich told Petroleum News July 12. Although electric cooperative NEA has yet to fully test the well, the discovery is already sufficiently promising to justify the drilling of a second well, Vukich said.

NEA hopes to spud that second well in September she said.

“It is a hydrothermal system. The well recharges itself,” Vukich said. “… We have good promise for a good hydrothermal system to generate power.”

Flow testing

The drillers have placed nearly 3,000 feet of slotted liner in the bottom of the well and have been able to lift about 500 barrels of warm water daily. However, the current focus is on cleaning drilling mud from the well, to enable precise testing of the resource.

“Currently we are flow testing and lifting the well and cleaning out the well bore,” Vukich said.

Preparing the well for the liner required the use of large quantities of mud, so it is taking a while to pull the mud from the underground rock formation. And it took some time to obtain the compressors needed to lift fluids from the well, so that the lifting operation only started about three weeks ago and will probably last for another four or five weeks, Vukich explained.

However, the tools for the testing the characteristics of the hydrothermal source should arrive by the end of this week, she said.

“We do have temperature but it’s not accurately defined since we don’t (yet) have accurate tools for testing it,” Vukich said. However, the temperature of the recovered fluids is increasing as the well is cleaned out, she said.

“In the next few weeks we’ll be gaining the temperature, pressure data from the production zone areas and then as we clean … we’ll be able to define how it’s increasing,” Vukich said.

Deep heat

NEA had anticipated having to drill to between 9,000 and 12,000 feet to find a geothermal source in a region noted for volcanic activity, and where oil exploration wells have discovered temperatures in the range 250 to 300 F at depths around 12,000 feet. Temperatures in this range could drive what is termed a binary geothermal system, in which hydrothermal fluid vaporizes a low-boiling-point fluid such as a refrigerant, with the vapor from the lower-boiling-point fluid then driving a turbine-powered electric generator.

The electric co-op purchased a drilling rig and engaged geothermal contractor ThermaSource to do the exploration drilling, having used geophysical techniques and soil sampling to identify a prospective well site.

The co-op hopes to establish a new power source for up to 30 communities in southwest Alaska, to provide relief from the escalating fuel costs that have hit rural Alaska in recent years. Diesel-powered generators currently provide electricity in the region.

Given an adequate geothermal source, NEA hopes to build a new 25-megawatt power plant, expandable in stages to 50 megawatts, with a transmission network tying the power supply to various local communities.

Funding complications

Originally Sen. Ted Stevens had secured nearly $2.8 million in U.S. Department of Energy funding to help with the estimated cost of up to $14.9 million for the Naknek well, with Sen. Lisa Murkowski obtaining an additional $2.5 million earmark for the project. But because DOE determined after the start of drilling that the federal funding would require an environmental assessment, that well became ineligible for the federal funding, Vukich said.

However, NEA has secured a $12.5 million enhanced geothermal systems demonstration project award, of which $1.5 million can go toward the cost of the first Naknek well. And the State of Alaska has also awarded a $1.25 million grant toward that well, Vukich said.

On the other hand, the move of geothermal well permitting from the Alaska Department of Natural Resources to the Alaska Oil and Gas Conservation Commission has resulted in a need to permit the well along the same lines as oil and gas wells, thus increasing the well costs, Vukich said. The cost of the Naknek G-1 well eventually came in at around $20 million, with NEA picking up almost all of that cost, she said.

Vukich expects subsequent wells at the prospect to cost $7 million to $10 million, with $5.3 million in earmarks available for the second well and perhaps up to $5 million available for a third well.

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