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Vol. 13, No. 1 Week of January 06, 2008
Providing coverage of Alaska and northern Canada's oil and gas industry

Preliminary BIF out for Mount Spurr

DNR proposing geothermal exploration area for 16 tracts totaling some 36,000 acres northwest of Trading Bay in Southcentral

Kristen Nelson

Petroleum News

A preliminary best interest finding has been issued for a proposed Mount Spurr geothermal exploration area. The Alaska Department of Natural Resources Division of Oil and Gas said Dec. 27 that comments must be received on or before Jan. 28 to be considered in the final best interest finding which is expected to be issued in March.

Mount Spurr geothermal lease sale No. 3 would include 16 tracts of state-owned land, a total of approximately 36,057 acres, northwest of Trading Bay along the southern flank of Mount Spurr, including the east end of Chakachamna Lake and part of the Chakachatna River. The area is entirely within the Kenai Peninsula Borough, approximately 40 miles west of the village of Tyonek, within townships 13 and 14 north, ranges 16 and 17 west, Seward Meridian.

The finding is available on the division’s Web site at:

Offering would be third sale

This offering would be the third geothermal lease sale in the Mount Spurr area.

Geothermal energy is heat taken from the earth and geothermal resources include underground reservoirs of hot water or steam which can reach the surface as hot springs, geysers, mud pots or steam vents. Mount Spurr is an active volcano and has potential as a geothermal energy source, but the division said “the presence of exploitable reservoirs remains unknown.”

Geothermal resources must be trapped in reservoirs near the surface of the earth to be extractable and can be accessed with wells. The heat energy is used to create electricity or used directly to heat buildings, for greenhouses, industrial processes and aquaculture. Because Mount Spurr is remote, the division said “if development occurs, the geothermal energy produced will be converted to electricity.”

Location in relation to population is an issue. While Alaska has some 140 volcanoes — one-third of which are active — and more than 90 hot springs, many of those resources are far from population centers. Mount Spurr, however, is close to the Southcentral power grid.

Mount Spurr tracts were offered in the state’s first geothermal lease sale in 1982; a single tract was leased and the lease was terminated in 1992. The state’s second geothermal sale, in 1986, offered two tracts, both of which were leased; one lease expired in 1996; the second lease was terminated in 1990.

No coastal zone acreage included

The division said the state’s initial proposal for the Mount Spurr geothermal exploration area included a small portion of land within the state’s coastal zone; that acreage has been deleted. As a result the proposed geothermal exploration area is not subject to the policies of the Alaska Coastal Management Program or the Kenai Peninsula Borough Coastal Management Program.

To dispose of geothermal resources, the state’s administrative code requires that the state designate tracts and call for applications. The division designated tracts and called for applications and comments in April 2007.

If tracts receive only one application, the state can issue noncompetitive prospecting permits; for tracts receiving two or more applications, competitive leasing is required.

The division said all tracts in the proposed Mount Spurr geothermal lease sale will be leased competitively.

There is a 30-day public comment period. The director of the Division of Oil and Gas will then determine if the proposed geothermal lease sale is in the state’s best interest and issue a decision and final finding; that decision is expected to be issued in March.

Exploration would be for reservoirs

The division said geothermal exploration is a search for hydrothermal reservoirs. The depth, volume, temperature and permeability of such reservoirs are then estimated, along with the chemical and physical nature of the reservoir fluids.

Geologic field crews would do initial reconnaissance and prospective locations could be further explored by electrical and electromagnetic surveys.

“Passive seismic monitors that record seismic movements are often used to locate geothermal reservoirs,” the division said.

If an area still looks prospective, “shallow holes are drilled to allow measurement of the temperature gradient.” The goal is to determine if a heat source is present. Temperature gradient holes, the division said, are typically 300-500 meters deep and can be drilled from portable, truck-mounted or helicopter-lifted drill rigs.

The next step is deep exploratory drilling.

“Only deep drilling, often of two or more wells, and well testing can prove the commercial viability of a geothermal system,” the division said.

Numerous wells, spaced over the reservoir, are used for commercial production. The producing wells are connected to nearby power plants with gathering lines.

Geothermal energy must be used or converted to electricity “within a few miles of its recovery from the ground,” the division said. Because of that, it is likely a power plant would be built close to the geothermal resource and a power line built to the existing electrical grid. The Beluga power plant, which has transmission lines to Anchorage, is approximately seven miles northeast of Tyonek and underwater cables carry power between Point MacKenzie and Point Woronzof.

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