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Vol. 12, No. 24 Week of June 17, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Naknek looks to geothermal energy

SW Alaska electric co-op plans seismic survey, deep drilling to find energy source for Bristol Bay region; Shell lending a hand

Alan Bailey

Petroleum News

Faced with the double whammy of depressed salmon prices and escalating energy bills, the Southwest Alaska community of Naknek is looking deep underground to alleviate the Bristol Bay region’s economic woes. Local electric co-op Naknek Electric Association plans to drill for a geothermal energy source that could power electricity generation for as many as 30 communities in the region, the NEA’s general manager Donna Vukich told Petroleum News on June 12.

NEA has been investigating the potential for geothermal energy in the Naknek area for about eight years, Vukich said. Initial research focused on the neighboring Katmai Range, in the Katmai National Research and Preserve, where there is obvious surface volcanic activity. But although potential geothermal resources were identified in the Katmai area, the fact that these resources lay inside the national park presented a major obstacle to development.

Deep drilling advances

However, recent technological advances in deep geothermal drilling present new opportunities for geothermal exploration in the Naknek area, to the west of the park. Geothermal developments in Iceland and by the U.S. Navy in California have demonstrated the effectiveness of deep drilling techniques, Vukich said.

A regional geologic fault called the Bruin Bay fault passes through the area. Fracture systems from that fault could provide conduits for the passage of geothermal water, Vukich said. And thermal data from oil exploration wells in the area show that at depths below 8,000 to 9,000 feet temperatures reach levels that could support what is known as a binary geothermal system, a system in which geothermal fluid vaporizes a lower boiling-point fluid such as a refrigerant. Vapor from the lower boiling point fluid then drives a turbine powered electricity generator.

“At about 12,000 feet some bottom hole temperatures were up in the 250 to 300 degrees Fahrenheit range (in wells at the east end of the Alaska Peninsula), which is adequate for a binary facility,” Vukich said. It’s all a question of finding a spot where there is also a source of hot water that could be brought to the surface, she said.

The technology of binary systems has improved in recent years to a point where geothermal water at relatively low temperatures can produce viable quantities of electricity — in 2006 Chena Hot Springs Resort in Alaska’s Interior started up a geothermal power plant producing 200 kilowatts of electricity from geothermal water at just 165 degrees Fahrenheit (see “Geothermal powers resort” in the Aug. 27, 2006 edition of Petroleum News and page 1 of this issue for a related news item).

Where to look?

NEA obtained some thermal imagery in the Naknek area 12 to 15 years ago while searching for coalbed methane, Vukich said. That imagery showed some thermal anomalies that could indicate the presence of either hydrocarbons or geothermal energy. Subsequent soil sampling found soil chemistry indicative of underground geothermal activity.

Based on this initial work NEA identified three sites for potential geothermal prospects. Two of these sites lie on the north side of the Naknek River at King Salmon, and the third site lies on the south side of the river halfway between King Salmon and Naknek. NAE then conducted shallow drilling at each of these sites, to test the soil chemistry and to test for bedrock under the soil. The soil chemistry in each of the wells confirmed the geothermal potential of the sites, although two sites showed stronger potential than the other. One well encountered bedrock at a depth of 250 feet, with the other two wells drilled down to 400 feet without encountering rock, Vukich said.

Having identified potential sites, NEA now needs to do some 3-D seismic surveying down to depths of 15,000 feet, to pinpoint a target for deep drilling. The company doesn’t anticipate drilling to 15,000 feet, but needs the seismic data to extend below the likely drilling depth, Vukich said.

Oil company Shell has been assisting NEA with geologic and seismic expertise, to help interpret well data from the region and plan the seismic operations, Vukich said.

“That’s where we’re at now,” Vukich said. “We’re hoping to get our seismic testing and modeling done this summer, so that we might be ready this winter to actually do a deep well drill.”


“So far NEA has financed 100 percent of the cost of the work we’ve done,” Vukich said (according to the NEA web site the company has invested about $400,000 in the project). The company is seeking financial assistance, although the NEA board is sanctioning the seismic work with or without external funding.

“Our board has committed to getting this (seismic) testing done whether we get the funding or not,” Vukich said. “… We think it’s the best use of our members’ money to be able to … change the way we do power generation and control our costs.”

However, the deep drilling will require external funding — NEA has been working with the Alaska congressional delegation and with the state to investigate possible funding sources, although no funding has yet been committed to the project.

And once NEA has found a geothermal source, the development of a power plant and electricity transmission network would involve major expense. The company hopes to build a transmission grid from the Naknek/King Salmon area southwest to Pilot Point; northeast to Iliamna and Port Alsworth; and northwest to Dillingham, New Stuyhok and Togiak. NEA says that the initial plant and approximately 450 miles of transmission lines connecting to regional villages would cost about $200 million.

The transmission network forms a major component of the project costs and Vukich said that NEA would use a phased approach to extending out the network, starting in the Dillingham area.

“We’re looking at serving the region,” Vukich said. “(But) if we find hot water we would want to tie in Dillingham as quickly as possible, since they’re the next largest place.”

NEA would start with a 25-megawatt plant and would expand the plant capacity in 12.5-megawatt increments to 50 megawatts, in tandem with extending the transmission network across the region.

Regional support

But why build such an extensive transmission network?

With Bristol Bay supporting the world’s largest sockeye salmon run, all of the communities in the region are involved in a commercial fishing industry that has in the past underpinned the region’s economy, Vukich said. A primary motivation in developing geothermal energy is the provision of modest-priced electricity that would support a resurgence of that industry across the region, she said.

“Our region has been known for development and being self-sustaining. We want to get back to that,” Vukich said. “… That’s why tying in the region is so important. That can change 25 to 30 villages overnight if the cost of power is affordable.”

For example, cheaper power might encourage fish processors to extend the fish processing season and do secondary fish processing in the Bristol Bay area, rather than shipping fish to Seattle for processing, Vukich said.

And possibilities like that are causing great enthusiasm for the Naknek geothermal initiative.

It’s “a lot of work, a lot of excitement and a lot of money,” Vukich said.

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Unalaska takes the next step

The City of Unalaska is now looking at a pre-feasibility stage for its concept of a geothermal power plant at the side of the Makushin Volcano, City Manager Chris Hladick told Petroleum News on June 6. The city has conducted talks about how to progress the project with Richmond, Calif., based Geothermex, a company that specializes in geothermal exploration and development, Hladick said. Geothermex would provide engineering and geology services and oversee any drilling, if the project proceeds.

“We’re putting together a conceptual design,” Hladick said.

Discovered in 1982

The U.S. Department of Energy discovered a 390-degree-Fahrenheit geothermal water source on the flank of Makushin Volcano in 1982. Since then several ideas for harnessing the geothermal energy have come to nothing, after foundering on the challenging economics of geothermal development in a remote and isolated community. But advances in the technology for binary cycle geothermal power generation have led to renewed interest in the Unalaska geothermal site. In 2005 Iceland America Energy, a subsidiary of Enex Corp., acquired geothermal rights on the slopes of the volcano and proposed a 50-megawatt power station, coupled with a heat exchanger that would enable hot fresh water to be pumped to town to heat buildings.

However, Unalaska now wants to investigate the potential for developing a geothermal facility in the valley floor next to the volcano, rather than on the higher ground on the volcano itself — DOE discovered the original geothermal source from a bench feature at an elevation of 1,200 feet. Access to the bench involves negotiating a “hellacious switchback road,” while the bench is subject to relatively high snowfall and suffers from unstable soil conditions, Hladick said.

By contrast the valley floor is at an elevation of 400 feet. And construction of a road from town to the valley floor site would be much simpler and involve a shorter route than building a road to the bench, Hladick said.

The plan now is to drill some 2.5-inch, slim-hole wells to a 1,000-foot depth in the valley floor, to test for a geothermal source. That investigation will enable a decision on whether the power plant should be located in the valley floor or at the original bench site. Once the site is determined, it will be possible to make the cost estimates necessary to carry out a feasibility study for the project. “I think we’re looking at $3 million to do the slim-hole work,” Hladick said.