Geothermal optimism
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Makushin could transform Unalaska, say city, power system developers
Alan Bailey for Petroleum News
As work moves ahead to build a geothermal electricity generation facility on a flank of the Makushin Volcano on Unalaska Island in the Aleutians, there is optimism about the outcome of the geothermal project, executives involved in the development told a meeting of the Commonwealth North Energy Policy Study Group on June 4.
“Once this gets established, I think it’s going to be a springboard for a lot of different activities that could come in and potentially be a showcase for how to transform a community and make it more vibrant, using green energy,” said David Matthews, program manager for Ounalashka/Chena Power LLC, or OCCP, the company developing the geothermal system.
From previous exploratory drilling there is a known significant source of hot geothermal water underground on the side of the volcano facing the City of Unalaska, the island’s main community.
A diverse community Erin Reindeers, city manager for the City of Unalaska, described the community that the geothermal system would support - the city hosts the port of Dutch Harbor and has a population of about 4,700 residents, with that population roughly doubling during the peak of the fishing season.
“Our diverse island community is the home to the largest commercial fishing port in the nation and is just off the great circle route,” Reindeers said.
So, given what appears to be an excellent location for geothermal power use, what are the obstacles to a geothermal development? The possibility of developing Makushin volcano geothermal resources has been a subject of research and debate for many years.
A geothermal power plant typically involves a high upfront cost but, once built, delivers energy at a predictable and stable price. Normally a facility of this type would be connected to a large electricity grid that would take all of the generated power, Matthews said. However, with a small isolated grid, as on Unalaska, the generation facility needs to put out power to follow the varying power demand. But, with a vibrant community at a location that can attract business activities, the Makushin geothermal presents a great opportunity, Matthews said.
At present, electricity on Unalaska comes from diesel power generation. Reindeers said that the island’s current installed generation capacity amounts to 56 megawatts. The city’s electric utility accounts for 22 megawatts of that capacity, with independent, self-generating entities accounting for the other 34 megawatts of capacity. The self-generating entities consist primarily of the fish processing plants that are located on the island. Utility sales go mostly to other industrial customers, Reindeers said.
Fish processing power demand Given the economies of scale that come from building as large a geothermal plant as possible, a major concern revolves around the need to have the fish processing companies sign up for geothermal energy as a replacement for their current diesel generation systems. Apparently, although the processing companies have shown an interest in the geothermal power development, they have thus far been unwilling to sign up to power purchase agreements.
However, confident that the long-term benefits of geothermal will prevail, the developers are planning a geothermal facility that will put out 36 megawatts, delivering 30 megawatts of power to the Unalaska meter, Matthews said. OCCP and the city utility have signed a 30-year power purchase agreement, involving an annual payment of $16.3 million per year, rising at 1% per year. Asked about the economics of the project, Matthews said that projections show that the geothermal energy, unlike diesel, would be stably priced, with a price only slightly higher than the average price of diesel generated power on Unalaska over the past seven years.
However, there is obviously risk to the rate structure if some power capacity goes unsold.
The generation system To supply power at the planned rate, OCCP anticipates using two to three production wells, to deliver hot geothermal water into the power generation plant, which will be located on a plateau on the side of the volcano. Cooled geothermal water, having passed through the plant, would be pumped back underground through three injection wells for reheating, thus forming a clean, closed loop system. The plan is to install several generation units at the site, rather than a single large unit, given the remote location and the need to be flexible in following the electricity load, Matthews said.
A 14-mile transmission line will connect the power plant to the city’s power grid. The line will follow the access road to the plant for 10 miles, and then go undersea for 4 miles to reach the city. The plan is to use modular designs for offsite construction of the facilities for the power plant, in a similar manner to the approach to constructing oilfield infrastructure on the North Slope, Matthews said.
Ounalashka Corp., one of the partners in OCCP, is the Native corporation for Unalaska and owns the land subsurface rights required for the geothermal power - there is no state or federal land involved. This greatly simplifies any land and resource access issues.
“We have a 50-year agreement for the resource already paid for,” Matthews said.
Fairbanks based Chena Power, the other OCCP partner, runs the only operational geothermal plant in Alaska and is providing equipment, including drilling rigs and camps, for the project. This contribution and the access to Ounalashka land together amount to $45 million of in-kind investment in the project, an investment that helps the project on its front end, Matthews said.
Work is progressing And, with the project anchored by the power purchase agreement with Unalaska, work has been moving ahead. OCCP now has its major permit applications approved and has developed a class three cost estimate. The partnership is engaged in seeking competitive bids for the power plant and the geothermal resource gathering system - four responses to a request for proposal for the work have now been shortlisted to two contenders, Ormat Technologies and Kaishan USA, with bids from these companies due in June.
Several projects have been contracted, including an assessment of the strength and resilience of the power grid; a geochemical analysis of the geothermal fluids; road and transmission line routing and design; and a marine survey for the subsea section of the transmission line. An investigation has identified all wetlands, and biological and archaeological resources in the project area. Construction of the access road has started, with the intent to continue this construction during the summer.
Two studies are also underway. One, led by the city, involves assessing the interconnection and integration of the geothermal system with the Unalaska electrical grid. The other, led by OCCP, is studying the potential use of air source heat pumps for heating buildings on Unalaska- heat pumps, working like reversed air conditioners, can be a particularly efficient means of using electricity for space heating.
The timing and cost of any needed upgrades to the Unalaska power distribution system are being considered and have been studied, to enable the city to proceed with some of the necessary distribution system construction. The project team is looking at a go live date for connecting up the system around 2023, Matthews said.
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