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Chugach Electric signs geothermal deal with GeoAlaska for electricity
Kay Cashman Petroleum News
On Aug. 4, GeoAlaska LLC said that Chugach Electric Association Inc. has provided GeoAlaska with a non-binding letter of interest to acquire geothermal-sourced electricity pursuant to a long-term power purchase agreement, or PPA.
Chugach's non-binding letter says that Chugach is interested in working with GeoAlaska to determine the most cost-effective and efficient means to extend transmission infrastructure to connect and deliver baseload geothermal power to the Railbelt grid.
GeoAlaska, with its partner company, Ignis Energy Inc., is exploring for sustainable baseload geothermal power at Augustine Island and Mount Spurr -- both on the west side of Cook Inlet.
Augustine Island is in the southwest portion of Cook Inlet, immediately south of the Iniskin Peninsula. The island has emerged as GeoAlaska's leading prospect with an expected power generation capacity of 200+ MW.
Chugach is a member-owned cooperative and Alaska's largest electric utility, providing safe, reliable and affordable electric service to more than 90,000 members in Southcentral Alaska. Chugach's strategic priority is to diversify and decarbonize its future power with an ongoing focus on reliability and affordability.
GeoAlaska's mission is to provide sustainable baseload geothermal power for the benefit of Alaska's economy and its long-term energy security.
"GeoAlaska welcomes the opportunity to collaborate with Chugach Electric Association to provide sustainable geothermal energy to its members," said GeoAlaska CEO Paul L. Craig.
"GeoAlaska is poised to help improve Alaska's energy security. By generating baseload geothermal power at Augustine Island and delivering it to the Railbelt grid, Alaskans will be able to use our dwindling Cook Inlet gas reserves for the important task of heating our homes and businesses.
"People keep asking me, 'Did President Trump destroy the geothermal industry with the Big Beautiful Bill?' The answer is a resounding 'NO.' H.R. 1 -- aka 'The Big Beautiful Bill' -- materially enhanced tax credits for geothermal. Previous administrations have differentially subsidized solar and wind projects. Geothermal was the stepchild of green energy. Geothermal is no longer a stepchild thanks to H.R. 1."
Craig's experience "I have been in the energy business since 1993 when I participated in the Cook Inlet lease sale in which ARCO acquired its leases for 'The Sunfish' prospect. GeoAlaska's progress at Augustine Island is more exciting than anything in which I have been involved during the past three decades," Craig told Petroleum News.
"GeoAlaska's prospects are poised to become a major player in the geothermal industry. Augustine is one of the hottest prospects in the world -- pun intended," Craig said.
The company's recent success at the Augustine Island lease sale more than doubled its acreage at that prospect.
"GeoAlaska and its consultants used very conservative parameters when developing the P50 power production potential of 204 MW. With the increased acreage and using more optimistic parameters, significantly more power may be proven and produced at Augustine Island," Craig added.
Almost perfect "There are many attractive qualities to geothermal power. It is sustainable and can produce power in perpetuity once the production and injection wells are functioning in synchrony. There is not a decline curve like we see in oil and gas reservoirs. Another attraction is that geothermal generates baseload power rather than intermittent power as is the case with solar and wind. Even hydroelectric power can be somewhat intermittent in Alaska because water freezes in the winter which reduces flow rates in many drainages during the dark months of winter when power is most needed.
"There is no perfect source of power, but geothermal is pretty close to it. Geothermal power has a small footprint per MW as compared with most other sources of green energy such as wind and solar farms. All it took for me was one trip driving around Iceland to convince me how economically beneficial and environmentally friendly geothermal power can be," Craig said.
GeoAlaska's geothermal journey on Augustine Island began when its first prospecting permit was issued by DNR in 2022
High bidder In an April 22 press release GeoAlaska said it was pleased to announce it was the apparent high bidder on all six tracts in the 2025 state of Alaska Augustine Island competitive geothermal lease sale. GeoAlaska bid on 100% ownership in the following six tracts: AI0010, AI0011, AI0012, AI0019, AI0023, and AI0024 on ADL 394387, 394388, 394389, 394390, 394391, 394392.
The acquisition added 11,991 acres to the company's growing geothermal portfolio.
In addition, effective April 1, DNR converted GeoAlaska's geothermal prospecting permits covering the southern half of Augustine Island into seven geothermal leases with 10-year terms. These leases secure rights to an additional 10,330 acres, for a total of 22,321 acres at Augustine Island for the company.
Founded in May 2020 and majority-owned by Alaskans, GeoAlaska partnered in 2023 with Ignis Energy Inc., a Houston-based international geothermal exploration and production company.
After conducting a gravity and audio-magnetotelluric survey in 2023, the two-year exploration permit was extended for a third year. This survey was followed by an expanded magnetotelluric survey on Augustine Island in 2024.
These subsurface surveys have identified three shallow geothermal reservoir targets and a deeper reservoir target above the island's magma storage system located about 2 km subsurface.
Power modeling based on conservative volumetric and enthalpy models supports a P50 estimate of 224 MW.
Exploratory drilling is the next phase to further de-risk the project and to refine the P50 power model, GeoAlaska said in its press release.
Richard Calleri, CEO of Ignis Energy, told Petroleum News Aug. 5: "From T- rkiye to Alaska, we build partnerships and pursue progress grounded in local energy needs and geology. We develop geothermal projects with a pragmatic, region-first, and technologically-flexible approach -- prioritizing early-stage risk reduction and local momentum over speculative tech bets."
Marcus Oesterberg, chief operating officer of Ignis Energy had this to say: "We are proud to unlock geothermal energy potential by streamlining early-stage exploration and development, Mount Agustine is a valuable addition to Ignis' enabling a diverse portfolio of commercially viable projects across geographies and technologies."
--KAY CASHMAN
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