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Vol. 25, No.37 Week of September 13, 2020
Providing coverage of Alaska and northern Canada's oil and gas industry

Looking to geothermal energy resources from Alaska volcanoes

Alan Bailey

for Petroleum News

The potential for new geothermal development in Alaska has surfaced again. Ounalashka Corp. and Chena Power have signed a 30-year power purchase agreement with the City of Unalaska in the Aleutian Islands for geothermal energy from the Makushin Volcano on Unalaska Island. And the Alaska Department of Natural Resources Division of Oil and Gas is issuing a call for applications for geothermal exploration on land tracts at Mount Spurr volcano, to the northwest of the upper Cook Inlet.

Ounalashka Corp. is the Alaska Native village corporation for Unalaska. Chena Power installed and operates the Chena Hot Springs geothermal power plant in the Alaska Interior. In 2019 Ounalashka and Chena Power formed OCCP LLC, a partnership designed to establish a sustainable geothermal energy system using the Makushin Volcano.

Geothermal systems

Alaska has geothermal systems associated with the cooling of subsurface granite bodies and with the volcanoes that occur along the Alaska Peninsula and the Aleutian Islands. The volcanic systems tend have near-surface magma, with the potential to generate large volumes of hot water.

The challenge, however, is to site a geothermal power plant at a location where the electrical power can be viably delivered to places where there is sufficient demand for electricity - most of Alaska’s volcanoes are positioned at very remote locations. However, a Makushin power plant could supply electricity for the City of Unalaska, Dutch Harbor and local fish processing facilities. Mount Spurr, on the other hand, is about 40 miles from the Beluga gas-fired power station on the Railbelt electricity grid.

Makushin Volcano

Interest in the geothermal potential of the Makushin Volcano goes back several decades. In 1981 an exploration drilling project discovered an excellent geothermal resource on the eastern flank of the volcano, about 13 miles from the City of Unalaska. Over the years since then there have been multiple initiatives aimed at developing the resource, but none of these efforts have come to fruition. However, the parties to this new development agreement feel confident that they will now see success.

“What makes this different is that we’ve put together a team of Alaskans with a common vision and proven local, national and international business and technical leadership,” said Chris Salts, CEO of Ounalashka Corp. “We know this can be transformational for our community and our future role in the world and we’re all pulling in the same direction to see it realized.”

The development of the planned 18 to 30 megawatt plant will involve the installation of roads, pads and facilities. Power transmission and communications lines will be buried along much of the route from the power plant to the City of Unalaska power grid, with the lines running subsea along about 3.2 miles of the route. The developers envisage the drilling of three production wells and two injection wells to depths of about 2,000 feet.

The parties to the new agreement say that the agreement will enable the geothermal project to proceed to financing, with initial commercial operation anticipated to begin in the fourth quarter of 2023. The capacity of the planned facility will be sufficient to accommodate all of Unalaska’s current electricity customers, as well as known potential future customers, the parties say.

Mount Spurr

At Mount Spurr the state is offering three land tracts with a total area of 6,400 acres for geothermal exploration. Two of the tracts are on the southern flank of the volcano’s currently active crater, to the south of the mountain’s summit. The other tract encompasses an adjacent area on the southwest side of the other tracts.

Exploration applications must be filed by Oct. 5. The division issues non-competitive prospecting permits for a primary term of two years, with the potential for renewal for an additional year. The division also issues competitive geothermal leases for primary terms of 10 years, with the possibility of a five-year extension if drilling operations are active.

Starting in 2009 geothermal company Ormat Technologies conducted geothermal exploration in 15 state leases covering a fairway on the south side of Mount Spurr. The company drilled three boreholes, on the southeastern side of the mountain some distance from the crater but failed to find a hot water source. The company formally discontinued its exploration program in 2015.


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