Legislature(2011 - 2012)BARNES 124

01/27/2012 01:00 PM House RESOURCES


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01:05:34 PM Start
01:08:47 PM Overview(s): Update: Renewable Energy Project and Technology
03:00:34 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Update: Renewable Energy Project and Technology TELECONFERENCED
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                        January 27, 2012                                                                                        
                           1:05 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eric Feige, Co-Chair                                                                                             
Representative Paul Seaton, Co-Chair                                                                                            
Representative Peggy Wilson, Vice Chair                                                                                         
Representative Alan Dick                                                                                                        
Representative Neal Foster                                                                                                      
Representative Bob Herron                                                                                                       
Representative Cathy Engstrom Munoz                                                                                             
Representative Berta Gardner                                                                                                    
Representative Scott Kawasaki                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW(S):  UPDATE:  RENEWABLE ENERGY PROJECT AND TECHNOLOGY                                                                  
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JEANNIE JOHNSON, Airport Manager                                                                                                
Juneau International Airport                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented an update and answered questions                                                               
on the installation of the Geothermal Heat Pump System at Juneau                                                                
International Airport.                                                                                                          
                                                                                                                                
CATHERINE FRITZ, AIA                                                                                                            
Airport Architect                                                                                                               
Murray & Associates, P.C.                                                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided a PowerPoint presentation titled                                                                
"Juneau International Airport Geothermal Heat Pump Project" and                                                                 
answered questions about the project.                                                                                           
                                                                                                                                
DOUG MURRAY, Consulting Engineer                                                                                                
Murray & Associates, P.C.                                                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions  during the discussion of                                                             
the geothermal heat pump system at Juneau International Airport.                                                                
                                                                                                                                
PAUL THOMSEN                                                                                                                    
ORMAT Technologies, Inc.                                                                                                        
Reno, Nevada                                                                                                                    
POSITION  STATEMENT:   Presented a  PowerPoint, "The  Mount Spurr                                                             
Geothermal Project," and answered questions about the project.                                                                  
                                                                                                                                
PATRICK WALSH                                                                                                                   
ORMAT Technologies, Inc.                                                                                                        
Reno, Nevada                                                                                                                    
POSITION  STATEMENT:   Answered  questions  during discussion  on                                                             
"The Mount Spurr Geothermal Project."                                                                                           
                                                                                                                                
TARA RIEMER JONES, PhD                                                                                                          
President & CEO                                                                                                                 
Alaska SeaLife Center                                                                                                           
Seward, Alaska                                                                                                                  
POSITION  STATEMENT:   Presented  a PowerPoint,  "Sea Water  Heat                                                             
Pump Project," and answered questions during the discussion.                                                                    
                                                                                                                                
DARRYL SCHAEFERMEYER, Operations Manager                                                                                        
Alaska SeaLife Center                                                                                                           
Seward, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions  during discussion of the                                                             
heat pump system at the Alaska SeaLife Center.                                                                                  
                                                                                                                                
NANCI MORRIS-LYON                                                                                                               
Board of Directors                                                                                                              
Naknek Electric Association (NEA)                                                                                               
Naknek, Alaska                                                                                                                  
POSITION  STATEMENT:     Presented   an  update  on   the  Naknek                                                             
Geothermal Project.                                                                                                             
                                                                                                                                
DONNA VUKICH, General Manager                                                                                                   
Naknek Electric Association (NEA)                                                                                               
Naknek, Alaska                                                                                                                  
POSITION STATEMENT:   Answered questions during an  update on the                                                             
Naknek Geothermal Project.                                                                                                      
                                                                                                                                
DARRON SCOTT, President/CEO                                                                                                     
Kodiak Electric Association, Inc. (KEA)                                                                                         
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:   Provided a  PowerPoint presentation  on the                                                             
Pillar Mountain Wind Project.                                                                                                   
                                                                                                                                
ETHAN SCHUTT, Senior Vice President                                                                                             
Land and Energy Development                                                                                                     
Cook Inlet Region, Incorporated (CIRI)                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Provided a  PowerPoint presentation  on the                                                             
corporation's Fire Island Wind Project.                                                                                         
                                                                                                                                
DOUG JOHNSON, Director                                                                                                          
Alaska Business Development                                                                                                     
Ocean Renewable Power Company (ORPC)                                                                                            
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Presented   a  PowerPoint,  "ORPC  Alaska                                                             
Update," on tidal power in Cook Inlet.                                                                                          
                                                                                                                                
MONTY WORTHINGTON, Director                                                                                                     
Project Development                                                                                                             
Ocean Renewable Power Company (ORPC)                                                                                            
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified and  answered questions during the                                                             
ORPC presentation.                                                                                                              
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:05:34 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  PAUL   SEATON  called  the  House   Resources  Standing                                                             
Committee meeting to order at  1:05 p.m.  Representatives Seaton,                                                               
Feige, Dick,  Foster, Munoz, Herron,  and Wilson were  present at                                                               
the call to order.   Representatives Kawasaki and Gardner arrived                                                               
as the meeting was in progress.                                                                                                 
                                                                                                                                
^OVERVIEW(S):  Update:  Renewable Energy Project and Technology                                                                 
 OVERVIEW(S):  Update:  Renewable Energy Project and Technology                                                             
                                                                                                                                
1:16:17 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON announced  that the only order  of business would                                                               
be  an  update  on  renewable   energy  projects  and  technology                                                               
throughout the  state of Alaska.   He said the focus  would be on                                                               
projects the legislature had an interest in funding.                                                                            
                                                                                                                                
1:08:47 PM                                                                                                                    
                                                                                                                                
JEANNIE JOHNSON,  Airport Manager, Juneau  International Airport,                                                               
introduced  the  architect and  project  manager  for the  Juneau                                                               
International Airport Geothermal Heat Pump Project.                                                                             
                                                                                                                                
CATHERINE  FRITZ, AIA,  Airport Architect,  Murray &  Associates,                                                               
P.C.,  introduced   a  PowerPoint  presentation   titled  "Juneau                                                               
International  Airport  Geothermal  Heat   Pump  Project."    She                                                               
directed  attention  to  slide 2,  "Terminal  Renovation  Project                                                               
Goals," and listed the three  primary goals: reduce the operating                                                               
costs, modernize  the infrastructure,  and improve  the passenger                                                               
airport  experience.   She  stated  that  there was  $23  million                                                               
available to  address about $50  million of problems.   She moved                                                               
on to  slide 3,  "Terminal Renovation Project  Approach," stating                                                               
that  the project  would be  done in  two phases;  renovation and                                                               
addition to the parts of the  building that were newer than 1984,                                                               
and replacement  of any pre-1984  buildings, many of  which dated                                                               
to the  original 1948  terminal.  She  explained that  this would                                                               
entail good  design, rather than  lots of design,  and efficiency                                                               
in all the  decisions and operations.  The  renovation would make                                                               
the facility  modern and aesthetically pleasing  by designing and                                                               
constructing   to  a   "high   performance   standard,"  a   term                                                               
established  by the  U.S. Department  of Energy  to describe  the                                                               
building infrastructure.                                                                                                        
                                                                                                                                
1:11:20 PM                                                                                                                    
                                                                                                                                
MS.  FRITZ gave  a quick  overview of  slide 4,  "Geothermal Heat                                                               
Pump  System Basics."    She reported  that  vertical pipes  were                                                               
placed in  the ground  to about  350 feet,  and then  filled with                                                               
fluid.  The  fluid would capture the heat of  the earth, about 42                                                               
degrees, and  then be  pumped into  the building  to each  of the                                                               
electric heat pumps.                                                                                                            
                                                                                                                                
MS. FRITZ  referred to  slide 5,  "Alaska Energy  Authority Grant                                                               
Funding,"  and  reported  that  this  funding  request  had  been                                                               
included in the February 2008  program for alternative energy and                                                               
construction requests.   She noted that the  application had been                                                               
prepared by Juneau  staff, and did not require  any outside grant                                                               
writers,  as the  application rules  were  easy to  follow.   She                                                               
shared that the grant was awarded in October 2008.                                                                              
                                                                                                                                
1:13:02 PM                                                                                                                    
                                                                                                                                
MS. FRITZ  continued on  with slide  6 and  slide 7,  "Loop Field                                                               
Construction,"  and  reported  that construction  of  the  system                                                               
began outside, under the small  plane airfield, with 108 six inch                                                               
borings, each  350 deep.   She explained  that each hole  had two                                                               
pipes with a "U" assembly at the  bottom, for a total of 16 miles                                                               
of  piping  in  the  ground.   This  system  captured  the  earth                                                               
temperature of 42 degrees.                                                                                                      
                                                                                                                                
MS. FRITZ  expanded on  slide 8,  "Pipe Fusion,"  which described                                                               
that each  seam and joint of  the HDPE pipe was  welded to create                                                               
even  greater strength,  and a  life expectancy  for the  pipe in                                                               
excess of 100 years.                                                                                                            
                                                                                                                                
MS. FRITZ spoke  about slide 9, "Into the  Pump Room," explaining                                                               
that  the  pipe system  was  consolidated  into four  main  pipes                                                               
before it  entered the building.   She stated that the  fluid, 88                                                               
percent  water  and  12 percent  methanol  to  prevent  freezing,                                                               
continually circulated  to the heat  pumps in the building.   She                                                               
described the  digitally controlled three way  valve that decided                                                               
when  the fluid  was returned  to the  underground loop  field to                                                               
capture more heat.                                                                                                              
                                                                                                                                
1:15:40 PM                                                                                                                    
                                                                                                                                
MS. FRITZ addressed slide 10,  "Into the Ceilings," relaying that                                                               
28  heat pumps,  each  the  size of  a  small refrigerator,  were                                                               
located in the ceilings.                                                                                                        
                                                                                                                                
MS. FRITZ moved on to  slide 11, "Ice-Melt System," and described                                                               
the three  water-to-water pumps for  the front  sidewalk ice-melt                                                               
system.   She stated  that the geo-thermal  system was  more cost                                                               
effective than traditional diesel technology.                                                                                   
                                                                                                                                
MS. FRITZ  noted that the  data on slide 12,  "System Performance                                                               
to Date,"  was preliminary and  that "multiple years  of complete                                                               
system  operations  under  varied  demand  conditions  should  be                                                               
considered  for  comprehensive  analysis."     She  compared  the                                                               
decrease of  diesel usage in  2008, the  year prior to  heat pump                                                               
installation, to 2011, and reflected  on the savings of $130,529.                                                               
She also compared  the increase in electrical usage  from 2008 to                                                               
2011, an  increased cost  of $15,554.   She  stated that  the net                                                               
direct fuel usage annual savings was $114,985.                                                                                  
                                                                                                                                
1:18:03 PM                                                                                                                    
                                                                                                                                
MS.  FRITZ  pointed to  slide  13,  "Additional Benefits,"  which                                                               
included:   the  cost  of snow/ice  removal  operations had  been                                                               
reduced by  approximately $11,000 per year  while providing safer                                                               
public  access  to  the  terminal; the  removal  of  the  central                                                               
heat/vent equipment  had freed up  valuable square  footage areas                                                               
inside  the building  for  other uses;  the  heat pumps  provided                                                               
improved air quality,  including air-conditioning; the geothermal                                                               
loop   field  had   been  sized   to  accommodate   the  proposed                                                               
replacement of the  pre-1984 terminal area, and  also allowed for                                                               
expansion  if necessary  in  the future;  and,  the reduction  in                                                               
diesel  contributed to  a  reduction in  carbon  emissions.   She                                                               
touted that  the confidence gained through  this installation had                                                               
convinced the  airport to use  geothermal technology for  the new                                                               
Snow Removal Equipment facility.                                                                                                
                                                                                                                                
1:20:02 PM                                                                                                                    
                                                                                                                                
MS.  FRITZ concluded  with slide  14,  "Geothermal is  part of  a                                                               
holistic approach  to design and  construction," and  stated that                                                               
the  geothermal  heat  pumps not  only  allowed  conversion  from                                                               
diesel to  a renewable hydroelectric  source, but that  they were                                                               
also part of  a holistic approach to the  design and construction                                                               
of the  building.   She declared  that it  was necessary  to also                                                               
look at  other high  performance standards,  including insulation                                                               
under slabs, heavy  vapor barriers, insulation on  the outside of                                                               
buildings, and high quality glazing.                                                                                            
                                                                                                                                
MS. FRITZ emphasized that the  grant funding had made the project                                                               
possible.                                                                                                                       
                                                                                                                                
1:21:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  asked what the  projected payback period  was for                                                               
the project.                                                                                                                    
                                                                                                                                
MS. FRITZ  replied that,  other than the  fuel savings,  they had                                                               
not  calculated  the  other  paybacks.     She  shared  that  the                                                               
feasibility report  had projected a  payback of 10 years  for the                                                               
geothermal construction.                                                                                                        
                                                                                                                                
CO-CHAIR  FEIGE, noting  the relatively  mild climate  in Juneau,                                                               
asked where else in Alaska this would be useful.                                                                                
                                                                                                                                
DOUG  MURRAY, Consulting  Engineer,  Murray  & Associates,  P.C.,                                                               
replied  that it  would depend  on the  heat requirements  of the                                                               
building and  its location.   He  shared that  geothermal systems                                                               
had been  discussed in Anchorage  and Fairbanks.  He  noted that,                                                               
as  the  ground temperature  goes  down,  the efficiency  of  the                                                               
system goes  down, and therefore,  an analysis needed to  be done                                                               
for each project.                                                                                                               
                                                                                                                                
CO-CHAIR  SEATON pointed  out  that  cost competitive  geothermal                                                               
residences were being built in Homer, Alaska.                                                                                   
                                                                                                                                
1:25:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P.  WILSON,  pointing  out the  new  windows  and                                                               
insulation, asked if these could be factored into the savings.                                                                  
                                                                                                                                
MS.  FRITZ agreed  with Representative  P.  Wilson, stating  that                                                               
these were the variables which would  need to be addressed with a                                                               
more  specific  analysis.   She  noted  that even  though  12,000                                                               
square feet of  open space had been added to  the building, there                                                               
was still savings.                                                                                                              
                                                                                                                                
REPRESENTATIVE KAWASAKI requested that  Ms. Fritz speak about the                                                               
renovation of the older facilities.                                                                                             
                                                                                                                                
MS.  FRITZ  replied that  this  airport  project combined  35,000                                                               
square  feet  of  renovation  with  12,000  square  feet  of  new                                                               
building.   She reiterated that  the key was a  holistic approach                                                               
to  the building,  not just  conversion of  fuel types,  and that                                                               
this would determine the cost feasibility.                                                                                      
                                                                                                                                
1:28:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ  asked if the  bonding authority on  Phase 1                                                               
would extend to Phase 2, and what was the time line for Phase 2.                                                                
                                                                                                                                
MS. FRITZ  responded that  the renovation  project had  been paid                                                               
for in  a rather  unique way:   $10 million  in local  sales tax,                                                               
$8.5 million in  passenger facility charges, and  $2.3 million in                                                               
state funding,  which included  the $513,000  energy grant.   She                                                               
clarified  that there  was  not any  bond  indebtedness for  this                                                               
project.  In response to  Representative Munoz, she said that the                                                               
airport was still  in the planning of Phase II.   She shared that                                                               
the  projected financing  could  include a  percentage of  Juneau                                                               
sales tax and passenger facility charges.                                                                                       
                                                                                                                                
1:31:13 PM                                                                                                                    
                                                                                                                                
PAUL THOMSEN,  ORMAT Technologies,  Inc., directing  attention to                                                               
slide 11, "Mt. Spurr -  Status & Estimated Timeline," stated that                                                               
in October 2008 ORMAT leased  36,000 acres from the Department of                                                               
Natural Resources  (DNR) to  develop the Mt.  Spurr project.   He                                                               
detailed  that non-intrusive  exploration work  was conducted  in                                                               
the  summers  of   2009  and  2010,  with  two   1,000  ft.  deep                                                               
exploration core  holes being  drilled in  September 2010  and an                                                               
additional 4,000 ft. deep exploration  core hole being drilled in                                                               
the summer of 2011.                                                                                                             
                                                                                                                                
MR.  THOMSEN  referred to  slide  12,  "General  Lease Area:    3                                                               
Regions,"  depicting an  overview  of the  three  regions of  the                                                               
lease area.                                                                                                                     
                                                                                                                                
MR.  THOMSEN  moved  on  to  the  geological  map  on  slide  13,                                                               
"Drilling Work Focused  on Eastern Region," and  noted that drill                                                               
site 26-11  was the first  deep well.   He assured  the committee                                                               
that the  well was  in the  eastern region  along the  Kid Fault,                                                               
outside of  the known  volcanic hazardous zone.   He  stated that                                                               
future  work would  be in  the  central region  along the  Crater                                                               
Fault, and  although more  analysis was  still needed  before any                                                               
drilling, it was thought to contain more geo-thermal resource.                                                                  
                                                                                                                                
1:33:42 PM                                                                                                                    
                                                                                                                                
MR. THOMSEN spoke about slide  14, "Core Drilling 2010 and 2011,"                                                               
which pictured  drilling sites, and  slide 15, "Core  collected -                                                               
Donated  to DNR/DGGS,"  which pictured  the cores  that had  been                                                               
removed from the holes.                                                                                                         
                                                                                                                                
MR.  THOMSEN moved  on to  slide 16,  "Results to  Date," stating                                                               
these were the "heart of our  presentation today, to give you the                                                               
update."   He explained  that the  "results from  the exploration                                                               
work  were  encouraging  that there's  the  potential  geothermal                                                               
resource  at  commercial depth,  however,  we  don't think  we're                                                               
gonna be  able to  find it economically  in the  eastern region."                                                               
He went on  to say that ORMAT would direct  future exploration in                                                               
the central region.  He  listed three criteria, slide 17, "Status                                                               
and Next Steps,"  to fulfill:  can volcanic  hazard be mitigated,                                                               
can road access and transmission  line be connected at reasonable                                                               
cost,  and  was  there  a  reasonable  likelihood  of  finding  a                                                               
commercial  resource.   He shared  that  the time  line had  been                                                               
pushed back two  years, so that analysis would  continue in 2012,                                                               
with more drilling in 2013.                                                                                                     
                                                                                                                                
MR.  THOMSEN  moved  on to  slide  21,  "Additional  Appropriated                                                               
Funds,"  and noted  that  although ORMAT  had  received a  direct                                                               
fiscal appropriation  of $14.5  million dollars  in FY  2012, the                                                               
change in the project scope would necessitate its use in 2013.                                                                  
                                                                                                                                
1:36:08 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON agreed that locating  the geothermal resource and                                                               
determining the  permeability was difficult.   Noting that Apache                                                               
Oil  was currently  conducting 3-D  seismic on  the west  side of                                                               
Cook  Inlet, he  asked if  this would  be valuable  for ORMAT  in                                                               
identifying the underlying structure and geothermal resource.                                                                   
                                                                                                                                
PATRICK  WALSH,  ORMAT  Technologies,   Inc.,  replied  that  3-D                                                               
seismic was  valuable, in general,  for exploration of  oil, gas,                                                               
and geothermal.  He said it  was very challenging to use in areas                                                               
with high topographic relief, similar  to the Mount Spurr region,                                                               
but  that ORMAT  did  use  the technology  in  other  areas.   In                                                               
further response, he  agreed to look into a  possible dovetail of                                                               
work with Apache Oil.                                                                                                           
                                                                                                                                
CO-CHAIR SEATON expressed disappointment  that the exploration on                                                               
the eastern side was not commercially viable.                                                                                   
                                                                                                                                
1:39:32 PM                                                                                                                    
                                                                                                                                
TARA RIEMER JONES,  PhD, President & CEO,  Alaska SeaLife Center,                                                               
presented  a  PowerPoint,  "Sea Water  Heat  Pump  Project,"  and                                                               
referring  to slide  2, "Alaska  SeaLife Center,"  said that  the                                                               
mission  of  the  SeaLife  Center   was  to  generate  and  share                                                               
scientific knowledge to promote  understanding and stewardship of                                                               
Alaska's marine ecosystems.  She  listed the programs to include:                                                               
research, education,  rescue and rehabilitation, and  the visitor                                                               
exhibits.   Moving on  to slide 3,  "Alaska SeaLife  Center," she                                                               
reported that  the Center  was an economic  driver in  the Seward                                                               
community, and,  as the  largest private  employer in  Seward and                                                               
the  11th largest  private employer  on the  Kenai Peninsula,  it                                                               
employed about 90 full time employees.                                                                                          
                                                                                                                                
DR. JONES  directed attention  to slide 4,  "Sea Water  Heat Pump                                                               
Project,"   and  spoke   about  the   strong  support   of  these                                                               
partnerships,  which included  the City  of Seward,  Kenai Fjords                                                               
National  Park, the  Alutiiq Pride  Shellfish  Hatchery, and  the                                                               
University  of  Alaska  Fairbanks  School of  Fisheries  &  Ocean                                                               
Sciences.                                                                                                                       
                                                                                                                                
1:41:19 PM                                                                                                                    
                                                                                                                                
DR. JONES stated that one goal  for the project was to reduce the                                                               
carbon footprint, slide  4, "Goals = Reduce Energy  Cost & Carbon                                                               
Emissions."  She reported that  the Alaska SeaLife Center covered                                                               
115,000 square feet,  and that it had large power  demands, as it                                                               
pumped a lot of  water.  She noted that there  were two oil fired                                                               
boilers and one electric boiler,  and that the winter heating oil                                                               
demand  could exceed  500  gallons  per day,  and  up to  132,000                                                               
gallons per  year.  She said  the peak annual heating  costs were                                                               
$463,000.                                                                                                                       
                                                                                                                                
DR.  JONES moved  on  to slide  5,  "Sea Water  Heat  - Sweden  &                                                               
Norway," explaining that the concept  of using heat from seawater                                                               
had been  used in fjords  in Sweden and  Norway for more  than 20                                                               
years.   Pointing to slide  6, "Seward Sea Water  Heat Resource,"                                                               
she stated that  Seward was a perfect location  for this project,                                                               
as Resurrection  Bay stored a  lot of  solar heat year  round and                                                               
the water was  usually above 36 degrees.  Viewing  slides 7 - 10,                                                               
"Technology  Overview,"  she explained  that  the  heat pump  was                                                               
using the  heat contained in  the water  to increase the  heat in                                                               
the building.   She noted  that, as electricity was  necessary to                                                               
run the  heat pump, the  coefficient of performance (COP)  was an                                                               
important metric and it was derived  by taking the amount of heat                                                               
produced by  the pump and divided  by the power necessary  to run                                                               
the heat pump.   She shared that  the expected COP was  3.1 - 3.6                                                               
for  the heat  pumps.   She shared  that the  two installed  heat                                                               
pumps were  each larger than  a small refrigerator, and  could be                                                               
operated and  supported with automated controls,  while monitored                                                               
from the internet.                                                                                                              
                                                                                                                                
1:44:36 PM                                                                                                                    
                                                                                                                                
DR.   JONES,   referring   to  slide   11,   "Project   Financial                                                               
Evaluation," relayed that the capital  cost to date was $833,300,                                                               
which  was paid  by grants  from  the Denali  Commission and  the                                                               
Alaska Energy  Authority (AEA).   She  listed the  annual heating                                                               
oil savings to be $212,738, but  shared that there were that this                                                               
did not  comprise some of the  additional costs to the  heat pump                                                               
system,  including  glycol  pumping,  electricity  for  the  heat                                                               
pumps,  and routine  operations and  maintenance.   She projected                                                               
the net annual  savings to be $100,000, and predicted  a 6.7 year                                                               
payback period.   She  confirmed that  the annual  CO2 production                                                               
was lowered by 1.3 million pounds.                                                                                              
                                                                                                                                
DR.  JONES shared  slides  12 and  13,  "Overall System  Operator                                                               
Screen,"  which portrayed  a real  time screen  view of  the heat                                                               
pump  system   on  January  21,   2012.    She  noted   that  the                                                               
calculations included  temperature differentials and flows.   She                                                               
pointed to the savings of 11.46  gallons of fuel per hour and 275                                                               
gallons per  day.  After  paying for the  additional electricity,                                                               
the net savings  would be a $643  each day.  She  agreed that the                                                               
savings would fluctuate during the year.                                                                                        
                                                                                                                                
1:48:02 PM                                                                                                                    
                                                                                                                                
DR. JONES reviewed  slides 14 - 19,  "Actual Installation," which                                                               
depicted  the  heat  pumps,  sea  water  exchangers,  circulation                                                               
pumps, and the heat exchangers  for the air handlers and domestic                                                               
hot water.                                                                                                                      
                                                                                                                                
DR. JONES,  addressing slide  20, "Alaska  Application," declared                                                               
that  this   technology  would  work  in   those  coastal  Alaska                                                               
communities  with  ice free  sea  water  and  a large  sea  water                                                               
intake.    She referenced  similar  heat  pumps at  the  National                                                               
Oceanic and  Atmospheric Administration  (NOAA) facility  at Lena                                                               
Point  in  Juneau.   She  predicted  an  annual cost  savings  of                                                               
$100,000,  a large  reduction in  carbon emissions,  and a  lower                                                               
demand on the local utility grid.                                                                                               
                                                                                                                                
1:50:31 PM                                                                                                                    
                                                                                                                                
DR. JONES  summarized slide 21,  "Project Tasks &  Timeline," and                                                               
shared  that although  the  final design  had  been completed  on                                                               
November 30, 2010, the equipment  had been installed in March and                                                               
April 2011, and the heat pumps  were started up in July 2011, the                                                               
commissioning  and tying  together  of the  systems  was not  yet                                                               
completed.   She mentioned that  the TRACER screens  were enabled                                                               
in August 2011, and that  the data monitoring was currently being                                                               
integrated.                                                                                                                     
                                                                                                                                
DR. JONES concluded  with slide 22, "Project  Status," and shared                                                               
that  $183,000 in  funding  had been  received  from the  Murdock                                                               
Foundation to connect the sea water  heat pump system to the slab                                                               
heat system,  and to  install a heat  recovery system  to utilize                                                               
waste heat.                                                                                                                     
                                                                                                                                
1:52:22 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE compared  the use of glycol for  the heat transfer                                                               
fluid at  the Alaska SeaLife Center  with the use of  a water and                                                               
methanol  mix  at the  Juneau  International  Airport, and  asked                                                               
about the advantages of each.                                                                                                   
                                                                                                                                
DARRYL SCHAEFERMEYER, Operations  Manager, Alaska SeaLife Center,                                                               
replied that the SeaLife Center  used propylene glycol because of                                                               
the environmental sensitivity  of the facility.   He described it                                                               
as  "a pretty  safe material  to use.   It's  basically vegetable                                                               
grade.   It's not going to  harm animals or anything  like that."                                                               
He  agreed with  Representative  Feige  that it  was  a bit  more                                                               
expensive than other transfer fluids.                                                                                           
                                                                                                                                
1:53:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE, observing  the overall  operator system  screen,                                                               
asked how  much the  intake temperature of  the sea  water varied                                                               
and if it was possible to draw sea water from other locations.                                                                  
                                                                                                                                
MR. SCHAEFERMEYER replied  that the intake system was  fixed at a                                                               
depth of  275 feet,  and it was  not feasible to  adjust it.   He                                                               
explained that there  were two 750 foot  pipelines which siphoned                                                               
the  water into  a large  wet  well, and  then vertical  turbines                                                               
pumped the water throughout the  building.  The pump could supply                                                               
350 - 700 gallons per minute.   In further response, he said that                                                               
the temperature probably did not fluctuate at this depth.                                                                       
                                                                                                                                
1:55:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P.  WILSON asked if  there were any  problems with                                                               
the seawater intake system.                                                                                                     
                                                                                                                                
MR.  SCHAEFERMEYER   acknowledged  that  there   were  occasional                                                               
problems  common with  salt  water.   He said  that  there was  a                                                               
special filter  for silt, and  that the legislature  had provided                                                               
funding for  annual cleaning.   In response to  Representative P.                                                               
Wilson, he confirmed that the system was now working smoothly.                                                                  
                                                                                                                                
CO-CHAIR SEATON pointed  out that the pipes  pumped directly into                                                               
the SeaLife Center, which enhanced the efficiency of the system.                                                                
                                                                                                                                
MR. SCHAEFERMEYER affirmed  that there was also a  cost factor to                                                               
move the water around the building.                                                                                             
                                                                                                                                
REPRESENTATIVE GARDNER asked where  the pumps and heat exchangers                                                               
were manufactured.                                                                                                              
                                                                                                                                
MR.  SCHAEFERMEYER replied  that these  were manufactured  in the                                                               
U.S. but,  since that time,  the manufacturer had  been purchased                                                               
by  a  foreign  company.    He  said  that  the  steel  pipe  was                                                               
manufactured in Korea.                                                                                                          
                                                                                                                                
1:59:32 PM                                                                                                                    
                                                                                                                                
NANCI   MORRIS-LYON,   Board   of  Directors,   Naknek   Electric                                                               
Association (NEA),  congratulated the  Seward SeaLife  Center and                                                               
the  Juneau  International  Airport  for their  successes.    She                                                               
declared  that NEA  was currently  at  an impasse,  and had  been                                                               
forced to file  bankruptcy.  She explained that  NEA was required                                                               
to  do  balanced drilling,  as  opposed  to geothermal  drilling.                                                               
This had required  the use of barite, which had  plugged the hole                                                               
and prevented an assessment of the resource.                                                                                    
                                                                                                                                
2:01:12 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  asked  for  an   explanation  of  balanced  and                                                               
geothermal drilling.                                                                                                            
                                                                                                                                
MS.  MORRIS-LYON explained  that balanced  drilling was  required                                                               
when drilling for  oil and gas, and it required  mud in the hole,                                                               
rather  than air  pressure.   She  declared that  this mud,  when                                                               
placed in the drilled hole,  blocked the openings and fissures to                                                               
heat  and  water.   She  stated  that  the  State of  Alaska  had                                                               
required that NEA  use this drilling technique, and  that NEA had                                                               
been  unsuccessful in  flushing out  the  mud.   She stated  that                                                               
members of  the geothermal industry  had researched  and analyzed                                                               
the project and suggested the  most cost effective approach would                                                               
be to side  track drill on the current hole.   She explained that                                                               
the  barite  plug  could  not  be  removed,  rendering  the  hole                                                               
unusable, and not allowing an assessment of the resource.                                                                       
                                                                                                                                
2:03:18 PM                                                                                                                    
                                                                                                                                
MS. MORRIS-LYON established that, as  70 percent of the necessary                                                               
materials  were already  on site,  the cost  would be  about $3.2                                                               
million.  The  project could start with the arrival  of the first                                                               
barge,  and the  side track  drilling  would take  four weeks  to                                                               
reach a point of assessment.   She said federal funding was still                                                               
readily available once this stage had been completed.                                                                           
                                                                                                                                
2:05:06 PM                                                                                                                    
                                                                                                                                
MS. MORRIS-LYON  emphasized that  her community, less  than 1,000                                                               
people, had already  invested $23 million into the  project.  She                                                               
reported  that the  community spent  $5.7 million  on fuel.   She                                                               
reiterated that  NEA was only  requesting $3.2 million to  do the                                                               
side drilling  in order to  assess the viability of  the project.                                                               
She  announced  that,  as  Naknek was  the  economic  engine  for                                                               
Bristol  Bay,  affordable, reliable  energy  was  a necessity  to                                                               
build a future.                                                                                                                 
                                                                                                                                
2:06:36 PM                                                                                                                    
                                                                                                                                
MS. MORRIS-LYON stressed that NEA  was struggling and had only 30                                                               
days to secure the $3.2 million,  or it would become necessary to                                                               
submit  a  diesel-only  energy  plan.    If  that  occurred,  the                                                               
drilling  equipment  would  be  sold and  the  project  would  be                                                               
terminated.     She  confirmed  that  her   presentation  to  the                                                               
committee was  to glean  any information.   She cited  the demand                                                               
for geothermal energy as a resource for the future, and stated:                                                                 
                                                                                                                                
     $3.2  million, in  reality,  is a  drop  in the  bucket                                                                    
     compared to what's  been spent in a lot  of other areas                                                                    
     when we've  already got  $23 million  on the  table for                                                                    
     it.  It would give ya  a lot of information on what the                                                                    
     potential is in  the whole area out there,  if we could                                                                    
     get this side track done.                                                                                                  
                                                                                                                                
CO-CHAIR SEATON  expressed his  understanding for  the difficulty                                                               
of reporting to a committee when there had not been success.                                                                    
                                                                                                                                
2:08:29 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE  referred  to  the  handout,  "Naknek  Geothermal                                                               
Project Update," [Included in members'  packages] and asked about                                                               
the projected temperatures noted at the bottom of page one.                                                                     
                                                                                                                                
MS. MORRIS-LYON  responded that the  testing had varied  and that                                                               
the  temperature tools  did not  work well  in the  barite.   She                                                               
explained  that  the  drillers needed  temperature  estimates  to                                                               
determine the mud mixture.   She confirmed the variability of the                                                               
temperatures.                                                                                                                   
                                                                                                                                
CO-CHAIR  FEIGE  asked  what  the   natural  gradient  of  rising                                                               
temperature should be.                                                                                                          
                                                                                                                                
MS. MORRIS-LYON replied that she did not know.                                                                                  
                                                                                                                                
CO-CHAIR  FEIGE  reflected  that  the  drilling  conditions  were                                                               
geologically challenging.                                                                                                       
                                                                                                                                
MS. MORRIS-LYON expressed her agreement.                                                                                        
                                                                                                                                
2:10:36 PM                                                                                                                    
                                                                                                                                
DONNA  VUKICH,  General   Manager,  Naknek  Electric  Association                                                               
(NEA), affirmed  that there were  challenges.  She  relayed that,                                                               
in the  original hole at  a depth of  11,300 feet, the  cones had                                                               
come off the  bit, and it was not resolved.   During the drilling                                                               
of  the first  side track,  the contractor  had drilled  into the                                                               
original  hole, and  the second  side track  had become  instable                                                               
when it was left open too long.                                                                                                 
                                                                                                                                
CO-CHAIR FEIGE  asked what leads  NEA to  believe it is  going to                                                               
have success with a third side track.                                                                                           
                                                                                                                                
MS. VUKICH  replied that  NEA now had  a better  understanding of                                                               
the project, would  be hiring a different engineer,  and would be                                                               
using the technical team from the U.S. Department of Energy.                                                                    
                                                                                                                                
2:12:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON asked  to clarify that the  State of Alaska                                                               
had supplied $1.25 million in general fund dollars.                                                                             
                                                                                                                                
MS. VUKICH confirmed this.                                                                                                      
                                                                                                                                
REPRESENTATIVE HERRON asked if the  balance of the costs had been                                                               
paid by NEA or with federal loans and grants.                                                                                   
                                                                                                                                
MS. VUKICH replied that federal loans  had paid the balance.  She                                                               
detailed that the $1.25 million  had been used in an unsuccessful                                                               
attempt to clean  the barite from the well,  and later determined                                                               
to not be a cost effective way to continue operations.                                                                          
                                                                                                                                
2:13:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON   asserted  that  this  was   a  difficult                                                               
situation.   He asked  if the bankruptcy  courts would  take into                                                               
consideration any  funding from  the State  of Alaska,  which was                                                               
budgeted but not yet awarded.                                                                                                   
                                                                                                                                
MS. VUKICH offered  her belief that the court  would consider any                                                               
firm obligation for the money.                                                                                                  
                                                                                                                                
REPRESENTATIVE  HERRON  asked  if   the  $3.2  million  would  be                                                               
sufficient funding "to confirm the resource."                                                                                   
                                                                                                                                
MS. VUKICH reiterated that NEA  currently had about 70 percent of                                                               
the necessary  material on hand  to do  the sidetrack.   She said                                                               
that  it  would  take  about   45  drilling  days,  and  then  an                                                               
additional 4 weeks for the testing.                                                                                             
                                                                                                                                
REPRESENTATIVE   HERRON  asked   about  the   positions  of   the                                                               
governor's  office, the  Department of  Natural Resources  (DNR),                                                               
and the  Alaska Energy  Authority (AEA) for  the request  and the                                                               
project.                                                                                                                        
                                                                                                                                
MS. VUKICH replied  that there had not been any  support from the                                                               
State of Alaska.                                                                                                                
                                                                                                                                
2:15:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ inquired about the balance of the NEA debt.                                                                
                                                                                                                                
MS. VUKICH replied that the total debt was about $44.5 million.                                                                 
                                                                                                                                
REPRESENTATIVE  MUNOZ   asked  about  the  $0.09   rate  increase                                                               
recommended to cover the debt service obligations.                                                                              
                                                                                                                                
MS.  VUKICH explained  that the  reorganization  plan would  vary                                                               
from the  total debt.  She  stated that the $0.09  increase would                                                               
pay the debt load, with a new rate of $0.49 per kilowatt hour.                                                                  
                                                                                                                                
2:16:38 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE asked if NEA  had approached any other entities in                                                               
the  Naknek  area  that  would  benefit  from  success  with  the                                                               
project.                                                                                                                        
                                                                                                                                
MS. VUKICH  confirmed that NEA  had approached other  groups, but                                                               
as  NEA could  not receive  any  more loans,  they had  requested                                                               
grants from the native corporations and the fish processors.                                                                    
                                                                                                                                
2:18:38 PM                                                                                                                    
                                                                                                                                
DARRON SCOTT,  President/CEO, Kodiak Electric  Association (KEA),                                                               
Inc.,  presented  a  PowerPoint  titled,  "Pillar  Mountain  Wind                                                               
Project  Update,"   directing  attention  to  slide   2,  "Vision                                                               
Statement."   He stated  KEA's goal:   to  produce 95  percent of                                                               
energy  sales with  cost effective  renewable power  solutions by                                                               
the year 2020.  In other words,  diesel would not be a major part                                                               
of the KEA future.                                                                                                              
                                                                                                                                
MR. SCOTT  reviewed slide 3, "Kodiak  Electric Association, Inc."                                                               
and conveyed that  it was a locally  owned cooperative, providing                                                               
electricity to approximately  5800 meters.  He said  the KEA grid                                                               
was not  connected to any other  grids, and its peak  load was 26                                                               
MW with  a minimum load  of 11 MW.   He declared that  the Terror                                                               
Lake Hydroelectric Plant, two 1.5  MW units, was the "backbone of                                                               
our system," and pointed to  the four diesel generating stations,                                                               
total capacity  of 33 MW, as  the backup for the  hydro facility.                                                               
He reported  that the Pillar  Mountain Wind Project  consisted of                                                               
three 1.5 MW units.                                                                                                             
                                                                                                                                
2:20:35 PM                                                                                                                    
                                                                                                                                
MR. SCOTT turned to slide  4, "Pillar Mountain Wind Project," and                                                               
stated that it  became operational in July 2009, and  had met the                                                               
expectations for 8 - 9 percent of KEA capacity.                                                                                 
                                                                                                                                
MR.  SCOTT directed  attention to  slide 5,  "Project Financing."                                                               
He reported that $5 million came  through the State of Alaska and                                                               
the  Renewable  Energy  Fund.   He  discussed  the  low  interest                                                               
financing to  renewable projects  for the  $12 million  loan, and                                                               
specified that  the remaining $4.4 million  was financed directly                                                               
by KEA.                                                                                                                         
                                                                                                                                
2:22:26 PM                                                                                                                    
                                                                                                                                
MR. SCOTT,  addressing slide  6, "Operational  Successes," stated                                                               
that wind  power could not  be as controlled as  hydroelectric or                                                               
diesel.   He explained that  the wind  generation was not  run at                                                               
full power  continuously if the  winds were variable.   He lauded                                                               
an economic  analysis and  an avian  study prior  to installation                                                               
that had prepared KEA for all  the variables.  He shared that the                                                               
availability was almost 98 percent,  which included the down time                                                               
for maintenance and service.                                                                                                    
                                                                                                                                
2:24:28 PM                                                                                                                    
                                                                                                                                
MR. SCOTT,  pointing to  slide 7,  "Savings," specified  that the                                                               
success  was revealed  in a  savings  of 2.2  million gallons  of                                                               
diesel fuel since  the startup, which indicated a  net savings of                                                               
$4.8 million.   He  shared that this  savings signified  that KEA                                                               
had  "basically  broken even  from  the  original investment  [$5                                                               
million] from the state."                                                                                                       
                                                                                                                                
2:25:48 PM                                                                                                                    
                                                                                                                                
MR.  SCOTT discussed  slide 8,  "Building on  Success," and  said                                                               
that a  slightly different addition  to the wind  project, Pillar                                                               
Mountain High Penetration  Wind Project, would be  augmented by a                                                               
third  hydro turbine  and  used in  conjunction  with an  extreme                                                               
power battery  storage system, slide 9,  "Energy Storage System."                                                               
He  analyzed  that the  increased  availability  would bring  the                                                               
system to its  goal of 95 percent renewable energy  by the summer                                                               
of 2013.                                                                                                                        
                                                                                                                                
2:28:11 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  clarified  that   the  committee  members  were                                                               
assessing  the  successes, not  determining  the  budget and  the                                                               
funding.                                                                                                                        
                                                                                                                                
REPRESENTATIVE   GARDNER   asked    where   the   turbines   were                                                               
manufactured.                                                                                                                   
                                                                                                                                
MR. SCOTT replied that the  turbines were manufactured by General                                                               
Electric,  and  that the  various  parts  were made  in  Florida,                                                               
Brazil, Oklahoma, and Canada.                                                                                                   
                                                                                                                                
REPRESENTATIVE  MUNOZ asked  if there  was any  community concern                                                               
for the visual impact of the wind turbines.                                                                                     
                                                                                                                                
MR.   SCOTT  opined   that  the   community  response   had  been                                                               
supportive, and  that the  two major  concerns, avian  safety and                                                               
disturbance to local berry picking, had been addressed.                                                                         
                                                                                                                                
2:30:46 PM                                                                                                                    
                                                                                                                                
ETHAN   SCHUTT,   Senior   Vice  President,   Land   and   Energy                                                               
Development, Cook Inlet Region,  Incorporated (CIRI), presented a                                                               
PowerPoint, "Alternative energy solutions  for Alaska," on CIRI's                                                               
Fire Island  Wind Project.    He  directed attention to  slide 6,                                                               
"Project Overview,"  and informed the committee  that Fire Island                                                               
was located  offshore, about  three miles  west of  the Anchorage                                                               
airport.  He noted that  CIRI was the majority surface landholder                                                               
on  the  island.    Returning  to  slide  5,  "Fire  Island  Wind                                                               
Project," he  pointed to the  33 permitted wind turbine  sites on                                                               
the island, with specific attention  to the 11 turbine sites that                                                               
were built in  the first phase of the project,  slide 7, "Project                                                               
description."   He stated  that the project  and its  permits had                                                               
been  pursued for  almost 10  years, and  was "on  track now  for                                                               
construction and first power by this  fall of 2012."  He reported                                                               
that  a 25  year, fully  flat,  fixed price  term power  purchase                                                               
agreement was  in place  with Chugach  Electric Association.   He                                                               
said  that  these  wind  turbines  were  very  similar  to  those                                                               
previously  depicted wind  turbines  in Kodiak,  with  a 17.6  MW                                                               
capacity.   These  turbines  would meet  about  32.8 percent  net                                                               
capacity, would serve 6,000 households,  and would save about 0.5                                                               
billion cubic feet (bcf) of natural gas consumption.                                                                            
                                                                                                                                
2:32:52 PM                                                                                                                    
                                                                                                                                
MR.  SCHUTT moved  on to  slide 8,  "Project Status  Report," and                                                               
reported   that  the   cost   recovery   with  Chugach   Electric                                                               
Association  had been  approved by  the Regulatory  Commission of                                                               
Alaska (RCA), the contracts for  all the major project components                                                               
had  been executed,  the  financing had  been  approved, and  the                                                               
construction  for  the  transmission   line  was  underway.    He                                                               
described   the  transmission   line,   slide  9,   "Transmission                                                               
Interconnections,"  as  a  "12.5  mile,  34.5  kV  double-circuit                                                               
transmission line"  with about 3.5  miles offshore.   He reported                                                               
that  the  State  of  Alaska  had invested  $25  million  in  the                                                               
project.   He  specified that  the  land based  contractor was  a                                                               
local  company,  Northern   Powerline  Constructors,  the  marine                                                               
construction  contractor, Cruz  Companies, was  based in  Palmer,                                                               
Alaska,  and  that, upon  completion  of  the transmission  line,                                                               
Chugach  Electric Association  would own  and maintain  the line.                                                               
He shared  that the balance  of the on-island  construction would                                                               
be constructed be  Delaney Construction Group, as  shown on slide                                                               
10, "Balance of  Plant Construction."  He  disclosed that Delaney                                                               
also built the first phase  of the earlier referenced Kodiak wind                                                               
turbine project.                                                                                                                
                                                                                                                                
2:34:44 PM                                                                                                                    
                                                                                                                                
MR. SCHUTT moved  on to slide 11, "Project  Schedule," and shared                                                               
that  the commercial  contracts, the  project financing,  and the                                                               
initial transmission  line construction were all  accomplished in                                                               
2011, while the  final construction of the line  and the turbines                                                               
for  delivery of  commercial  power would  be  completed by  late                                                               
September 2012.                                                                                                                 
                                                                                                                                
MR. SCHUTT  discussed slide 12,  "Project supports  Alaska energy                                                               
goals," and stated  that it aligned with many  of Alaska's energy                                                               
objectives,  including private  investment,  local ownership  and                                                               
operation,  local job  creation, local  contracts, energy  supply                                                               
diversification,   long   term   energy  price   stability,   and                                                               
environmental responsibility.                                                                                                   
                                                                                                                                
2:36:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  asked  about  the expected  life  of  the                                                               
entire project.                                                                                                                 
                                                                                                                                
MR.  SCHUTT, in  response, assessed  the  turbine life  to be  25                                                               
years,  whereas most  of  the components  of  the turbine  itself                                                               
would have a longer  life.  He opined that, at the  end of the 25                                                               
years,  the  technology  will  have evolved  so  that  the  power                                                               
generating components could be replaced.                                                                                        
                                                                                                                                
REPRESENTATIVE  HERRON asked  if the  Fire Island  site would  be                                                               
utilized for many decades.                                                                                                      
                                                                                                                                
MR. SCHUTT expressed his agreement.                                                                                             
                                                                                                                                
2:37:43 PM                                                                                                                    
                                                                                                                                
MR. SCHUTT addressed slide 13,  "Stone Horn Ridge," and explained                                                               
that  this  underground coal  gasification  (UCG)  project was  a                                                               
technology  that converted  gas in  situ into  syngas, slide  15,                                                               
"UCG: Proven, Clean Technology."   He noted that this project had                                                               
been undertaken by CIRI with no public financing.                                                                               
                                                                                                                                
REPRESENTATIVE  KAWASAKI  asked  for   a  reconciliation  of  the                                                               
statements on  slide 15  that UCG was  "a proven  technology" and                                                               
that it was "an emerging energy technology."                                                                                    
                                                                                                                                
MR. SCHUTT  replied that  UCG had been  deployed on  a commercial                                                               
scale about 15  times in the former Soviet Union,  and studied by                                                               
the  Lawrence Livermore  National  Laboratory  in California,  so                                                               
that  it was  proven.   He offered  that it  was emerging  as not                                                               
often had it been used commercially in western countries.                                                                       
                                                                                                                                
REPRESENTATIVE DICK asked if there  was any relationship with the                                                               
coal process that Exxon was  developing which the legislature had                                                               
helped finance.                                                                                                                 
                                                                                                                                
MR. SCHUTT responded that there was not any relationship.                                                                       
                                                                                                                                
2:40:52 PM                                                                                                                    
                                                                                                                                
MR. SCHUTT explained slide 16,  "Southcentral Alaska Energy," and                                                               
detailed that  the Cook Inlet  was a massive, deeply  buried coal                                                               
basin and  its access depended  on this technology.   He reported                                                               
that the core drilling program  by CIRI had confirmed significant                                                               
volume  for commercial  scale, validated  favorable geology,  and                                                               
verified a  local market need  consistent with the  future energy                                                               
needs of Southcentral Alaska.                                                                                                   
                                                                                                                                
MR. SCHUTT described  slide 17, "Synthesis Gas,"  as "the product                                                               
that comes  out of the ground"  and noted that once  cleaned, can                                                               
be combusted through a turbine  or steam boiler into electricity.                                                               
He allowed  that it  was possible to  upgrade into  methane, also                                                               
known as synthetic natural gas.                                                                                                 
                                                                                                                                
2:42:05 PM                                                                                                                    
                                                                                                                                
MR. SCHUTT  pointed out that  the "Stone Horn Ridge  site," slide                                                               
18,  was north  of  the  Beluga River,  about  40  miles west  of                                                               
Anchorage.   He moved to  slide 19, "Project History,"  and noted                                                               
that the 13-hole  core drilling, the wire line  data program, the                                                               
concept-level   engineering   and   costing,  and   the   initial                                                               
geological,  rock mechanics  and hydrogeological  site model  had                                                               
all been completed.                                                                                                             
                                                                                                                                
MR.  SCHUTT,  summarizing  slide  20, "Project  Update  and  Next                                                               
Steps," said  that CIRI would  next incorporate the  seismic data                                                               
to  complete a  model  of  the site  geology  and  design a  site                                                               
characterization  drilling  program.    After  that,  they  would                                                               
initiate  a permitting  process for  site characterization  and a                                                               
baseline environmental data collection.                                                                                         
                                                                                                                                
2:43:25 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  announced  that   the  presentation  by  Ahtna,                                                               
Incorporated  on  the  Geothermal   Options  would  be  postponed                                                               
because no one was available to testify.                                                                                        
                                                                                                                                
DOUG  JOHNSON,  Director,   Alaska  Business  Development,  Ocean                                                               
Renewable  Power Company  (ORPC), presented  a PowerPoint,  "ORPC                                                               
Alaska Update,"  and reported, slide 2,  "Company Overview," that                                                               
Ocean Renewable Power Company (ORPC) was  formed in 2004 as a new                                                               
technology  company  to  develop tidal  energy  and  hydrokinetic                                                               
power systems  in marine environments.   He shared that  ORPC had                                                               
projects in Maine,  Alaska, and Nova Scotia.   He asserted, slide                                                               
3,  "Maine  Tidal Energy  Project  Schedule,"  that ORPC's  first                                                               
commercial project, in the Bay  of Fundy, would be grid connected                                                               
later  in the  spring 2012.   He  offered an  overview of  ORPC's                                                               
economic  impact,  slides  4  & 5,  "ORPC's  Economic  Impact  in                                                               
Maine,"  which listed  400  to  500 direct  jobs  with  up to  $1                                                               
billion in direct investment in the industry.                                                                                   
                                                                                                                                
2:48:16 PM                                                                                                                    
                                                                                                                                
MR.  JOHNSON  directed attention  to  slide  6 "Impact  of  Tidal                                                               
Energy in Alaska," and indicated  the $2 million grant to develop                                                               
Cook Inlet  tidal energy and  power.  He declared  that, although                                                               
Alaska was a different environment,  there was a lot of knowledge                                                               
that ORPC brought from its Maine projects.                                                                                      
                                                                                                                                
MONTY   WORTHINGTON,   Director,   Project   Development,   Ocean                                                               
Renewable Power Company  (ORPC), said that Alaska  was a parallel                                                               
story to what  ORPC had done in  Maine.  He referred  to slide 7,                                                               
"ORPC's Economic Impact to Date  in Alaska," which listed many of                                                               
the ORPC business partners within Alaska.                                                                                       
                                                                                                                                
2:50:06 PM                                                                                                                    
                                                                                                                                
MR.  WORTHINGTON  acknowledged that  the  pilot  project on  East                                                               
Foreland in Cook Inlet, slide  8, "East Foreland Project Layout,"                                                               
was  an ideal  site, as  it had  a robust  current resource  very                                                               
close  to a  shore with  significant transmission  infrastructure                                                               
already in  place.   He mentioned  that a lot  of field  work had                                                               
been completed  during the  previous summer,  but that  early ice                                                               
had  curtailed  work,  so  there   was  still  more  data  to  be                                                               
collected.   Once the data  was collected, the  licensing process                                                               
could be completed.                                                                                                             
                                                                                                                                
CO-CHAIR  SEATON,  referring to  slide  9,  "East Foreland  Tidal                                                               
Energy  Project  Deployment  Schedule," asked  whether  the  four                                                               
TidGen Devices listed  for the year 2014 would supply  the 600 kW                                                               
of power.                                                                                                                       
                                                                                                                                
MR.  WORTHINGTON  affirmed this,  then  continued  with slide  9,                                                               
stating that the goal for installation  was now 2014.  He pointed                                                               
to each phase, which would  ultimately allow for a project output                                                               
of 4950 kW.   Directing attention to the  Demonstration Phase, he                                                               
explained  that   this  would  ascertain  whether   the  cost  of                                                               
operating tidal  energy in Cook  Inlet would be  competitive with                                                               
current generation.                                                                                                             
                                                                                                                                
2:52:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DICK  asked if there  was any project  concern for                                                               
federal intervention due to beluga whale endangerment.                                                                          
                                                                                                                                
MR.  WORTHINGTON  relayed  that  the  National  Marine  Fisheries                                                               
Service  (NMFS) had  suggested  to ORPC  that  the pilot  project                                                               
begin in an  area that was less critical and  less high value for                                                               
the beluga.   He said ORPC  had a good working  relationship with                                                               
the agencies.   He  stressed that monitoring  to prove  there was                                                               
not an impact on belugas was a key to the project.                                                                              
                                                                                                                                
2:54:27 PM                                                                                                                    
                                                                                                                                
MR.  JOHNSON  affirmed   that  ORPC  had  just   signed  a  joint                                                               
development agreement with Homer Electric.   He moved on to slide                                                               
10,  "Comparing Tidal  Energy  Market  Incentives," and  observed                                                               
that  the State  of  Maine incentivized  companies  to enter  the                                                               
market with  a Systems Benefit Charge  to all utility users.   He                                                               
explained that up to  5 MW of tidal energy was put  up for bid at                                                               
the  proposed rate  of  $0.26 kWh,  with a  contract  term of  20                                                               
years,  an impact  to rate  payers of  15 cents  each month.   He                                                               
reported  that officials  in Maine  had  determined the  economic                                                               
benefits of tidal energy to far exceed the minimal costs.                                                                       
                                                                                                                                
2:56:34 PM                                                                                                                    
                                                                                                                                
MR. JOHNSON, directing  attention to slide 11,  "600kW Cook Inlet                                                               
Power  Cost  Projections," said  that  the  State of  Alaska  had                                                               
currently  invested  $2  million  in this  600  kW  tidal  energy                                                               
project, but  the full funding  would require about  $13 million.                                                               
He shared  that ORPC had  currently committed about  $1.8 million                                                               
to the project.  He pointed  out that an additional $9.25 million                                                               
was needed.                                                                                                                     
                                                                                                                                
MR. JOHNSON said  this was happening over a three  year period to                                                               
allow for a better understanding  of the associated operating and                                                               
maintenance  costs  for the  turbines  in  the  Cook Inlet.    He                                                               
expressed the need  for the additional $9.25 million  in the near                                                               
future.   He added that  ORPC was a  match with the  new Emerging                                                               
Energy  Technology  Fund  and  expressed   his  belief  that  the                                                               
commercial viability of the ORPC  technology would be proven this                                                               
spring with the Maine project.                                                                                                  
                                                                                                                                
2:58:57 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON asked to clarify the use of the $9.25 million.                                                                  
                                                                                                                                
MR. JOHNSON replied  that the money was for the  three year costs                                                               
to the 600kW demonstration project.                                                                                             
                                                                                                                                
CO-CHAIR SEATON  asked to clarify  whether this was only  for the                                                               
first phase.                                                                                                                    
                                                                                                                                
MR. JOHNSON  confirmed that  it was necessary  to prove  what was                                                               
needed to operate these devices in  Alaska.  He observed that the                                                               
costs  in Maine  and  Nova  Scotia had  shown  that  it would  be                                                               
expensive.   He opined  that after three  years, ORPC  would know                                                               
the costs,  and would make  the decision whether to  move forward                                                               
with a pilot project for up to 5 MW of power.                                                                                   
                                                                                                                                
3:00:34 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 3:00 p.m.                                                                 

Document Name Date/Time Subjects
2012 Copper River Basin Regional Energy Conference 3.pdf HRES 1/27/2012 1:00:00 PM
Copper River Basin Geothermal Potential
A Brief Report to the Alaska Energy Authority.pdf HRES 1/27/2012 1:00:00 PM
AK House Com RE Presentation - Jan 27a 2012.ppsx HRES 1/27/2012 1:00:00 PM
Geothermal_Area_01b.jpg HRES 1/27/2012 1:00:00 PM
Copper River Basin Geothermal Potential
Geothermal_Areas.jpg HRES 1/27/2012 1:00:00 PM
Copper River Basin Geothermal Potential
House Resources Cmte Mtng Jan 2012.ppt HRES 1/27/2012 1:00:00 PM
House Resources Comm geothermal Jan2012 (2).pdf HRES 1/27/2012 1:00:00 PM
Land Committee Report-Geothermal 1-23-2012.doc HRES 1/27/2012 1:00:00 PM
Copper River Basin Geothermal Potential
Latest Cook Inlet info sheet.pdf HRES 1/27/2012 1:00:00 PM
Kodiak Electric Association - Pillar Mountain Wind Read-Only Compatibility Mode.pdf HRES 1/27/2012 1:00:00 PM
ORPC _HouseResource_1_27_12 Read-Only.pdf HRES 1/27/2012 1:00:00 PM
CIRI--House Resources Committee (01 27 12).pdf HRES 1/27/2012 1:00:00 PM
Naknek Electric Diesel Fuel Consumption chart.pdf HRES 1/27/2012 1:00:00 PM
Naknek Electric Geothermal Project Update.pdf HRES 1/27/2012 1:00:00 PM
Naknek Electrict Investment in Naknek Geothermal Project.pdf HRES 1/27/2012 1:00:00 PM
Mt Spurr presentation to House Resources Committee 27-Jan-12 rev1.pdf HRES 1/27/2012 1:00:00 PM