Legislature(2011 - 2012)BARNES 124
01/27/2012 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| Overview(s): Update: Renewable Energy Project and Technology | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
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.