SB 69-GEOTHERMAL RESOURCES  3:47:14 PM CO-CHAIR BISHOP reconvened the meeting and announced the consideration of SENATE BILL NO. 69 "An Act relating to geothermal resources; relating to the definition of 'geothermal resources'; and providing for an effective date." He noted that this was the first hearing. 3:47:40 PM JOHN BOYLE, Commissioner-Designee, Department of Natural Resources, Anchorage, Alaska, stated that a most important priority for DNR is to advance energy security in Alaska. He highlighted that while a number of areas within the state should be very conducive to geothermal exploration and development, these areas had not been delineated and characterized for decades. He said it is also important to ensure that the leasing statutes and regulations encourage and promote the exploration and development of the identified energy resources. DNR believes that advances in technology provide multiple opportunities to develop geothermal resources along the volcanic chain and areas in the Interior with both warm and hot springs. SB 69 is important to this effort. 3:51:15 PM JOHN CROWTHER, Deputy Commissioner, Department of Natural Resources, Anchorage, Alaska, described the presentation and introduced DR. LePain. 3:51:41 PM DR. DAVID LEPAIN, Director and State Geologist, Division of Geological and Geophysical Surveys, Department of Natural Resources, Fairbanks, Alaska, began the presentation on slide 4, "Fundamental Ingredients of Useable Geothermal Energy." He explained that the graphic on the left shows a typical high temperature hydrothermal system that used hot water at depth to power turbines that generate electricity. There is a power plant at the surface and production wells (represented with the red arrows) that move hot fluid up from depth. The hot fluid goes into the system and turns a turbine that generates power. The fluid that has gone through this process has cooled and is reinjected at some distance from the production wells. He described the following requirements: • Elevated geothermal gradient • Porosity and permeability for the migration of fluids • Surface access • Sufficiently large thermal system • Customers for energy 3:54:11 PM CO-CHAIR BISHOP asked Mr. Crowther if this type of reinjection well would need Class VI certification. MR. CROWTHER answered that geothermal wells fall under Class V of the Environmental Protection Agency's (EPA) underground injection control program for the Safe Water Act. The Class V category applies to the injection of non-hazardous fluids. He noted that Class VI certification is for injection of carbon dioxide for carbon sequestration purposes. CO-CHAIR BISHOP asked what the timeline is to get Class V certification. MR. CROWTHER relayed his understanding that the EPA currently is not permitting Class V wells for geothermal, but SB 69 does authorize the Alaska Oil and Gas Conservation Commission (AOGCC) to investigate it in the event that the EPA provides that authorization in the future. He said he didn't know the timeframes for other Class V permits, but the EPA has the ability to issue the permits directly to the applicant without the state assuming primacy. Geothermal wells are not complex and should not take the 2-3 years that it can take for the EPA to issue a permit for a Class VI well. 3:56:56 PM CO-CHAIR GIESSEL asked the likelihood that the geothermal fluids would contain minerals. DR. LEPAIN replied it's a possibility, depending on the rocks that the fluid comes from. He noted that lithium has been found in some of the produced geothermal fluids in Nevada. CO-CHAIR GIESSEL asked whether lithium is considered a hazardous substance. DR. LEPAIN replied that it would depend on the concentration. He deferred to Mr. Crowther to discuss how that would affect the regulations for the wells. MR. CROWTHER said he'd follow up with the exact specifications for the different classes of wells, but DNR's understanding is that mineral concentrations that typically cycle in geothermal systems fit within Class V. Most geothermal water is saline brine with trace elements. 3:59:21 PM DR. LEPAIN referenced the graphic on slide 4 and advised that if there are hot dry rocks at depth, water can be injected and circulated through those rocks then produced some distance away for use in a power plant. The cooled water can then be reinjected some distance from the production hole and the process can be repeated. The fluid doesn't have to be hot but hot rocks are a necessity. DR. LEPAIN advanced to slide 5, "Heat Flow in Alaska." It shows the color-coded natural heat flow from the earth superimposed on a map of the state. He explained that the earth is a layered system that has radioactive minerals at depth that generate heat as they decay. He acknowledged that the map conveys the inaccurate impression that every hole that's dug will result in an elevated heat flow. He added that it does correctly convey that much of the state has slightly elevated heat flow. Importantly, the white symbols that run in a belt from the Seward Peninsula to Circle and Central reflect geothermal springs. He highlighted that of the 97 geothermal sites scattered throughout the state, there was advanced understanding of the system in just five of those sites. These are the Makushin Volcano, Akutan, Spur, Pilgrim, and Chena. Only Chena is producing. Little is known about the other 92 sites scattered across the state, but widespread geothermal potential is suggested. 4:02:49 PM DR. LEPAIN advanced to the chart on slide 6, "Geothermal Gradients." He explained that he provided this depth temperature plot for reference. It shows that at the Makushin Volcano, the temperature of the water at 2000 feet is a little warmer than 380 degrees Fahrenheit. It is a high temperature system. By comparison, the temperature at Chena is a little more than 160 degrees Fahrenheit at a depth of 1000 feet. He underscored that little is known about the other 92 spots and where they fit in this depth temperature space. 4:04:00 PM DR. LEPAIN advanced to slide 7, "Geothermal Resource Quality," and discussed the following: Generation capacity per unit cost depends on several geologic and economic factors: • Temperature hotter is better • Flow rate higher flow rates are better • Reservoir framework uniform porosity better than fractures • Recharge partially natural better than all artificial • Depth shallower is less expensive, thus better • Location, location? relative to population, transmission system, development costs... CO-CHAIR BISHOP commented that he could envision several villages tied together to take advantage of one geothermal site. 4:06:22 PM DR. LEPAIN advanced to slide 8 and spoke to the following summary: INTRODUCTION TO GEOTHERMAL RESOURCES • Geothermal heat, where technically and economically accessible, is an excellent form of sustainable energy • Hydrothermal systems are the most common form of energy extraction from geothermal heat • Complex geologic parameters necessary for a viable geothermal resource, all present at one location, is rare • Alaska contains several potential geothermal resources • New technologies that will help expand geothermal development into less favorable geology are on the horizon MR. CROWTHER advised that Mr. Huber was online to clarify the interaction between Class V and the requirements for permitting wells for geothermal. 4:08:07 PM BRETT HUBER, Chair, Alaska Oil and Gas Conservation Commission, Anchorage, Alaska, stated that Class V is only necessary for the injection portion of the wells. AOGCC currently has the authority to permit to drill for exploratory wells, delineation wells, and stratigraphy wells. Statute directs that the turnaround time for those permits is to be as expedient as practicable. In practice this translates to turnarounds in about two weeks. MR. CROWTHER advised that the supplemental information he mentioned earlier begin on slide 29, "Supplemental Information." 4:09:09 PM At ease 4:09:41 PM CO-CHAIR BISHOP reconvened the meeting. 4:09:55 PM DR. LEPAIN directed attention to the map on slide 30, "Geothermal Systems of Alaska." It shows two broadly classed geothermal systems: granite-related systems and volcano-related systems. The latter are located in the Aleutian arc, up the Alaskan Peninsula, and along the west side of the Cook Inlet basin. Three granite-related systems have been identified: 1) the east-west system that trends from the Seward Peninsula to the hot springs at Circle and Central, 2) the Southwest system that runs from Tatawiksuk in the northeast to Ophr, and 3) the Southeast system. There are large granitic bodies that have been intruded at 3000 to 5000 feet up into shallower crustal depths, some of which are on the surface. These systems are up to 100 million years old. They've been cooling for a long time and are still extremely hot. The volcano-related systems stem from the Pacific crust subducting under Southcentral Alaska. This generates magma that rises and creates volcanoes. He advised that the next few slides provide a closer look at each area. 4:12:33 PM DR. LEPAIN advanced to slide 31 that identifies the geothermal systems in the Fairbanks region. Each site is classified as high temperature hot spring, hot spring, or warm spring. This region has quite a few warm and hot springs, but no high temperature hot spring. These sites are widespread and all are granite- related. Many are off grid but have villages close by. DR. LEPAIN advanced to slide 32 that identifies the geothermal systems on the Seward Peninsula. He identified Pilgrim Hot Springs, the high temperature hot spring at Serpentine, and hot springs at Lava Creek, Koyuk, Golovin, Elim, Nome, and Kotzebue. With the exception of Pilgrim, not much is known about these systems. DR. LEPAIN advanced to slide 33 which identifies the volcano- related systems along the Alaska Peninsula and the eastern part of the Aleutian chain. He identified the Makushin Volcano and the high-temperature hot springs at Hot Springs Cove, Partov Cove, and Akutan. Makushin is in the process of being developed and work has been done at Akutan, but it's not being developed. These systems are widely distributed along the chain and up into the upper peninsula, but not much is known about most of them. 4:15:07 PM DR. LEPAIN advanced to slide 34 which shows geothermal resources in Southeast Alaska. There are high-temperature hot springs at Bailey Bay and Tenakee Inlet, and a number of warm and hot springs are scattered throughout the region. They are all granite-related systems, and not much is known about them other than the temperature and flow rate of the water coming from the spring, and perhaps the chemistry of the water. DR. LEPAIN underscored how widespread the geothermal resource potential is in the state and how little is known about it. 4:16:26 PM CO-CHAIR BISHOP asked if he had more details on what Nevada has been doing to produce power from geothermal resources. DR. LEPAIN offered to follow up with details for Nevada. He noted that California, Idaho, and potentially Utah have been producing power with geothermal resources. 4:17:38 PM SENATOR DUNBAR commented that it seems that the geothermal resources generally are where the population isn't. He noted that the largest gap was in the Anchorage and MatSu area. He asked three questions: 1) whether the development on the Aleutians was associated with the fish processing plant, 2) whether mines were exploring geothermal as a potential power source, and 3) what the land ownership looks like and whether access to the resource would be difficult on federal land. DR. LEPAIN responded that he knows that some of the sites in the central belt from the Seward Peninsula to the Canadian border are on federal land. He acknowledged that he didn't know how difficult it might be to develop those sites. SENATOR DUNBAR asked for information about industrial users like mines and fish processors. DR. LEPAIN said he understands that the project underway at Makushin Volcano will provide power to the City of Unalaska and the fish processor in the area. He mentioned the slow development of the Donlin Gold Mine and posited that one geothermal plant in that area could be a game changer. 4:20:41 PM MR. CROWTHER thanked the committee and advised that DNR would give a detailed review of the bill at a future meeting. CO-CHAIR BISHOP held SB 69 in committee.