Raser update on Lighting Dock project in New Mexico
Raser Technologies expects to start drilling at its Lighting Dock project in New Mexico in May 2010.
In a release, “Raser Technologies, Inc. provided an update on its Lightning Dock, New Mexico project today, including that it has selected Barbour Well, Inc., of Henderson, Nevada to begin drilling in May. Barbour Well is an experienced geothermal well drilling firm licensed to drill geothermal and domestic water wells in New Mexico.
The Lightning Dock resource, located in southwest New Mexico, is one of the most studied, undeveloped resources in the country. It is a shallow resource, with primary production expected from depths of less than 3,000 feet and at temperatures between 285 and 310 degrees Fahrenheit.
“We are extremely anxious to get moving on our next geothermal project,” said Raser CEO Nick Goodman. “The Lightning Dock resource has attracted attention from the geothermal industry since the 1970’s. It has been heavily studied with numerous temperature gradient holes and hot water wells. We are looking forward to making significant progress on our next plant.”
Raser has completed a comprehensive internal review and report on the Lightning Dock project, has selected drilling locations and will now begin operations by re-entering a well (TFD 55-7) that was drilled in 1984. That well was plugged and sat idle for decades awaiting development of the geothermal resource. Surveys of this well have shown bottom hole temperatures of more than 320 degrees Fahrenheit. Raser plans to mobilize the Barbour #77 rig to Lightning Dock in early May to reopen and flow test well TFD 55-7. Drilling additional production and injection wells will follow the test.
Raser signed a co-development agreement with Evergreen Clean Energy in December of 2009 to provide financing for Raser’s drilling activities. Evergreen’s funding obligations with respect to each site selected for development are subject to the satisfaction of a number of conditions, including satisfactory due diligence, the completion of certain milestones, the granting of a security interest, and the negotiation of definitive agreements relating to the financing of each project. Moreover, Evergreen is a newly formed clean-energy fund in the process of raising capital for its first investments in renewable energy projects. Therefore, the ability of Evergreen to perform its obligations and provide funding for one or more of our projects under the Co-Development Agreement is dependent upon Evergreen’s ability to obtain sufficient capital commitments from investors. Raser anticipates that after completing a successful flow test of well TFD 55-7, Raser and Evergreen will finalize negotiations for a potential funding commitment by Evergreen for the Lightning Dock project. If Raser is able to successfully negotiate a funding commitment with Evergreen for the Lightning Dock project, Raser anticipates that Evergreen would (i) reimburse Raser for its costs related to well TFD 55-7, (ii) pay Raser $5 million for participation rights and (iii) pay for all future drilling for the Lightning Dock project.
By beginning drilling and construction this year on Lightning Dock, Raser expects to be able to take advantage of the Section 1603 renewable energy grant program established by the American Recovery and Reinvestment Act of 2009. The Section 1603 program, under which the Treasury Department awards a grant of 30% of the qualified capital costs of renewable energy facilities in lieu of tax credits, is available for geothermal projects which commence construction during 2010 and are placed in service before the end of 2012. Raser’s Thermo No. 1 geothermal power plant in Beaver County, Utah received a $33 million grant under the Section 1603 program in February of 2010. Raser anticipates that a grant for the Lightning Dock project would be in the range of $22 million.
When complete, the Lightning Dock project is expected to deliver 15 MW of geothermal power to the Salt River Project Agricultural Improvement and Power District (“SRP”), a major utility district of the State of Arizona serving the Phoenix area, under a 20 year power purchase agreement signed with SRP in 2008. The project is expected to deliver reliable baseload energy, with a capacity factor of 95% to SRP.
Raser Technologies owns and operates a geothermal power plant in southern Utah which delivers renewable energy to Anaheim, CA. Once completed, the Lightning Dock plant will become the Company’s second geothermal project. Raser has a number of projects in different stages of development located in Utah, New Mexico, Nevada and Oregon.”
Source: Release via Marketwatch