Lava flows cover wellheads of two wells of Puna geothermal plant, Hawaii
In an update, Ormat Technologies reports that lava flows have covered two wellheads on site of the Puna geothermal power plant on Hawaii's Big Island and have destroyed the substation and a warehouse on site.
With continuing lava flows in Hawaii, Ormat Technologies has released another update on the situation around its Puna geothermal plant on Hawaii’s Big Island, yesterday.
Due to the approaching lava, the substation of the Puna complex and an adjacent warehouse that stored a drilling rig were burned. Both items are expected to be covered by the Company’s insurance policies. Due to the long lead time of constructing a new substation and the extent of the damage to HELCO’s transmission lines, the Company cannot asses when the Puna complex will be able to resume operation and deliver power to the grid.
The approaching lava also covered and blocked the main access road to the power plant. Alternative access road is currently open.
As announced on May 28, the approaching lava covered the wellheads of two geothermal wells. The Company cannot assess at this stage the extent of the damage to the future functionality of these wells. As of today, the lava did not cover any additional wells. The lava continues to flow and may reach other wells and areas of the Puna facility.
The 38 MW Puna power plant, which is operated by Puna Geothermal Venture GP (PGV), reflects approximately 4.5% of Ormat’s total generating capacity. In 2017, PGV accounted for an aggregate of approximately $11 million of net income and approximately $20 million of Adjusted EBITDA annually. Ormat holds a 63.25% interest in PGV and the balance is held by its partner, an affiliate of Northleaf Capital Partners.
Ormat has property and business interruption insurance policies that include insurance coverage in a combined amount of up to $100 million in the event of volcanic eruptions and earthquake. The Company is working with its insurance broker and has provided notice to its insurance carriers regarding the situation at Puna. As of March 31, 2018, the Puna complex represented approximately $90 million of net assets on the Company’s balance sheet based on a total asset value of approximately $109 million plus approximately $30 million of prepaid expenses less deferred lease income of approximately $49 million. In addition, PGV is required to pay an aggregate of approximately $22 million of future lease payments until 2027.
Any significant physical damage to, or extended shut-down of, the Puna facilities could have a material adverse impact on the power plant’s electricity generation and availability, which in turn could have an adverse impact on our business and results of operations.
The video here below is a news report from an information meeting and an fly over update from May 29, 2018.
Source: Ormat release