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U.S. Geothermal receives key reservoir certificate by DOE for loan guarantee

Drilling rig at Neal Hot Springs, Oregon (source: US Geothermal)
Alexander Richter 11 Apr 2011

U.S. Geothermal announces it has received a key reservoir certificate by the U.S. Department of Energy's independent reservoir engineer, which is required under the DOE's $96.7 million loan guarantee for the construction of the plant at Neal Hot Springs in Oregon.

In a release by the company today, “U.S. Geothermal Inc. (TSX:GTH) (NYSE Amex:HTM) announces it has received a key reservoir certificate by the U.S. Department of Energy’s (DOE) independent reservoir engineer. The certificate is a technical condition required under the DOE’s $96.7 million loan guarantee to construct the planned net 23 megawatt (MW) power plant at Neal Hot Springs in Eastern Oregon.

USG Oregon LLC, a subsidiary of U.S. Geothermal Inc., has now provided TAS Energy, Inc., Idaho Power Company and Industrial Builders Inc., with notices to proceed with the manufacture of the power plant, construction of a 10-mile transmission line and the site construction and development services, respectively. USG Oregon LLC also has initiated the final stage of drilling activities to drill the remaining required injection wells for the project.

“We are moving quickly to bring the Neal Hot Springs project online,” said Daniel Kunz, President and Chief Executive Officer of U.S. Geothermal. “The Department of Energy’s renewable-energy loan programs are helping to grow America’s green economy by adding new jobs and putting renewable energy on a more level playing field with fossil fuel energy sources.”

Idaho’s largest utility, Idaho Power Company, has signed a 25-year power purchase agreement with USG Oregon LLC for up to 25 MW of electrical power per year. Beginning in 2012, the base energy price is $96 per MW hour and escalates annually. The calculated 25-year levelized price is $117.65 per MW hour.

The Neal Hot Springs project is the first geothermal project to complete the closing of a loan guarantee under DOE’s Title XVII Section 1703 loan guarantee program, which was created by the Energy Policy Act of 2005 to support the deployment of innovative clean energy technologies. Based on the DOE loan guarantee, the U.S. Treasury’s Federal Financing Bank is providing a $96.7 million low-cost, long-term loan to the Neal Hot Springs project. Enbridge (US) Inc. is acquiring a 20% direct ownership interest in the $129 million Neal Hot Springs project by funding the remaining equity share of the construction costs, with the balance of the construction costs being funded by the project loan.

The Neal Hot Springs project is expected to create or retain more than 50 permanent jobs in the Pacific Northwest. Approximately 400 jobs through the equipment supply chain, plant manufacturing and site construction activities will be created or retained during the project’s 18-month construction phase.”

Source: Company release via American Banking News