Ormat plans to accelerate exploration activities in Alaska

Mount Spurr, Alaska (source: USGS, wikimedia commons)
Alexander Richter 7 Jun 2010

Ormat Technologies plans to accelerate its exploration activities in Alaska, following the reform of the state's geothermal energy royalties system. The company has leased state land in 2008 and has carried out some exploration work at Mount Spurr.

In news from Alaska, “Geothermal company Ormat Technologies has said it will now accelerate its exploration activities in Alaska, following the reform of the state’s geothermal energy royalties system.

The company said Alaska has “substantial” geothermal potential, despite having no commercial power plants in place so far. It applauded Governor Sean Parnell for signing into law Senate Bill 243 last week (see this story).

The new law cuts the royalty payments geothermal developers must pay to generate power through projects located on federal lands from 10-15% of gross revenues to 1.75% during the first 10 years of a project, and 3.75% from then on.

Ormat leased 36,000 acres of state land back in October 2008, and has since carried out some early exploration work around Mount Spurr, the highest volcano of the Aleutain arc.

But, following the changes made to the state royalty system, it said last week that it now intends to start drilling core holes as part of early development work for the site.

Construction should take around three years, but the company based in Reno, Nevada, said it hopes to be the first independent power provider selling geothermal power to utilities in Alaska.

Commenting on the changes to the payment system for geothermal projects in Alaska, Ormat president and COO Yoram Bronicki said: “Reducing this rate is an important first step towards developing the state’s renewable geothermal resources into utility scale power plants.

“At the end of the day, SB 243 provides Ormat with the confidence that the state supports the development of the geothermal industry in a manner that is financially viable.”

Alaska lawmakers believe geothermal power plants could eventually provide nearly a third of the electricity supply in southcentral Alaska, an area dependent on a “nearly depleted” supply of natural gas from the Cook Inlet.

Senator Lesil McGuire, who originally sponsored SB 243, said: “Alaskans want to live and work where they have access to reliable and affordable energy. By reducing the royalty rate on geothermal power, we acknowledge the unusually high costs of geothermal development in Alaska but still protect the State’s interests.

“This bill will ultimately lower the cost of clean, reliable power to the ratepayers,” she added.”

Source: Brighter Energy