Homer Alaska - Business

Story last updated at 8:22 PM on Wednesday, May 25, 2011

Companies pursue several alternative energy projects



By Tim Bradner
Morris News Service - Alaska

With natural gas reserves running down in Southcentral Alaska, efforts are being focused on alternative energy on several fronts.

Cook Inlet Region Inc. still hopes to develop its $160 million Fire Island wind project near Anchorage, a project stalled because of difficulties in negotiating power sales agreements with regional electric utilities.

However, CIRI is moving ahead with exploration at an underground coal gasification project on land it owns in the Beluga coal fields, about 50 miles west of the city.

CIRI has drilled 13 core holes to map coal resources in the area and plans to begin an intensive drilling program this winter to zero in on a site for its project, Ethan Schutt, CIRI's vice president for energy and natural resources, told an Anchorage business group May 13. The project would produce a gas similar to natural gas.

In a separate initiative, Ormat Technologies Inc. of Nevada has mobilized a field crew for a second year of summer exploration at the company's Mount Spurr geothermal project, 75 miles southeast of Anchorage. Mount Spurr is an active volcano.

Ormat will use the same core drilling rig CIRI used for drilling at Beluga last winter, which will be airlifted to Mount Spurr soon, according to the company's manager for the project, Rahm Ornstein.

Two 4,000-foot test wells will be drilled this summer at the geothermal site, following up on two 1,000-foot test wells drilled last year. The 2011 wells will be at different locations on the geothermal reservoir than the 2010 wells, Ornstein said.

Data from the four wells will be used to model the extent of the resource, which will provide information for planning three commercial-scale wells the company hopes to drill in 2012. The Legislature approved $20 million in state funds to support Ormat's work when lawmakers adjourned May 14. State funds, combined with Ormat's investment, will be used to drill the three deep wells in 2012. Next year's drilling is contingent on favorable results from the 2011 drilling, however.

Ormat Vice President Paul Thomsen told legislators in Juneau in a May 6 briefing that results from the 2010 drilling were encouraging, and if the 2011 and 2012 wells are successful, the project could be constructed and producing 50 megawatts of power for Southcentral Alaska electric utilities by 2015, and 100 megawatts by 2019.

Orenstein said Ormat would have spent about $4.5 million on Mount Spurr exploration from 2010 and 2011 with $2 million of the program funded by grants from the state's Renewable Resource Fund and $2.5 million funded by Ormat itself. The company also paid the state $3.5 million in 2008 to lease 38,000 acres of geothermal leases at Mount Spurr.

A full-scale development at Mount Spurr would require an investment of $220 million to $270 million, which Ormat would finance itself, Thomsen told legislators.

However, state funding would be requested for a 40-mile transmission line and road would need to be constructed to connect the site to a natural gas-fired power plant and transmission infrastructure owned by Chugach Electric Association, which also could be one of Ormat's customers.

Ormat has estimated that $65 million would be needed to build the transmission line.

CIRI project

Meanwhile, CIRI is continuing work on its underground coal gasification project, where core drilling has been under way for two winter seasons, Schutt told a luncheon gathering of the Building Owners and Managers Association of Anchorage.

The corporation now has enough data in hand to begin development of a three-dimensional geological model of the underground coal resource.

A specialist in rock mechanics and a ground water hydrologist also have been retained to work on the project, CIRI's Schutt said.

Core holes drilled so far have been spaced at intervals of one-half mile to one mile, but a more intensive, closely spaced set of holes will be drilled this winter as CIRI focuses on a possible location for its project.

Core holes drilled to date have been abandoned and cemented in compliance with state regulations, but some of the wells drilled next winter will be left open for monitoring and data gathering, which will be used during the permitting process. Those wells will not be used for production, however.

Underground coal gasification involves combustion in an underground chamber in a coal seam. The combustion, made possible by air or oxygen injected from the surface, which also controls the reaction, provides heat and pressure to create a series of chemical reactions in the coal seam to create a flow of synthesis gas, a mixture of carbon monoxide and hydrogen, that will flow to the surface in a separate well.

"We're not simply burning the coal. We use the combustion to drive the process that creates the syn-gas. Only about 20 percent of the coal in the seam is consumed in the combustion," Schutt said.

The site for the project must be selected carefully, he said. The coal seam must be deep enough, and covered by an impermeable rock layer, to ensure that no contaminants from the coal seep toward the surface and reach shallower aquifers that contain groundwater.

Also, the coal seam must not outcrop on the surface somewhere else, or else air or water could penetrate the coal. Were that to happen a continuous combustion could result, rather than one that can be controlled by shutting off or reducing the air supply.

CIRI's current location is suitable from those standpoints.

The syn-gas can be used as fuel in a turbine for power generation, like natural gas, although the syn-gas has a much lower energy content than conventional natural gas.

However, syn-gas can be used in manufacturing products, such as the fertilizer that Agrium Corp. used to produce in a plant near Kenai (it closed due to lack of affordable gas supplies), or to make high-quality fuel products through the Fischer Tropsch process. Both of these manufacturing process use synthesis gas as feedstock.

Alternatively, the syn-gas can be upgraded through a process known as methanation into a gas product chemically the same as the methane, the main component of natural gas.

This gas would be suitable for use by Enstar Natural Gas Co. for space heating in Enstar's Southcentral Alaska service area.

Tim Bradner is a reporter for the Alaska Journal of Commerce.

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