Ormat’s Alaska Geothermal Program To Move Ahead

Ormat Technologies this week said that it will accelerate geothermal exploration work this summer on Mount Spurr following Alaska Governor Sean Parnell’s signing of Senate Bill 243. Originally, the annual royalty rate paid from geothermal production on state lands was a minimum of 10 percent of gross revenues.

This bill significantly reduces that rate to the same level paid on Federal land. While it is believed that Alaska has substantial geothermal potential, it has yet to develop a large-scale geothermal power plant.

“Alaskans want to live and work where they have access to reliable and affordable energy,” said the bill’s sponsor Senator Lesil McGuire. “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.”

In October 2008, Ormat leased approximately 36,000 acres of state land through a competitive bid process, and has since conducted early exploration work at the site. Ormat plans to begin drilling core holes this year as part of exploration and early field development, which is expected to take three years. Construction is expected to last another three years. Ormat hopes to be one of the first independent power providers selling geothermal power to utilities in Alaska.

“Reducing this rate is an important first step towards developing the state’s renewable geothermal resources into utility scale power plants,” said Yoram Bronicki, president and COO of Ormat. “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.”

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