Power Purchase Agreement

 

Negotiations are in process for PPA with the City of Unalaska, who owns the utilities for the City.  It will be a standard take or pay arrangement with obligation of the parties for 30 years.  The approach is to provide the city power at today’s price with only inflationary related increases for duration of the PPA. There will be milestones for the developer to achieve in advance of obligations for take or pay by the city.   Negotiations results will determine the actual size of the plant to be initially built.

Permitting

 

There are many nuances to the requirements and by far, the outline below is not comprehensive, but in nutshell;

 

Federal:  The leased land has all been conveyed to Aleut Corporation and OC, i.e. the lands are private (and now entirely in OC’s control).  The only major federal agencies that will be involved will be the COE, (dredge and fill of waters and coastal alterations), and EPA (its underground injection control program).  A NPDES will not be necessary because of the reinjection of fluids.  Because of the expected low impact of this project, it’s unlikely an EIS will be required.

 

State:  The Alaska Department of Fish and Game (ADF&G) will have active permitting interest. Road and pipeline development will affect streams with fish resources, so permits will be needed for bridges, culverts, buried pipes and cable stream crossing, etc.   We think the Alaska Department of Environmental Conservation (ADEC) will be involved with permitting reinjection of geothermal fluids through its wastewater discharge permit program. ADEC will also be involved with air quality permitting.  The Alaska Department of Natural Resources will be involved for structures in the tidal zone.

 

After a detailed project description is developed, assuming an EIS is not required, we expect permitting process to be completed in 8 - 12 months.

Funding of project

 

The project will be financed with a combination of debt and equity.   The first choice is that debt financing will come through Department of Energy (DOE) guarantees utilizing Title XVII funds. 

 

There was a meeting with DOE in April, 2019 to determine if an application process could be started.   Prior to taking the meeting the DOE required three things:

 

  1. Proof of the entity formed for the application process, i.e., OCCP LLC, and

  2. Bring in the parties to the PPA, which was accomplished with the major and utility operators of Unalaska giving verbal support, and

  3. Meet statutory requirements of the innovative loan program, which was discussed as entry requirements for Phase I of II.Those requirements are:

    • Utilize a new or significantly improved technology

    • Avoid, reduce, or sequester greenhouse gases

    • Be located in the United States, and

    • Have a reasonable prospect of repayment

 

In a September 2019 meeting with the DOE, OCCP LLC was notified they would be allowed entry into the application process Phase I.   The DOE assigned a single point of contact to the team for assistance with the application. 

 

The OCCP LLP team has been working on Phase I responses and expect to pass Phase I screening in May 2020 and move into Phase II.

 

Phase II essential requirements are:

 

  1. Design basis and preliminary drawings

  2. Resource plan

  3. PPA negotiated

  4. Engineering Procurement Construction firm, or equivalent, commitment and pricing

  5. Well defined loan payback plan

 

Phase II will typically take up to 9 months to complete.  However, we are combining much of Phase 1 and Phase 2 requirements into our Phase 1 submittal.    With the extensive technical work already completed on the project, we target the low end of scale, or 6 months to complete Phase 2.   If so, that would place full sanctioning of the project before the end of 2020. 

Timeline For Concept To Delivery

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