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The Armed Services Geothermal Program GRC 2007

Briefing Content. Program OverviewBusiness ModelGeothermal Development Project Areas. Program Authorization. 10 USC 2394 - Allows for 30 year contracts for energy production10 USC 2689 - Allows for development of geothermal resources beneath military-controlled lands (fee simple or withdrawn)10 USC 2867 - Allows for sale of electricity from renewables or cogeneration facilities .

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The Armed Services Geothermal Program GRC 2007

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    2. Briefing Content Program Overview Business Model Geothermal Development Project Areas

    3. Program Authorization 10 USC 2394 - Allows for 30 year contracts for energy production 10 USC 2689 - Allows for development of geothermal resources beneath military-controlled lands (fee simple or withdrawn) 10 USC 2867 - Allows for sale of electricity from renewables or cogeneration facilities

    4. Geothermal Program Office Mission To locate & develop resources on military facilities anywhere in the world Two-pronged approach: Resource Development Resource Management

    5. Geothermal Program Office Role Evaluate the resource Provide permitting/process guidance Oversee the PPV contracting process Technical training for on-site personnel Maintain resource management expertise Contract administration Provide economic analyses Industry and government interface

    6. Business Model “Farm-Out” Tried & True Energy Business Mechanism Establish Resource Potential Pre-Qualify Third-Party Investors Proposals/Negotiations Compensation Navy oversight - resource mgmt.

    7. Why this Business Model? Risk Reduction - Success Increase Flexibility Market Conditions Resource Quality/Viability Fair Market Value

    8. “Acid Test” If deal is too tough, the industry won’t participate. Corollary: If economics are not favorable, then developers won’t invest.

    10. Military Facilities with Known Geothermal Potential Coso - China Lake Naval Air Station Fallon Naval Air Facility El Centro Hawthorne Army Ammunition Depot Chocolate Mountains Gunnery Range

    11. Locations with Unproven, but Prospective Geothermal Potential Nellis AFB Luke AFB MCAGCC 29 Palms Schofield Barracks MCAS Yuma Fort Bliss Kelly AFB Brooks AFB NAS Corpus Christi NAS Kingsville Bravo 19 NAS Fallon Ingleside NAS

    12. Coso Geothermal Field First power from Coso in 1987 Full power in January 1990 Nearly 30,000 GWh electricity since first power Average on-line availability 98% Anticipated reservoir lifetime is 50 years although longer is not unlikely Exploring Southeast Coso for additional resource

    13. Project Milestones - Leading to Contract Award

    14. Milestones for Geothermal Development at NAS Fallon

    15. Potential Benefits to Military Services Revenue Sharing Direct Power Purchase Electricity Bill Offset “Green Power”

    16. Critical Variables Affecting Success Maintaining Mission Integrity Power Purchase Agreement - Market Conditions Realistic Expectations Buy-in by Local Command & Upper Management

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