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The Armed Services Geothermal Program GRC 2007

The Armed Services Geothermal Program GRC 2007 Briefing Content Program Overview Business Model Geothermal Development Project Areas Program Authorization 10 USC 2394 - Allows for 30 year contracts for energy production

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The Armed Services Geothermal Program GRC 2007

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  1. The Armed Services Geothermal Program GRC 2007

  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• 10 USC 2689 - Allows for development of geothermal resources beneath military-controlled lands (fee simple or withdrawn) • 10 USC 2867 - Allows for sale of electricity from renewables or cogeneration facilities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.

  9. Geothermal Resources Yakima Firing Center Moses Lake Minot AFB Ellsworth AFB Mt. Home AFB (Saylor Creek) Warren AFB Sierra Army Depot NAS Fallon USAFA Hawthorne Fort Carson Coso Nellis AFB Fort Irwin White Sands 29 Palms Randolph AFB/ Fort Sam Houston NAS El Centro Chocolate Mtns. Fort Bliss Fort Polk Yuma Luke AFB Lackland AFB Williams AFB Temperature Above 194°F Kelly AFB Brooks AFB Ingleside NS NAS Corpus Christi NAS Kingsville Keesler AFB, Biloxi Gulfport NAS New Orleans Temperature Below 194°F Geopressured Resources

  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. 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 Locations with Unproven, but Prospective Geothermal Potential

  12. 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 Coso Geothermal Field Navy GPO Mission Drilling Rig To locate, develop and manage geothermal resources wherever they occur on U.S. military facilities Approach NAVY I Power Plant • Public-private venture capital projects • “Other people’s money” • Share in revenue/benefits Status/Highlights Multi-Use Project • Navy Mission – Weapons Development • Geothermal Resource Power Generation • Environmental/Cultural Resource Mgmt. Program Manager: Dr. Frank Monastero

  13. Project Milestones - Leading to Contract Award 200X 200X+1 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Briefings CBD Announcement Industry Meeting Pre Qualification Package Due RFP to Qualified Group Firms Bids Received Negotiation Completed Contract Award - ASN Approval Required Total Elapsed Time  9 Months

  14. Milestones for Geothermal Development at NAS Fallon Months After Contract Award 0 12 24 36 6 18 30 Contract Award EA/EIS for Exploration Permitting Well Drilling & Testing Reservoir Evaluation Financing Secured EA/EIS and Permitting for Development Construction of Facilities Transmission Tie-in Start Production

  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

  17. The Military/Industry Geothermal Story: Partnering for Success

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