Construction
Volcanic Value
Building the Makushin Geothermal Project

By Nancy Erickson

J.F. Larsen | AVO/UAF-GI

“O

ne does not resist the invasion of ideas,” said Victor Hugo, and one idea whose time has come has been bubbling underneath the Aleutian Island arc. Fifty million years in the making, visionaries now are taking active steps toward energizing Unalaska’s electrical grid with geothermal energy tapped from nearby Makushin Volcano.

An exploratory test well in 1983 determined the Makushin resource can supply enough geofluid to generate 500MW for 500 years. The geothermal resource at the base of the active volcano 14 miles from the Aleutian fishing community of Unalaska/Dutch Harbor is well documented, according to Dave Matthews, program manager with the joint venture Ounalashka Corporation/Chena Power (OCCP).

“Tens of millions of dollars have been spent in the past forty years investigating this resource, with Alaska Division of Geological & Geophysical Surveys, Republic Geothermal, Alaska Energy Authority, and the University of Alaska investing time and research into the value of the resource,” says Matthews. “Multiple PhDs have been earned based on resource investigations. The Makushin Geothermal Resource is hence a verified resource that is well-known in the geothermal world.”

After several failed attempts by others at developing the utility resource, the joint venture between Unalaska’s Native village corporation, Ounalashka Corporation, and Chena Power, a privately-held Fairbanks-based entity that installed the first geothermal power plant in Alaska, is scaling the hurdles of also being the first in the state to transform the volcano’s thermal energy into green energy for residents of Unalaska.

The Hurdles
Ownership of the land and subsurface rights around the volcano has been a roadblock for previous developers. That is no longer the case.

“There are no land ownership/access issues,” says Matthews. “The entire project corridor and facilities are on our 51 percent partner’s land, made possible by a key 7,037-acre purchase by Ounalashka Corporation in 2019.”

High capital costs were also an issue that the joint venture has overcome. “OCCP has contributed significantly via in-kind contributions in order to keep the development costs low,” Matthew says.

Another boost was the City of Unalaska committing in 2020 to a thirty-year annual payment starting at $16.3 million, increasing 1 percent per year, according to Steve Tompkins, director Public Utilities for Unalaska.

First to Zero
“We’re going to change the world. Unalaska and Dutch Harbor will be the poster child for the world,” says Bernie Karl, co-founder, president, and director of OCCP.

Also labeled as inventor, serial entrepreneur, “imagineer,” and a long-time advocate for geothermal energy, Karl is the founder and developer of Chena Hot Springs Resort outside Fairbanks. Not only does geothermal energy provide 100 percent of heat and electricity for the resort, but it also heats greenhouses that produce lettuce and tomatoes for the resort’s restaurant and refrigerates the Aurora Ice Museum at a cool 25°F year-round.

Karl is scaling up his vision for geothermal in Alaska as he works to advance the Makushin Geothermal Project, which taps energy from a much larger geothermal source: the Pacific plate subducting under the Aleutian chain.

“The Ormat EPC contract is by far the largest and most technically complex part of the overall project… Having secured a fixed result contract in this important area of the project is indeed an important milestone.”
Bernie Karl, President, OCCP
Considered the gateway to the Aleutian Islands, Unalaska lies approximately 900 miles southwest of Anchorage and is home to the Port of Dutch Harbor, the busiest fishing port in North America by volume. The island has roughly 4,200 year-round residents but can bulge to 10,000 when the fishing season is in full swing.

“Unalaska/Dutch Harbor will be the first community in the United States to have zero emissions,” Karl envisions. “We’ve done a heat pump study to put heat pumps in every home using 1kW of geothermal energy and you get 4.5kW of heat out, so it’s 4.5 to 1.”

The city typically purchases up to 3 million gallons of diesel per year, Tompkins says. The price per gallon fluctuates widely: the average price in May 2020 was $1.12 per gallon, and July 2022 saw an average price of $5.27 per gallon. Overall price for FY22 was $3.39, according to Tompkins.

Totally dependent on diesel for its two generating plants, the City Power Division supplies 22.4MW, less than 40 percent of the power generated on the island, according to Tompkins. Six entities, including local fish processors, run their own diesel generators.

“We’re looking at November 2027 for delivering 30MW of power to Unalaska/Dutch Harbor, and it’s going to change the world,” Karl says.

Infrastructure Taking Shape
The plan for the Makushin Geothermal Project is to construct a plant that uses artesian hot geofluid (390°F) that boils an organic fluid (such as propane, butane, or more exotic hydrocarbons) into vapor to turn a turbine generator. Electricity is generated and the geofluid is reinjected into the ground, while the vapor is sent through cooling towers, converting it back to liquid for re-use.

A lot has been accomplished since the City of Unalaska’s commitment to purchase power from the geothermal project.

“We have a 50-year lease for the geothermal resource. We have all the necessary permits to proceed for the infrastructure installation for the 10 mile stretch from Broad Bay to the plant site,” Matthews says.

Broad Bay is the location closest to the base of the valley leading up to the 6,000-foot volcano, whose eastern slope is the proposed site of the project’s geothermal plant.

Matthews adds, “We have completed the basic engineering, enabling bidding of certain phases of the project. We have completed a significant mobilization of equipment and camps and have constructed 2.3 miles of the utility access corridor.”

Several contractors have already added their expertise to the project.

Ormat Technologies signed an engineering, procurement, and construction (EPC) contract with OCCP in January worth approximately $100 million. The Nevada-based company will build the Makushin power plant and remote gathering system that collects hot geofluid and then re-injects it into the ground. Ormat will also be responsible for supervisory control and data acquisition of fiber optic control integration from the entire plant to the City of Unalaska dispatch center.

“The Ormat EPC contract is by far the largest and most technically complex part of the overall project,” Karl says. “Having secured a fixed result contract in this important area of the project is indeed an important milestone.”

Geochemist Allan Lerner of the US Geological Survey measures the temperature of a bubbling pool in the upper Glacier Valley south of Makushin Volcano.

Christoph Kern | AVO/USGS

Geochemist Allan Lerner of the US Geological Survey measures the temperature of a bubbling pool in the upper Glacier Valley south of Makushin Volcano.
“In order to take power from the Makushin Geothermal project, the island electrical distribution system has to be significantly upgraded and formed into a unified grid… The project needs significant participation from many of the self-generators in order to be economical to the city.”
Steve Tompkins
Director of Public Utilities, City of Unalaska
Ormat’s history in Alaska began with the Trans Alaska Pipeline System, selling power units for remote gate valves along the pipeline route. It has built more than 190 power plants around the world and is now the second-largest thermal power producer in the United States.

The joint venture selected Power Engineers of Hailey, Idaho as an independent engineering firm to represent OCCP in specification writing, design criteria, bid evaluations, and guidance in various technical areas.

OCCP signed a contract for utility access corridor and transmission line routing and design in 2020 with 3-Tier Alaska, Travis Peterson Environmental, and Northern Land Use Research Alaska. The contractors will assist in routing delineation; wetland, biological, and archeological resource identification; and design of the utility access corridor (road) from Makushin Bay to the powerhouse site. Anchorage-based CONAM Construction has been chosen to install land-based power and communication transmission cables, substation modules, and the battery energy storage system.

TerraSond Precision Geospatial Solutions commenced work in 2021 with F/V Miss Alyssa, performing geophysical route surveys for the two power and communication subsea cables over a 4-mile route, connecting the geothermal plant’s electrical output and control to the City of Unalaska.

Data collected was analyzed by Wopschall Consulting for route selection, with a marine archeologist performing archeological studies. That effort enabled J.F. Brennan Company, a marine specialty contractor based in Wisconsin, to develop an installation plan and estimate for the subsea installation for its contract piece. That same data is utilized for the subsea permit application.

The punch list for this year’s construction season includes resuming utility access corridor construction through the Makushin Valley up to the power plant site and mobilization of a large drill rig at the production well site, Matthews says.

Challenges Ahead
The concept of harnessing energy from a volcano to power an electrical grid 14 miles away sounds challenging, yet Tompkins says the city is excited about geothermal power becoming a reality. And while many aspects of this project are expensive, Tompkins sees getting everyone connected as the most expensive portion of the project.

Geothermal project installation has high capital requirements, and the facilities are normally located where they can supply output to a large electrical grid at full capacity around the clock, says Matthews. Unalaska is a small, isolated grid with a plant designed to follow the load as demand fluctuates, which increases the initial installation costs.

“In order to take power from the Makushin Geothermal project, the island electrical distribution system has to be significantly upgraded and formed into a unified grid,” Tompkins explains. “The project needs significant participation from many of the self-generators in order to be economical to the city.”

“Upgrading the existing distribution and installing additional distribution to connect to all self-generators in preparation for hooking into geothermal power is the most expensive portion of the project for the city and has been slowly ongoing while OCCP has sought funding for the project,” he adds. “By combining all self-generators on to one power grid, we will have more robust, reliable service.”

“We have letters of interest but no commitments from them, and I don’t blame them,” Karl says of local facilities that generate their own power. “They want to wait until it’s built. Seeing is believing.”

Heating the Future
“Unalaska is a perfect place to demonstrate this conversion,” says Matthews. “It’s next to the Makushin Volcano. It’s the largest seafood port in Alaska and it’s on the shipping lanes. Another point is that geothermal capital requirements are high but, at the same time, it includes the cost of thirty years of fuel [the thirty-year design life of the plant]. Therefore, it adds stability to the area in terms of predictable energy.”

Key to any major project is funding.

OCCP is working with the US Department of Energy’s Tribal Energy Loan Guarantee Program, thanks to Ounalashka Corporation owning 51 percent of the joint venture. It also hopes to involve the Alaska Industrial Development & Export Authority, the Alaska Energy Authority, and/or other preferred equity groups to get funding in place.

There have been eleven proposals to make Unalaska geothermal a reality, Karl recalls, and no one has been able to put it together. Karl is undaunted.

“We were the first. It doesn’t take money and it doesn’t take brains. It takes vision and it takes passion, and these jobs have always been lacking in vision and passion,” says Karl. “I bring vision and passion to this job.”

Victor Hugo also said, “A day will come when there will be no battlefields, but markets opening to commerce and minds opening to ideas.” Karl’s mind has been open for a while, and now the markets are opening.

“First, you have to go where the need is,” says Karl. “Then you have to go where the resource is. Then you have to marry the two together, and that’s what we’ve done.”