Nevada Geothermal Power Inc. (NGP) (TSX-V: NGP, OTC-BB: NGLPF) is
pleased to update the status of on-going work.
Nevada Geothermal Power is a leading geothermal developer focused on
geothermal power development in the US for continued growth. World
events, including political instability in Middle East oil producing
regions and the tragic nuclear power plant failure in Japan provide
renewed impetus for the U.S. Government plan to encourage the
construction of clean, renewable power plants, the development of new
clean energy technology and the strengthening of the power grid to bring
new power to market. At present, the U.S. is the largest producer of
geothermal power in the world with over 3000 MW of geothermal power
capacity on line, 1600 MW of new geothermal capacity under development
and over 5000 MW of identified geothermal resources for potential future
development (Geothermal Energy Association, 2011).
NGP operates the 49.5 MW Faulkner 1 power plant at the Blue Mountain
Geothermal Project, Humboldt County, Nevada. Near term growth is planned
to come from development of the Crump Geyser (Oregon) and Pumpernickel
(Nevada) properties, as well as project acquisitions in Imperial Valley
(California) from Iceland America Energy, Inc. (IAE).
NGP has sufficient cash reserves to enable further development of its
plans through 2011. The Company is well advanced in its program to
acquire three new geothermal properties in the Imperial Valley from IAE
and in its resource development in a joint venture at Crump Geyser with
Ormat Nevada Inc. The Company is also planning to further pay down
mezzanine debt related to the Faulkner 1 plant.
The economics of the Faulkner 1 geothermal plant continue to be
adversely affected by lower than anticipated power production and a
forecasted gradual temperature decline. The Company is currently further
stimulating and testing five wells, as well as re-modeling the reservoir
to update its forecast of power production. The Company presently
believes the most reasonable power production forecast is 35 MW (net)
declining approximately 2.5% per year. If there is no improvement in
this forecast the Company will not be able to meet the terms of its loan
with EIG Global Energy Partners (EIG), formerly the Trust Company of the
West (TCW), and accordingly, in addition to applying for a federal
government cash grant and assessing a tax-assisted financing, the
Company has begun discussions with EIG in order to make changes to the
The current balance on the EIG loan is approximately $88 million. NGP
anticipates repaying a portion of the debt with proceeds of
approximately $7.5 million from a potential tax grant based on
additional $25 million of qualified well field expenditures since the
plant was placed in service. In addition, NGP will explore its strategic
options and has engaged Marathon Capital to assist with the structuring
and potential placement of a $30-50 million tax-assisted financing. The
financing requires reaching an agreement with EIG on new terms that
include some conversion of debt to Faulkner 1 Holdco equity, or similar
adjustments, as well as receiving a satisfactory updated resource report
from independent consultants, GeothermEx Inc., upon the completion of
current well tests.
The Company is advancing the following development projects:
Blue Mountain, Nevada
Plant production has been steadily improved to current levels of 35-37
MW (net) or 46-48 MW (gross) output by additional well field drilling
since October 2009 when the plant was placed in service. Seven
full-sized geothermal wells were completed under the supplemental
drilling program, and four have been connected to the Faulkner 1 power
plant. Three of these wells (55-15, 58-11, and 91-15) are in operation
as injection wells and a fourth well (44-14) is connected to the plant
and has been used intermittently for both production and injection since
its completion. The remaining wells (41-27, 34-23, 86-22) located
southwest of the production area showed marginal permeability associated
with a weak thermal zone and are not connected to the plant at this
time. Wells 34-23 and 86-22, along with previously-drilled,
sub-commercial production test wells 38-14, 89-11, and 44-14, are being
stimulated by cold water injection and oil field fracturing techniques
in an attempt to improve injection capacity/production capacity. Test
results will be incorporated into an updated reservoir report needed to
support the tax-assisted financing referred to above.
NGP plans to continue with exploration drilling of the "Western” and
"South Blue Mountain” geothermal target areas.
Iceland America Asset Purchase, Imperial Valley,
Imperial Valley is a premier address for geothermal development in the
US with 500 MW of power capacity on line. Active new power development
projects include the 50 MW Hudson Ranch Project which is under
construction and the 50 MW Orita Project where Ram Power has released
encouraging results from two deep development test wells.
The agreement to purchase the New Truckhaven, East Brawley and South
Brawley high temperature geothermal projects is progressing and is
expected to close shortly. NGP believes that commercial reservoirs may
be present at the New Truckhaven and the East Brawley Projects based on
extensive past work including development test drilling in both areas.
Iceland America’s East Brawley leases are centered on a large heat
anomaly immediately south of current drilling by Ram at the Orita
NGP project planning has been initiated so that development permit work
and infrastructure studies can commence expeditiously after the
acquisition is complete.
Crump Geyser, Oregon
Crump Geothermal Company (CGC), a joint venture between Nevada
Geothermal Power and Ormat Nevada, Inc., completed and tested a
5000-foot deep exploration well (34-3) at the Crump Geyser property at a
location along the range front to the south of Crump Geyser. A shallow
thermal outflow zone not suitable for production was intersected;
however, results indicate the well can be used for injection. Planning
is in progress to drill additional exploratory production test wells.
CGC obtained extensive temperature gradient drilling data over the
project area from an earlier exploration program which outlines the
shallow thermal anomaly and obviates the need for further shallow
gradient drilling work at Crump. Consequently, CGC submitted a revised
deep slim well drilling program along with a progress report covering
geophysical (gravity, seismic, aeromag) surveys completed, details of
the earlier gradient well program, and environmental/permitting work to
the Department of Energy (DOE) relative to the on-going $3.4 million,
cost- shared exploration program.
A deep well drilling program to test targets down to 5000 feet has
commenced. Power market and transmission access feasibility studies are
The Pumpernickel Project has been extensively explored and is ready for
development drilling. Three production test well sites are permitted and
a level drill pad has been constructed at one location. A water license
has been awarded for future power plant operations enabling a water
cooled power plant and increasing power production during summer months.
NGP is seeking a financial partner for further project development.
A $3.2 million DOE cost-shared exploration program has been transferred
from North Valley to the Pumpernickel Project. NGP will move ahead with
environmental studies and a shallow soil-gas sampling program leading to
two deep confirmation holes in collaboration with the DOE.
North Valley, Nevada
A $300,000 deep confirmation well program is scheduled to commence
shortly pending receipt of access road permits at North Valley in a
central location within a 10-square-mile, high grade thermal anomaly.
The well is intended to measure subsurface temperatures and to obtain
geothermal brine samples and better define the potential geothermal
resource temperature and field capacity.
Geothermal Power Inc.:
Nevada Geothermal Power Inc. operates the 49.5 MW Faulkner 1 geothermal
plant in Nevada. It is a growing, renewable energy developer focused on
producing clean, efficient and sustainable geothermal electric power
from high temperature geothermal resources in the United States. NGP
currently owns leasehold interests in five properties: Blue
Mountain and North
Valley in Nevada, and Crump
Geyser, in Oregon. These properties are at different levels of
exploration and development. NGP estimates a potential of between 150 MW
and 300 MW from its current leaseholds.
Nevada Geothermal Power Inc.
Brian D. Fairbank, P. Eng.
President & CEO
This Press Release contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
have tried, whenever possible, to identify these forward-looking
statements using words such as "anticipates," "believes," "estimates,"
"expects," "plans," "intends," "potential" and similar expressions.
These statements reflect our current belief and are based upon
currently available information.
forward-looking statements involve known and unknown risks,
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