Reported locally, “The City of Unalaska is taking a new approach to the Makushin geothermal project. Instead of negotiating for resource and land use rights from private landowner Jack Woods, the city is now negotiating with the Aleut Corporation and the Ounalashka Corporation.

“So our negotiations basically fell apart with Mr. Woods,” said city manager Chris Hladick. “So we’ve got our geologists looking in other places.”

A team of scientists hired by the city visited the area in May and said there is good resource potential in Driftwood Bay, Wide Bay, Makushin Valley, and Glacier Valley on corporation lands.

“It is there, it’s just a matter of finding the three things that you need to go together,” he said. “You need fractured rock, you need a heat source, and you need a water supply that keeps moving through that region of the rock.”

Before the city can use the US$4 million they have set aside for exploratory drilling, they need an agreement with the Aleut Corporation to determine royalties in case they find a resource. They also need access and use permission from the O.C. He said the city hopes to have an agreement with the Aleut Corp. by March.

That means they will put off exploratory drilling again until next summer. They have until then to use the US$1 million of federal stimulus funds.

Current price estimates for the project range between US$100 million and US$150 million, depending on the location of the resource and the available technology. Hladick said that with current diesel prices, the project is not economically feasible; it would cost significantly more to produce geothermal energy than to use the diesel generators. However, this may not be the case in 10 years, especially if environmental regulations require expensive pollution mitigation technologies.

“If this is a 10-year project and you just keep chipping away at it, and you get grants for production wells, etc and you’re not on the hook for a lot of money, then you’d be crazy if you didn’t do it.”

Hladick says the city will pursue the project in small steps to determine its feasibility.

Source: Public Broadcasting, KIAL, Alaska