Econ 919 — Energy companies eyeing Cook Inlet's Mount Spurr

May 14, 2021

Credit Photo Cyrus Read/Alaska Volcano Observatory/U.S. Geological Survey

Two companies are looking at the geothermal energy potential of Mount Spurr, a volcano about 40 miles west of Tyonek in Cook Inlet.

Once they have the final go-ahead from the state, GeoAlaska and Raser Power Systems can explore adjacent leases on the south side of the volcano.

 


Interest in Mount Spurr isn’t new. The state has held geothermal lease sales there since the ’80s. 

But the resource has never been successfully harnessed or developed. 

Step one is just locating it, said Steve Masterman, the director of the state’s Division of Geological and Geophysical Surveys.

“First, you have to find the resource," he said. "Understanding the geology is really a key part to that.”

The basic idea of geothermal is to harness the heat contained below the earth’s surface, in the form of steam and water. Geothermal’s a renewable resource, and like other renewables, can be used to heat homes or generate electricity.

But here’s the challenge with Mount Spurr, said Gwen Holdmann, the director of the Alaska Center for Energy and Power in Fairbanks.

While it’s an active volcano, with a lot of trapped, simmering heat, “that system doesn't have a lot of clear surface expression in terms of where you might want to drill, for example, to confirm a resource," she said.

Gov. Mike Dunleavy’s administration wants to make geothermal exploration in Alaska easier for interested companies, whether it’s at Mount Spurr or elsewhere. 

He’s proposed legislation that would, in part, allow companies to lease and explore nearly double the acreage they’re currently allowed. 

Masterman said that'd be helpful because surface hot springs often indicate the presence of reservoirs. But the hottest water isn’t always right beneath those springs.

“That might be a number of miles away from the place where it comes out of the ground," he said.

Dunleavy’s legislation would also extend the maximum exploration period, from two years to five. 

“It might take a number of summers in order to do the background work, the geology, the geophysics before you do the drawing," Masterman said. "And then it might take a number of rounds of drilling before you're successful with finding a viable resource.”

There are other geothermal projects in motion in the state. Chena Hot Springs has its own geothermal plant. And in Unalaska, two companies plan to start constructing a geothermal energy plant this summer for the city's power grid.

Those plans and the ones for Mount Spurr are subject to the state’s current regulations, since Dunleavy’s legislation hasn’t passed yet (and may not before the Legislature adjourns next week).

According to Petroleum News, one of the companies looking for a permit, GeoAlaska, started in 2020 and is based in Anchorage. The other, Raser Power, is based in Utah. Raser Power filed for bankruptcy in 2011 in relation to a geothermal plant there.

Surveyors tried and failed to find hot water reservoirs at Mount Spurr a decade ago. Ormat Technologies did surveys and some exploratory drilling there between 2008 and 2011, but later relinquished those leases when it couldn’t locate the resource.

“They took a little bit of a conservative approach from the standpoint of drilling in a location that would be more optimal to develop a power plant, and staying a little bit away from any areas that might be close to hazards," Holdmann said.

But she said there is much more land to explore on the volcano. And data from the prior surveys are publicly available and could still be helpful for GeoAlaska and Raser.

“I am certain that they have looked closely at that data and are using that to rethink the program that they’re developing," she said.

The up-front costs are expensive. But Holdmann said there are also regulatory hurdles to development including restrictions from the Alaska Oil and Gas Conservation Commission.

“I think one that one thing that we want to be thinking about in addition to encouraging and promoting exploration is really thinking about what development might look like," she said.

Then, there’s the question of a market, and whether a geothermal project at Mount Spurr is cost competitive with existing energy sources. 

But that’s all years down the road. First, the interested companies need to prove the resource is there — and that they can find it.