With dwindling natural gas reserves, will South Alaska be powered with geothermal energy? Ormat may be the first to open Alaskan territories, still virgin to this clean technology.
Yavne, in Israel’s Central District, was briefly home to ancient Israel’s Sanhedrin (its highest rabbinical assembly). The town of 32,000 can also claim to be the original home of Ormat Technologies, Inc, now a multinational listed on the New York Stock Exchange (NYSE: ORA) and headquartered in Reno, Nevada. Ormat has been around for the last 40 years, and has a market capitalisation of $2 billion and annual revenues of $250 million.
Ormat specialises in building power stations fuelled by renewable geothermal energy. This energy emanates ultimately from the Earth’s molten core, and it’s the “renewable” part of the equation that has driven Ormat’s recent growth. Ormat owns and operates a dozen geothermal energy power plants worldwide, with another eight or so under development. By their nature, the plants tend to be located in geyser and volcano-rich areas.
What does this have to do with Alaska? Ormat leased some 36,000 acres of Federal land in Alaska back in 2008, but has carried out only exploratory work until now. With Alaska just having reformed its geothermal energy royalties system, it has now become financially viable to begin core drilling, leading up to actual development and construction at the site.
The changes to the royalties system mean that, instead of handing over 10-15 percent of gross revenues as royalties, companies such as Ormat will pay only 1.75% for the first 10 years of the project and 3.75% for its remaining life. Construction of the Alaska plant should take about 3 years.
Alaska is believed to have substantial potential for geothermal energy. The Ormat plant alone is expected to supply one-thrid of the electricity requirements of south central Alaska, which currently relies on an almost-depleted supply of natural gas from Cook Inlet.
With the world steadily waking up to the real costs of energy based on non-renewable fossil fuels – both to our economies and to the planet – the future for geothermal energy and Ormat looks bright.
Further reading on Ormat:
Ormat gears up to develop its first geothermal plant in Alaska
Ormat Technologies: Heating Up the Geothermal Landscape
Ormat Industries – Israeli energy pioneer
Israel’s Ormat makes clean fuel that is good to go
Above image: An Ormat geothermal power plant in Nevada (via Ormat Technologies)