Raft River Project In-Depth

The Raft River geothermal project is located in southern Idaho, approximately 200 miles SE of Boise, at the site of a former U.S. Department of Energy geothermal installation. The Company currently owns and/or leases approximately 8.2 square miles of land with a proven geothermal reservoir which may be capable of producing up to 110 megawatts of power based on estimates from GeothermEx Inc.

US Geothermal acquired the project in 2002 and have a 20 year contract with the Idaho Power company to sell 10 megawatts of electricity from the Raft River Unit 1 power plant. The Raft River Unit 1 began commercial operations in January 2008.

The Raft River project is at the site of a former U.S. Department of Energy ("USDOE") geothermal demonstration project that operated from 1974 to 1982 where over $40 million dollars were invested in geothermal studies and production infrastructure. In a 1985 study undertaken on behalf of the Bonneville Power Administration, Raft River was rated first in the "Final High Temperature Ranking: Pacific Northwest" of geothermal sites in the four state Pacific Northwest region.

GeothermEx Inc., an independent, world leading geothermal consulting firm, has completed a technical review of the extensive data available on the Raft River geothermal site. They have estimated that the site has a 50% probability of a power production capacity of 15.6 megawatts per square mile.

History and Infrastructure

The first commercial size binary cycle geothermal power plant in the world, a 7 gross megawatts dual pressure system using isobutane as the binary fluid, was successfullyconstructed, and tested at this site in 1980-1982. Although the 7 megawatts demonstration plant only produced electricity for several months on a test basis, the technology has since advanced to become the leading, proven technology for producing electrical power from moderate temperature geothermal resources in the world. There are currently 12 operating binary cycle plants in the Western United States, which produce 184 megawatts of electrical power.

The site is attractive because of the proven 300 degree Fahrenheit hot water resource that has been developed and tested, and because of the significant infrastructure facilities that are currently in place.

Geoscientific data collected from the Raft River geothermal field provides abundant evidence that confirms the existence of a large, moderate temperature geothermal resource. Measured temperatures vary between 275°F to 300°F at depths between 4,500 to 6,000 feet. Fluids encountered in the wells drilled to date are clean and of low salinity with total dissolved solid contents between 1,200 to 6,800 parts per million. The fluids also have low non-condensable gas content.

Geothermal Energy and Power Generation

Geothermal systems in this moderate temperature range use a binary-cycle power plant for the production of electric power. In a binary plant, the hot geothermal water is passed through a heat exchanger, which in turn heats a binary liquid. The binary liquid, isopentane in the case of U.S. Geothermal's power plant, vaporizes at a lower temperature and higher pressure than water. In a closed loop cycle, the vapor produced from the binary liquid spins the turbine-generator unit, then it is condensed back to liquid before being reused in the heat exchanger. After a portion of the heat is used from the geothermal water, it exits the binary plant and is injected back into the reservoir.

Geothermal electric power plants typically have operating availabilities of 96% or higher and function as base load power generators, which is higher than hydro dams, coal and natural gas fired generators. They are modular, and can be installed incrementally on an as needed basis, which allows for the gradual expansion of a geothermal field as it is developed on a schedule of 18 months from notice-to proceed to start-up.