The Phase II expansion is dependent on successful development of additional production and injection well capacity. We expect that approximately 75% of the Phase II development may be funded by non-recourse project debt, with the remainder funded through equity financing. We anticipate the project qualifying for the 30% Federal Investment Tax Credit, which when monetized, can meet most of the equity financing requirements.
The updated reservoir model (announced January 11th) resulted in a significant increase in the potential size of the San Emidio Phase II reservoir of up to 47 net megawatts. Data from flow tests that took place in late 2016 from two wells were incorporated into a Probabilistic Power Density model, which estimates the Net generation potential of a reservoir. The power density model is not a Monte Carlo style “heat in place” estimate. Based on the flow rate and temperature produced by the two wells, and by measurement of pressure response both in the wells and across the wellfield, the model estimates that the Most Likely Outcome (50% probability) is 47 net megawatt of generation capacity within a 1.4 square mile area. The Minimum level of generation capacity (90% probability) occurs in a 0.18 square mile area, and has 18.8 net megawatts of generation capacity.
These two wells are approximately 1,700 feet apart, along the new structural trend identified in the Southwest Zone which is still open for expansion. Temperature gradient well data and seismic information indicate a potential strike length for the Southwest Zone of up to 2,700 feet. This compares to a strike length for the primary producing wellfield at San Emidio Phase I of 800 feet, suggesting the potential for a much larger resource in this Southwest Zone. Permits to deepen three remaining temperature gradient wells were received from the Bureau of Land Management in December 2016. These three wells will be deepened to the targeted reservoir depth to further explore the Southwest Zone when weather allows. If successful, it will extend the length of the productive reservoir by 1,000 feet.
The three power plant units that were purchased in 2016 are available to provide this project with the major, long lead equipment requirements for 35-45 net megawatts of power (depending upon cooling system used). The increased San Emidio II reservoir capacity with a 320°F+ temperature fits the design range of the equipment. These new, unused components represent approximately 70% of the equipment needed for a complete facility similar to the Company’s Neal Hot Springs operation.