VANCOUVER, Jan. 17, 2012 /CNW/ - Nevada Geothermal Power Inc. (NGP) (TSX.V: NGP) (OTCBB: NGLPF) is pleased to announce that it has engaged Canaccord Genuity as
financial advisor to NGP to determine strategic alternatives in the
restructuring of its mezzanine debt and in the recapitalization of the
ONGOING INJECTION DISTRIBUTION AT BLUE MOUNTAIN PROVIDING ENCOURAGING
A program to preserve generation capacity was initiated in 2011 and is
nearing completion. The program objective is to shift injection away
from the injection wells that return cooled geothermal fluid from the
plant back to the production zone too quickly.
Three existing unused wells, 58A-15, 38-14, and 89-11, were selected to
be placed into injection service following field tests and computer
simulation modeling. In early November 2011, injection into well
58A-15 commenced at a rate of 600 gpm to a shallow permeable horizon
that appears from tracer tests to be isolated from current production
zones such that cooled fluid is not expected to return to production
wells. Well 38-14, requiring new pipeline construction, was connected
and injection at a rate of 150-200 gpm commenced Dec 28, 2011 on the
southern margin of the producing field. Well 58A-15 and 38-14 injection
has resulted in a lessening of temperature declines at the production
wells. Temperature declines at some wells (14-14, 26A-14) appear to
have ceased. The third well 89-11 was cleaned out and a slotted liner
was installed in November 2011; injection tests confirm that the well
is a "better than expected" injector capable of taking approximately
2000 gpm. Pipeline construction to 89-11 was recently completed and
injection commenced on January 12, 2012 starting at 500 gpm to be
increased in stages. The further redistribution of injection into
89-11 is expected to further moderate observed temperature declines in
Reservoir simulation modeling by GeothermEx, Inc. has estimated that the
re-distribution of injection into 58A-15, 38-14 and 89-11 will allow
senior loan covenants to be met through the remaining 17-year life of
the facility. The mezzanine debt service coverage ratios are in breach
and the Company is working cooperatively with lenders and its advisor
to restructure the loan.
A tax-assisted financing to monetize deductions is planned with Marathon
Capital, LLC as agent, following the completion of the current
injection program and confirmation of the reservoir response.
BLUE MOUNTAIN RESERVOIR DEVELOPMENT
As announced previously, NGP completed a comprehensive independent study
by Engeocon LLC. of all resource and geotechnical information to better
understand the geothermal fluid flow system, recommend strategies for
arresting slow thermal declines, and recommend additional field
development steps to increase production at the Faulkner 1 geothermal
power plant. The study forms the basis for NGP's current reservoir
management strategy and identifies new injection targets on fault
structures trending north and northeast from the existing wellfield.
New deep production drilling targets are identified on known structures
to the west.
The Company proposes a three-well development program comprised of two
new northern injectors (55-10, 65-11) and one new production well
(47-15) to achieve a targeted 53 MW gross plant output (42 MW net
delivered to the grid). The two new injectors will be drilled in
sections 10 and 11 to shift the injection from the current western
injectors to the northern periphery of the field. A new production well
would be sited in the hottest part of the known field west of the
current four deep western injectors.
The $20 million drilling and development project has excellent financial
returns because wells can be placed in service as they are completed
and connected by pipeline to use the excess production capacity of the
existing Faulkner 1 plant. Production increases may require the
approvals from NVE, the senior debt holder and certain regulatory
agencies. GeothermEx has been engaged to independently assess the
proposed development project.
In addition to Blue Mountain in Nevada, NGP is actively working on
development programs at Crump Geyser with Ormat in Oregon and at New
Truckhaven in the Imperial Valley region, California.
About Nevada Geothermal Power Inc.:
Nevada Geothermal Power Inc. operates the 49.5 MW Faulkner 1 geothermal
plant in Nevada. It is a renewable energy developer focused on
producing clean, efficient and sustainable geothermal electric power
from high temperature geothermal resources in the United States. NGP
currently owns leasehold interests in eight properties: Blue Mountain, Pumpernickel Valley, Edna Mountain and North Valley in Nevada, New Truckhaven, East Brawley and South Brawley in California, and Crump Geyser, in Oregon. These properties are at different levels of exploration
This Press Release contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
We have tried, whenever possible, to identify these forward-looking
statements using words such as "anticipates," "believes," "estimates,"
"expects," "plans," "intends," "potential" and similar expressions.
These statements reflect our current belief and are based upon
currently available information. Accordingly, such forward-looking
statements involve known and unknown risks, uncertainties and other
factors which could cause the Company's actual results, performance or
achievements to differ materially from those expressed in or implied by
such statements. We undertake no obligation to update or advise in the
event of any change, addition, or alteration to the information catered
in this Press Release including such forward-looking statements.
Neither the TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
SOURCE Nevada Geothermal Power Inc.
For further information:
Nevada Geothermal Power Inc.
Brian D. Fairbank, P. Eng.
President & CEO
Nevada Geothermal Power Inc.
Telephone: 604-688-1553 X118
Direct Line: 604-638-8784
Toll Free: 866-688-0808 X118