From: Lindsey Cymbalisty - MVLWB To: Permits Subject: FW: Mattson Re-injection Date: Monday, February 06, 2012 3:31:29 PM Attachments: Borealis Mattson Re-injection MVLWB 2012.pdf Ft Liard Geology Report FINAL.pdf Please post these two documents under MV2012L4-001 and MV2012X0001, Initial Application, Application and Related Documents. Please let me know when they are up, so I can send out a notice this afternoon. Thanks, Lindsey From: [email protected] [mailto:[email protected]] Sent: February-06-12 12:00 PM To: Lindsey Cymbalisty - MVLWB Cc: [email protected] Subject: Mattson Re-injection Hello Lindsey As a reference, our geothermal project design is a closed loop system; the geothermal production water remains securely behind pipe from production to injection. The water is produced and re- injected without any exposure to surface environment or potable water aquifers. However, in lieu of the Nation Energy Board not being involved with the Fort Liard Geothermal Project, I thought it may be helpful to address the use of the Mattson formation for re-injection of the geothermal production water. This formation has been used in the past for re-injection and I thought it may be accommodating to reference some of these wells and geological environment, and address any potential concerns. If you see it as helpful, I have attached a document that can be added to our file. Any questions feel free to give me a call, Happily going green, Craig Dunn, P.Geol Borealis Geopower [email protected] #(403) 461 8802 February 5, 2012 Lindsey Cymbalisty Regulatory Officer MacKenzie Valley Land and Water Board 7th Floor, 4922 48th Street Yellowknife, NT X1A 2P6 Attn: MacKenzie Valley Land and Water Board Re: Geological Analysis on Re-injection for Fort Liard Geothermal Project Borealis Geopower is currently working on the development of a smaller scale geothermal energy project in Fort Liard, NWT. The project would entail bringing cost effective electricity generation and direct heat opportunities to a native community that is currently producing its power from diesel generation. The Borealis Remote Geothermal Project will consist of a geothermal power plant with associated heat exchangers, a ~4,300m production well and ~1,500m injection well. This power and heat created will be completely ‘green’ and sustainable, with minimal emissions of any air pollutants or GHG’s, cover a small ground footprint and is expected to be indefinitely renewable. The use of injection wells is common practice in the oil and gas industry as a method of disposing formation waters and reducing exposure of formation waters to surface environments. There are a number of economic and technical advantages to the re-injection of the formation fluids into a shallower formation; however, it requires that the injection formation can be categorized as a ‘containing reservoir’. A well-designed injection program will prevent formation waters from coming into contact with surface environment and local potable aquifers. There are two potential sources of contamination from the use of disposal wells: permeability between geological formations allowing vertical movement of fluids and the vertical movement along the well casing itself. The use of the Mattson formation as a viable re-injection or disposal well is well recognized by both the National Energy board and BC Energy. The Mattson is a porous, high permeability sandstone zone with overlying low permeability shale zones within the Garbutt and Fantasque formations. This offers an ideal opportunity for water re-injection and the formation has already been used as water disposal for wells in the industry at multiple locations in the Liard Basin. Wells that have been used for injection or water disposal into the Mattson formation include: QUESTERRE BEAVER D- 064-K/094-N-16: This well in Northern BC dates back to 1957, but is currently in still operation as a water disposal well. It was pressure tested in 1998- the wellhead was serviced and injection capability confirmed. QUESTERRE BEAVER B-A019-K/094-N-16: This well in Northern BC was also permitted as a water disposal well into the Mattson formation. From April 1999 to December 2012 there was 336,832 m3 of water injected. DEVON KOTANEELEE YT M-17: This well within the Liard Basin in the NWT was also designated as a water disposal well. Formation top for the Mattson is 959.5m TVD (similar Borealis GeoPower Inc. www.borealisgeopower.com Calgary, Alberta, Canada depths to our drilling program for Fort Liard) and 382.5m of the Mattson were drilled (TD of 1332.0m). There are multiple drill stem tests and core samples run on this well. The full well report is available through the National Energy Board. CHEVRON ET AL MCKAY LAKES 0-80: This well was spudded in 1999 (most recent) and is in close proximity to the Fort Liard Property. A full injectivity test was completed for this well. There is a clear shale zone greater than 100m thick in the Garbutt formation recognized in the wireline/gamma logging data set. Fort Liard Project specifics: The design of this project’s production and injection wells for geothermal power production is very similar in design to oil and gas development in the area. Formation (non- potable) water will be sourced from the Nahanni formation (~4,170m TVD to 4,320m TVD (True Vertical Depth) and is intended to be re-injected into the Mattson formation (705m TVD- 1460m TVD). All depths of formation tops were calculated from offsetting wells and seismic analysis. The Nahanni Formation is a vuggy dolomitic limestone and the Mattson Formation is a deltaic Quartzenite sandstone. The geological environment at the proposed geothermal drilling location at Fort Liard is well documented in Borealis’s “Fort Liard Geology Report” and references all the key formations that would be encountered with the drilling program. The formation to be injected into is the Mattson and consists mainly of stacked fluvial, deltaic sandstone that is yellowish grey to pale red, submature to mature and siliceous to calcareous and dolomitic. Quartzenite dominates, but there are thin intervals of shale, limestone, dolostone, coal and chert. Based on extensive offset well analysis and available seismic data, the Mattson is approximately 755m thick; the top of the formation is estimated to be at 705m TVD and bottom of the formation is 1460m TVD. One of the overlying low permeability zones, the Garbutt formation, is composed of dark grey shale and siltstone with sideritic concretions. There are two main divisions: a lower and an upper unit. The lower unit is composed of silty mudstone, argillaceous siltstone, sideritic concretions and a few thin seams of bentonite and has a glauconitic basal mudstone. The upper unit is mainly rubbly mudstone with rows of reddish brown weathering and has sideritic concretions. The upper beds include argillaceous siltstone and thin beds of laminated sandstone. As directly measured in the wells of the Fort Liard area, the range of thickness of the formation is from 50-261 m, and has an average thickness of 140 m. Directly above the Mattson is the Fantasque formation, which is rhythmically bedded and composed of spicular chert, shale and siltstone. A thin basal lag deposit of phosphate and chert nodules and pebbles exists in north-eastern British Columbia. As directly measured in the wells of the Fort Liard area, the range of thickness of the formation is from 2-194 m, with an average thickness of 118 m. These low permeability caps above our intended injection formation are expected to be thick enough to by far withstand any injection pressures induced by the injection well. As for the risk of vertical movement of fluids along the well casing itself, this is the fundamental reason for extensive well design and strict drilling protocol to prevent cross- contamination between formations (including potable water aquifers and the surface environment). Borealis has acquired well design services from Codeco Energy Group to ensure Borealis GeoPower Inc. www.borealisgeopower.com Calgary, Alberta, Canada that our well design conforms to all required specifications as per National Energy Board (NEB) “ Drilling and Production Guidelines” (COGOA: Canada Oil and Gas Operations Act). If there is any uncertainty or gaps in these regulations for our specific drilling application, we will be following the more detailed ERCB (Energy Resources Conversation Board) regulations. An example of this is the “Director 008 Surface Casing Depth Requirements” for protecting groundwater with surface casing. Adhering to these extensive drilling regulations for well design and drilling procedures (including casing, cementing and pressure testing) is standard practice for all oilfield wells drilled in the Western Canada Sedimentary basin, including those in the NWT. If there are any other questions regarding the well design or use of the Mattson as an injection reservoir please feel free to contact me directly. Sincerely, Craig Dunn, P.Geol. Chief Operating Officer: Borealis GeoPower #403-461-8802 [email protected] Borealis GeoPower Inc. www.borealisgeopower.com Calgary, Alberta, Canada ADK/Borealis Geothermal Energy Project: Geological & Geothermal Energy Resource Assessment Submitted to: Primary Author: Craig Dunn, P.Geol. Borealis Geopower Inc. August 24 , 2011 Contents TABLE OF FIGURES .................................................................................................................................................................. 3 EXECUTIVE