The Managament Discussion & Analysis (MD&A) starts after page 33. - Have we been the victum of hype? - Management says it is simply a issue of the injecrtion well being to close for the water to reheat properly. - QUOTE: NEVADA GEOTHERMAL POWER INC.
Management’s Discussion and Analysis
For the Quarter Ended March 31, 2011 Form 51-102F1 - At Blue Mountain, the Company’s nameplate 49.5 MW (gross), 38 MW (net) power plant, owned by its subsidiary NGP Blue Mountain I LLC (“NGP I”), has been operating commercially since October 10, 2009. The Company has increased power production to approximately 35 MW (net), nevertheless without additional injection and/or production wells, modelling suggests reservoir temperatures will gradually decline approximately 2.5% per year. To ensure long-term compliance with its Power Purchase Agreement (“PPA”) with NV Energy (“NVE”), the Company must limit power production as per our agreement with John Hancock Life Insurance (“John Hancock”). Under one of the terms of the recent loan agreement with John Hancock and the DOE, the Company agreed to constrain power production to the PPA minimum: 35 MW (net) in 2011 declining 3% per year. - The predicted temperature decline results from injection wells that are too close to production wells to provide time to re-heat recycled brine. - The solution is more distributed injection, further from the current production wells. - During the fourth calendar quarter of 2010 and the first calendar quarter of 2011, the Company completed drilling of two injection test wells to the south of the production field (wells 86-22 and 34- 23). The wells showed marginal permeability associated with a weak thermal zone and are not connected to the plant at this time. However, wells 34-23 and 86-22, along with previously drilled, subcommercial wells 38-14, 89-11, and 44-14 are being stimulated by cold water injection and oil field fracturing techniques in an attempt to improve injection/production capacity. Test results are intended to be incorporated into an updated reservoir report as support for a tax assisted financing. - RJ