Tuesday, May 15, 2018

USA, Hawaii: Ormat Believes Surface Lava Will Not Impact Puna Geothermal Venture

Ormat Provides An Update On The Puna Power Plant In Hawaii Following The Kilauea Volcanic Eruption (News Release)

Ormat Technologies Inc. provides an update on the Puna geothermal power plant located about 15 miles away from the Kilauea volcano, which erupted on May 3, 2018 and which continues to erupt and flow lava.

Plant and company personnel have been and continue to be in close communication with local and state authorities, as well as HELCO officials, regarding the Puna facility. Several steps have been taken to secure the Puna facilities in accordance with its emergency response plan. These steps include:
  • Taking electricity generation offline 
  • Shutting down all the geothermal wells 
  • Placing physical barriers around, and protective coverings over, the geothermal wells
  • Removing flammable materials from the facility to a storage area off-site
  • Working together with the state emergency agencies on implementing measures to secure the geothermal wells and mitigate any hazards to the surrounding area and damage to the geothermal wells
According to the alert issued by U.S. Geological Survey on May 14, 2018, the eruption of lava continues from multiple points along the northeast end of the active fissure system. This eruption is still evolving, and additional outbreaks of lava are possible. Ground deformation continues, and seismic activity remains elevated in the area. However, topographical paths of steepest descent for possible lava flows are around and away from the power plant in the direction of the ocean. This gives the Company confidence that there is a low risk of surface lava impacting or making its way to the facility.

“Currently there is no physical damage to the Puna facilities above-ground, however, we will be able to assess the impact of the volcanic eruption on the Puna geothermal wells only after the situation stabilizes,” commented Isaac Angel, CEO of Ormat Technologies. “We continue to monitor the situation in coordination with HELCO, and with local and state authorities. We expect to restore the Puna operations as soon as it is safe to do so.”

The 38 MW Puna power plant, which is owned and operated by Puna Geothermal Venture GP (PGV), reflects approximately 4.5% of Ormat’s total generating capacity. In 2017, PGV generated approximately $11 million of net income and $20 million of Adjusted EBITDA. Ormat owns a 63.25% interest in PGV and the balance is held by its partner, an affiliate of Northleaf Capital Partners.

Ormat has property and business interruption insurance policies that include insurance coverage in the event of volcanic eruptions and earthquake in an amount of up to $100 million (combined). The Company is working with its insurance broker and provided notice to its insurance carriers regarding the situation at Puna and expects to submit a claim under its business interruption cover.

Any significant physical damage to, or extended shut-down of, the Puna facilities could have an adverse impact on the power plant's electricity generation and availability, which in turn could have a material adverse impact on our business and results of operations.