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Seattle Industry Online is published by the Manufacturing Industrial Council of Seattle

Fall 2008 Issue - Special Report

Green Gusher

 

Posted: December, 2008

Bernie Karl Hits Geothermal Pay Dirt That May Enrich Us All

The laptop computer that processed these words was powered by electricity from a power plant fueled by water that is just 165 degrees Fahrenheit.

Coffee that temperature is hot, but cool enough to sip and it is widely believed that it is impossible to generate electricity with water that cool. Yet, at a rustic resort located off the electrical grid outside Fairbanks, emission-free electricity is being created with 165 degree water 24 hours per day, and it powers far more than words.

The generating system meets all the electrical needs of the 88- room Chena Hot Springs Resort. It also provides the power to heat the resort’s industrial-sized greenhouse, which grows fresh produce for the resort restaurant, even during the darkest, coldest days of the long interior Alaskan winter. It also supplies the electricity that keeps the resort’s 154,000 cubic foot Aurora Ice Museum frozen during the brief summer, which brings surprising heat.

At today’s fuel prices, it generates another thing – big savings. The geothermal power system will save the resort owners about $625,000 this year because they don’t have to fire up the resort’s old diesel-powered electrical generators.

The story of how this all came to be is an amazing, only-in-Alaska tale that combines the intellectual prowess of a brilliant young scientist and/or sled dog musher with some of the best engineering and manufacturing talent in the United States. And, the whole adventure was driven by the inspired entrepreneurship of a former oil field mechanic, gold prospector, and North Slope wheeler-dealer named Bernie Karl.

In Alaska, just about everyone calls him “Bernie” and, in Alaska, it seems like just about everyone knows him. Bernie and his wife Connie are the ones saving $625,000 on diesel fuel. They own the resort and Bernie is a hardcrusted, soft-hearted, high-volume, renewable energy pioneer who takes Lower 48 concepts about who and what is “green” and spins them into a whirling kaleidoscope.

The Chena plant attracts a growing volume of publicity that tends to portray Bernie as some kind of Green Guru of the bush. To which he responds, “People say I’m a greenie? Well, I’m a greenie all right. Here’s my green!” To underscore that last point, Bernie holds up a wad of green dollar bills.

But, this is mostly Bernie bluster. Because he is also a frontier-style showman who gives tours of the resort for his guests while dropping one-liners the way Foreman dropped Frazier – namely, often, and with much authority. Like, “My mom raised ugly kids, not dumb ones.” And, “You know how I spell luck? W-O-R-K.” And, “I’ve never had a bad day.”

But, we will set aside the Bernie Karl story for a moment to explain why his Chena power system and other new developments may soon make geothermal power the Next Big Thing in the drive for cleaner energy resources.

Next Big Thing

It is not a new idea to generate electricity from the heat that emanates from the center of the earth. It was first accomplished in Italy more than a century ago and, today, geothermal power fuels electricity in a couple dozen countries. Iceland may be the best-known geothermal user, but the United States is the world’s biggest producer, with much of the activity concentrated in California where The Geysers power plant north of San Francisco turns out enough electricity for more than 900,000 homes.

But while geothermal power grinds away in relative obscurity, it is drawing growing attention because it possesses major strategic advantages in the bid to find reliable, clean alternatives to fossil fuels.

Like wind, solar, and nuclear power, geothermal can generate electricity while emitting few if any greenhouse gases Emission levels depend on the nature of the generating plant. While the Chena system creates none, most plants create some, but at levels far below those of fossil fuels.

But unlike wind or solar, geothermal provides baseline power 24 hours per day. In this way, geothermal is like nuclear power, with one huge difference – maybe two. It creates no dangerous wastes – in fact, it creates few wastes of any kind. And, so far at least, it doesn’t scare the bejesus out of anybody – more about that later.

Like nuclear power, geothermal could also create power at a mind-boggling scale. Scientists estimate the earth’s heat could generate 130,000 times more electricity than humanity consumes today.

So why aren’t the presidential candidates falling all over each other to be the first to promise that geothermal power will be one of the foundation stones of our cleaner, more abundant energy future? There are probably many reasons for this – so many promises, so little time – but we’ll focus on the two that seem most relevant.

If renewable resources were cars, geothermal would be an Oldsmobile – your dad’s alternative to fossil fuels, maybe even granddad’s. The resource is literally as old as dirt and although geothermal power was up and running in the 1960s, it never acquired the Maui Wowie buzz that attached itself to wind and solar.

But, speaking more practically, until now it was also believed geothermal was only feasible in exotic, remote areas of high volcanic activity – and the operative phrase is “until now.”

MIT

In 2007, the Massachusetts Institute of Technology – MIT – released an eye-opening report regarding geothermal’s future in the United States. The MIT report documented that with new technologies already in use by the oil and gas industries, it would be possible to artificially create the kind of conditions that naturally fuel geothermal power in places like Iceland. This approach is called an Enhanced (or Engineered) Geothermal System – EGS.

With EGS, an initial well is drilled deep enough to reach rock formations that are 300 to 400 degrees F. This initial well is used to inject cold water. When the cold water enters the fissures within the hot rock, the reaction is explosive, blowing open fractures in the rock formations. Additional wells are then drilled to pump water through the fractures and this water is then pumped back to the surface as steam or water hot enough to turn a generating turbine.

The water is then cooled and recycled back into the well. Such a closed system not only saves water – a valuable resource itself – it creates very few greenhouse emissions.

The explosive mix underground between cold water and hot rocks will no doubt create a fear factor for some, but the scale of the process can be controlled along with the locations of the target rocks.

The engineers and scientists who worked on the MIT report found “no technological showstopper” that would stymie EGS development and, as if to underscore that point, the world’s first EGS plant recently came on line in Germany.

The MIT report is highly provocative. Because, while you may or may not find oil, gas, or gold if you drill into the earth, it is a leadpipe cinch that you will find heat, and the MIT report concludes that if we just drill deep enough, most of the U.S. can be transformed into a huge geothermal power zone while drastically reducing the nation’s carbon footprint.

For instance, the geothermal prospects for the U.S. eastern seaboard were previously considered to be nil. But, the German EGS plant sits above geological and geothermal conditions very similar to those that exist beneath Washington, D.C.

That’s worth noting because the MIT team projected that if the federal government were to invest just $1 billion to demonstrate the large-scale viability of EGS, they believe it could spur private development that would ramp up geothermal electrical generation to 10 percent of all U.S. electric production by 2050, up from 2 percent today.

One billion dollars. Isn’t that about the size of the U.S. Air Force budget for wrenches and toilet seats? Sheesh. What if we put up $1.5 billion? What if we could tap just one or two percent of the potential resource? We might be rolling in more lowemission electricity than we know what to do with.

Much of this might sound like science fiction, but it isn’t.

Closer to Home

Susan Petty, a Seattle-based geothermal power developer, served on the MIT team. She also founded a company, AltaRock Energy Inc., which in August received $26 million to pursue EGS development in Oregon, Washington, California and Nevada. The investors included Google.org. and Paul Allen’s Vulcan Capital.

Petty believes geothermal is about to receive a “perfect storm” boost from the combination of rising concerns about global warming, rising energy costs, and the fact utilities in many states, including Washington, are now under legal mandates to increase renewable energy production.

Petty recently told US News & World Report that EGC “brings an absolutely gigantic amount of power into the realm of economic feasibility.”

The Snohomish PUD is now assessing the feasibility of tapping into the geothermal resources that exist along the western slope of the Cascade Mountains in that exotic area to the Far East of the Everett Convention Center.

The PUD hopes to find 300 degree water at a depth of 5,000 feet, but the PUD’s resource manager, Craig Collar, says the utility is still assessing the situation because the estimated drill costs range from $1 to $6 million per well. And nobody knows if it will take two, three, four, or a hundred such wells to make geothermal work on the western slope of the Cascades.

Then again, this scenario is based on the MIT, Big Science, EGS approach that requires very hot water – and that is not the only option. At the opposite end of the spectrum there is now the Little Guy, low-temperature, low-cost Chena approach.

If Chena produces electricity with 165 degree water from a well that is just 700 feet deep, why assume you have to drill down a mile to find 300 degree water?

After a century in which geothermal power never really took off, it is now creeping up on us from two very different directions. The PUD is mulling all of the possibilities. As Collar says, “the Chena system opens a window that was not there before.”

Which brings us back to window-opener-in-chief, Bernie Karl.

Bernie’s Window

People who leave the Lower 48 to seek their fortunes in Alaska are different than you and me. For one thing, they are often way more interesting, and the most interesting thing about Bernie is the fact he is so positively imbued with an extraordinary sense of his own good fortune.

Now, you might expect that someone who once prospected for gold might feel they are “lucky,” but when he says “good fortune” Bernie does not mean L-U-C-K. He means it in the literal sense that he feels divinely blessed with the enormous good fortune of being able to get up every morning, ready and able to put in a good day’s work, doing things he loves doing. That’s the real power behind Bernie’s journey to the Chena Hot Springs, and it comes from Peoria, Illinois, where Bernie grew up on a farm on the edge of town, one of 16 children.

Just as it is now, Peoria was then famous for being home base to Caterpillar, the company that makes some of the world’s best, and biggest, heavy construction and mining equipment. Bernie loves machines, and the Caterpillar impact sunk in early and deep. “In Peoria, people said we grew up with blood in our veins that was yellow instead of red, and I suppose we did,” Bernie recalls.

Bernie’s dad worked at Caterpillar, and – after graduating from high school – Bernie got a job at Caterpillar too. But then he heard about the plan to build the trans-Alaska oil pipeline and he was soon bit by the bug to pursue his fortune up north.

He wanted his father’s blessing, and when Bernie went to ask for it, he found his dad in a field at the family farm, lying on the ground, peering into a fancy camera and snapping pictures of an ant crawling up a stalk of wheat.

And this brings us to just one of the many unexpected turns in the story of Bernie Karl.

Bernie’s dad was not a mechanic, production worker, or an engineer at Caterpillar. He was a world-class photographer for Caterpillar who made good money traveling the globe to take action photos of Caterpillar rigs for promotional purposes. That’s how he could afford to support his wife and 16 kids. When he was young, Bernie tried developing an interest in photography, but it just didn’t click. Cameras were neat but they simply did not compare with big equipment.

Bernie told his dad about his Alaska dream and he remembers that his dad “stood up, dusted himself off, looked me in the eye, and said, basically, ‘Go West, young man.’ He said he’d probably do the same thing if he was my age. He gave me his blessing and that was important to me.”

North to Seattle

Bernie then proceeded with a career plan that was surprisingly wise for a 20-year-old mechanic. Instead of heading for Alaska with no contacts or job prospects, he traveled first to Seattle, figuring he would get a job with a Seattle company that did business in Alaska, then transfer north to look for a good pipeline job while he remained gainfully employed.

Good plan – and it worked. Bernie got a warehouse job in Seattle at a Caterpillar distributor, NC Machine, not that the job interview went that great. “The guy who hired me asked what my expectations were, how much money did I want to make? I told him, Well, I want to make $100,000. He told me he didn’t think that was realistic. But, he’d asked me, and that was my goal. And, you know what? My first year on the pipeline, I earned about $100,000.”

Not that it was easy. In fact, it was very, very hard, but Bernie worked through the cold months, the dark months, the weekends, and most of the days he could have taken off while pulling in as much overtime as he could get, using the good fortune of a pipeline job to make as much money as humanly possible. But, making good money was not the most fortunate thing that happened to him on the pipeline. Bernie says that stroke of true good luck was meeting his wife, Connie.

Like Bernie, Connie had traveled to Alaska to earn her fortune – she was from Connecticut. She started out working in resorts, but was able to get a better paying job driving a bus that transported pipeline workers. Bernie climbed on her bus one day and he did not make a good impression.

Recalls Connie, “The first time I met Bernie, I told him he was a loud-mouthed jerk.” But, as sometimes happens with rowdy kids on buses, there was more to Bernie than sheer volume. After 33 years, Connie says Bernie “makes life interesting.”

Bernie still can’t quite believe Connie married him. He thinks he sealed the deal at a camp dance on the North Slope. “It wasn’t much of a dance. There were like 1,200 men and four women. I picked her up, carried her to the dance floor, and we danced all night. We’ve been together 33 years and I hope we’re together for 50 more.”

The 800-mile-long pipeline was started in 1975 and completed in 1977. By the end of the job Bernie and Connie had saved a nice nest egg, and they decided to plow a good share of it into gold mining, pursuing an old-time technique popular in Alaska called “placer mining.” This is the approach that ordinary people in Alaska use when they want to try their hand at gold prospecting and it’s the process where you set up shop next to a promising spot along a river or stream and use the water to “wash” gold from the dirt, mud, and gravel that you dig up from nearby.

Placer mining is mostly a summer activity in Alaska because Alaska’s river and stream water temperatures usually range somewhere between 33 degrees and frozen.

Just like the summer growing season for Alaskan agriculture, the placer mining season is short, and Bernie used the prolonged downtime to return to the North Slope, where he made good money working in a variety of jobs, usually for oil service companies, and it was during a winter back on the North Slope that he came across yet another instance of his own good fortune.

Horse Whisperer

Bernie is a very good mechanic who pursues the craft through a “Horse Whisperer” approach. “I say being a good mechanic is harder than being a good doctor,” he explains. “A doctor has patients who can tell the doctor where it hurts, and the patient can do the things the doctor tells them to do to get better. A mechanic and a machine can’t doanyof those things. You have to really listen to machines to understand what’s wrong with them and then it’s all up to you to fix them.”

Bernie’s mechanical skills and hometown pedigree turned out to be extremely valuable. Prudhoe Bay was the largest oil field ever discovered in the United States and the pipeline and oil development turned the North Slope into one of the world’s largest repositories of used heavy-duty construction equipment, nearly all of it made by Caterpillar.

The profusion of used, beat-up equipment was due to the extreme conditions under which the equipment ran and the haste with which the oil companies would abandon old equipment for new. The growing volume of used rigs was like a Caterpillar-yellow gold mine for Bernie because of his ability to tell which used equipment could be rehabilitated and which was shot.

He made his first used-equipment purchase in 1982 while working as the utility manager for an oil service company. The company put four Caterpillar 998 Loaders up for sale for $40,000 each. Bernie looked them over, gave a good listen, and determined they still had plenty of mechanical life within them. He went to the plant manager to buy them. “I’m the guy who is literally cleaning the toilets and keeping the sewer running, and he looks at me like I’m crazy. He said, ‘Bernie, that’s $160,000. Do you really have that kind of money?’ ”

As a matter of fact, Bernie was able to round up the money and he bought the loaders, shipped them south on the Dalton haul road, repaired them, and eventually sold two for a tidy profit. Bernie kept the other two – because in the Alaskan bush you never know when a Cat 998 Loader might come in handy.

With this experience, Bernie and Connie learned a fundamental lesson of the mining business, he says. “We realized there was a lot more money in selling equipment to the miners instead of mining the gold.”

Bernie and Connie expanded their business portfolio by adding a recycling business, at first specializing in heavy equipment sales to miners and mining companies, and then expanding their customer base. This venture eventually turned into K&K Recycling, now one of the largest recyclers of used industrial equipment on the North Slope. The company extends its reach for used equipment, scrap, and customers throughout the entire Pacific Northwest, from Seattle through British Columbia and all the way up to the Beaufort Sea, with the far-flung operations revolving around a 106-acre scrap yard in Fairbanks.

In the Lower 48, most of what we hear about Prudhoe Bay concerns the decline in oil production. But “decline” is a relative term. The remaining oil fields continue to operate on a vast scale, and the magnitude of the activity is reflected in the large volume of used equipment piled and stacked up inside the K&K yard. Graders, dozers, drill pipe, enormous valves and electrical control systems, trucks, buses, engines. Bernie cruises through the yard, picking which pieces to keep and which to turn into scrap.

The yard also contains one of the Cat loaders that he purchased back in 1982. The rig rolled off the Caterpillar production line back in 1974. It still runs almost like new and it can still lift just about anything that weighs up to 20 tons.

Road to Chena

Bernie eventually gave up gold mining to recycle full-time, but not before working a mining claim that put him on the road to Chena.

The claim was fed by warm water from the Circle Hot Springs, also located deep in the Alaskan interior. Bernie discovered it was great to wash gold near a hot springs because the warmer water made it so much easier to break up the mud, dirt, and gravel. It was also possible to work the claim for a longer period than you could with the cold water in other streams.Bernie never extracted much gold from the site, but he did take away a vision.

It might be cool to own a resort in the Alaskan wilderness, but a major challenge is the cost of power. The resorts are far removed from electrical grids, so you have to provide your own electricity, a very expensive proposition, depending on fuel costs. But what if you could provide your own electricity cheap, through a geothermal-generated power system?

In 1998, Bernie came across an opportunity to put his theory into practice when the Chena Hot Springs Resort was put up for sale just 60 miles outside Fairbanks. Bernie and Connie bought it. Within days, Bernie hauled a drill-rig to the resort, drilled a well, and, inside a week, he was using the hot springs water to heat the resort’s swimming pool.

That was fast, but the first phase of geothermal development at Chena was the last one to move so quickly. Bernie’s bigger dream turned into a long, hard slog that eventually brought him into partnership with an amazing young scientist, Gwen Holdmann. Gwen could not be interviewed for this article because she was occupied with pregnancy, but to make a long story short, Gwen is Wonder Woman, Alaska-style.

Originally from Wisconsin, Gwen moved to Alaska after graduating from college to pursue her dream of creating a molecular map of the Aurora Borealis. She hoped to do that as a graduate student at the University of Alaska in Fairbanks, which, like Chena, is located along an ideal latitude for observing the Northern Lights.

Graduate school didn’t work out, but she stayed in Alaska, homesteading a vacant cabin where she had to chop her own wood and fetch her own water. She became an avid “musher” or sled-dog racer, tough enough to finish the 1,161-mile Iditarod and good enough to win the 430-mile Wyoming Stage Stop, and eventually married another musher.

It might be pointed out that on top of all this, Gwen looks like a USC cheerleader, but that would probably offend some readers. In any case, forget her good looks and appreciate that her brains, her drive, her love of physics, and her expertise in mechanical engineering made her a perfect candidate for the job of spearheading the Chena geothermal generating system and the Karls hired her to do it.

After lots of starts and stops, Gwen and Bernie developed good contacts at the U.S. Department of Energy, which put them in touch with UTC Power, a subsidiary of United Technologies Corp., and UTC provided the last piece to complete the puzzle.

Heat Differential

At one time a subsidiary of The Boeing Company, UTC is now the seventeenth largest manufacturing company in the United States, with subsidiaries that include Otis Elevator, Pratt & Whitney, Sikorsky Helicopter, and Carrier Air Conditioning.

When they came into contact with the Chena project, UTC scientists and engineers were refining a small power plant that was first developed to generate electricity from waste heat at industrial facilities. The plant is based on a reverse-engineered version of air conditioning. Instead of using electricity to create a heat-cold differential that can be used to cool a room, the process uses a heat-cold differential to create electricity that can be used for just about anything. The science for this was not new, but the industrial application was, and UTC adapted it to the unique water conditions at Chena.

Because 165 degrees isn’t hot enough to turn a turbine, the power plant operates as a binary system that is powered by a liquid refrigerant with a boiling point low enough so that it can create steam even at 165 degrees. The refrigerant is continuously sucked through the power plant by a heat-cold differential that vaporizes the liquid and then cools it back to liquid. The differential is provided by water from the hot springs and water from a nearby stream that is never warmer than 40 degrees.

Two of the UTC power plants went on line at Chena in 2006, and they’ve been humming ever since. The entire project cost about $2 million. Before the geothermal power came on line, it cost the resort about 30 cents per kilowatt hour to generate electricity. With the power on line, it costs about 6 cents per kilowatt hour – about the same as the citywide average in Seattle, which has some of the cheapest electrical rates in the country.

Bernie estimates that after he pays off his debt load for the power plant next year, he’ll be paying one cent per kilowatt hour, matching the super cheap rates that are paid for pure hydropower systems.

The success of the system has earned Bernie, Gwen, and Chena a steady stream of positive publicity and high praise in their adopted state, because the Chena system has so much promise to address two of the biggest, everyday, quality-of-life challenges of living in the Last Frontier.

Alaskan energy prices are extraordinarily high, especially in the remote locations where nearly half of all Alaskans live. But, as a hot spot on the Pacific Ring of Fire, Alaska is also full of promising geothermal resource areas. The reality of Bernie’s dream means it may be possible for many Alaskan settlements and small towns to tap into a relatively cheap resource. The present UTC power plants are small, but they are relatively cheap and ideal for serving communities the size of most Alaska villages.

But, as shown by the large greenhouse at the resort, Bernie’s vision includes food. The vast majority of Alaska’s food is imported because the climate limits the growing season, just as it limits the working season for placer mining. The Chena greenhouse demonstrates that Alaskans might someday be able to grow far more of their own food than hardly anyone can presently imagine.

And the Chena ramifications are not limited to Bernie’s adopted home. Like many other accounts, this article is guilty of making too much of the cool water that drives the Chena system. The cool temperature is unique, but it is not the key to the UTC technology that runs the power plants. The real key is the heat differential.

The UTC power plants can generate electricity wherever there are water resources with a 100-degree heat differential. In Chena, this was met by the difference between the 165 degree water from the hot springs and the 40 degree water available in the nearby stream.

In Florida, UTC, Bernie, and Southern Methodist University are setting up a power plant at an abandoned oil well where the low end of the differential will be met by seawater while the high end is met by hot water from the bottom of the oil well.

David Blackwell, a professor of geophysics for SMU, was part of the MIT team. He also helped with the Chena system and is one of the leading geothermal experts in the United States.

Hot water is found at the bottom of virtually every oil well and Blackwell believes the UTC plants can create emission-free electricity at thousands of abandoned oil wells around the Gulf Coast and throughout Texas. He \ predicts this application could create enough electricity to equal the output of five nuclear plants. “Chena could be the forerunner of great things,” he said.

Combine the Chena approach with the possibilities of EGS, and the benefits could prove to be greater than any of us know.

Pay Dirt

At Chena, after years of trial and error and disappointments, the rewards rolled in quickly.

Gwen was hired by the University of Alaska in Fairbanks to create the state’s new Alaska Center for Energy and Power, which will focus on meeting rural energy needs. Bernie is now one of Alaska’s leading citizens. He has explained his power system to academics at Stanford University and SMU. The Chena project is being written up in newspapers, magazines, and books, and featured on television shows, and the Chena team has won national awards.

But for Bernie, the most important recognition came 3,000 miles from home.

Bernie’s dad is now deceased, but before he died he sent Bernie a picture frame holding a laminated stalk of wheat. “I think it was his way of telling me he was proud of what I accomplished in Alaska.”

Then, there’s the shared sense of accomplishment that binds Bernie with his 15 siblings and the well head of his own good fortune.

Bernie was the sixth of the 16 children born to his parents, and five of his brothers were born with muscular dystrophy.

Some of the afflicted brothers are older than Bernie and some are younger, and Bernie emerged from his kinship with them profoundly inspired to do something constructive with his life.

The disease usually deprives its victims of the use of their limbs, but, Bernie says, his five brothers never let the disease turn them into victims.

Each one has to use a wheelchair, but all were gainfully employed throughout their adult lives, working as accountants and, for a time, teaming up to manage a construction company. All five now live at the family farm outside Peoria.

Bernie loves these brothers, he admires them and, the daily challenges and triumphs of their lives are constant reminders of his own good fortune.

“They are my role models. They could have lived off society. Instead, they contributed to society. They are the reasons I feel so blessed. I’ve got arms that work. I’ve got legs that work. They accomplished things even though their arms and legs didn’t work. They accomplished way more in their lives than I ever will. They are heroes to me.”

Bernie might be the one who finally struck pay dirt, but in the end, his story enriches us all.