Canadian Crew Energy -- Meager Creek Geothermal Project.

VANCOUVER, British Columbia--(BUSINESS WIRE)--Sept. 21, 1995-- Pacific GeoPower (PGP), the Joint Venture formed between Canadian Crew Energy Corp. (CCEC) and Guy F. Atkinson Holdings Ltd. to develop the South Meager Geothermal Project, has been informed that it has not been included on B.C. Hydro's short list in respect of its 1994 request for proposals for electricity supply to British Columbia.

A total of ten proposals, from 48 submitted, were short listed.

CCEC is both surprised and disappointed at the omission and is concerned with certain aspects of the B.C. Hydro evaluation process. These include the fact that the social evaluation report appeared to have no significant impact on the project selection process and that, ultimately, the B.C. rate payer must accept long-term fuel-price risk for new projects in favor of short-term low-cost electricity.

CCEC believes that the South Meager Geothermal Project has a number of advantages that are worth considering, including: the beginning of a new industry in Canada; a renewable and sustainable energy source; environmental benefits including the lack of emissions; a long-term low-cost source of energy; a diversification from hydro generation; and the associated dependence on weather.

Geothermal projects, by their nature, are required to secure a source of steam at the beginning of the project which, when properly managed, will provide an indefinite "fuel" supply and result in a real decrease in price after 20 years. Unfortunately, this fuel cost results in significant initial capital costs, which places geothermal projects at a disadvantage under the current B.C. Hydro selection process.

The present regional electricity market situation is seeing a lot of uncertainty, especially considering the Columbia River Downstream Benefits negotiations and the relationship between the provincial government and Bonneville Power Authority.

PGP is, therefore, reviewing the various development options for the South Meager Project, particularly considering the scope of required field programs.

It is noted that the short list is heavily biased in favor of gas-fired projects which currently have the ability to provide short-term low-cost power; however, they do consume a nonrenewable resource and produce air-quality concerns.

Environmental, renewable and sustainability goals are still widely supported, therefore alternatives such as geothermal energy will still play a key role in providing new sources of electricity to British Columbia.

While omission from the short list is a setback for the project, CCEC believes that the requirements for new electricity sources in British Columbia and the Pacific Northwest remain high. Also, in 1993, the provincial government authorized independent power producers and utilities to export firm and peaking power under long term electricity sales contracts to the United States.

The export policy specifically includes geothermal resources as a suitable source for electricity sales to the export market, while prohibiting the construction of any large scale hydro electric projects for export sales.

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