BARNWELL 1~'rA-rRIES, INC. · May 15,2002 RE: Barnwell Geothermal Corporation Geothermal Resources Lease Bond for Geothermal Resources Mining Lease No. R-3 As per the attached cover

....

BARNWELL 1~'rA-rRIES, INC.

Water and Land Development Department of Land and Natural Resources State of Hawaii PO Box 373 Honolulu, Hawaii 96809

To Whom It May Concern:

May 15,2002

RE: Barnwell Geothermal Corporation Geothermal Resources Lease Bond for Geothermal Resources Mining Lease No. R-3

As per the attached cover letter from Marsh Inc., I am enclosing for your file the Change Rider for the above referenced lease, which changes the Reliance bond number from B 1829574 to the Travelers bond number 103635063. ~

Ilks

Enclosures

Sincerely,

~K.S~-Leslie K. Scott Executive Assistant

1100 Alakea Street. Suite 2900 • Honolulu, Hawaii 96813 • Telephone (808) 531-8400 • Fax (808) 531-7181

~

________________________________________ lIIK-.. "' ............

•

May 7, 2002

Mrs. Leslie Scott

o MARSH 745 Fort Street, Suite 1100, Honolulu, HI 96813

Post Office Box 4238, Honolulu, HI 96812 Ph. (808) 585-3525, Fax (808) 585-3511

WATER RESOURCES INTERNATIONAL, INC. 1100 Alakea Street, Suite 2900 Honolulu, HI 96813

Re: BARNWELL GEOTHERMAL CORPORA nON Lease Bond to the State of Hawaii .

Dear Leslie:

o

MARSH An AtMC Company

I must apologize of the delay in the 2001-2002 renewal of this bond. As you know, Travelers purchased Reliance Surety Company two years ago and began to convert Reliance bond numbers, which began with a "B" to Travelers bond numbers. Unfortunately, with this change, many bond renewals got lost in the shuffle and this bond was one of them.

I have finally got this matter straightened out with Travelers. Attached is the Change Rider which changes the Reliance bond number from B 1829574 to the Travelers bond number 103635063. ~ase submit this Rider to the State of Hawaii. Please retain the other Rider for your files ..

Also attached is Invoice Number 239328 in the amount of$200 for the 2001-2002 renewal ofthe bond. I have included a self-addressed remittance envelope for your convemence.

Leslie, once again, I apologize for the tardiness in the renewal ofthis bond. If you have any further questions, please do not hesitate to contact me:

- Direct Line: 585-3525 -Fax: 585-3511 - E-Mail: [email protected]

Thank you.

Sincerely,

~ - ~~--------------~ Arlene A. Tanaka Bond Department

Traveler5t o o

SURETY BOND RIDER

TO: STATE OF HAWAII WATER AND LAND DEVELOPMENT 1151 Punchbowl Street HONOLULU HAWAII 96813

RE: Bond Principal: Barnwell Geothermal Corporation Obligee: STATE OF HAWAII Surety Co: Reliance Insurance Company Surety Bond Number: B1829574 Bond Amount: $10,000.00 Type of Bond: Geothermal Resource Lease Bond

The purpose of this Rider is to:

[Xl CHANGE BOND NUMBER

Upon execution of this Surety Bond Endorsement by all parties hereto, surety bond number B1829574 is changed to 103635063.

[Xl CHANGE SURETY COMPANY

Effective August 15,2001, Travelers Casualty and Surety Company of America{"Travelers") replaces Reliance Insurance Company{"Reliance") as surety on the above referenced bond and, accordingly, agrees to be bound by the terms of the above-referenced bond and to perform all of Reliance's obligations thereunder as if the above-referenced bond had originally been issued by Travelers. The termination of liability under the Reliance bond is a condition precedent to the change of surety. Upon execution of this Surety Bond Endorsement by all parties hereto, Reliance shall have no further obligation or liability under the above-referenced bond.

o CONTINUATION CERTIFICATE

This certificate extends the life of the bond to . It is executed upon the express condition that the surety's liability under said bond, together with this and all previous continuation certificates, shall not be cumulative and shall in no event exceed the amount specifically set forth in said bond or any existing certificate changing the amount of said bond.

Signed, sealed and dated May 30, 2001.

Travelers Casualty and Surety Company of America

~. By: ________ _

Paull. Semanski, Vice Pres.

5-53530 6/00

Reliance Insurance Company

~o~~~,...c --"'"---By: __________________ ~ ____________ _

George W. Thompson, Attorney-in-Fact

Travelers Casualty and Surety Company of America, Hartford, Connecticut 06183 Travelers Casualty and Surety Company, Hartford, Connecticut 06183

Farmington Casualty Company, Hartford, Connecticut 06183

Please direct any questions or correspondence to: Travelers Bond, Bank of America Tower, SEATTLE, WA 98104 Attn: Sylvia J Whitman, (206) 386-5785, Fax (206) 386-5577

~~~--------------------------------~,,~".'-

A ..... II •• : PRODUCER

Karsh , KcLennan, Incorpo~4..EJ P. O. Box 38 Honolulu, HI 96810

INSURED

water Resources Int'l Inc 1100 Alakea st suite 2900 Honolulu, HI 96813

ANY AUTO

AU. OWIED AUTOS

SCt£OULED AUTOS

HIRED AUTOS

NON-OWIED AUTOS

GARAGE UASUTY

UABILITY

WORICER'8 COMPEN8A1ICN

OTI£R

AND

EMPLOYERS' UA8IJTY

PClUCY NUMBER

462978

DESCRIP110N OF OPERATlONSJUlCATJON8IVEI'ICLESCIAL ITEMS

A FIRST INSURANCE CO OF HI

NATIq!1Ni ~OPMENT

~ANYC

~ANYD

POUCY EFfEClNE DAlE (MM/OO/yy)

10/01/96 10/01/97

$

BOOl.Y IN.AJRY (Per perlOn) $

BOOIlY INJURY (per accldenll $

PROPERlY DAMAGE $

(SEE REVERSB AND/OR ATTACHED)

S~A~E OF HAWAII 1151 PUNCHBOWL S~RBB~ HONOLULU, HI 96813

SHOULD />N( Of THE AOOV£ DESCRIBED POUCIES BE CANCELLED BEFORE THE

EXPIRATION DATE THEREOF. THE ISSUING COMPANY wlLDUaU

MAIL ~ DAYS WRITTEN NOnCE TO THE CERTIFICATE HOLDER NAMED TO THE

LEFT.

AUTHORIZED REPRESENTATNE _&~.

DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS

CE~~IFICATE #63400 (CONTINUED) DLW

INSURED: water Resources Int'l Inc

HOLDER STATE OF HAWAII 1151 PUNCHBOWL STREET HONOLULU, HI 96813

ADDITIONAL INSURED:

-

TAX MAP KEY:

1-3-45:9 1-3-45:10 1-3-45:14 1-3-45:16 1-3-45:17

1-3-45:25 1-3-45:22 1-3-45:21 1-3-4W8

1-l:-4~ .1-3-46&.3

'::r";'!-46: 4 :.!-a-4615 .. !.t"-4~13 " r -.]·-4 dIt 14 ·t-.~-4!15

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~

STATE OF HAWAII, HAWAII STATE BOARD OF LAND AND NATURAL RESOURCES, CHAIRMAN OF THE BOARD OF LAND AND NATURAL RESOURCES, DEPARTMENT OF LAND AND NATURAL RESOURCES ARE ADDITIONAL INSUREDS FOR THE LOCATIONS DESCRIBED BELOW ONLY TO THE EXTENT SET FORTH IN THE GENERAL LIABILITY POLICY PROVISIONS.

LANDS SITUATE AT KAPOHO, KANIAHIKU, KEAHIALAKA AND POHOIKI, PUNA, HAWAII, BEING ALL OF THOSE CERTAIN PARCELS OF LAND (PORTIONS OF THE LAND DESCRIBED IN AND COVERED BY:

1. ROYAL PATENT 4497, LAND COMMISSION AWARD NO. 8559, APANA 5, TO C. KANAINA;

2. ROYAL PATENT GRANT NO. 3209 TO ROBERT RYCROFT; AND

3. LAND PATENT NO. 8094, LAND COMMISSION AWARD NO. 8559-B, APANA 15, TO WM. C. LUNALlLO DESIGNATED BY TAX MAP KEY AS FOLLOWS:

TAX MAP KEY:

1-3-46:60 1-3-46:61 1-3-46:62 1-3-46:63 1-3-46:64 1-3-46:65 1-3-46:66 1-3-46:67 1-3-46:68 1-3-46:69 1-3-46:70 1-3-46:71 1-3-46:72 1-3-46:73 1-3-46:74 1-3-46:29 1-3-46:30 1-3-46:33

PAGE: 2 OF

AREA:

3

o o DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS

CERTIFICATE '63400

INSURED: water Resources Int'! Inc

HOLDER STATE OF HAWAII

1-3-46:16 1-3-46:17 1-3-46:18 1-3-46:19 1-3-46:20 1-3-46:21 1-3-46:22 1-3-46:23 1-3-46:24 1-3-46:25

1-3-46:76 1-3-46:78 1-3-46:79 1-3-46:81 1-3-46:82 1-3-46:84 1-3-46:52 1-3-46:53 1-3-46:54 1-3-46:55 1-3-46:56 1-3-46:57 1-3-46:58 1-3-46:59

1151 PUNCHBOWL STREET HONOLULU, HI 96813

1-3-46:34 1-3-46:35 1-3-46:36 1-3-46:37 1-3-46:38 1-3-46:39 1-3-46:40 1-3-46:41 1-3-46:42 1-3-46:43 1-3-46:44 1-3-46:45 1-3-46:46 1-3-46:47 1-3-46:48

1-3-46:49 1-3-46:50 1-3-46:51

1-3-08:06

1-3-08:07

1-3-08:19

1-3-09:07

1-4-01:20

PAGE:

(SUBTOTAL OF FOREGOING)

(PORTION)

3 OF 3

(CONTINUED)

77.0000 ACRES

140.0000 ACRES

160.2920 ACRES

227.5910 ACRES

119.1800 ACRES

45.0738 ACRES

DLW

PRODUCER

Harsh , HoLennan, P. O. Box 38 Honolulu, HI "810

96 DEC ~~ COMPANIES AFFORDING COVERAGE

="" A ZURICH AKBRICAN OP ILL.

~==~----------------~~~~~~~~ B AMERICAN RATIONAL PIRB ~er Resouroes Int'l I~O 1100 Alate. st suite 2'00 Honolulu, HI "813

THIS 18 TO CERTIFY ~T THE POLICIES OF INSURANCE USTED BElOW HAVE BEEN ISSUED TO TttE INSURED NAMED NJI:NE FOR THE POlICV'PERIOD',," INDICATED, NOTWITHSTANDING AMY REOUIaEMENT, TERM OR CONDITION OF N« CONTRACT OR OTHER DOCUMENT WITH RES~CT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POUCIES DESQUBED HEREIN IS SUBJECT TO AlL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POUCIES. UMlTS SHOWN MAY HAVE BEEN REDUCED BY fWD ClNMS.

OTtER

10/01/95 10/01/9'

00M8N:0 SIN(U UMIT •

OWNEOAUT08 BOOl.Y INJURY {Per~) • BOOl. Y IN.AJRY • {Per MCidenll

PROPERTY IWIWlE •

(SEB REVERSB AND/OR ATTACHBD)

S~A~B OF HAWAII 1151 PUNCHBOWL S~RBBT HONOLULU, HI '6813

EXPIRATION DATE THEREOF, THE ISSUING COMPANY WI' DUDU MAIl--3J) DAYS WRITTEN NOTICE TO THE ~TIFICATE HOLDER NAMED TO THE

LEFT,

: AUTHORIZED AEPRESENTATNE

, DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS

CERTIFICATE '63355 (CONTINUED) (, . DLW

INSURED: water Resources Int'l Inc • ,!

HOLDER : STATE OF HAWAII l' 1151 PUNCHBOWL STREET l. . HONOWW, HI 96813

LOCATIONS:

TAX MAP KEY:

1-3-45:9 1-3-45:10 1-3-45:14 1-3-45:16 1-3-45:17

1-3-45:25 1-3-45:22 1-3-45:21 1-3-45:18

1-3-4611 1-31:."46 1-3"4"", 1"'3"'"46:5

(~1"'l.."'4~3 .!\J ... 4 4 '1-3-4.15 , " . tIIQ"

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STATE OF HAWAII, HAWAII STATE BOARD OF LAND AND NATURAL RESOURCES, CHAIRMAN OF THE BOARD OF LAND AND NATURAL RESOURCES, DEPARTMENT OF LAND AND NATURAL RESOURCES ARE ADDITIONAL INSUREDS FOR THE LOCATIONS DESCRIBED BELOW ONLY TO THE EXTENT SET FORTH IN THE GENERAL LIABILITY POLICY PROVISIONS.

LANDS SITUATE AT KAPOHO, KANIAHlKU, KEAHIALAKA AND POHOIKI, PUNA, HAWAII, BEING ALL OF THOSE CERTAIN PARCELS OF LAND (PORTIONS OF THE LAND DESCRIBED IN AND COVERED BY:

1. ROYAL PATENT 4497, LAND COMMISSION AWARD NO. 8559, APANA 5, TO C. KANAINA:

2. ROYAL PATENT GRANT NO. 3209 TO ROBERT RYCROFT: AND

3. LAND PATENT NO. 8094, LAND COMMISSION AWARD NO. 8559-B, APANA 15, TO WK. C. LUNALlLO DESIGNATED BY TAX MAP KEY AS FOLLOWS:

TAX MAP KEY: AREA:

1-3-46:60 1-3-46:61 1-3-46:62 1-3-46:63 1-3-46:64 1-3-46:65 1-3-46:66 1-3-46:67 1-3-46:68 1-3-46:69 1-3-46:70 1-3-46:71 1-3-46:72 1-3-46:73 1-3-46:74 1-3-46:29 1-3-46:30 1-3-46:33

PAGE: 2 OF 3

o o DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS

CERTIFICATE '63355 (CONTINUED) DLW

INSURED: water Resources Int'l Inc

HOLDER : STATE OF HAWAII

1-3-46:16 1-3-46:17 1-3-46:18 1-3-46:19 1-3-46:20 1-3-46:21 1-3-46:22 1-3-46:23 1-3-46:24 1-3-46:25

1-3-46:76 1-3-46:78 1-3-46:79 1-3-46:81 1-3-46:82 1-3-46:84 1-3-46:52 1-3-46:53 1-3-46:54 1-3-46:55 1-3-46:56 1-3-46:57 1-3-46:58 1-3-46:59

1151 PUNCHBOWL STREET HONOLULU, HI 96813

1-3-46 34 1-3-46 35 1-3-46 36 1-3-46 37 1-3-46 38 1-3-46 39 1-3-46 40 1-3-46:41 1-3-46:42 1-3-46:43 1-3-46:44 1-3-46:45 1-3-46:46 1-3-46:47 1-3-46:48

1-3-46:49 1-3-46:50 (SUBTOTAL OF 1-3-46:51 FOREGOING)

1-3-08:06

1-3-08:07

1-3-08:19

1-3-09:07

1-4-01:20 (PORTION)

PAGE: 3 OF 3

77.0000 ACRES

140.0000 ACRES

160.2920 ACRES

227.5910 ACRES

119.1800 ACRES

45.0738 ACRES

-) Q

BARNWELL GEOTHERMAL CORPORATION 1100 Alakea Street, Suite 2900

Honolulu, Hawaii 96813 (808) 531-8400 Telephone (808) 531-5171 Facsimile

~1r. ~lanabu Tagomori Manager-Chief Engineer State of Hawaii Department of Land and Natural Resources Division of Water and Land Development P. O. Box 373 Honolulu, HI 96809

Dear Mr. Tagomori:

June 17, 1994

Please find enclosed a copy of my letter to Mr. James A. Harkins at Resolution Credit Services Corporation regarding his inaccurate letter trying to cancel the well indemnity bonds for Lani Puna Geothermal Wells 1 and 6.

Marsh & McLennan agrees with us that these bonds are non-cancelable until the wells are abandoned.

If you have any questions please feel free to contact me at (808) 531-8400.

Sincerely,

Russell M. Gifford Vice President

RMG/rlhb

Enclosure

Q BARNWELL GEOTHERMAL CORPORATION

1100 Alakea Street, Suite 2900 Honolulu, Hawaii 96813

Mr. James J. Harkins Senior Vice President

(808) 531-8400 Telephone (808) 531-5171 Facsimile

June 17, 1994

Resolution Credit Services Corporation Embarcadero Center West Tower, Suite 1100 275 Battery Street San Francisco, CA 94111

Dear Mr. Harkins:

I am in receipt of your letter dated May 25, 1994 regarding your desire to cancel Lani Puna Geothermal Wells 1 and 6 geothermal resources well indemnity bonds.

Barnwell Geothermal Corporation ("BGC") understands that the well indemnity bonds for Lani Puna Geothermal Wells 1 and 6 are non-cancelable unless the wells have been, to the satisfaction and acceptance of the State of Hawaii, abandoned. Neither of these wells have been abandoned and your statement that "all . . . activities have ceased, and the above referenced wells therefore have been abandoned in fact" is not correct.

Therefore, your "cancellation" of these bonds is not effective and they continue in full force and effect. Additionally, BGC or Marsh & McLennan would appreciate the courtesy of being informed by your office, prior to any action in the future.

If you have any questions please contact me at (808) 531-8400.

Sincerely,

~'c...,~ Russell M. Gifford Vice President

RMG/rlhb

cc: Mr. Manabu Tagomori - State of Hawaii Mr. John Lettieri - Marsh & McLennan

JOHN WAIHEE 1l0VERNOR OF HAWAII

o

STATE OF HAWAII DEPARTMENT OF LAND AND NATURAL RESOURCES

DIVISION OF WATER AND LAND DEVELOPMENT

Mr. James J. Harkins Senior Vice President

P. O. BOX 373

HONOLULU. HAWAII 96809

JUN , 4 J99~

Resolution Credit Service Corporation Embarcadero Center, West Tower, Suite 1100 275 Battery Street San Francisco, California 94111

Dear Mr. Harkins:

LANI PUNA GEOrnERMAL WEU..S 1 AND 6 , BARNWEll. GE01HERMAL CORPORATION

KErn! W. AHUE, CHAI!tPERSON

BOARD OF LAND AND NATURAL RESOURCES

DEPUTIES

JOHN P. KEPPELEA. " DONA L. HANAIKE

AQUACULTURE DEVELOPMENT PROGRAM

AQUATIC RESOURCES CONSERVATION AND

ENVIRONMENTAL AFFAIRS CONSERVATlQN AND

RESOURCES ENFORCEMENT CONVEYANCES FORESTRY AND WilDLIFE HISTORIC PRESERVATION LAND MANAGEMENT STATE PARKS WATER AND LAND DEVelOPMENT

Thank you for your May 24, 1994 letter informing us of your intent to cancel the two $50,000 indemnity bonds for the subject wells.

Contrary to your understanding, Geothermal Resource Mining Lease R-3, issued to Barnwell Geothermal Corporation, which is still in effect, and our Administrative Rules, require that the bonds remain in force for the life of the wells and may not be cancelled until the wells are properly abandoned. Therefore, the bonds for Lani Puna 1 and 6 must remain in effect until the wells have been properly plugged and abandoned and site restored, as reasonably as possible to their original conditions.

Should you have any questions, please contact Mr. Gordon Akita of my staff at (808) 587-0227.

HY:ek c: Barnwell Geothermal Corp.

R~'4/~('4-

I o Q

RESOLUTION CREDIT SERVICES CORP. * ~4 JUN 6

May 25,

state of Hawaii Department of Land & Natural Resources Division of Water and Land Development P.O. Box 373 Honolulu, Hawaii 96809

A 9: 43

Re: principal: Barnwell Geothermal Corporation surety: Industrial Indemnity Company Bond No. YS845-7457 Geothermal Resources Well

Lanipuna *1, TMK: 1-3-9:7 Bond No. YS845-8885 Geothermal Resources Well

Lanipuna *6, TMK: 1-3-9:7 Bond Penal Sums: $50,000.00 Each Bond

Gentlemen:

EMBARCADERO CENTER

WEST TOWER, SUITE 1100

275 BATTERY STREET

SAN FRANCISCO, CA 94111

(415) 773-6600

WRITER'S DIRECT DIAL:

FAX:

Please note that Resolution Credit Services Corporation is the managing agent for Industrial Indemnity Company surety bonds including the two referenced above.

As to the referenced bonds and wells we understand that the above permits have expired, all drilling operations and activities have ceased, and the above referenced wells therefore have been abandoned in fact. Industrial Indemnity as surety therefore gives notice that it is cancelling the above-captioned goethermal resources well indemnity bonds effective July 1, 1994.

Very truly yours,

. Harkins Vice President

JJH:psc

Enclosures

a:\52594barn.jjh

A MEMBER OF THE RESOLUTION GROUP, INC. 'Formerly Industrial Indemnity Financial Corp.

c/o Resolution Credit Services Corporation

Address 275 Battery Street, Suite 1100 San Francisco, CA 94111

" Industrial Indemnity ~ a Crum _net Forst., Ofq.JnlzdttOn

NOTICE OF CANCELATION

State of Hawaii Date May 25, 1994 Department of Land & Natural Resources Division of Water and Land Development P.O. Box 373 Honolulu, Hawaii 96809

Gentlemen:

PLEASE TAKE NOTICE that this company elects to cancel the underrnentioned bond in

accordance with its terms and conditions, cancelation to be effective as indicated below.

Bond No. YS845-7457 Amount S 50,000.00

Principal: Barnwell Geothermal Corporation

Address: c/o 2828 Paa Street Honolulu, Hawaii

Kind of Bond: Geothermal Resources Well Indemnity Bond No. Lanipuna #1, TMK: 1-3-9:7

Cancelation to be effective thirty (30) days from receipt of Notice of Cancelation.

cc: Barnwell Geothermal Corporation Marsh & McLennan, Inc.

1 V035 R2 (6/821

Attomey·jn·t"act

o ~c/o ResolutW Credit Services Corporation

Address 275 Battery Street, Suite 1100 San Francisco, CA 94111

a~ Industrial Indemnity • Crum .... FOIl ..... OfCltlfttldilOft

NOTICE OF CANCELLATION

State of Hawaii Date 11a y 25, 1994

Department of Land & Natural Resources Division of Water and Land Development

P.O. Box 373 Honolulu, Hawaii 96809

Gentlemen:

PLEASE TAKE NOTICE that this company elects to cancel the undermentioned bond in

accordance with its terms and conditions, cancelation to be effective as indicated helow.

Bond No. YS845-8885 Amount S 50,000.00

Principal: Barnwell Geothermal Corporation

Address: c/o 2828 Paa St. Honolulu, Hawaii

Kind of Bond: Geothermal Resources Well Indemnity Bond Well No. Lanipuna #6, TMK: 1-3-9:7

Cancelation to be effective thirty (30) days from receipt of Notice of Cancellation.

cc: Barnwell Geothermal Corporation Marsh & 1.1cLennan, Inc.

, Y035 R2 (6/621

Attomey·in·t'act

JOHN WAIHEE

GOVERNOR OF H~WAII


REF:WRM-LN

Mr. Marty L. Jokl President Barnwell Geothennal Corporation 2828 Paa Street, Suite 2085 Honolulu, Hawaii 96819

Dear Mr. Jokl:

P. O. BOX 621


NOV 5 f991

WILLIAM W. PATY. CHAIRPERSON

BOARD OF LANO AND NATURAL RESOURCES

DEPUTIES

KEITH W. AHUE MANABU TAGOMORI

DAN T. KOCHI

AOUACULTURE DEVELOPMENT PROGRAM

AOUATIC RESOURCES CONSERVATION AND

ENVIRONMENTAL AFFAIRS CONSERVATION AND

RESOURCES ENFORCEMENT

CONVEYANCES FORESTRY AND WILDLIFE HISTORIC PRESERVATION

PROGRAM LAND MANAGEMENT STATE PARKS WATER RESOURCE MANAGEMENT

The Department of Land and Natural Resources acknowledges the receipt of your request for extension of Geothennal Resource Mining Leases (GRML) R-3.

Mining lease GRML R-3, Section 3(B), provides that if at the expiration of the primary tenn geothennal resources in commercial quantitites are not being produced from the leased lands, but the Lessee is actively engaged in drilling operations designed to drill below the depth of 1,000 feet, or, to a production zone at a lesser depth in a diligent manner, that Lease shall be continued for so long thereafter as such operations are continued with no cessation of more than 180 days, but not to exceed a period of five (5) years, and if such drilling operations are successful, as long thereafter as geothennal resources are being produced or utilized in commercial quantities except for the 65-year limit of the lease.

The Department has reviewed your earlier exploration activity conducted under mining lease R -3 and your current plans for exploration! development proposed between Barnwell and Morgan Oil Ltd. of Kentucky. We have no objections to your proposal to conduct further exploration activity within the mining lease area, or to your plans to apply for all applicable permits necessary to undertake this effort.

Accordingly, a five-year extension of lease R-3 beyond the primary 10-year tenn is hereby granted subject to all applicable tenns a the lease. The new expiration date of mining lease GRML R-3 shall e August 10, 1996. Should you have any questions, please contact Manabu Tagomori, Deputy , a -~ . ....

Sincerely,

WILLIAM W. PAlY

cc: Division of Land Management

• o a BARNWELL GEOTHERMAL CORRC9.BerPlOJ'J

Mr. Manabu Tagomori Deputy Director state of Hawaii

July 8, 1991

Dept. of Land & Natural Resources P.O. Box 373 Honolulu, Hawaii 96809

Dear Mr. Tagomori:

91 JUl' p4: 51

DiV. OF V/ATER & l AttD DEVtLOPMENT

Barnwell Geothermal Corporation ("BGC") has engaged in the exploration for geothermal resources within the County of Hawaii, having drilled a total of three geothermal test wells and one side track from one of the wells. Of the four drilling efforts, three were drilled within the lands demised by the state Geothermal Lease, R-3. In particular, BGC drilled the Lani Puna 1 well, a side track to that well and later drilled the Lani Puna 6 well. As a result of this drilling, which occurred during a four year period ending in late 1984, BGC determined that while the Lani Puna 1 well and its side track were quite hot, neither intersected the fractures necessary to make the well productive. The Lani Puna 6 well encountered a zone of extremely high permeability, but at too Iowa temperature to make it useable as a producing well. However, the depth of the permeable zone makes the Lani Puna 6 well an excellent candidate for use as an injection well.

There has been a significant delay since the completion of the Lani Puna 6 well, during which time we have worked to lay the ground work necessary to continue further exploration. In particular, we at BGC have analyzed the likely resource and worked with other parties to develop a rational plan for continued exploration. Having- completed a significant initial exploration program, during which BGe discovered many features of the geothermal resource within the state Geothermal Lease including a likely injection site, and with the work done after our last drilling effort, BGC is now prepared to begin a second phase of exploration within R-3.

During the last year and a half, BGC has worked with Morgan Oil, Ltd. ("MOL"), a Kentucky company engaged in natural gas exploration and development, to reach an agreement to continue the exploration for geothermal resources within the lands demised by the state Geothermal Lease, R-3. BGC and MOL have reached substantial agreement on the form of a working relationship and, to date, the two companies have expended well in excess of $100,000 in engineering and legal fees.

2828 PAA STREET, SUITE 2085 • HONOLULU, HAWAII 96819 • TELEPHONE (808) 839-7720' TELEX 7238672 • TELECOPIER (808) 833-5577

I.

Mr. Manabu Tagomori July 8, 1991 Page 2

o

While working towards the agreement, BGC and MOL strove to develop a sound strategy for further exploration within the state Geothermal Lease. Enclosed with this letter are (1) a reservoir analysis performed by Geothermex, Inc., clearly setting forth the very high likelihood of commercial geothermal production from within R-J, (2) a drilling plan, setting forth a prudent well design consistent with the known reservoir characteristics, and (J) a well testing and evaluation plan. Under the planned agreement, MOL will be appointed the Operator. MOL has begun the preparation of the applications for all permits necessary for the drilling of a geothermal well. Each of the permits, when complete, the County of Hawaii Geothermal Resource Permit, the Authority to Construct from the state Department of Health, together with the Geothermal Plan of Operations and the Geothermal Well Drilling Permit to be submitted to your department, will show that MOL plans to drill a test hole as soon as it receives all necessary permits.

Given the SUbstantial work performed within the lands demised by the state Geothermal Lease, the detailed planning completed during the last year and a half, the continuing efforts and desire to commence drilling operations as soon as possible, we request that the Department of Land and Natural Resources extend the R-J lease so that we can continue to explore and develop a viable geothermal resource.

Enclosures

MLJ/rz

cc: Charles L. Culton

Sincerely,

/~t!:r- ? ,/j( Martin L. k; President

.D o

Paul WII.s.~ (9.e~/a:;'srf) P'/tJ7an ~/I Ce" L-fd. P3(J. £wcltd Av<-.

[e;x,n7-nn I K-e#'f~~~ ¥t:J£:C2-

(~b") u,8"- 32.lf-o

o TO ________________________________ __

DATE __________ T1ME ___ _

WHILE YOU WERE OUT M ________________________________ _

of ____________________________________ __

Phone ________________________________ ___

TELEPHONED 'LEASE CALL

CALLED TO SEE YOU WILL CALL AGAIN

WANTS TO SEE YOU URGENT

I RETURNED YOUR CALL 1 I -

Message ______________________________ __

OJ)tfltor

o o JOHN WAIHEE

GOVERNOR OF r"i'!~ • r ,._

DEi;t~:~:,.'~ .~ C(, TIe,.. ·-iJ.;.~; '~';~~-:J""

SfP Jj B 43 IiH '90

REF:WL-MH

STATE OF HAWAII DEPARTMENT OF LAND AND NATURAL. RESOURCES

P. O. BOX 621

HONOLULU, HAWAII 96809

5EP '2 191)

MEMORANDUM

TO:

ATIN:

FROM:

SUBJECf:

Honorable Warren Price III, Attorney General

Johnson Wong, Supervising Deputy Att~ey eneral Land!Transportation Division

William W. Paty, Chairperson

Approval as to Fonn of the Perfonnance Bond for Geothennal Resource Mining Lease R-3

--1 fT'1

,,::-;t r -l'j ':~'::":"

1---0-7" ..... )--1 7- ~ rbi.

4'J-(g 3f WILLIAM W. PATY CHAIRPERSON

BOARD OF LAND ANj+lATURAL RES(OURCES I '

~PUTIES . )\. v KEITH w. AHUE ~

MANABU TAGOMORI 'V RUSSELL N. FUKUMOTO ~'




RESOURCES ENFORCEMENT CONVEYANCES FORESTRY AND WILDLIFE LAND MANAGEMENT STATE PARKS WATER AND LAND DEVELOPMENT

~~ii" •... '.,' .. \

,'" W' .•.. ~.,' ,

,of"I' " ... ,

rn e,..") u:,"

Transmitted for your review and approval as to fonn is the required Geothennal Resource Mining Lease Perfonnance Bond submitted by Barnwell Geothemal Corporation in compliance with our Department's Administrative Rules, Section 13-183-34.

Please note that while the language contained in Section 13-183-34 asks for the submittal of a bond on a fonn approved by the Board, no such "generic" version of a bond has been utilized by the Department. However, the Department has no objections to the current body of language contained in this bond, which is similar to other perfonnance bonds previously submitted and approved.

Your review of the enclosed bond and the return of the original document to our Division of Water Resource Management will be appreciated. Should you have any questions, please contact Manabu Tagomori at Ext. 87533.

Thank you for your continued assistance and cooperation.

DN:mh

Enclosure

,- o o STATE OF HAWAII

DEPARTMENT OF LAND AND NATURAL RESOURCES

GEOTHERMAL RESOURCE LEASE PERFORMANCE BOND

KNOW All MEN BY THESE PRESENTS:

Bond No. B 1829574 Executed One (1)

That we Barnwell Geothermal Corporation, as PRINCIPAL, and

_____ Re __ 11_·a_n_c_e __ I_n_s_u_r_a_n_c_e __ C_o_m.p_a_ny~ ___ , as SURETY, organized and doing business

under and by virtue of the laws of the STATE OF Pennsylvania andlor authorized

to do business in the STATE OF HAWAII, are held and firmly bound unto the

STATE OF HAWAI I and the Occupier of the land covered by Lease hereinafter

described, in the sum of Ten Thousand and No/IOO -------------------~-----

($ 10,000.00 ), lawful money of the UNITED STATES OF AMERICA, to be paid to

the STATE OF HAWAI I, BOARD OF LAND AND NATURAL RESOURCES, for which payment,

we bind ourselves, our heirs, executors, successors and assigns, jointly and

severally, firmly by those present.

The conditions of the foregoing obligation is such tha~ if the above

bounded PRINCIPAL shall comply with the provisions of GEOTHERMAL RESOURCES

MINING LEASE NO. _______ R-_3 _______ , Regulation NO.8 relating to Leasing of

Geothermal Resources and applicable laws of this State, then this obi igation

s h a I I be v 0 i d i 0 the r wi s e, tor ema i n i n f u I I for c e and e f f e ct.

AND, IT IS HEREBY STIPULATED AND AGREED:

1. That any change, extension or alteration permitted by said Lease,

regulation or laws of the State shal I not in any way affect the obI igat ion of

said Surety on this bond; and that said Surety does hereby waive notice of

any such change, extension or alteration. , ,

• 2. That suit on this bond may be brought before a court of competent

jurisdiction without a jury, and that the sum of sums specified in said lease

as I iquidated da~ages shall be considered as, and held to be, fixed and

I iquidated damages which shall be forfeited to the State of Hawaii, its

successors or assigns, in the event of a breach of any, or all, or any part

of, the stipulations, agreements, covenants or conditions contained in said

contract or in this bond, in accordance with the terms hereof.

3. That this bond shall also inure to the benefit of the Occupier of and

the I ease d I and /a n y and a I I per son sen tit led to f i I e c I aims for I abo r

performed or material furnished in said work so as to give such Occupier(s) a

right of action against said PRINCIPAL and SURETY and so as to give any and

all persons a right of action as contemplated in Section 507-17, Hawai i

Revised Statutes.

WITNESS our hands and seals at Honolulu State of

______ ~H~a~w~a~i~i _______ , this __ ~1~5~t~h~ __ day of ___.....;;.A;;;,;:u;.c;g""'u;;;,;:s;.,;:t"--___ , 19 9~.

PRINCIPAL: BARNWELL GEOTHERMAL CORPORATION

APPROVED AS TO FORM: By: 1fMt:. I

SURETY: RELIANCE INSURANCE COMPANY

By: Its Attorney-in-Fact, Brent Olson

STATE OF HAWAI I ) CITY AND COUNTY) SS:

OF HONOLULU )

INDIVIDUAL ATTORNEY-IN-FACT ACTING FOR CORPORATION

On this 15th day of August 19 90 before me personally appeared Brent Olson to me personally known, who, being by me duly sworn, did say that he is the Attorney-In-Fact of Reliance Insurance Company duly appointed under Power of Attorney, dated 3/8/90 , which said Power of Attorney is now in force and effectl and that the foregoing instrument was executed in the name and behalf of said Reliance Insurance Compan~ by said

Brent Olson as its Attorney-in-Fact, and said Brent Olson acknowledged said instrument to be the

free act and deed of said corporation.

,.~~~ ~ry Public, ~ My Commission Expires: 5/6/94

$I ,0;44 ',P )"i $EX < 2_, JJSM'&".#Hti,;;;'; Ai!,APi9¢A44 i4 Mt ! £.:;;:4.4$4 4.1t t ,&44,-44 ,; " 14j14::1 "

· ,. , , RELI~CE INSURANCE C~MPANY

W HEAD OFFICe. PHILADELPHIA. PENN8YLVA'tM!

POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS. That the RELIANCE INSURANCE COMPANY. a corporation duly organized under the laws of the State of Pennsylvania. does hereby make. constitute and appoint

BRENT OLSON of HONOLULU, HAWAII -------------

ita true and lawful Attorney-in-Fact. to make. execute. seal and deliver for and on ita behalf. and as its act and deed

ANY AND ALL BONDS AND UNDERTAKINGS OF SURETYSHIP -------

and to bind the REUANCE INSURANCE COMPANY thereby as fully and to the same extent as If such bonds and undeftakings and other writings oblililatory in the nature thereof were signed by an Executive Officer of the REUANCE INSURANCE COMPANY and sealed and atteated by one other of such ,)fIIeera. and hereby ratifies and confirms all that ita said Attorney(s)-in-Fact may do in pursuance hereof. "

This Power of Attorney is granted under and by authority of Article VII of the By-Laws of REUANCE INSURANCE COMPANY which became effective September 7.1978. which provisions are now in full force and e"act. reading as follows:

ARTICLE VII - EXECUTION OF BONDS AND UNDERTAKINGS

1. The Board of Directors. the President. the Chairman of the Board. any Senior VIce President. any VIce President or Assistant Vice President or other officer designated by the Board of Directors shall have power and authority to <a) appoint Attorneys-in-Fact and to authorize them to execute on behalf of the Company. bonds and undertakings. recognizances. contracts of indemnity and other writings obligatory in the nature thereof. and (b) to remove any such Attorney-in-Fact at any time and revoke the power and authority given to him.

2. Attorneys-in-Fact shall have power and authority. subject to the terms and limitations of the power of attorney issued to them. to execute and deliver on behalf of the Company. bonds and undertakings. recognizances. contracts of indemnity and other writings obligatory in the nature thereof. The corporate seal la not necessary for the validity of any bonds and undertakings. recognizances. contracts of indemnity and other writings obligatory In the nature thereof.

3. Attorneys-in-Fact shall have power and authority to execute affidavits required to be attached to bonds. recognizances. contracts of indemnity or other conditional or obligatory undertakings and they shall also have power and authority to certify the financial statement of the Company and to copies of the By-laws of the Company or any article or section thereof.

This power 0' attorney is signed and sealed by facsimile under and by authority of the following Resolution adopted by the Board of Directors of REUANCE INSURANCE COMPANY at a meetingheld on the 5th day of June. 1979. at which a quorum was present. and said Resolution has not been amended or repealed:

"Resolved. that the signatures of such directors and officers and the seal 0' the Company may be affixed to any such power of attorney or any certificate relating thereto by facsimile. and any such power 0' attorney or certificate bearing such facsimile Signatures or facsimile seal shall be valid and binding upon the Company and any such power so executed and certified by facsimile signatures and facsimile seal shall be valid and binding upon the Company in the future with respect to any bond or under1aking to which It is attached."

IN WITNESS WHEREOF. the REUANCE INSURANCE COMPANY has cau~ these presents to be signed by Its Vice President. and its corporate seal to be hereto affixed. this 8th day of March 19 9 Q

REUANCE INSURANCE COMPANY

~~ \P!d:t STATE OF Washington COUNTY OF King On this 8 th day of

} ss.

March .1990. personally appeared Lawrence W. Carlstrom

to me known to be the Vice-President of the REUANCE INSURANCE COMPANY. and owledged that he executed and attested the foregoing instrument and affixed the seal of said corporation thereto. and that Article VII. . 1. 2. an 3 of the By-Laws of said Company and the Resolution. set forth therein. are still in full force.

My Commission Expires:

February 23.19 93

Residing at Tacoma I. Robert D. Ri tzhaupt . Assistant Secretary of the RELIANCE INSURANCE COMPANY. do hereby certify that the above and foregoing is a true and correct copy of a Power of Attorney executt'd by said REUANCE INSURANCE COMPANY. which is still in full force and effect

IN WITNESS WHEREOF. I have hereunto set my hand and affixed the seal of said Company this 15th day of August 19 90.

"'_t~~~ Robert D:Ritaupt IIOf'-1431 Ed. 6/79

I o o JOHN WAIHEE

GOVERNOR OF HAWAII



REF:WL-MH


P. O. BOX 621


SEP 12 1990

MEMORANDUM

TO:

ATTN:

FROM:

SUBJECT:


Johnson Wong, Supervising Deputy Atr{0 ey eneral Land/Transportation Division

William W. Paty, Chairperson

Approval as to Form of the Performance Bond for Geothermal Resource Mining Lease R-3

DEPUTIES

KEITH W. AHUE MANABU TAGOMORI

RUSSELL N. i"UKUMOTO




RESOURCES ENFORCEMENT CONVEYANCES FORESTRY AND WILDLIFE LAND MANAGEMENT STATE PARKS

WATER AND LAND DEVELOPMENT

Transmitted for your review and approval as to form is the required Geothermal Resource Mining Lease Performance Bond submitted by Barnwell Geothernal Corporation in compliance with our Department's Administrative Rules, Section 13-183-34.

Please note that while the language contained in Section 13-183-34 asks for the submittal of a bond on a form approved by the Board, no such "generic" version of a bond has been utilized by the Department. However, the Department has no objections to the current body of language contained in this bond, which is similar to other performance bonds previously submitted and approved.

Your review of the enclosed bond and the return of the original document to our Division of Water Resource Management will be appreciated. Should you have any questions, please contact Manabu Tagomori at Ext. 87533.

Thank you for your continued assistance and cooperation.

DN:mh

Enclosure

A.~.tlilt .. PRODUCER

CODE

INSURED

MARSH " lkI.ENNA.N. INC. P. O. BOX 38 HONOLULU, HAWAII 96810

SUB-CODE

BABNWILL GEO'tBIIQIAL COIl'OlAnON 282.8 FAA SftUr. SVITi 12085 HONOLULU, iJAW.&.II 96819

ISSUE DATE (MM/DD/YY)

7-24-90 csk:ey THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW

COMPANY A LETTER

COMPANY B LETTER

COMPANY C LETTER

COMPANY D LETTER

COMPANY E LETTER

COMPANIES AFFORDING COVERAGE

PACIFIC INSURANC1& COMPANY. LIMITED

THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.

CO LTR TYPE OF INSURANCE

GENERAL LIABILITY

A X COMMERCIAL GENERAL LIABILITY

CLAIMS MADE X OCCUR.

OWNER'S & CONTRACTOR'S PROT.

AUTOMOBILE LIABILITY

ANY AUTO

ALL OWNED AUTOS

SCHEDULED AUTOS

HIRED AUTOS

NON-OWNED AUTOS

GARAGE LIABILITY

EXCESS LIABILITY

WORKER'S COMPENSATION

AND

EMPLOYERS' LIABILITY

OTHER

POLICY NUMBER POLICY EFFECTIVE POLICY EXPIRATION DATE (MM/DDIYY) DATE (MMIDDIYY)

10 UElI ZlU286 10/01/89 10/01/'0

70 JUiU ZD5Z41 10/1/8' 10/1/90

ALL LIMITS IN THOUSANDS

GENERAL AGGREGATE $ 1,000 PRODUCTS·COMPIOPS AGGREGATE $ 1.000 PERSONAL & ADVERTISING INJURY $ 1,000 EACH OCCURRENCE $ 1,000 FIRE DAMAGE (Anyone fire) $

MEDICAL EXPENSE (Anyone person) $

COMBINED SINGLE LIMIT

BODILY

$

INJURY $ (Per person)

BODILY INJURY $ (Per accident)

100 10

EACH AGGREGATE OCCURRENCE

$ 1,000 $ 1,000

STATUTORY

$

$

$

(EACH ACCIDENT)

(DISEASE-POLICY LIMIT)

(DISEASE-EACH

DESCRIPTION OF OPERATIONSILOCATIONSNEHICLESIRESTRICTIONSISPECIAL ITEMS LOCA.'rIOJlS: SEE 4'lTACIIID

STAD 01' JW1A1I, IlAWAII S'UTI IOAID 0' LAND AID MTUIW. USOtJI.C&S. JJWUQ) 01' LAID AIm »A'tUJW. DIlAa'J:MBllT 01' LAD AD IIATUI.AL RESOUJ.CIS

SUD 01' HAWAII 1151 l'tlKBIOWL STIDT B.O.IOLULU, BA.V4l1 96813

ACORD25-S

SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE

EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL~

MAIL -30- DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE

LEFT,

AUTHORIZED

CQRPORATION

Lands o:'uate at Kapoho, Kaniahiku, Ohialaka and Pohoiki, Puna, Hawaii, being all of tfiose certain parcels of land (portion~of the land described in and covered by:

1. Royal Patent 4497, Land Commission Award No. 8559, Apana 5, to C. Kanaina1

2. Royal Patent Grant No. 3209 to Robert Rycroft; and

3. Land Patent No. 8094, Land Commission Award No. 855 9-B I Apana 15, to W~. C'. Luna1i10 designated by Tax Map Key as follows:"

TAX MAP KEY TAX MAP KEY AREA

1~3-45!9 1-3~46:60 1-3-45:10 1-3-46161 1-3-45:14 1-3-46:62 1-3-45:16 1-3-46 :,63 1-3-45:17 1-3-46:64

1-3-45:25 1-3-46165

,l-3-46i66 1-3-45:22 1-3-46: 67 ' 1-3-45:21 1-3~46:68 1-3~4S:19 1-3-46:69

1-3-46:70 1-3-46:2 ,1-3-46:71 1-3-46:3 1-3-46:72 1-3-46:4 1-3-46:73

1-3-46:5" 1-3-46:74 1-3-46:13 1-3-46:29 1-3-46:14 1-3-46:30 1-3-46:15 1-3-46:33 1-3-46:16 1-3-46:34 1-3-46:17 1-3';"46:35 1-3-46:18 1-3-46:36 1-3-46:19 1-3--46:37 1-3-46:20 1-3;,.411:38 1-3-46:21 1-3-46:39 1-3-46:22 1-3-46:40 1-3-46:23 1-3'-46: 41 1-3-46:24 1-3-46:42

1":'3-4 Ii : 43 1-3-46:25 1-3-46:44

1-3-46:1$ 1-3-46:45 1-3-46: 78"' 1-3-46:4G / i

1-3':"46:47 I

1-3-46:79 I

1-3-46:81 1-3-46': 48 1-3-46:82 ' " !- 1-3-46:49 1-3-46:84 1-3-46:52 :,': ,.. 1-3-46:50 (Subtotal of

.'.'

1-3-46:53 1-~-46:51 foregoing) 77.0000 acres 1-3-46:54 1-3-46:55 1-3-08:06 140.0000 acres 1-3-40:56 1-3-46:51 1-3-08:07 160.2920 acres 1-3-46:58 1-3-46:59 1-3-0a:19 227.5910 acres

1-3':"09:07 119.1800 acres

1':'4-0-1:20 (portion) 45.0738 acres

TOTAL , 769.1368 acres

" \

.;. ' -.' .. -

t ,~.

RELI~CE INSURANCE COMPANY V HEAD OFFICE, PHILADELPHIA. PENN8YLV ... O

POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS. That the REUANCE INSURANCE COMPANY. a corporation duly organized under the laws of the Stale of Pennsytvania, does hereby make.· constitute and appoint .

BRENT OLSON of HONOLULU, HAWAII -------------

its true and lawful Attorney-in-Fact, to make. execute. seal and deliver for and on its behalf. and as ita act and deed

ANY AND ALL BONDS AND UNDERTAKINGS OF SURETYSHIP -------.

and to bind the REUANCE INSURANCE COMPANY thereby as fully and to the same extent as If such bonds and undertakings and other writings obIi\latory in the nature thereof were signed by an executive Officer of the REUANCE INSURANCE COMPANY and sealed and attested by one other of 8UCh .)fIIeers; and hereby ratifies and confirms atl that its said Attorney(s)-in-Fact may do in pursuance hereof.

This Power of Attorney is granted under and by authority of Atticle VII of the By-Laws of REUANCE INSURANCE COMPANY which became effective September 7. 1978. which provisions are now in full force and effect, reading as follows: ~

ARTICLE VU - EXECUTION OF BONDS AND UNDERTAKINGS

1. The Board of Directors. the President. the Chairman of the Board. any Senior VIce President. any VIce President or Assistant VICe President or other officer designated by the Board of Directors shall have power and authority to (a) appoint Attorneys-in-Fact and to authorize them to execute on behalf of the Company. bonds and undertakings. recognizances. contracts of indemnity and other writings obligatory in the natura thereof. and (b) to remove any such Attorney-in-Fact at any time and revoke the power and authority given to him.

2. Attorneys-in-Fact shall have power and authority. subject to the terms and limitation. of the power of attorney issued to them. to execute and deliver on behalf of the Company. bonds and undertakings. recognizances, contracts of indemnity and other w~ng. obligatory In the nature thereof. The corporate seal is not necessary for the validity of any bond. and undertakings, recognizances. contracts of indemnity and other writings obligatory In the nature thereof. .

3. Altomeyl-in-Fact shall have power and authority to execute affidavits required to be attached to bonds. recognizances. contracts of indemnity or other conditional or obligatory undertakings and they shall also have power and authority to certify the financial statement of the Company and to copies of the By-laws of the Company or any article or section thereof.

This power of attorney is signed and sealed by facsimile under and by authority of the following Resolution adopted by the Board of Directors of REUANCE INSURANCE COMPANY at a meeting hald on the 5th dey of Juna. 1979. at which a quorum was present. and said Resolution has not been amended or repealed:

"Resolved. that the signatures of such directors and officers and the seal of the Company may be affixed to any such power of attorney or any certificate relating thereto by facsimile. and any such power of attorney or cet1ificate bearing such facSimile signatures or facsimile seal shall be valid and binding upon the Company and any such power so executed and certified by facsimile Signatures and faCSimile seal shall be valid and binding upon the Company in the future with respect to any bond or undertaking to which It is attached."

IN WITNESS WHEREOF. the REUANCE INSURANCE COMPANY has cau~ these presents to be signed by its VICe President. and its corporate seal to be hereto affixed. this 8 th day of March 19 9 U

REUANCE INSURANCE COMPANY

ti?l6::~~ . President

STATE OF Washington COUNTY OF King On this 8 th day of

} ss.

March .1990'personallyappeared Lawrence W. Carlstrom

to me known to be the Vice-President of the REUANCE INSURANCE COMPANY. and owledged that he executed and attested the foregoing instrument and affixed the seal of said corporation thereto. and that Article VII. Sectiol'i 1. 2. an lion. set forth therein. are still in full force.

My Commission Expires:

February 23.19 93

Residing at Tacoma I, Robert D. Ri tzhaupt . Assistant Secretary of the RELIANCE INSURANCE COMPANY. do hereby certify that the above and foregoing is a true and correct copy of a Power of Attorney executEld by said REUANCE INSURANCE COMPANY. which is still in full force and effect.

IN WITNESS WHEREOF. I have hereunto set my hand and affixed the seal of said Company this 15 t h day of Au gu s t 19 90 .

... -.--~;Q~ Robert D. Rlt aupt

1lOR·1431 Ed. 6/79

t o o STATE OF HAWAII


GEOTHERMAL RESOURCE LEASE PERFORMANCE BOND

KNOW ALL MEN BY THESE PRESENTS:

Bond No. B 1829574 Executed One (1)

Tha t we Barnwell Geothermal Corporation, as PR I NC I PAl, and

_____ Re __ 11_·a_n_c_e __ I_n_s_u_r_a_n_c_e __ C_o_m6P~a~ny'_ ___ , as SURETY, organized and doing business

under and by virtue of the laws of the STATE OF Pennsylvania and/or authorized

to do business in the STATE OF HAWAII, are held and firmly bound unto the

STATE OF H.AWAII and the Occupier of the land covered by lease hereinafter

described, in the sum of Ten Thousand and No/lOO ----------~--------------

U 10,000.00 ), lawful money of the UNITED STATES OF AMERICA, to be paid to

the STATE OF HAWAI I, BOARD OF LAND AND NATURAL RESOURCES, for which payment,

we bind ourselves, our heirs, executors, successors and assigns, jointly and

severally, firmly by those present.

The conditions of the foregoing obligation is such that if the above

bounded PRINCIPAL shall comply with the provisions of GEOTHERMAL RESOURCES

MINING LEASE NO. _________ R_-_3 ________ , Regulation No.8 relating to Leasing of

Geothermal Resources and applicable laws of this State, then this obi igation

shall be void; otherwise, to remain in full force and effect.

AND, IT IS HEREBY STIPULATED AND AGREED:

1. That any change, extension or alteration permitted by said lease,

regulation or laws of the State shall not in any way affect the obligation of

said Surety on this bond; and that said Surety does hereby waive notice of

any such change, extension or alteration. , l

---------------------:..'------------------------..... ~ ... ,--.-"

o o 2. That suit on this bond may be brought before a court of competent

jurisdiction without a jury, and that the sum of sums specified in said lease

as liquidated damages shal' be considered as, and held to be, fixed and

I iquidated damages which shall be forfeited to the State of Hawaii, its

successors or assigns, in the event of a breach of any, or al" or any part

of, the stipulations, agreements, covenants or conditions contained in said

contract or in this bond, in accordance with the terms hereof.

3. That this bond shall also inure to the benefit of the Occupier of

the leased land any and all persons entitled to file claims for labor

performed or material furnished in said work so as to give such OccupierCs) a

right of action against said PRINCIPAL and SURETY and so as to give any and

all persons a right of action as contemplated in Section 507-17, Hawaii

Revised Statutes.

WITNESS our hands and seals at _______ H_o~n~o~1u __ 1u ________ State of

_______ H;;aw~a~i~i _______ , this 15th day of ____ ~A~u~gu~s~t~ _____ , 1991L--.

PRINCIPAL: BARNWELL GEOTHERMAL CORPORATION

;APPROVED AS TO FORM:

SURETY: RELIANCE INSURANCE COMPANY

Deputy Attorney General By: Its Attorney-in-Fact, Brent Olson

I

o

STATE OF HAWAII) CITY AND COUNTY ) SS:

OF HONOLULU )

o

INDIVIDUAL ATTORNEY-IN-FACT ACTING FOR CORPORATION

On this 15th day of August 19 90 before me personally Bppeared Brent Olson to me personally known, who, being by me duly sworn, did say that he Is the Attorney-In-Fact of Reliance Insurance Company duly appointed .under Power of Attorney, dated 3/8/90 , which said Power of Attorney Is now In force and effect, and that the foregoing Instrument was executed In the name and behalf of said Reliance Insurance Company by said

Brent Olson as Its Attorney-In-Fact, and said Brent Olson Icknowledged slid Instrument to be the

free act and deed of said corporation.

~1Hd~~:.4. L./1fot8fy Public, t;~f Hlwall My Commission Expires: 5/6/94

o o BARNWELL GEOTHERMAL CORP0RA!T:I&N

- -........ .. ' ....... ;"_..1

Mr. Manabu Tagomori Deputy Director state of Hawaii Dept. of Land & Natural Resources P.O. Box 621 Honolulu, Hawaii 96809

Dear Mr. Tagomori:

"-,; t Ii 11 8; 5 5

Enclosed please find a new designation of resident agent for each of the Well Indemnity Bonds, numbers YS 845-7457, YS 845-8885, and 872109. Also, each of the bonds has been countersigned by the resident agent as requested.

Please do not hesi tate to contact me should any further action be required on these bonds.

enclosures

MLJ/rz

Sincerely,

7(4/jIJ Martin L. Jokl President

2828 PAA STREET, SUITE 2085 • HONOLULU, HAWAII 96819 • TELEPHONE (808) 839-7720· TELEX 7238672 • TELECOPIER (808) 833-5577

JOHN WAIHEE

GOVERNOR OF HAWAII

o o


Mr. Martin L. Jokl, President Barnwell Geothennal Corporation 2828 Paa Street, Suite 2085 Honolulu, Hawaii 96819

Dear Mr. Jokl:

P. O. BOX 621


April 16, 1990



DEPUTIES

KEITH W. AHUE MAN ABU TAGOMORI

RUSSELL N. FUKUMOTO





The Department of Attorney General has reviewed the bonds submitted by Barnwell Geothennal Corporation and Geothennal Exploration & Development Corporation (GEDCO), and has identified several matters requiring your attention.

Geothennal Resources Well Indemnity Bond Nos. YS 845-7457, YS 845-8885, and 872109 require notarized signatures by a Hawaii Resident Agent.

Enclosed are the original documents which have been signed and approved as to fonn by the Deputy Attorney General. However, please note that this prior approval is dependent upon the aforementioned conditions being satisfied. If the above requirements are not met, the Deputy Attorney General's signature shall be considered invalid.

Please have these documents signed and completed as required. Should you have any questions, please contact George Matsumoto 548-7619!

DN:ln Encl.

truly yours,

o o Corporate

STATE OF HAWAII ) CITY & COUNTY OF HONOLULU ) S8:

)

On this 18th day of August • 19~. before me appeared E. C. Craddick

to me personally known. who, being by me duly sworn, did say that _________ _ he is president

of BARNWELL GEOTHERMAL CORPORATION • and that the seal affixed to the foregoing instrument is the corporate seal of said corporation and that said instrument was signed and sealed in behalf of said corporation by authority of its Board pf Directors, and the said __ =E~.~C~.~C=r~a~d~d~1~·c~k~-----------------~aclmowledged said instrument to be the free act and deed of said corporation.

State of Hawaii City &

County of Honolulu

YOlO RoC ('/721

~ SS.

~~~~~~~---:-_e...!:> Notary Public, Judicial Circuit

State of Hawaii I()...O (1J My Commission Expires:~C_-,r,-l:.2...T_

On August 16, 1982 , before me, the undersigned, .a Notary Public of said county and state, personally appeared

John T. Lettieri known to me to be the Attorney-in-Fact of

INDUSTRIAL INDEMNITY COMPANY the Corporation that executed the within instrument, and know~ to me to be the person who executed the said instrument on behalf of the Corporation therein named, and acknowledged to me that such Corporatio executed the sam . •

. ,

o o

GEOTHERMAL RESOURCES WELL INDEMNITY BOND ($50,000 Individual Well Bond)

KNQt.,r ALL MEN BY THESE PRESENTS:

BOND NO. YS 845-7457 Executed 2

That we BARNWELL GEOTHERMAL CORPORATION --~==~==~==~====~~~~~~-----------------------------------------

as principal; and INDUSTRIAL INDEMNITY COMPANY ----~~====~~~~~~~~~---------------------------------------

organized and existing under and by virtue of the laws of the STATE OF HAWAII and authorized

to transact surety business in the STATE OF HAl-lAII, as surety, are held and firmly bound unto .

the State of Hawaii in the full and just sum of FIFTY THOUSAND AND NO/IOO DOLLARS ($50,000.00)

lawful money of the United States of America, to be paid to the said State of Hawaii, for which

payment, well and truly to be made, we do hereby bind ourselves, our heirs, executors, administr.

tors, successors and assigns, jointly and severally, firmly by these presents.

Signed, sealed, delivered and dated this 16th day of August , 19~8~2~_, at Honolulu, City and County of Honolulu, State of Hawaii.

THE CONDITION OF THE ABOVE OBLIGATION IS SUCH THAT,

WHEREAS, said principal is. about to acquire, drill, redrill, deepen, operate, maintain or

abandon a geothermal resources well designated as Well No. Lanipuna #1 TMK: 1-3-9:7

Latitude _______________ , Longitude __________________ , Island of ___ H_a_w_a_i_i ______ and is

required to file this bond in connection therewith in accordance with Rule 9.4 of Regulation 8

of the Department of Land and Natural Resources, State of Hawaii.

NOW, THEREFORE, if said BARNWELL GEOTHERMAL CORPORATION the above bounden principal, shall well and truly comply with all the provisions of said Regulation 8 and shall obey all lawful orders of the Chairman of the Board of Land and Natural Rrsources, or his representative, if not appealed to the Board of Land and Natural Resources, or cpon affirmance thereof by the Board of Land and Natural Resources, if appealed thereto, and shall pay all charges, costs, and expenses incurred by the Chairman or his representative, in respect of such well or the property or properties of said principal, or assessed against such well or the property or properties of such principal, in pursuance of the provisions of said Regulation 8, then this obligation shall be void; otherwise, it shall~emain in full force and effect.

Approved as to form:

Dp.,ted:

BARNWELL GEOTHERMAL CORPORATION -=~~==~~~==~~~~~~~~--------------Principal

E. C. Craddick It. Presid nt

INDUSTRIAL INDEMNITY COMPANY Surety

By: (----~~----~~--------~~-----------

Its: ,John T. Lettieri

o J0tnrr of ~ttorllry 111156 I 'i i) C ' : f· I \ I

• 1) i ' .. r l

HOME OFFIC:E - SAN FR ANC:ISC:O

That J:\IH-S I R.I.\!. I:\I>E\I:\IT'I" CO:\II'.\:\Y. a corporation on;anized and existinl( lmdcr th(' laws oJ' Ihe St.ltl· of California. and havinl( its prill( ip;t! "ificl.' in the City "f San Francisco, State of California. c10es herehy make. constitute .lI1d .lpl'OInt

-------------------------------------JOBN T. LETTIERI-----------------------------______ _ it~ true and lawful attorney-ill-fact for it and ill its name, place and stead to execute on its behalf as surety. blind" IIlldcrtakinl{~. stipu-lations. consents and all ullltracts of suretyship and to attach its corporate seal to such ohligations ill fdv\)r oJ' .1I! tlhli.;ees. providcd that the liability of the Company ,IS surety under his authority in no one instance shall exceed the sum of

-----------------------------------------UNLIHITED---------------------------------------and rcsen'ing to itself full po\\cr of suhstitution and revocation. This Power of ,\ttorney is made and executed in accordance with the Resolution adopted by the Buard of Directors of

I :\Dl'STRL\L IND":MNITY COMPANY at a meeting held on the 27th day of September. 1972. reading as follows: "RESOLVED. that the Chairman of the Board or President or Executive Vice President or Senior Vice President ()ilhc Company.

in conjum:tion with the Secrc:tary or an .\ssistant Secretary of this Company. he and he herehy is authorized to Cxc\·ute. acknowledge or n:rify Powers of Attorney qualifying selccted attorneys·in·fact to act under such Powers of Attorney to exelute on behalt of IIII.Justrial Indemnity Compau)' honds. undertakings. stipulations. consents and all contracts of suretyship. and tt> altai'll the corporate se;,1 thereto;

"RESOLVED. FURTHER. that the signatures of said officers so authorized hy this Company may he !,rinted tau.mile, litho· olraphed or otherwise produced. and that the facsimile signature of any person who shall have been such offii:er of thili Cumpany at the time of such execution. acknowledgment or verification may continue to be used for the purvose hereinaho\'c stated and will be binding on this Company. notwithstanding the fact that he may have ceased to be such offker at the time when 5udl instruments shall hc issued."

In witness whereof, INDUSTRIAL INDfo:MNITY COMPANY has caused these presents to be signed and its wrJHlrate seal to be affixed by its proper officers. at the City of San "'rancisco. California, this 18th day of February • 19 82

INDUSTRIAL INDE~INITY CU~II''':-':Y

L. E. Kulryan, Secretary 8y~~~~~~~~~~ J. G. President

SlATE OF CALI FOR!,;IA t CITY A:-JD COU~TY OF SA!'; FRA;\lCISCO ~ 55.

Un this 18th day of February .1982. before !'Ie. Mary Mueller oJ lIutary public ill and for the Cuy and County of Sail francisco. State of California. personally appeared

J. G. LaPlante and L. E. Kulryan

known to me to be the Senior Vice President and Secretary of the corporation whit'h cxefuted the within instrument. and acknowledged to me that such corporation exenlted thc same. dnd that the resolution Teft-rred to in the preceding instrument is 1l true and correct copy of the resolution duly passed at a meeting of the Board of Directors on Septemher 27. ]972. and that the WDC is in full force and effect.

In witness whereof, I have hereto.tet my hand and affixed my official seal the day and year in this ('crtil'icate first ahove written. . ./

lan_ ]JEIlI.II .,.:uEWI ' --- .~ em I ~ OF SAIl ...asco Mr C. '1I1Ift> ......... 3 •• , ._ .......... - and for the City and Cou'iliY""

cisco. State of California

I. L. E. Mulryan, Secretary of I;\iDUSTRI,\1. 1:\I>DI:'-lITY Cm.IPA:'\Y. do herd>)' certify that I havc compared the Power of Attorney granted herein and the Resolution rccitl."d herein with the originals now on file in the principal office of said Company. and that the same arc correct transcripts therefrom and of the whole of the said oril{inals. and that said Power of :\ttorney has not been revoked but is still in full force and effect.

In witness whereof. I havc h('reunto subscribed my name as such officer and affixed the seal of I~JlI_·STRL\1. I:,\DJ-::\INITY

CO:\IPA="r .it the City of San Francisco. California. this 16th day of August • J 9 82 .

SE.\L

Secretary

tvn .. , "" 'tn/,."

________________________________________________________ """+' ·0'_'

73-9 o o State of Hawaii


DESIGNATION OF AGENT

In compliance with Rule 8.2 of Regulation 8 of the Department of Land and

Natural Resources, notice is hereby given and I hereby certify that I (1, we) -(""'1 -, -w-e)"-

E. C. Craddick Name (s)

representing BARNWELL GEOTHERMAL CORPORATION (OWNER-OPERATOR) (firm or corporation)

of _--AHwI.lQ"",mwQ~ll~] .... J.IoI]] __ ' State of _-.QH.c:IaUAW,""auj..lj~ ___ , have appointed, authorized and (CitY>

empowered BARNWELL GEOTHERMAL CORPORATION (name of designee)

whose address is 2828 Paa St., Suite 2085, Hen.« Hi 96819 , State of Hawaii,

as our agent in the State of Hawaii * (my, our) ---------------------

who shall be the repository for all well records for each geothermal well drilled by

us , and upon whom all orders, notices and processes under the provisions of (me, us)

said Regulation 8 may be served.

This notice supersedes all previous designations made for the above-described

purposes.

IN WITNESS WHEREOF I have signed is certificate this 18 th day of (I, we)

Augus t , 19 ~2

, Witness: ~ ?t. ~ ~~

Na

NOTE: An owner or operator may appOint himself as agent.

*Should the owner or operator filing this form choose to appoint more than one agent, the phrase, "State of Hawaii" should be deleted and the exact area for w'hich the agent is to be appointed should be inserted. A separate form must be fileq for each agent.

Rule 8.2. Designation of Agent. Any person who has drilled, is drilling, or proposes to drill any geothermal well shall designate on forms provided by the Department an agent who shall be a resident of the State of Hawaii and upon whom may be served all orders, notices, and processes of the Department or any court of law. Every person so appointing an agent shall, within five days after the termination of any such agency, notify the Chairman in writing of such termination, and unless operations are discontinued, shall appoint a new agent. All changes in the address of an agent must be recorded with the Chairman within five days of the change of the address.

o o Corporate

STATE OF HAWAU ) CITY & COUNTY OF HONOLULU ) 88:

)

On this 2nd day of August • 19JiL, before me appeared E. C. CRADDICK'~---:"';';;:'-"=;"";:""'---

to me personally known. who. being by me duly sworn, did say that ___ ---",,\ ____ _ he is president

of WATER RESOURCES INTERNATIONAl. INC , and that the seal affixed to the foregoing instrument is the corporate seal of said corporation and that said instrument was signed ~ sealed in behalf of said corporation by authority of its Board pf Directors, and the said E. C. CBADDICK . acknowledged said instrument to be the free act and deed of said corporation.

-ru--.......,blic, ' Judicial Circuit

SeQ Hawaii C ~/ /!. My Commis ion Expires: ~ - T" /' i-

,--,-------------------------=----

STATE OF HAWAII ) ) ss:

CITY & COUNTY OF HONOLULU )

On this 29th day of~ _ __:;:.J.:::u.=.ly.L.._ ______ , 19~, before me

appeared John T. Lettieri , to me personally known, who, being by me duly sworn, did say that he is the Attorney-in-fact of the

INDUSTRIAL INDEMNITY COMPANY , a corporation of the State of California , duly appointed under Power of Attorney dated the 18th day of February , 19 82 , which power of attorney is now in full force and effect; and that the seal affixed to said instrument is the corporate seal of said corporation and that said instrument was signed on behalf of said corporation under the authority of its Board of Directors and said John T. Lettieri acknowledges said instrument to be the free a and deed of s id co poration.

Notary My comm

bIie, State of_Hawaii sion expires: 11/16/84

~----.. -j

o ./ o BOND NO. YS 845-3885

GEOTHE~IAL RESOURCES HELL INDB-1NITY BOND ($50,000 Individual Well Bond)

KNOtol ALL ~lEN BY THESE PRESENTS:

That we BARNWELL GEOTHERMAL CORPORATION

as principal; and INDUSTRIAL INDEMNITY COMPANY

organized and existing under and by virtue of the laws of the STATE OF HAHAII and authorized

to transact surety business in the STATE OF BAHAII, as surety, are held and firmly bound unto

the State of Hawaii in the full and just sum of FIFTY THOUSAND AND NO/lOO DOLLARS ($50,000.00)

lawful money of the United States of America, to be paid to the said State of Hawaii, for which

payment, ~ell and truly to be made, we do hereby bind ourselves. our heirs. executors, administr.


Signed. sealed, delivered and dated this 29th day of ____ ~J~u~lyL_ ____ • 19 83 • at Honolulu. City and County of Honolulu, State of Ha,.,aii.

THE COXDITION OF THE ABOVE OBLIGATION IS SUCH THAT,

WHEREAS, said principal is about to acquire, drill, redrill, deepen, operate, maintain or

abandon a geothermal resources well designated as lolell No .Lanipuna IF~ THK:---'I=--..... 3o!..-~9'-';w7 ______ _

Latitude 19°28'44" , Longitude _-=1:.:5;...:4_0.:::5.:::3_'~O.::.3_" _____ , Island of Hawaii and is

required to file this bond in connection therewith in accordance with Rule 9.4 of Regulation 8

of the Department of Land and Natural Resources, State of Ha,vaii.

NOtol, THEREFORE, if said BARNWELL GEOTHERMAL CORPORATION , the above bounden principal, shall well and truly comply with all the prov1s10ns of said Regulation 8 and shall obey all lawful orders of the Chairman of the Board of Land and Natural ~esources, or his representative, if not appealed to the Board of Land and Natural Resources, 01 ~lpon affirmance thereof by the Board of Land and Natural Resources, if appealed thereto, and ~hal1 pay all charges, costs, and expenses incurred by the Chairman or his representative, in respect of such well or the property or properties of said principal, or assessed against such well or the property or properties of such principal, in pursuance of the provisions of said Regulation 8, then this obligation shall be void; othen"ise, it shall_ remain in full force and effect.

GEOTHERMAL CORPORATION Principal

By:

Approved as to form: Its;

INDUSTRIAL INDEMNITY COMPANY Su'ret

Deputy By:

Dated; Its; John T. LettierO

o J0htrr of ~ttorltru 111156

itullht all l111'lt hu tl~l'Sl' }Jrl'5l'lltS:

o INDUSTRIAL

INDEMNITY

HOME OFFICE SAN FRANCISCO

'lhat l:\lJ('SIRI.\1. 1:\111'.\1:-:11\ cO:'>JI',\'\',.1 (orl'0r.ltlOI< "",,'IlI7.<'d .lllel t'xislil"~ IIlldn Ihl' L,ws of the St.,tl' "I C,tliforttl,l. and havin~ ih l"ill"i".01 ·>lTI,T ill Iht' eli)' of San hll" i,,< o. State "I' C.alifllrl1!.t. does hncbv 1ll.lke. l'lJllslillilc ,'Ilt! "l'l'otlll

-------------------------------------JOHN T LETTIERI its true .ll,d I.lwful attorlleY'Il-Ltd lor it ,lilt! ill its n;'llIe. pl"ce :'~ld stt'at! to l'Xl'~:-~~;:~i~I:.h::if:;_~;;~~~i::7;;;i:-.-;7;;;i~~~;k;:7;;~;;~;1 lations. t-onsents and ,Ill ,_'olllra('ts of sllretyshil' and to attath its l'C)rl'orate se.oI to such ohligations in f.I\or 01 ,011 ,,j.li,<\n·s. l'ro~ided that Ihe liability of the Company <IS surety under his authority ill 110 one instance' shall exceed the sum of

-----------------------------------------UNLIMITED----------------------------__________ _ and reserving 10 Itself full power of substitution and revoc.ttion,

This Power of Attoruey is made and executed in accordance with the Resolution adopted hy the l!o:lrd of Directors of I],;DL'STRL\L I!\1DEM~ITY COMP_\~Y at a meeting held on tht' 27th day of September. 197:!. reading as follows:

"RESOLVED. that the Chairm:1Il of the Board or President or Executive Viee Prcsidelll or Senior Vice Preside!]l of tht' Comp:IIIY. in conjunction with the Secretarv 01 ,\11 ,\ssistant Secretary of this Company, he and he hereby is authorized to cxecute. .,,'knowledge or verify Powers of Attorney qu.t1ifyin~ selected attorneys-in-bet to act under such Puwers of :\ttorllt:y to executl' "n \l('half of Industrial Indemnity CompaJlY bOl1d~, undert"kings. stipulations, consents and all cuntracts of suretyship. and tl< altach the corpoLlte seal thereto;

"RI::SOLVED. FURTHER. that the signatures of said officers so authurized hy this Company may he printed facsimile. lithographed or otherwise produced. and that the facsimile si,l\nature of "ny person who shall have heen such officer of this (:ompany al the time of such execution. acknowledgment or verification may continue to he IIsed for the purpose hereinahovc sl.tted and will he binding on this Company, notwithstallding the fal'! that he may h:lve ceased to be such officer at the time when stH h instruments shall be is'med."

In witness whereof. I~DUSTRL\L INllEl\.lNITY COMPA~Y has caused these presents to he signed ,1I1l1 its ",.rpm.He seal to be

affixed by its proper officers. at the City of San Francisco. California. this 18th day of February . 19 82

STATE OF C:\LIFOR~IA t CITY A:"I1l COU;'>;TY OF SAN FR:\~CISCO \ ss.

Un this 18th day of February

d notary public ill and for the City and County of San J. G. LaPlante

INDlISTRL\L 1~[)EII.Il\:ITY CO:\IP,\:'I:Y

Secretary

. 1982 . hefore !ne. Mary Mueller

Francisco, State of California. personally appeared and L. E. Mulryan

known to me to he the Senior Vice President and Secretary of the l:Urporation which executed the within instrument. and ~Icknowlcdged to me that such corporation exentled the ~ame. and th.lt the resolution referred to in the preceding instrument is 'a true and correl·t copy of the resolution duly pas~ed at a meeting of the Board of Directors on September 27.1972. and that the same is in full force and effect.

In witness whereof. I have hereto set my hand and affixed my official seal the day and year in this certificate first aho\'e written.

~-=-';··MU;;-·I . NOTARY PUBUC -CALIFORNIA !

CITY & COUIIIY Of SAN FRANCISCO ! My COIIIIIIiaion Expires Aut. 3, 1983 •

............ HI ••• U ••• H.J.~l ..... UI ••• I ••• a.; ..... 1

~, Notary I'uh c' 1 and for theCity amT(:oli~

of Sal Fr' ncisco. State of California

t. L. E. Mu 1 ryan , Secretary of l~lHJSTRIAL l~!)Dl~ITY COl\lPAl\:Y. do herehy certify that I have compared the Power of Attorney granted hereill and the Resolution recited herein with the originals now on file in thc principal office of said Company. ,lIId that the same are corred transcripts therefrom and of the whole of the said originals. ,md that said Power of ,\ttorney has not heen revoked bill is still in full force and effect.

In witt1cs~ whereof. I have hereunto suhscrihed my name as such offin'r and affixed the seal of 1:-':I>lJSTRIAL I:\1DE:\INITY

COlI.lrANY at the City of San Francisco. California. this 29th day of July , 1983

Lb<0 .. ' u ryan tJ..=, ~--~c~_~ ~ ~~ Secrctary

SEAL

tvnJlt Al7 110/7'"

______________________________________________________________ '!f.'III"'''~'_

\_~ ..--:...-.~" o o r-!

STATE OF HAWAII } CITY & 88.:

COUNTY OF HONOLULU

On this ........... J§.1;h.~ ..... ~~~ .. ~.day _ .. ~ ..... ~ .... ~~ ... ~~~~.~ .... ~~ ..... J.~Il,~~~~y.~~~~.~~~~ .. ~ ...... ~~~~.~ ...... ~~~ ........ 19 .. ~Q .... , before me personally came

M. G. Chillingworth .... _ .......... _ ........................................................................... -_ ....................................... _ ............................................. _ .......... _ ............................................................................ . to me known to be an Attorney-in-Fact of SEABOARD SURETY COMPANY, the corporation described in the within instrument, and he acknowledged that he executed the within instrument as the act of the said SEABOARD SURETY COMPANY in accord ce with autrco.ty y conferred upon him by said Company. .

ublic, State of Hawaii

FonnUI y ·c~~~~i;;i;~·~·E~~ir~~~--)F·a;.t()··Nota::;:y·I;~·b"iic~· ~ ...

r

• l .....

_ J

---------------------_ ...•. _.

o o 78-9

BOND NO. 872lO9

GEOTHERMAL RESOURCES WELL INDEMNITY BOND ($50,000 Individual Well Bond)

KNOW ALL MEN BY THESE PRESENTS:

That we GEOTHERMAL EXPLORATION & DEVELOPMENT CORP.

as principal; and SEABOARD SURETY COMPANY, a New York Corporation

organized and existing under and by virtue of the laws of the STATE OF HAWAII and authorized

to transact surety business in the STATE OF HAWAII, as surety, are held and firmly bound unto

the State of Hawaii in the full and just sum of FIFTY THOUSAND AND NO/lOO DOLLARS ($50,000.00)

lawful money of the United States of America, to be paid to the said State of Hawaii, for which pay

ment, well and truly to be made, we do hereby bind ourselves, our heirs, executors, administra


Signed, sealed, delivered and dated this 16th day of __ J_a_nu_a_ry __ 19~, at Honolulu, City and County of Honolulu, State of Hawaii.

THE CONDITION OF THE ABOVE OBLIGATION IS SUCH THAT,

WHEREAS, said principal is about to acquire, drill, redrill, deepen, operate, maintain or

abandon a geothermal resources well designated as Well No.1, TMK: 1-3-01: 24 ----Latitude , Longitude , Island of Hawaii and is --------------- --------------- -------------required to file this bond in connection therewith in accordance with Rule 9.4 of Regulation 8

of the Department of Land and Natural Resources, State of Hawaii.

NOW, THEREFORE, if said GEOTHERMAL EXPLORATION & DEVELOPMENT CORP. the above bounden principal, shall well and truly comply with all the provisions of said Regulation 8 and shall obey all lawful orders of the Chairman of the Board of Land and Natural Resources, or his representative, if not appealed to the Board of Land and Natural Resources, or upon affirmance thereof by the Board of Land and Natural Resources, if appealed thereto, and shall pay all charges, costs, and expenses incurred by the Chairman or his representative, in respect of such well or the property or properties of said principal, or assessed against such well or the property or properties of such principal, in pursuance of the provisions of said Regulation 8, then this obligation shall be void; otherwise, it shall remain in full force and effect.

By:

Its:

SEABOARD SURETY COMPAHY

Surety

By: 7.~ :=s Its: Attorney-in-fact

And By:

Its:

o o

STATE OF HAWAII City & County of Honolulu ss

On this 16th

E. C. Craddick

day of _______ J_an_ll_a_r....:y ____ , 19 80 , before me appeared

and --------------------------------- ---------------------------to me personally known, who, being by me duly sworn, did say that they are the

President and ---~~~~~----------------- ------------------------respecti vely, of __ G_e_o_th_e_rma __ l_E_x_p_l_or_a_t_i_o_n_&_D_e_V_e_lo_pm_e_n_t_C_o_r_p_. _______ _

and that the seal affixed to the foregoing instrument is the corporate seal of said

corporation, and that the foregoing instrument was signed and sealed in behalf of

said corporation by authority of its Board of Directors, and said _______ _

E. C. Craddick and --------------------- --------------------------------acknowledged the foregoing instrument to be the free act and deed of said corpora

tion.

My commission expires: 11/16/80

STATE OF HAWAII ss

On this ____ day of ____________ ' 19_, before me appeared

and -------------------- ----------------------to me personally known, who, being by me duly sworn, did say that they are the

and ---------------------------- ----------------------------respectively,of ________________________________________ ___

and that the seal affixed to the foregoing instrument is the corporate seal of said

corporation, and that the foregoing instrument was signed and sealed in behalf of

said corporation by authority of its Board of Directors, and said ________ _ ___________________________ and ___________________________________ _

acknowledged the foregoing instrument to be the free act and deed of said corpora

tion.

Notary Public,· _______ Judicial Circuit, State of Hawaii

My commission expires:

Ccrt ificd Copy

No. %84 POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS: That SEABOARD SURETY CO:\IPANY. a corporation of the State of New York. has made. constituted and appointed and by these presents does make. constitllte and appoint _______________ _ M. G. Chilling\o/orth or II. W. Chillingworth or Ronald Poepoe or June Kukino or Hilliam B. Steven or M. J. Singlehurst-------------------------------~--------------------------------------------of Honolulu, Hawaii its true and lawful Attorney-in-Fact, to make. execute and deliver on its behalf insurance policies. surety bonds. undertakings and other instruments of similar nature as foJlows: Hi thout Limitations.

Such ins~rance policies. s~ret!' bonds. unde:takings and instruments for said purposes •. when duly executed by the aforesaid Attorney-m-Fact. shall be bmdmg upon the said Company as fully and to the same extent as If signed by the duly authorized officers of the Company and sealed with its corporate seal; and all the acts of said. Attorney-inFact. pursuant to the authority hereby given. are hereby ratified and confirmed.

This appointment is made pursuant to the following By-Laws which were duly adopted by the Board of Directors of the said Company on December 8th. 1927. with Amendments to and including April 6. 1978 and are still in full force and effect:

ARTICLE VII, SECTION 1: "Policies. bonds. recognizances. stipulations. consents of surety. underwriting undertakings and instruments relating thereto.

Insurance policies, bonds, recognizances, stipulations, consents of surety and underwriting undertaking;; of the Company, and releases. agreements an( other writings relating in any way thereto or to any claim or loss thereunder. shall be signed in the name and on behalf of the Company

(a) by the Chairman of the Board, the President, a Vice President or a Resident Vice President and by the Secretary, an Assistant Secretary a Resident Secretary or a Resident Assistant Secretary; or (b) by an Attorney-in-Fact for the Company appointed and authorized by the Chair man of the Board, the President or a Vice President to make such signature; or (c) by such other officers or representatives as the Board rna: from time to time determine.

The seat of the Company shall if appropriate be affixed thereto by any such officer, Attorney-in-Fact or representative."

IN WITNESS WHEREOF. SEABOARD SURETY COl\IPA~Y has caused these presents to be signed by one of its Vice Presidents. and its corporate seal to be hereunto affixed and duly attested. by one of its Assistant Secretaries. this ... ;n~t ........ . day of ......... ~.~~.~~X ........................... 19.?~ .. .. Attest:

(Seal) Margaret Scofield

SEABOARD SURETY COMPANY.

By Thomas P. Gorke

Assistant Secretary Vice-Preside!

STATE OF NEW YORK I COUNTY OF. NEW YORK 5 ss. :

On this .. ~.~~.~ ..................... dai of ............................ :!.~~~~.ry' ................................................ 19 .. ?? ....... before me personally appeare ...................... Th9.~~.~ ... ~.~ ... 9.~?; ... ~ ................................................................. a Vice-President of SEABOARD SURETY CO~IP.\X\ with whom I am personally acquainted, who. being by me duly sworn. said that he resides in the State of .... ~~~ ... ~~.~~.~.Y ........... . that he is a Vice-President of SEABOARD SURETY COl\IPANY,' the corporation described in and which executed the fon going instrument; that he knows the corporate seal of the said Company; that the seal affixed to said instrument is such corporat seal; that it was so affixed by order of the Board of Directors of said Company; and that he signed his name thereto as Vic( President of said Company by like authority.

(Seal)

State of New York No. 41-7493475 Qualified in Queens County Cert. filed in New York County Commission Expires Harch 30, 1980

CERTIFICATE

Anita J. Leonard Notary Pub I

I. the undersigned Assistant Secretary of SEABOARD Sl.:RETY CO~!PAXY do hereby certify that the original Power of Attorney of "hie the foregoing i~ a full. true and correct copy, is in full force and effect on the date- of this Certificate and I do iurther certify that the Vice Pr~-it!~l who executed the said Power of Attorney was one of th .. Officers authorized by the Board of Dir"ctors to appoint all attorney-in-fact as prO\'j'"ed : Article VII, Section 1, of the By-Laws of SE.-\BOARD Sl.:RETY CO~!P.-\XY.

This Certificate may be signed and scaled by facsimile under and by authority of the following resolution of the Board of Directors of SE . .l BOARD SURETY CO~lPA!\Y at a meeting duly called and held on the 28th day of June 1978.

"RESOLVED; (2) That the use of a printed facsimile of the corporate seal of the company and of the ~ignature of an Assi5tant Secretal on any certification of the correctness of a copy of an instrument executed hy the President or a Vic-e-President pursuant to Article VII. ~ectil 1. of the By-Laws appointing and authorizing an attorney-in-fact to ~ign in the name and on hehalf of the company surety bonds. unden'. ritir undertakings or other instruments described in said Article VII, Section 1. with like effect as if such seal and such signature had been m;;:-.ual affixed and made, hereby is authorized and approved."

IN WITNESS WHEREOF. J ha\'e hert'unto set my hand and affixed the corporate seal of the Company to these presents t~

......................... ~.~.~h .............. day of J ~ilU"ty 19 eo. $~~ .................. " ...... . ................................... :: Ytt~~. t!!,,·:·r.t;s;;;;; i co: \'" i I./.·'l~ /·l..~{f.~·i~;~~·; I;:!! 1927 i~i \ ~ \. 'II' if}' ,.~"" .... ~ .... .,~ ' ..... ~., ..... 0

'~ .. ?!~ .·orm ~S7 (J< .. ~71

..

JOHN WAIHEE

GOVERNOR

o o

STATE OF HAWAII DEPARTMENT OF THE ATTORNEY GENERAL.

L.ANDITRANSPORTATION' DIV1S1<?N _ ,"

ROOM 300. KEKUANAO'A BUILDING

Mr. Manabu Tagomori Deputy Director

465 SOUTH KING STREET


March 28, 1990

Hawaii Commission on water Resource Management

1151 Punchbowl street Honolulu, Hawaii 96813

Dear Mr. Tagomori:

. : ~ i'" ; .. 1

\ 4

,_: .. c... , ,-,':';t!

WARREN PRICE. III ATTORNEy GENERAl

CORINNE K. A. WATANABE FIRST DEPUTY ATTORNEY GENERAl.

Re: Geothermal Mining Lease Performance Bond and Well Indemnity Bonds

We are writing in response to your January 24, 1990 request for approval as to form of geothermal mining lease performance bonds and well indemnity bonds. We call to your attention three matters that need completion before these bonds are legally proper.

First, the True Geothermal Bond Number 5615149 needs to be signed by the principal and notarized.

Second, the Geothermal Exploration and Development Corporation Bond must be countersigned bya Hawaii resident agent because its surety is not a Hawaii registered company.

Third, the Amor VIII corporation bonds need notaries on the signatures and they need to be countersigned by their Hawaii resident agent with documentation.

We have signed and approved as to form in order to save time in processing these bonds. However, this prior approval is expressly dependent upon the above three conditions being satisfied. If the above conditions are not met, then the approval signatures should be considered invalid and stricken. Please so advise the relevant parties when you forward the documents for completion.

• , o

(

Mr. Manabu Tagomori March 28, 1990 Page 2

o

If you have any questions, please feel free to contact me.

WMT:ksy 3012E

Very truly yours,

'" ;"." -..," .~., ~

i / ,// ;r..'-.'-,-i/t '-t.f/.,t L~ ':~Y- -- .:- c ,--.~ William M. Tam Deputy Attorney General

•

JOHN WAIHEE GOVERNOR OF HAWAII

o (

STATE OF HAWAII

o (


P. O. BOX 621

HONOlULU. HAWAII i6a09 January 24, 1990

MEMORANDUM

TO:

ATfN:

FROM:


Johnson Wong, Deputy Attorney General Land/Transportation Division

Manabu Tagomori, Deputy Director

L .... D ~ ,'10 -2 ---/5 I) - -q/L/- - It::.

U~ILLIJ.'W. PA~ CHAIRPERSON _ OF UNO _ NATUIIM. IIlIOUIlCES

DEI'ImE'

Keith W. Ahue MANABU TAGOMORI

RUSSELL N. FUKUMOTO

AOUACUl.TURE DEVELOPMENT PROGRAM



RESOURCES ENFOfICEMENT CONVEYANCES FORESTRY AND WiLDliFE lAND MANAGEMENT STATE PARKS WATER AND lAND DEVELOPMENT

SUBJECf: Review for Approval as to Form of Geothermal Resource Mining Lease Performance Bonds and Well Indemnity Bonds

Attached for your review and approval as to form are the required bonds filed by True Geothermal Energy Company, Ormat Energy Systems, Inc., and Barnwell Geothermal Corporation in compliance with our Department's Administrative Rules, Chapter 13-183, Sections 13-183-34 and 13-183-68.

Please note, that while the language contained in section 13-183-34, asks for the submittal of bond on a form approved by the Board, no such "generic" version of a bond has been utilized by the Department. However, the Department has no objections to the current body of language contained in each of the bonds submitted to date, and as such, asks for your review as to form of these bonds.

'The specific bonds submitted are identified as follows:

TRUE GEOTHERMAL ENERGY COMPANY

1) Geothermal Resources Exploration Indemnity Bond, (Geothermal Resource Mining Lease No. R-5) for the amount of $10,000, and identified by Bond No. 5615149.

2) Geothermal Resources Exploration Blanket Bond, (Geothermal Well Indemnity Bond - TruelMid-Pacific A-I) for the amount of $250,000, and identified by Bond No. 11 1914 3680.

o o i.

ORMAT ENERGY SYSTEMS/AMOR VIII

1) Geothennal Resource Lease Perfonnance Bond. (Geothennal resource Mining Lease No. R-l) for the amount of $10,000, and identified by Bond No. 3SM 714 751 00.

2) Geothennal Resource Lease Perfonnance Bond, (Geothermal Resource Mining Lease No. R-2) for the amount of $10,000, and identified by Bond No 3SM 714 751 00.

3) Geothennal Resource Lease Perfonnance Bond. (Geothermal Resource Mining Lease No. R-4) for the amount of $10,000, and identified by Bond No. 3SM 714 752 00.

4) Geothennal Resource Well Indemnity Bond. (Geothermal Well - Kapoho State Nos. 1, 2, and lA) for the amount of $250,000 and identified by Bond No. 3SM 714 749 00.

BARNWELL GEOTHERMAL CORPORATION

1) Geothennal Resources Well Indemnity Bond. (Geothennal Well - Lanipuna No. 1) for the amount of $50,000, and identified by Bond No. YS 845 7457.

2) Geothennal Resources Well Indemnity Bond, (Geothermal Well - Lanipuna No.6) for the amount of $50,000, and identified by Bond No. YS 845 8885.

3) Geothermal Resources Well Indemnity Bond, (Geothermal Well -Ashida No. 1) for the amount of $50,000, and identified by Bond No. 872109.

Your expeditious review and approval as to fonn of the attached bonds will be greatly appreciated. Should you have any questions, please feel free to contact me at Ext. 7533.

Thank you for your continued assista ce d cooperation.

DN:bm Attachment

-

----------_._ ... -

o Q

BARNWELL GEOTHERMAL CORPORATlbJ\[jtV'ED

Mr. Manabu Tagomori Deputy Director state of Hawaii

January 25, 1990

Department of Land and Natural Resources Commission on water Resource Management P. O. Box 621 Honolulu, Hawaii 96809

Reference: Your Letter of January 12, 1990

Dear Mr. Tagomori:

We suggest that the simplest way of turning over the Lanipuna No. 1 and Ashida No. 1 is by way of transfer of ownership and operation.

Barnwell Geothermal Corporation ("BGC") will submit application to the DLNR, prior to any acti vi ty or execution of agreement wi th Hawaiian Volcano Observatory ("HVO"). After approval, BGC will finalize a transfer agreement with HVO.

Meanwhile, BGC will submit as-built drawings, and take action to plan and schedule remedial work and submit this also to DLNR before proceeding with the work.

Although your request for drawing is for Lanipuna No. 6 and Ashida No.1, please note that the transfer is related to Lanipuna No. 1 and Ashida No. 1 only.

MLJ/ECC/sm

cc: E. C. Craddick Alexander C. Kinzler Reginald Okamura, HVO

Very truly yours,


Martin L. Jokl President

2828 PAA STREET, SUITE 2085 • HONOLULU, HAWAII 96819 • TELEPHONE (808) 839-7720· TELEX 7238672. TELECOPIER (808) 833-5577

JOHN WAIHEE

GOVERNOR OF HAWAII

o o WILLIAM W. PATY

CHAIRPERSON

JOHN C. LEWIN, M.D. MICHAEL J. CHUN, Ph.D.


COMMISSION ON WATER RESOURCE MANAGEMENT

P. O. BOX 621

HONOLULU, HAWAII 96809

January 12, 1990

Mr. E.C. Craddick, President Barnwell Geothermal Corporation 2828 Paa Street, Suite 2085 Honolulu, Hawaii 96819

Dear Mr. Craddick:

As a follow-up to our recent correspondence concerning the status of geothermal wells . Lanipuna Nos. 1 and 6 and Ashida No.1, and your proposal to transfer the responsibility and operation of these wells to the Hawaiian Volcano Observatory (HVO),our Department of Land and Natural Resources (DLNR) offers the following:

1) The proposed transfer of the referenced wells may require the assignment/sublease of the geothermal resource mining lease (GRML R-3) covering wells Lanipuna Nos. 1 and 6.

Pursuant to our Department's Administrative Rules Chapter 13-183, the transfer of responsibility and operation of these wells from Barnwell Geothermal Corporation (transferor), to the Hawaiian Volcano Observatory (transferee) would be subject to the approval of the Board of Land and Natural Resources. An application for a transfer requires a fee of $100.

2) A mining lease may be transferred in whole or in part. The transferee (HVO) shall be bound by the terms of the lease, including the bonding requirements. In addition, the transferor (Barnwell) and its surety shall continue to be responsible for the performance of all obligations under the lease. Should the Board release the transferor from any liabilities or duties under the mining lease those unsatisfied liabilities or unperformed duties which arose prior to the transfer shall remain the responsibility of the transferor.

3) If the transfer does not convey a separate interest in title, the transferee may become a joint principal on the indemnity bond with the transferor. The consent of the surety under such conditions is required.

ROBERT S. NAKATA RICHARD H. COX GUY K. FUJIMURA

MANABU TAGOMORI

DEPUTY

----------______ 1IIti1111b-__

... . o o

4) The transferee must also secure and maintain in force a comprehensive general public liability and property damage insurance in which the State of Hawaii, the Board, and the. Department are named insur~ds, for the minimum amounts of coverage specified in the lease and our regulations .

. 5) Under mining lease GRML R-3, the transfer of authority to operate wells Lanipuna Nos. 1 and 6 may also be possible through the designation. of HVO as the operator, without the need for an assignment or transfer of the mining lease. Such designation of a new operator must be approved by the Department's Chairperson.

The new operator must continue to comply with all applicable requirements relating to the use of the premises or the conduct of operations, including the requirement of securing and maintaining a geothermal well indemnity bond for the amount of $50,000. Such bond must remain in force for the life of the ·well and may not be released until the well is properly abandoned, as determined by the Chairperson.

6) In the case of geothermal well Ashida No.1, which is not covered under an existing geothermal resource mining lease and which cannot be transferred via an assignment of a lease, its operation by a party other than the original permittee may be possible by transferring ownership and operation of the well from Geothermal Exploration & Development Corporation (GEDCO) to HVO, and by designating HVO as the new operator of the well.

Any designation of a new operator under an amended ownership/operating agreement should be submitted to the Chairperson for approval prior to the commencement of any activity or use of the well. The party who acquires the ownership or operation of any well shall, within five days after acquisition, file with the Chairperson a new geothermal well indemnity bond or a consent by the surety to the change in principal under the existing bond.

In summary, any proposed changes concerning the responsibility and operation of the above geothermal wells, regardless of which method of transfer is selected, must be submitted in writing for review and approval by the Chairperson. Such request for approval must include a detailed discussion of each party's obligations and acknowledgement of the regulatory requirements and applicable lease conditions.

Please be advised that notwithstanding the outcome·· of any future

--------______ ".'" 'I ,,,,,, •• ~~

• • J . o o

discussions between Barnwell and HVO concerning the above transfer, the lessee and/or operator shall still be responsible for maintaining the wells and premises, providing access to the sites or properly abandoning any well. Additionally, no well shall be plugged until the manner and method of plugging has been approved or prescribed by the Chairperson.

With regard to Lanipuna No.1, the Department will require the immediate restoration of the access road, the removal of the overgrown vegetation, and the installation of proper fencing around the well-head. A plan and schedule outlining this required remedial work shall be submitted to the Department prior to the start of work. Unless immediate remedial efforts are undertaken, the Department will authorize well abandonment action, at the expense of the lessee (Barnwell) and the surety.

Lastly, the Department awaits the submittal of as-built diagrams showing existing well conditions for both Lanipuna No. 6 and Ashida No.1, requested in our letter of October 19, 1989.

Your prompt attention to the above, and a response concerning your discussions with the Hawaiian Volcano Observatory, will be greatly appreciated. Should you have any questions, please call me 548-7533.

r------.::...?

DN:bm cc: Reginald Okamura, HVO

., ,t

o o United States Department ofi-th<f.:mftti<it

Telephone: (808) 967-7328

Mr. Ed Craddick, President Water Resources International 2828 Paa Street Honolulu, HI 96819

Dear Mr. Craddick:

GEOLOGICAL SURVEY

lHIawaiian Volcano Obse£;jt(jti)r f 31 !~ 9: 04 P.O. Box 51

Hawaii National Park, Hawaii 96118 ;J. /{ A lERtiAx: (808) 967-8890

October 30, 1989

Thank you for the iruonnation concerning the availability of two 7,000-8,oo0-ft deep vertical drill holes in the lower east rift zone of Kilauea called Lanipuna #1 and Opihikao. The US Geological Survey's Hawaiian Volcano Observatory is very interested in obtaining the rights to these holes to conduct heretofore contemplated geophysical experiments.

Our main objective in acquiring these holes is to use data collected from them to refine seismicvelocity structure and temporal changes in stress of the east rift zone of Kilauea. This can be accomplished by installing a tri-axial broad-band seismograph with sensors in the accessible vertical deep holes and ground-surface and GEOS or compatible magnetic tape recording system to monitor the activity. We are initially interested in doing feasibility studies detailing short-term (6 months) operation for collection of spectral-velOCity data from local earthquakes, teleseisms, quarry blasts, volcanic tremor, ocean microseisms, and earth-ocean tidal fluctuations, with long-term (>5 years) continuance of deep hole and surface sensors for comparative spectral and velocity changes as a function of time. The ultimate goal of this project is to detect stress changes possibly applicable to earthquake and volcanic eruption-prediction models. Along with the long-term aspects of the project, conversion from on-site data collection to linkage with existing HVO telemetry should be accomplished. Allowances for other geophysical experiments involving strain meters and gravity measurements should be included as part of the use process.

There will be no adverse environmental impact while HVO conducts its experiments, other than a protective fence and shed within the fence. We also have questions as to ownership and access to the affected properties.

Concerns voiced by the staff are (1) whether there is any information or logging notes on the holes; (2) whether there are any rock cuttings available for us to analyze; and (3) whether the drill holes are suitable for simple vertical lowering and raising of cable-linked instruments.

Initial project coordinators will be Reginald Okamura, Thomas Wright, Robert Koyanagi, and Arnold Okamura from USGS-HVO and Bernard Chouet, USGS-Menlo Park, CA. Again, thank you for considering the Hawaiian Volcano Observatory as the benefactor for these holes. If there are any questions, please call us. Our number is (808)967-7328.

Sin~erely,

mGL_~~~~.~ ~ Reginald Okamura

Chief of Operations

cc: Manabu Tagomori, Department of Land and Natural Resources

----------------------------------<-"'~"--

Water ResourcQ.nternational

Mr. Manabu Tagomori Deputy Di rector State of Hawaii Department of Land and Natural Resources Commission on Water Resource Management P. O. Box 621 Honolulu, Hawaii 96809

o

"- . ..;

.,', .i,· 2 AIU : October 24s 1989

,. .' '... . . ._;. ,-·H:N j

Reference: Your Letter of October 19, 1989

Dear Mr. Tagomori:

We have been in communication with the Hawaii Volcanic Observatory concerning their interest in using Lanipuna No. 1 and the Ashida No. 1 for monitoring purposes.

They will be making a decision ,shortly and we will advise you at that time. '

'<-~~ Should geothermal plants be constructed near these areas, seismic

warnings of impending volcanic activity would be extremely valuable.

Very truly yours,

WATER RESDURCES INTERNATIONAL, INC.

ECC/sm

cc: W. R. Craddick - Hi10 Office

2828 Paa Street. SUite 2085. Honolulu. HawaII 96819. Telept10ne (808) 839 7727. Te1ecopler (808) 833-5577. Telex 7238G72 :. '<I' He;

JOHN WAIHEE

GovERNOR OF HAWAII

o " STATE OF HAWAII

DEPARTMENT OF LAND AND NATURAL RESOURCES DIVISION OF WATER AND LAND DEVELOPMENT

Mr. E.C. Craddick, President Barnwell Geothermal Corporation 2828 Paa Street, Suite 2085 Honolulu, Hawaii 96819

Dear Mr. Craddick:

P. O. BOX 373


November 20, 1989


BOARD OF LANO AND NATURAL RESOURCES

DEPUTIES

LIBERT K. LAN"oGRAF MANABU TAGOMORI

RUSSELL N. FUKUMOTO





Pursuant to Item No. 18 of Geothermal Resource Mining Lease R-3, issued to Barnwell Geothermal Corporation, and our Department's Administrative Rules, Section 13-183-34, every lessee shall file with the Board of Land and Natural Resources, a Geothermal Resource Mining Lease Performance Bond in the amount of $10,000, payable to the State.

In addition, Item No. 17 of the mmmg lease, and Section 13-183-35 of our rules, also requires the lessee to secure liability insurance in the amount and coverage specified by the lease.

Review of our records indicate that all Well Indemnity Bonds (for Lanipuna Nos. 1, 6, and Ashida No.1) have been submitted to the Department as required, however, no evidence exists as to the receipt of the required Performance Bond. Furthermore, we have no record of a signed and completed certificate of insurance indicating the required coverage and named insureds.

As such, in compliance with our regulations concerning bonding and insurance, please submit the required documents, or certified copies thereof, for those items specified above.

Should you have any questions, please feel free to contact me at 548-7533.

~-------------------~~.

Director

DN:bm

o o BARNWELL GEOTHERMAL CORPQRATJQN

Mr. Albert Lono Lyman, Director Planning Department County of Hawa i i

r 'I ~ t \ I , , ..J i ,I ' 1/ .~ 8' ') t~

• LV

25 Aupuni Street HHo, Hawa;; 96720 / p,!rll<-+! No. I

Special Permits 80-347 (LUC 460), 77-265 ( C 364), and 471

Biannual Statu e orts Due Januar ,

Dear Mr. Lyman: LA.u 'f'c..u..J..... W£w...s

This is to advise that there has been no change in the status of our plans since the last report, and that none are contemplated for the next six (6) months.

ECC/sm

cc: ~. Manabu Tagomori, DLNR

Very truly yours,


• C. Craddick President

2828 PAA STREET, SUITE 2085 • HONOLULU, HAWAII 96819· TELEPHONE (SOB) 839-mo· TELEX 7238672 • TELECOPIER (808) 833-5577

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F.RST AM::lVCAN TIl L£ cu. AFTER RECORDA'll 0lIl, ltETtJRII TO J

flKST ~IU<:.AN ruJ.J:o.....-... 6~8 ICinooie Su.:ct, Suire 20J ~Hila, Hnraii 91,720

U'l'URIf BY, MAIL C) PICKUP ( )

86- 41321 as APR 15 A 8: Q I '9423 571

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CAlllCELUTION Of' GEOTHERMAL LEASE AND AGREEMENT

THIS CAH~rON 0 .. G~~ LEASE AND AGREEMENT i.

_tend 1IIto tht. day of )'lp1 , 1986, by and

between J •. ~. ~x.G COMPANY, LTD., a Hawaii corporation, who.e

principel place of basine.. and _ilin'1 addre.. i. 688 K1IIoole

Street, Suite 205, Silo, Sawaii 96720, JOD S. TOLMIE, JR.,

Vboae re.idence and _ilinq addre •• i. 1069 Laulima Place, Hila,

Bewaii '6720, AUTO IMPORTS OF RAMAII, INC., a Hawaii corporation,

who.e principal place of bu.in ••• and _ilin'1 addre.. is 811

&anoelehua Avenue, Hila, Hawaii 96720, DAVID S. DeLUZ, "'hoae

re.idence and _i11ll'1 addre •• i. 1688 Wailuku Drive, Hilo, Ha",aii

'6720, and PROMlSZD LAJID CORPORATION, a Hawaii corporation, who.e

principel place of bu.ine.. and _ilin'1 addre.. i.~ =~~~ ______ ___

~um" kQtl. Qfy@ Hr"/o,f/4Li)(J..i.i 9"1.() Le •• or under that

certain Geothermal Lea.e and Agre_nt dated June 6, 1980. and

recorded in the Bureau of Conveyance. of the State of Ha",aii in

Liber 14787, Page 245, which Agreement wa. amended by instrument

dated June 6, 1980, and recorded 111 nid Bureau of Conveyance. in

, Liber 147~i.t and G'2tYrBE.JU4Al. ,..:tLORA'lION 5

"W CORP., a ~i corporat"l'!~ who.e prinCipal place

1

DEVELOPl-'.ENT

of busineall

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t !~{~~;3 572 ././ ,.~,.J, c././.,J,~··;'tJl!G

L ••• e. c::

!!!!!.!!!!!!I WllSRPS, Lea.or an4 Le •• " 4 • .s.r. to canc.l •• id

Geoth.~l Le". aJI4 .AIJr .... nt, and r.l.... ..ch' oth.r frOID any

further liability ther.un4.r, 1IOIf, ~1lB, Le •• or and Le •••• h.r.by .qr •• th.t

aa1d Geothe~l Le ••• aJI4 AcJr .... nt i. canc.lled •• of the date

of recordation or fil1ft9 of this Cancell.tion of Geotheraal Le •••

aa4 A9re ... nt

1ft the aure.U of conveyanc.. of the Stat. of

8.,,81i, th.t neither Le •• or Dor Le •• " ahall h.reafter have .ny

ri9ht., Obli9ation., duti •• or liabiliti •• und.r .aid Geoth.rmal

~ aa4 AcJr .... Dt' aJI4 Lea.or and Le •• " hereby .atually

rel ...... ch other frOID any and .11 cl.1aa .ith.r .. y h.ve

a9aJ.nat

the other ui.1ft9 out of .aid eeoth.raal Le... an4

Acp:e.-Dt or paJIMDts aa4e thereund.r. 111 WI'nIUS 1I8EJtBOF, the L ••• or and Le •••• h.v •• xecuted

the .. presents the day and ye.r fir.t aboVe written.

.... AllDIY.

DIXON" OKUftA A~ATI.Aw

.. AuPIH S1UI1'. SWTI_ HLO.HAwAli _

LTD •

OF IlAWAIl, DIC.

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573

PROMISED LAND CORPORA'l'IOif

8yl'~·~ ~/,~ fta~ •

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GEO'l'IIUMAL EXPLORATIOif , DEVELOPMENT CORP.

LmOSOR

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LESSEE

•••

OIl this It>ffJ day of -I!/!;n"/ 1986, before _ perSOD&lly appe-ana '!!!'" ~. ~i6 J~. , to _ !tn_. vIlo, ben;; aulyaworn, ala .ay that 6e is the PreaideDt of J. T. TRADING COMPANY, LTD., a aawaii corporation, ~ that tha .. al affixed to the foreqoin'J in.trument is the corporate .. e 1 of •• id corporation, that .aid in.trument w •• signed and sealed in behalf of •• id corporation by authority of ita board of director., and the •• id officer ac!tnowled'Jed .aid inau--nt to be the fr .. ~ct and deed of .aid corporation.

~~~fclS':7-I1 My e~~4~~~e.: M,au

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19423 574

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PROMISED LAND CORPORATIOIf

By Ita

By Ita

LESSOR

GEOTHERMAL UPx.oRATIOil • DEVELOPMENT CORP.

W ~ s- By ~dl'~ Ita .

. yJt~ LESSD

State of Jlalfa11 i aa: County of 8.a11 )

01 diu 10th day of April, 1986, before .. penonally appeare4 IVAlf I. lUL\NO, to _ knOVll, who, be~ by _ duly _om, 414 • .., that be 18 the ~.t:torney-in-F.ct far Davi4 S. DlLuz, duly appointe4 by the unrecarda4 POIIer of Ac:tOrDey 4ate4 April 24, 1984, that the foregoing wt~t v .. euc:ueed in the a.. _d OIl behalf of the .aid David S. IJeLUI: .. hia Attorney-in-Fact: _d aaid Iv_ I. Nak.a acknowleclsed aaid inat~t to be the frae act of aaid Dcv1d S. DILu& •

My Coaa1aa101lexpire.: 10-16-88 ~~ NOOn PU!!~ JUDfCDJ CIRCUIT, STATE OF HAWAII

.,

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______ ;;. ___________________________________________________ ~,"'il~".' ',_,'1<-

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'9423 575

•••

(In thill tr',:'~'? day of (!.".~., , 1986, before _ ~r"·:-""U'· "1 "~" r. .. '<t JO}:r.: s. 1'(,;':;''11., Jft., to _ known to be the p"r-t'on C:h:,,'c:'H..-d 1n and vho executed the for.90iuq iu.u_ut, and ackDOlfledg.4 that be execute4 the .... .. hie fr.. act and deec!.

ftAft or BAllAII

COUJrn or BAllAII

On thie llJ.Ih

•••

per.onally .pPe~ ,

to '~'i:J~r;;;:~, who, be u y .vorn, .. y t.. ~.",.;\ .• -".,.= • Be .... of AUTo IMPORTS OP HAifAII, IIfC., • HawaU corpo7ation, nd th.t the ••• 1 affixed to th. foreqoinq iMtruDent flO the COrporate •• al of •• id Corporation, that •• id ir.~trc~nt v.. .igned and ••• led in behalf of •• id corporation by .utJ..ol:ity of it. board of director., and the .aid officer aclcno-wledged .aid in.u-ut to be the fr ... ct and deed of .aid COrporation.

ftAft or IlAWAII

COIJIITY OP HAWAII ••• On thi. day of • 1186, before _

per.onally appearea DAVID 8. DeWZ, to _ known to be the person described in and who e.ecute4 the foregoing inatruaent, And acltnowledqed that be execute4 the ...... hi. fr .. act and deed.

IOtiry Mllc:, State of HawaIi

~ co.ai •• ion expire.', ________ __

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l'fAU OF tLUAII

COUMTY OF BAWAII

Jid,. P. J~.Z, ..

, ,- .... ,

19423 576

On thi. ~~ day of f!WJ\u" 1986, before -penonally appeare<!' l-j"cy c!\4M<z aM-_ . , to _ known, who,

bdnq duly 8VC)rn, aId .. y that ih~ iii the P~~\~mt .,... _ of PItOHISED LAND CORPO T ON, a Bawall corporation, and that the .eal affixed to -'"the foreqoinq iD.traaent i. the corporate •• al of .aid corporation, that .aid iD.traaent va. .i9fted and .ealed. in behalf of .aid corporation by authority of it. board of director., and the .aid o"t-ficerliC acknov1edqed .aid in.truaI8nt to be the free act aJI4 deed of .aid

corporation.

MlNJrL~ . Notary p c;state 9 t• B_AVt.rr,~ ~c,..:o.L~. -My co.-iaaion expire.: pJ\!llffl .

S'fA'l'B ~ BAWAII ••• 000IIft OF ______ _

of

.a of

CORP., a kaval! corporation, foreqoinq tn.truaI8nt i. the co that .aid tn.uu-nt va. .i9fted corporation by authority of it. board officer. acknovledqed .aid in.~nt to of .aid corporation.

NotarY

1986, before -and

, vho,

My co.-! •• ion expire.: __________ _

-5-

q P$

T-----Tl--~--------------·-···~ ______ d~ ____________________________________ :::::::::::::::-~-".-< __ -,

--11!. ____ --J .. ~-""--~7r~.-~--...... -... ,...;."""l!"-.--1¥ ........... ',..,':.i.; .. P ... 9#"' ...... --~ ... ;"";.i~ ..... '''' .... ~.1'!I$~jl"'''''.,..L,~,?'''.· .... ·'I!!MiI!l.''''·&.3I'\!i>I!''', ... ,'"U .. -"''''''''.,'''.-'''' .... ,,..,,,.I~: .. ·-'.ih~.t::r' ... '·.,; .. ,~!"'.4i1iO .. ., __ .... f.., .... ;_. _____ .. _ ..... __ -,..---

, ~-

"

A·

--

STATE or SAWAll

COt1ll'1'Y OF SAWAI I •••

of

19423 577

1986. before _ and

own. who. ey ar. t • .~~~~~ __ -:_~~

of ISED LAND CORPORATION. a HawaII that the e~ affixed to the foreqoinq

in.tru.ent i. the corporate .ea ~of~id corporation. that .aid in.truaent va. .iqned and •• aled 1ft h~ of .. id corporation by authority of ita board of director ~e .aid officer. acknowled9ed .aid inat~nt to be the f t and deed of aaid corporation.

Wotary pUblIc. State of aawall

My co.aiaaion expir •• ' _________ _

.a.

On thia OJ-.(JIL day of ~ • 1986. before _ peraonally appeared @Or!¢ CO 014; and

p. ~ on.cJG«.. , to _ known, vho, biIii9 dU y sworn, ala aay that th.y are the fl:esIPENr . and ilc&- PfZe.SI D€f.Jr of GEOTHERMAL .-UE~'U.pN • DI:."VI:LOPKENT CORP., a ~-:-Eorporat1on, and that~~ "ien affixed to the for490in9 RJ~nt i. tllta e0QM"re ... alla1 of .aid corporation, that .aid in.tr_nt va. aiCJDed _t ... 1.. in behalf of aaid corporation by authority of it. board of director., and the aaid officer. acltnovledged .. id in.tru.ent to be the fr_ act and d_d of .. id corporation.

Notary pUblic, State of Havali

My c~.aion expire.: g, /51

-5-

~ » • <"'I'~ ______________ .. __ ~'Q~~iL ••••••••••••••• jle •• rIJ'!'1.i!'[f,,~~*~~ --~---- ~III ~.,-:::" <,

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, ,

i -RECORDATION REQUESIEO IIY,

Securrty lillie CorporatIon . " I

AfTER RECORDATION. RETURN TO: S()- 6a318

Security Tittlp. CArDer]';')/,

RETURN IIY, MAIL () PICKUP ( ) '.- '" ":.'

o

SPACE AElOVI: HilS liNt' ~Ol( RtGI:.fKAiC'S USE

GEOTHERMAL LEASE AND AGREEMENT

THIS LEASE AND AGREEMENT is JIlada this

day of ~n e- 1,!, fa . by ... -.d

undersigned Lessor, whether one or more, and GEO'i'IlERMAL

EXPLORATION , DEVELOPMENT CORP., as I.essee.

WIT N E SSE T II: ----------That for and in consideration of TEN MID NO/IOO

DOLLARS ($10.00) to the Lessor paid and other good and

valuable consideration, the receipt of which is hereby

acknowledged, and in consideration of the covenants and

a9reements as herein provided, the Lessor does grant, lease,

let and demise unto the Lessee, its successors and assigns,

the land and premises hereinafter described, with the sole

and exclusive right to the Lessee to enter upon and to use

and occupy the said land to explore for, drill for, develop, •

mine, produce and utilize geothermal steam, geotherm~l

fluids,. geothermal energy and heat, hot wah.c, and by

products thereof and products aRqociated therewith, and to

take, store, remove, dispose of And use same and for uses

and purposes incidental thereto, toether with the right to

construct and ~intQin any and all facilities as may be

,

0'.1 AIii\I""",J..J.., --------'1 ,.--_______ Ik:.;,:.. ____ _

I ~ ..... _.III;.n· ""·.· •• __ :.: .. : .. : __ "' ___ ._. ___ .. t_r:c_IlI • ...,J _~u.:,:~,!,(:."~ ,..,. ";,

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14787 246 necessary for Lessee's operations on the leased lan~ or

other land in the vicinity of the leased land and for

utilization of the geothermal and other products produced

therefro., including but not limited to'pipelines. power

transmission lines. power stations. tanks. ponds, roads.

and structure. thereon.

Lessor reserves the exclusive right to utilize

saId land for all purposes other thAn the purposes described

in the preceding paragraph. If Lessee's operations on the

land cause damage or loss. Lessee shall compensate the

injured party for such loss.

In the event Lessee requires the permanent use of

the surface of any of said land for facilities for generation

o~ electric power or for processing by-products of geothermal

ste .. or fluids, Lessee shall pay to Lessor the then market

value of such land so required. Lessor. however, shall

retain all mineral and geothermal rights under such lands.

subject to this lease.

'!'he land covered hereby is the land in which the

Sute of Hawaii has not reserved mineral righta, described

In Schedule ·A~ attached hereto and _de a part hereof.

TO HAVE AND TO HOLD said land for a period of

five (St years fra. date hereof (herein called ·primary

tera-l and so long thereafter a. any of the aforesaid

substances i. produced therefrom, or drilling or producing

operations are conducted thereon, or exr.uaed under the

teras hereof. If at the expiration of the primary terJll

hereof Le .... ha. not coapleted one or IIOre wells on the

leased lands or on lands pooled therewith, but i. then

2. I

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lffI!P' . ____ .:::&."!. e-.:, .... ::e:::zw'!I= ~,. Pl "~~.",~,~,,._, .•• r,.'"

~ /

1~787 Z~; engaged in drilling. redrilling or reworkillg any well or

wells drilled thereon or on lands pooled therewith. and

as a result thereof geothermal steam or any other of the

aforesaid substances is producible in commercial quantities

within eighteen (1&) months ... fter the expiration of the

primary term. then. in such event, such well or wells shall

be deemed completed during the primary term of this lease.

In consideration of the premines. it is mutually

~greed as follows:

1. Lessee shall pay~ ~es8er as rOyalty~~ a. ten per.cent (lOt) to owner of mineral ri9hts. and

b. two .,.,.rcent (2') to oWlle.c of surface rights

based on the. gross proceeds received by Lessee from the

sale of. geothermal steam •. geothermal fluids. or by-products

thereof. Lessor shall designate a single payee for each of

the ~neral and surface royalties. and. upon payment of. such

royalties to such payees. Lessee's obligatiohs under this

Section I shall cease. Lessor may change the designated

payees under this Section. not more often than semi-annually,

by delivering notIce of such cha~ge to Lessee as provided

hareln.· Should Less .. process Its by-products before sale,

Lessor's royalty and percentage rental shall bear its

proportionate share of such processing or extraction costs.

Lessee shall pay to Lessor said royalty on the 25th day of

each ~nth for accrued royalties for the prccedi~g calendar

.anth. Lessee shall have the right to commingle the geo

thermal .te .. and other substances produced from the leased

land with such substances produced from other lands and to

pay Lessor'. royalty and percentage rental on the basis of

3.

---' .... _------ - ---~.-.~---- ._-----._--.-----"

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1~787 246 production allocable to the leased land as determiEed by

metering or gauging same. Lessee shall not be required to

account to the Lessor for, or pay royalty on any such pro

ducts produced by, Lessee trom said land and used by it in

its operations hereunder.

If the Lessor or any party Lessor owns a less

interest in the substances recovered hereunder than the

entire and undivided fee estate therein. then the royalty

and rental herein provided shall be paid the Lessor or such

party Lessor only in the proportion which his ownership

bears to the whole and undivided fee.

2. Commencing with the first anniversary of

the term thereof, if the Lessee has not theretofore commenced

drilling operations on said land or te~nated this lease as

herein provided, Lessee shall payor tender to Lessor as

rental yearly in advance the s~ of ONE THOUSAND AND NO/lOO

DOLLARS ($1,000.00) per year for so much of said land as

aay then still be held under this leas~until drilling

operations are commenced. Le ..... hall nevertheless endeavor

to obtain a Special Land Use and Drilling Permit within the

first year, and shall commit to drill the first well within

one year following issue of the drilling permit.

3. Le.see JIUly at any time during the life of

this lease pool, unitiz~ or combine all or any part of the

leased land into a unit with any other land or lands or

leases adjacent, adjoining or in the immediate vicinity of

the leased lands for drilling, development, producing or

operating purposes, provided that the total acreage within

any such drilling or operating unit shall not exceed 1,000

4.

1. 1,

~'-'--"i(,,,. L.

, ____ ... .,~ __ .. _____ ·~~,..."' ..... ( .......... l_t'l:~~.'·-·').-I"f'-/. , . .,..-:-J ......... ~" ~_. ~' ....... ?!if ~~,.; '''''.

14787 24~ acres, plus or minus tenperc:ent (10%), unless by mutual

agreement.

Production as to which royalty is payable

f~any wells drilled upon any such unit, whether located

upon the leased land or other lands, shall be credited to

the leased land in the proportion that the acreage of the

leased land in such unit bears to the total acreage of such l

unit. such a unit shall be created upon Lessee's filing

with the appropriate governmental agency a notice of such

unitization describing said unit with proper notice to

Lessor thereof.

4. The obligations of the Lessee hereunder.

shall be suspended while the Lessee is prevented from

complying therewith, in whole or in part. by strikes.

lockouts. actions of the elem~nts, accidents. rules and

regulations of any Federal. State, Municipal or other

governmental agency. or other matters or conditions beyond

the reasonable control of the Lessee. wheth~r or not similar

to the .atters or conditions herein specifically enumerated.

Less .. shall also be excused from its obligations hereunder,

except that Lessee shall continue to pay rental. as afore

said. after expiration of the primary tenn during the period

of such Ruspension of Lessee's obligation. if Lessee is

unable to sell. or no ready market is available for the

sale or use of. geothc~al ~tcam or any other product

produced by Lessee frOGl the leased land. However. Lessee

shall endeavor In. good faith to secure such market for such

product or products. In the event Lessee does not. within

five (5) years after teraination of the primary term, enter

5.

-.-.~~-

14787250

into a bona fide agreement for the sale or utilization of

geothermal steam or any other product produced from the

leased land, Lessor may declare this lease in default and

may terminate same if such default is not remedied as pro

vided in this lease.

S. The Lessee shall have the right and

obligation to dispose of waste water, gases and other waste

or residual products by injecting or re~injecting into a

well or wells, or by other means, in accordance with

appropriate governmental regulations, on the leased land,

incident to the operations of Lessee in pursuance of this

lease or to the operation of any electric power generating

facility upon the leased premises •.

6. The Lessee shall pay all property taxes

on its improvements and property and minimum of 90\ of the

taxes, if any, levied against geotherma!. steam rights and

rights as to other products covered by this lease. Lessor

shall pay all taxes levied and assessed against the land as

such and Lessor's property and JllaXimum of 10\ of the taxes

levied and assessed~galn.t geothermal steam rights and

rights as to other products covered by this lease. In the

event the State, united States, or any municipality or other

governmental agency levies a license, severance, production

or other tnx on the products hereunder. or on Lessee's right

to operate or produce or sell such products. then and in

that event the Lessee ahall P4Y minimum of 90' of such tax

and Lessor shall pay aaxt.u. of 10' th~r~f. LeRSP~ is

hereby authorized to pay any taxes and assessments on behalf

of Lessor and may, if It so d.sires, deduct the amount so

6.

~"

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14787 Zt»j paid from royalties or monies due Lessor hereunder. The

percentages to be paid by Lessor shall be equal to percent

age royalty stipulated in Paragraph I, the balance shall be

paid by the Lessee.

7. The Lessee or the owner thereof shall

have the right at any time, and the duty upon termination.

of this lease, to remove from said land all machinery,

equipment, pipes, ebsing, 3truct~r~R and other property and

improvements belonging to or placed on the land by or.under

agreement with the Lessee, provided that such removal shall

be completed within a reasonable time after the termination

of this lease. I.essee agrees after termination of this lease

to leave said land in a clean condition and to level sump

holes or excavations.

8. Upon the violation of any of the terms

or conditions of this lease by the I.essee and the failure to

begin to remedy the same within ninety (90) days after

written notice from the I.essor specifying such default and

requesting remedying thereof, then, at the option of the

Lessor, this lease shall forthwith cease and terminate, and

all rights of the I.essee in and to said land be at an end,

save and excepting one (1) acre surrounding each well produc-

ing or being drilled and in respect to which I.essee shall

not be in default, and saving and excepting rights of way,

easements and surface .areas necessary for I.essee's operating

and for .. intenance and operation of electric generating and

power transmi •• ion facilities and other facilities for

utili:~tion of pr~~~~.ing of other products covered hereby,

and a. to which the person or per.ons owning or operating

7 •

I t __

7 .....

-r'~

14787 Z:'Z

such facilities are not in default under the agreement or

agreeJllents pursuant to which such facilities were installed

on the leased land. Lessee may, at any time before or after

such default, and upon payment of the sum of Ten Dollars

($10.00) to the Lessor as and for fixed and liquidated

damages, quitclaim to the Lessor all of the right, title and

interest 'of Lessee in and to the leased lands or any part

thereof, and thereupon all rij!-."" <l~d ~~l ;.,]ation::: cf t!lc

parties hereto one to the other shall thereupon cease.and

terminate as to the premises quitclaimed, except Lessee's

duties specified in Paragraph 7 above.

9. All labor to be performed and material

to be furnished in the operations hereunder shall be at sole

coat and expense of Leasee, and Lessee shall hold Lessor

tree and harmless from liability thereunder, and Lessee

shall keep the demised premises fully protected against all

liens of every character arising from or connected with its

operations hereunder.

10. Leaa_ during the term herea.! shall.

Indeanify and aave Lesaor harmless from and against any and

all claiaa and demands, including Lessor's costs and

attorney'. fees, whether for injuries to persons or loss of

life, or damage to property, occurring on the leased land

and arising out of the use of the leased land by Less~,

excepting however such claims and demands, whether"for

injuries to persons or loss of life, or damage to property,

caused by acts or omissiona of Lessor.

11. The rights of Lessor and Lessee hereunder

.. y be assigned in whole or in part. If all or any part of

8. ------_ ... -

L ..

14787 2S3 this lease-is assigned, no leasehold owner shall be~iable

for any" act or omission of any other. leasehold owner, and

failure by one to pay rental or in-lieu royalty shall not

affect the rights of others and the rentals or in-lieu

royalty shall be apportioned in proportion to acreage.

Lessee shall not sell, conveyor assign its interest or

any part of itsinterestur.der t.his lea~e without the

written consent of Lessor, which consent shall not be

unreasonably withheld. No change in ownership of Lessor's

interest, however accomplished, shall be binding on Lessee

until Lessor has furnished Lessee with written notice of

such change, and then only with respect to payments there

after made; such notice to consist of original or certified

copies of all recorded instruments, documents and other

information necessary to establish a complete chain of record

title from Lessor, and written instructions from Lessor and

Lessor's transferee directing the disbursement of any payments

which may be aade thereafter. No present or future division

of Lessor's ownership as to different portions or parcels of

said land shall operate to enlarge the obligations or diminish

the rights of Lessee.

12. This lease may be executed in any number

of counterparts with the s~e force and effect as if all

parties signed the same document.

13. This lease and all its terms, conditions

and provisions shall extend to and be binding upon the heirs,

of the parti.s hereto. Should any person, firm or corpo

ration having an interest in the land covered hereby not

9.

-

.. .- ..

,,'

~:

14787 254 lease to Lessee, or should allY one or more of the parties

named as Lessor not execute this lease, it shall nevertheless

be binding upon the party or parties executing the same.

14. Any notice from the Lessor to the Lessee

must be given by sending the same by registered or certified

mail, postage prepaid, addressed to the office, GEOTHERMAL

EXPLORATION , DE\~LOPMENT CORP., 2829 p~~ Street, Suite 2085,

Honolulu, Hawaii 96819, and any notice from the Lessee to

the Lessor must be given in the same manner addressed to the

Lessor at 1069 f,a!!lima place. Hila Hawaii 96770

The parties may, upon notice, change their said respective

addresses for notice.

15. In the event of any controversy between

the Lessor and Lessee over any provision of this Geothermal

Lease and Agreement, or arising out of default under any

provision of this Geothermal Lease and Agreement, the pre

vailing party shall recover from the non-prevailing party

ita coata, including a reasonable attorney's fee.

IN WITNESS WHEREOF the parties hereto have caused

this instrU&ent to be duly executed as of the date first

hereinabOve written.

COMPANY, LTD.

AUTO IMPORTS OF HAWAI I, INC •

Jiy~~J~ r Its )

Ll ... ..;c ~ ,d -z:f: DAVID S. D& LU:': , ~~~- ..

10.

---': _.

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14787 Zr,~

PR~ISED LAND CORPORPTION

BV ~'.~: Its 'Pree. ' .

By Its

LFSSOR

GEOTHF.RMAL EXPLORATION & DEVELOPMENT CORP .

BYK~ ItS. pur.. /

By /. d i(j)c( (/.LJr ~11 \',';'1. h~~ .... .,.",T

I.ESSf:F

'l'--~" -"''"i''··'<r~er E CY#W(·j;ftfS.:J~:'li~~~jjjll ~.".,~, .. " .. ~ .", ... ,.. ... ' ...

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.";.""~~~~~~::,~~::: 111I.1II!:!11 ........ '_IF_.'_. ___ ••• _________ -------------... - .... --.. '"" ...... '''''\-'"'.'--'-'~''' ... ''''''_'w"L .... ,..;., .,.;- .... ~r ....... , ...

c'

STATE OP HAWAII

COONTYOFHAWAII

On t:his

1980. before _ appeare4

) ) 55: )

1~787 256

,

to - known, "ho, being

j),.e~; dt!/lL by me duly sworn, did say that he is

the of J. T. '1'RAD:mG COMPANY, L1iJ.

• 8.".ii corporation, and that the seal affixed to the

foregOing instrument i!'l .-hf" r-nrIXlrate seal of eai1 corporl!ti:on,

and that said instrument "as signed and sealed in behalf of aaid corporation by authority of its

.:hh~ S. ToI"" /e X. c

Board of Directors, ~na aaid

acknowledged 8aid

inatru.ent to be the fr .. act and deed of 8aid corporation.

My C~ssion expires:

: ~~ev:,;£i ~~. V' Notary ~~c, Th~rd JudIcIal

C~rcuit, State of 8awaii

December 4, 1983

, • + -

-i

-::'W' _-r~: ____ .:J:~:l ___ +_:_'_'~iec_:_:~gr_·l_._:_~ft_:jf_:_'.;,_"1i"P_*'$_if'rt_:"'_t!_a_d_.ri_~t:i_~}:_1i'_ ... _."_"t_&*_.i_,..A __ 'H_t_t.Ii!:.:.a.;:.'lt_'i •• ::_itli_-_:_~_~.n.:'O __ 'Z.w ________________________________________________ , ... ,,'*w, 11-"""""",,*

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(

14787 2~;

STATE OF HAWI.II S5:

COUNTY OF HAWAII

On this __ 6_~_-__ day of __ X_"'_,,_t!.. ______ ,

19 ;0, before _ per.onally appeared JOHN 5. TOLMIE, JR.,

to me known to be the person described in and who executed

the foregoing in.trument. and "cknow1edqed to me that he

executed the .... as his free act and deed.

My Caa.ission expires:

Viiotary Pi.it)lic, Third Judicial Circuit, state of Hawaii

December 4. 1983

STATE OP HAWAII

COUNTY' OP HAWAII

} ) S8: )

·,

14787 258'

On' this _0 ____ '""' __ day of __ ..h:_4"_'?.....;.....;:t!:/~ ___ ;......._P

1980 p before .. appeared ...-:~=:.-...;.,.:.v..::.,..;:d:.:..-....:5~_· • ..:.ze,~=:......:~::..;~:::.;:.:v-,;.... __ · __ p

duly swomp did sa~the' is to me Jcnown p whop being by me

the J4.~::>;c:I&7 T· of AUTO IMPORTS OF HAWAlI p

INC. p a Hawaii corporation, and that the seal affixed to the

tor~o~g instxument 1s the corporate seal of said corporation,

and that said instrument was signed and sealed in behalf of

said corporation. by authority of its Board of Directors, and

said . J),uicl' S .. ~l ~-r!-.. acknowledged said

inst.rwaent· to be the free act and deed of said corporation •

'.

. . £}.t2:'7'.~ . Q.. ~~ •. '

£?Notary itfbiic, Third Judicial Circuit, State of Hawaii

Ity ec-baion expire.: December <t. 1983

.!

~'.

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:'* ..... -;,~.,,'.,. -'-,',1.~~~~11:f7'~::- ~ ~'>i ,:~" " "., .. '-i.-; ':'~'''~;~:it.~;J!~ ~" :; .,..i.,..:!.,.".;; .... ,i;~~.::&.\o".f.::<- _~ ..

i'c."'I}' _______________________________________________________ ....

:.w. ~--------·$".---------____ ."'1 • ." .... ____ '-........... ----,--.. .,., .. " ............... -1"'01> ....... .,1 _'.'.

STATE OF HAWAII

COUlft'YOFHAWAII

On this

) ) )

ss:

day of

l' Fo. before .. per80nally appeared DAVID S. DE LUZ. to IDe .'

known to be the person described in and who executed the

for!l9oinv instrument, and acknowledged to me that he executed

the .... a. hi. free act and deed.

My Ca..i.sion expires:

VNotary tr.l.c. Third JudIcial Circu t. State of Hawaii

December 4, 1183

I 1 ~ .... --.... ------.. ~ .. ----------~··· .. -------------------------------· .. L _____ •• cc ____ __

""7. • p •• _

14781 260 -STATE OF HAWAII

SS: COUNTY OF HAWAI I

On this

1980, before me appeared

and _______________________________________ , to me personally

he M known, who, being by me duly sworn, did say that ~hey a£8

the p~:!>icten1 and

respectively, of PROMISED LAND CORPORATION, a Hawaii corpo

ration, and that the seal affixed to the foregoing instru-

ment is the corporate seal of said corporation, and that

said instrument was signed and sealed in behalf of said

c~~ation by authority of its Board of Directors, and said·

~.,~ '-taus and severally

acknowledged said instrument to ~ the free act and deed of

said corporation.

My eom.i.sion expire.:

v£~~ Q. c:A~~. / tary PUiPtC, Third Judicial

Circuit, State of Hawaii

;,:

-------------------- ".- .. - ----.---

STA'~E OF HAWAI I /lA-«JIIII

GI\''? "Me COUNTY OF tf6ttOLur.tI

14787 261

S5:

L ,.., e. . 1980. be fore

and to. R. (kl?ddt ek.. . to l1Ie personill~known. who. being by me duly sworn. did say

that they are He~;d~t: and ._~_"_·'_r_._ .. _.'_;._' ___ _

res~~ctive1y. of GEOTHERMAL EXPLORATION AND DEVELOPMENT CORP., no

a H"1oIaii corporation; w.at. t.Ae seal affixed M the fOf!goill9

such instrument was signed •• ut s@ale'" on behalf of such cor

por~tion by authority of its Board of , Directors: and said

£'@ . (f.,ocld<C& and l(J. R. (2,.4'ddt c..I:::.- acknow 1 edged such

ins~rulllent to be the free act and deed of such corporation.

v ~tary PU~lC, State of Hawaii

My comMission expires: December 4. 1983

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14787 :6~ DESCRIPTION OF PROPERTY

1. All that certain tract of land situated in the District of Puna, County of Hawaii, State of Hawaii, comprising:

Tax HAp Key Tax Map Key Tax Map Key Tax Map Key

1-3-08(6) 1-3-08(7) 1-3-08(19) 1-3-09 (7)

Being a portion of the lands describe~ in and covered by Royal Patent Grant Number 3209 to Robert Rycroft and Land Patent Number 8094, Land Commission Award 8559-B Apana 15 to William C. Lunalilo. Royal P3t~~t c=~~~ 3209 c0ntain£ ~n express reservation of all mineral and metallic mines to the State of Hawaii. Land Patent 8094 and Land Commission Award 8559 B:15 contain no such reservation.

2. All that certain tract of land situated in the District of Puna, County of Hawaii, State of Hawaii comprising Tax Map Key 1-4-1(20) and being a portion of Land Patent Grant Number 13,156 and Royal Patent Number 4497, Land Commission Award Number 8559, Apana 15 to C. Kanaina, Land Patent Number 8177. Royal Patent Number 4497 contains an express reservation of rights to mineral and metallic mines to the State of Hawaii. Land Patent Grant Number 13,156, Land Commission Award 8559:5 and Land Patent Number 8177 contain no such reservation.

3. All those certain lots situate in the District of Puna, County of Hawaii, State of Hawaii comprising a portion of tax map n~bers 1-3-45 and 1-3-46 and delineated on the map entitled -Lanipuna Gardens Increment I- filed in the Bureau of Conveyances of the State of Hawaii on August 2, 1973, as File Plan Mo. 1340 and bearing the following lot and block numbers:

Block I, Lots 2, 3, 4, 5, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24 and 25;

Block 2, Lots I, 3, 4, 6, 7, 9, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67 and 68;

Block 3, Lots 4, 5, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 and 23;

Block 5, Lots I, 2 and 3,

Block 7, Lots 9, 10, 14, 16 and 171 And

Block " Lot. 12, 15, 16 and 19.

',- - • SCHEDULE -A-

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HOME Of f Ie E

INDUSTRJAL INSURANCE C"'OF HAWAII, LTD. 737 Bishop St., Suife 1900

Honolulu, Hawaii 94813

OWNEII. OBLIGEE Oil O'''GINATING CO .... ANY

atural Resources

po Box 621 Honolulu, HI 96809 CONTR"'CTO"

Barnwell Geothermal Corporation ADD"" ••

clo 2828 Paa St. Honolulu.HI D~.C"I~TION 0" CONT"ACT (I"el .. ~, IOl'ldi"R ... ~ ow.,.,', c",,'rflcl .... mb,,)

GeothermalResources Well Indemnity Bond

OWNIlII

State of Hawaii CONTR"'CT ~"'C" BOND,S,

• • 50,000.00

~ .. e ~ ., : " f,

":lI'.rDUSTIlIAl' , UiDEMNIT'r~

"I'.~{..:.. .. " "! ~ ..

feoiX ... \, GENERAL FORM

STATUS INQUIRY

DATI[

AUG 1 1983 OUR BOND NO.

YS 845-7457

EFFECTIVE D .... TE

8/16/82 WITHOUT PREJUDICING YOUR RIGHT OR AFFEC,:,I4G OUR LIABILITY UNDER OUR BOND (5 I DESCRIBED ABOVE. WE WOULD APPRECIATE SUCH

INFORMATION AS IS NOW AVAILABLE.

IF CONTRACT COMPLET!D. PLEASE STATE:

"'''~ROXIMATE DATE 0" CO"~LETION OF WORK (or /,,.tll Jdivu'1J

A(laP"O., ..... TE ACCEPTANCE DATE

,.,NAL CONTRACT .. RICE

.1.. IF CONTRACT UNCOMPI.ETED PLEASE STATE:

SINCERELY.

BY

Surety Underwriter

It is understood that the information contained herein is furnished as a matter of courtesy for the confidential use of the surety and is merely an expression of opinion. It is also agreed that in furnishing this information, no guaranty or warranty of accuracy or correct· ness is made and no responsibility is assumed as a result of reliance by the surety, whether such information is furnished by the owner or by an architect or engineer as the agents of the owner .

AP(laROXIMATI: PERCENTAGE OR DOLLAR AMOUNT OF' CONT ..... CT COM~LETED OR DELIVERED

3. DO YOU KNOW OF ANY UNPAID BILLS FOR LABOR OR MATERIAL o YES o NO

4. REMARKS (// .. .,)

The geothermal well indemnity bond remains in force for the life of the

well and may not be released until the well is properly abandoned

)ATE

~/~~/rJ (),..i,;IIJ ~ 6qc/t:-

PLEASE RETURN THIS INQUIFfY

IN THE ENCLOSED ENVIU.OPE.

Manager-Chief Engineer "'OD"E5S

P.o. Box 373, Honolulu, HI 96809 ....TTENTION

\.

--

. RECOP~ATION REQUESTED:

AFTER RECORDATION, RETURN TO:

RETURN BY: MAIL ( ) PICKUP ( )

STATE OF HAWAII

DEPARTMENT OF LAND AND NATURAL RESOORCES

GEOTHERMAL RESOURCES MINING LEASE NO. R-3

between

STATE OF HAWAII

and

~~LL GEOTHEm~ CORPORATION, a Hawaii corporation

(Geothermal Lease-May, 1981)

STATE OF HAWAII


GEOTHERMAL RESOORCES MINING LE1~E

TABLE OF CONTENTS

1. LEASE ••••••••••••.••••••.••••••••.•••.••••.•.••••

2. RESERVATIONS TO LESSOR •••••••••••••••••••••••••••

A. Disposal ........ e· ••••••••••••••••••••••••••••

B. Rights-of -Way ••••••••••••••••••••••••••••••••

C. Certain Mineral Rights •••••••••••••••••••••••

o. Casing ....••.....•..•........•........•......

E. Measurements ••• • ' ••.••••••••••••••••••••••••••

3. TERM ••••••••••••• •.•••••••••••••••••••••••••••••••

A. Primary Term, Extended Term, Maximwn T.erm ••••

B. Extension of Lease Beyond Primary Term by Drilling Operations •••••••••••••••••••••••

c. Shut-in Production •••••••••••••••••••••••••••

D. Drilling or Reworking Operations After Cessation of Production .••••••••••••••••••••••

4 • RENT.ALS. • • • • • • • • • • • • • • • • "._ • • • • • • • • • • • • • • • • • • • • • • • •

A. Amount and Time of Payment •••••••••••••••••••

B. Credits Against Royalties ••••••••••••••••••••

s. ROYALTIES ••••••••••••••••••••••••••••••••••••••••

A. For Period of Initial Thirty-Five years ••••••

B. Readjustment After Thirty-Five years •••••••••

C. Deadline for Royalty Payments ••••••••••••••••

o. Royalties-Production (Absolute Open-Flow Potential) .................................. ..

E. Geothermal By-Products Testing •••••••••••••••

F. Interest and Penalties •••••••••••••••••••••••

--i-

Page No.

1

3

3

3

4

4

4

..4

4

5

5

6

6

6

7

7

7

S·

S

9

10

10

, ,

Table of Contents (cont'd)

6. REQUIREMENT TO COMMENCE MINING OPERATIONS •••••••

7. TAXES •••••••••••••••••••••••••••••••••••.•••••••

A. Real Property Taxes ••• . . . . . . . . . . . . . . . . . . . . . . B. Other Taxes ••••• . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8. UTILITY SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. SANITATION •••••••••••••• . . . . . . . . . . . . . . . . . . . . . . . .

10. WASTE: USE OF PREMISES. . . . . . . . . . . . . . . . . . . . . . . . . 11. COMPLIA.~CE WITH LAWS •••••••••••••••••• . . . . . . . . . . 12. INSPECTION OF PREMISES AND RECORDS •••• . . . . . . . . . . 13. GEOTHERMAL OPERATIONS •••• . . . . . . . . . . . . . . . . . . . . . . .

A. Removal of Derrick. . . . . . . . . . . . . . . . . . . . . . . . . . B. Operating Sites •• . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Site Selection •••••••••• . . . . . . . . . . . . . . . . . . . . D. Drilling Operations ••••• . . . . . . . . . . . . . . . . . . . . E. Water Quality - Waste Disposal •••••••••• . ... F. Fish and Game Notice - Intererence ••••••••• ,.

G. Damage to Terrain. . . . . . . . . . . . . . . . . . . . . . . . . . . H. Pollution ••••• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I. Filled Lands •• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J. Road Maintenance ••• . . . . . . . . . . . . . . . . . . . . . . . . . K. Timber Damaged ••.••••..••.••.........••. . . . . L. Improvements - Protection from Damage •••••••

M. Oama.ges - Payttlent •••••••••••••••••••••••••••

N. Damages to Surface or Condition of Land •••••

O. Power Plants ••••••••••••••••••• . . . . . . . . . . . . . P. Agreement with Surface Owner ••••••••••••••••

Q. Drilling Mud •.•..••.•••••.......•.•.•..•...•

R. Facili ty Si te·s ............................. .

S. Construction of Terms •••••• . . . . . . . . . . . . . . . . . T. Spacing, Production, Etc ••••••••••••••••••••

-ii-

Page No.

11

12

12

12

13

13

13

14

15

16

16

16

16

17

18

18

18

19

20

21

21

21

21

22

23

23

24

24

24

, ..... '\

Table of Contents (cont'd) Page No.

u. Drilling - Notice - Plan ••••••••••••••••• ... 25

V. Dr illing " Etc. - Circulating Medi urn •••••• 25

W. Generating Plants - Approval ••••••••••• ••••• 25

14. LIENS ••••••••••••••••••••••••••••••••••••••••••• 26

15. ASSIGNMENT OF SUBLEASE •••••••••••••••••••••••••• 26

16. INDEMNlfi .••••••••••••••••••••••••.••••••••••••. 27

17. LIABILIfi INSURANCE ••••••••••••••••••••••••••••• 28

18. BOND REQUIREMENTS ••••••••••••••••••••••••••••••• 29

19. REV'OCATION ...................................... . 30

20. SURRENDER ....................................... . 31

21. ACCEPTANCE OF RENT AND ROYALTIES NOT A WAIVER ••• 33

22. EXTENSION OF TIME OF PERFORMANCE •••••••••••••••• 33

23. NO WARRANfi OF TITLE •••••••••••••••••••••••••••• J.4

24. COMMINGLED PRODUCTION - PLANS - APPROVAL -ACCURACY •••••••••••••••••••••••••••••••••••••••• 35

25. SUSPENSION OF OPERATIONS •••••••••••••••••••••••• 36

26. DILIGENT OPERATIONS REQUIRED •••••••••••••••••••• 37

27. PRODUCTION OF By-PRODUCTS ••••••••••••••••••••••• 37

28. RECORDS AND REPORTS ••••••••••••••••••••••••••••• 38

29. FORCE .MAJEURE: ••••••••••••••••••••••• · •••••••••••• 40

30. UNIT OR COOPERATIVE PLANS ••••••••••••••••••••••• 41

31. NOTICES ••••••••••••••••••••••••••••••••••• • •••• • 41

32. RESTORATION OF PREMISES ••••••••••••••••••••••••• 42

33. HEA.DINGS •••••••••••••••••••••••••••••••••••••••• 42

34. REFERENCE ••••••••••••••••••••••••••• • • • • • • • • • • • • 42

35. INSOLVENC"l ••••••••••••••••••••••••• • • • • • • • • • • • • • 42

36. SUBSIDENCE ••••••••••••••••••••• • • : •• • • • • • • • • • • • • 43

37. WORKMEN'S COMPENSATION INSURANCE ••••••••••••••••• 43

38. SUCCESSORS ••••••••••••••••••••• • ••• • • • • • • •• • • • • • • 43

-iii-

, ., .. .\ o oj

Table of Contents (cont'd)

39. SEVERABILITY ••••••••••••••••••••••••••••••••••••

40. GEOTHElU'.:AL OWNERSHIP ••••••••••••••••••••••••••••

41. LEASE TERMS V. REGULATION 8 •••••••••••••••••••••

42. APPLICABILITY OF LEASE •••••••••.•••.•••••••••••••

-iv-

Page No.

44

44

44

44

,--\

STATE OF HA~iAII

DEPARTMENT OF ~~D AND NATURAL RESOURCES

GEOTHERMAL RESOURCES MINING ~EASE NO. R-3

THIS INDENTURE OF LEASE, made this \D~ day of

\\llI't) ~!r , Haw::(~Revised Statutes,

19 ~\ ,pursuant to Chapter 182,

and the rules and regulations pro-

mulgated thereunder, by and between the STATE OF HAWAII,

by its Board of Land and Natural Resources, hereinafter

called the "L~ssor", and BARNWELL GEOTHERMAL CORPORATION,

__ a __ H_a_w_a_1_o1_o_c_o_rp __ o_r __ a_t_i_o_n _______________________ , whose business

and post office address is

Honolulu, Hawaii 96819

2828 Paa Street, Suite 2085,

-----------------------------------------------------------------, hereinafter called the "Lessee",

WIT N E SSE T H: ----------1. LEASE

Subject to the provisions of paragraph 23 entitled

"No Warranty of Title", Lessor, in consideration of the

royalties, rental, and other monetary considerations, agree

ments and stipulations herein contained, does hereby lease

unto the Lessee the right to develop geothermal resources

and geothermal by-products in and under that certain parcel

of land, hereinafter designated as the "leased lands n., iden

tified in Exhibit "A" containing approximately 769.13

acres situated at Puna, Hawaii , as ------------------------------------------

k d E h 'b't "B-1", "B-2", shown on the maps mar e x 1 1 S "B-3", "B-4"

and "B-S", which exhibits are attached and made a part hereof.

The Lessee shall have the sole and exclusive right

to drill for, produce and take geothermal resources from the

leased lands and occupy and use so much of the surface of

the leased lands as may be reasonably required pursuant to

the provisions of section 182-3 of the Hawaii Revised

Statutes and section 6.1 of the regulations. Lessee agrees

to comply with these provisions and to save and hold the

Lessor harmless with respect to the claims made under said

statute and regulations by the owners and occupiers of the

surface of the leased lands. This Lease does include the

right to reinject beneath the leased lands geothermal fluids

subject to the prior written approval of the Lessor and

upon such terms and conditions as the Lessor considers to

be in the public interest and include any other right as may

be necessary to produce the geothermal resources. This Lease

does not confer upon the Lessee the privilege or right to

store hydrocarbon gas beneath the leased lands; nor does ~his

Lease confer upon the Lessee any other privilege or right

not expressly given herein.

This Lease is entered into with the agreement that

its purposes are and its administration shall be consistent

with the principle of multiple use of public lands and

resources; this Lease shall allow co-existence of other

permits or leases of the same lands for deposits of other

minerals under applicable laws, and the existence of this

Lease shall not preclude other uses of the leased lands.

"However, operations under such other permits or leases or

other such uses shall not unreasonably interfere with or

endanger operations under this Lease, nor shall operations

under this Lease unreasonably interfere with or endanger

operations under any permit, lease, or other entitlement for

use issued or held pursuant to the provisions of any other

law. Nor shall this Lease be construed as superseding the

authority which the head of any State department or agency

-2-

· . " . .. .

\

has with respect to the management, protection, and utili

zation of the State lands and resources under his jurisdiction.

The State may prescribe in its rules and regulations those

conditions it deems necessary ior the protection of resources.

2. RESERVATION TO LESSOR

All rights in the leased lands not granted to the

Lessee by this Lease are hereby reserved to the Lessor.

Without limiting the generality of the foregoing such

reserved rights include:

A. Disposal - If the State owns the surface of

the land, the right to sell or otherwise dispose of the

surface of the leased lands owned by the State or to sell or

dispose of any other resource in the leased lands under

existing laws, or laws hereafter enacted subject to t~e rights

of the Lessee under this Lease. Nothing provided herein

shall be construed to authorize or provide for the sale or

disposition of the surface of reserved or other privately

owned

Rights-of-way - to authorize geo-

logical 1cal explorations on the leased lands

which do not interfere with or endanger present operations

or reasonable prospective operations under this Lease, and

if the State owns the surface of the land the right to grant

such easements or rights-of-way for joint or several use

upon, through or in the leased lands for steam lines and

other public or private purposes which do not interfere with

or endanger present operations or reasonable prospective

operations or facilities constructed under this Lease.

Nothing provided herein shall be construed as a grant or the

-3-

· .. . \

right to grant an easement or right-of-way upon reserved

or other privately owned lands.

C. Certain Mineral Rights - The right to extract

at its sole cost and expense and own oil, hydrocarbon gas,

and helium from all geothermal steam and associated geo-

thermal resources produced from the leased lands; provided,

however that such extraction and ownership rights shall be

exercised by Lessor in such manner as will not unduly inter

fere with the rights of Lessee under this Lease.

D. Casing - If the State owns the surface of the

land, the right to acquire the well and casing when the

Lessee finds only potable water, and such water is not

required in lease operations; and

E. Measurements - ·The right to measure geothe~al

resources and to sample any production thereof.

3. TERM

A. primary Term, Extended Term, Maximum Term

This Lease shall be for a term of ten {lO} years

from and after the effective date of this Lease pursuant to

Rule 3.11 of the Regulations, (hereinafter referred to as the

-"primary term"), and for so long thereafter as geothermal

resources are produced or utilized in commercial quantities,

provided that the maximum term of this Lease shall not exceed

sixty-five (65) years: provided, however, that if the primary

term or the maximum term for geothermal leases should be

extended by statute, retroactively, such extended terms

shall be applicable to this Lease, or should said terms be

extended generally by statute, such extended terms may be

made applicable to this Lease upon such other terms and

conditions as the Board may determine. Production or uti-

-4-

--.. ... , . o

lization of geothermal resources in commercial quantities

shall be deemed to include the completion of one or more

wells capable of producing geothermal resources for delivery

to or utilization by a facility or facilities not yet

installed but scheduled for installation not later than

fifteen (15) years from the date of commencement of the

primary term of this Lease.

B. Extension of Lease Beyond Primary Term by

Drilling Operations

If at the expiration of the primary term hereof

geothermal resources in commercial quantities are not being

produced from the leased lands, but the Lessee is actively

engaged in drilling operations designed to drill below the

depth of 1,000 feet, or, to a production zone at a lesser-

depth in a diligent manner, this Lease shall be continued

for so long thereafter as such operations are continued with

no cessation thereof for more than 180 days, but not to

exceed a period of five (S) years, and if such drilling

operations are successful, as long thereafter as geothermal

resources are being produced_or utilized in commercial

quantities except for the sixty-five (6S) year limit ~

provided above.

c. Shut-in Production

If the Lessee has voluntarily shut-in production

for lack of a market, but is proceeding diligently to acquire·

a contract to sell or to utilize the production or is pro

gressing with installations needed for production, this

Lease shall continue in force upon payment of rentals for

the duration of the primary term or for five (5) years after

shut-in, whichever is longer. T~e Chairman shall continue

to review this Lease every five (S) years until production

-S-

;. " ,

. . . , o

in commercial quantities occurs or this Lease is terminated

by Lessor for Lessee's lack of due diligence or is surrendered

by the Lessee. When production and sale or utilization of

geothermal resources in commercial quantities has been esta

blished, the term of this Lease shall continue as provided in

Paragraph A of this paragraph 3.

D. Drilling or Reworking Operations After Cessa

tion of Production

If production of geothermal resources should cease

by reason of a decline in the productive capacity of existing

wells after expiration of the primary term, or before the

end of the primary term if production has commenced, this

Lease shall continue so long as Lessee actively and conti-

nuously engages in drilling or reworking operations which

shall be commenced within One Hundred Eighty (180) days

after cessation of production. Continuous drilling or

reworking operations shall be deemed to have occurred where

not more than One Hundred Eighty (180) days elapse between

cessation of operations on one well and commencement of

operations on the same or another well. If such operations

are continued and if they are successful, this Lease shall

continue as long thereafter as geothermal resources are being

produced in commercial quantities, except for the sixty-five

. (65) year limit provided above.

4. RENTALS

A. Amount and Time of Payment

The first year's annual rent shall be paid pursuant

to Rule 3.12. Thereafter, Lessee shall pay to Lessor at

the Department, in advance each year on or before the anni-

d h f th 1 rental of ONE AND NO/IOO----versary ate ereo, e annua

---------------------------------------OOLLARS ($ 1.00---------, ,

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per acre or fraction thereof, on the leased lands during the

life of this Lease,' or a total of $770.00 per annum.

B. Credits Against Royalties

The annual rental due and paid for each year shall

be credited against any production royalties due and accrued

during the same year. Annual rentals paid for a given year

shall not be credited against production royalties due in

future years.

5. ROYALTIES

A. For Period of Initial Thirty-five Years

For the primary ten (10) year term and during the

first twenty-five (25) years thereafter Lessee shall pay to

Lessor the following royalties on production measured and

computed in accordance with the regulations:

1. Geothermal Resources (Excluding Geothermal By-products) A royalty of ten (10%) percent of the gross proceeds received by the Lessee from the sale or use of geothermal resources produced from the leased lands and measured at the wellhead without any deduction for treating, processing and transportation cost, notwithstanding Rule 3.l3b. of Regula tion 8.

2. Geothermal By-Products Five (5%) percent of the gross proceeds received by the Lessee from the sale of any such by-product produced under this Lease, including demineralized or desalted water, "after deducting the treating, processing and transportation costs incurred.

In the event that geothermal resources hereunder

is not sold to a third party but is used or furnished to a

plant owned or controlled by the Lessee, the "gross proceeds

of s~ch production for the purposes of computing royalties

hereuIJ.der shall be that' which is reasonably equal to the

gross proceeds being paid to other geothermal producers for

geothermal resources of like quality under similar conditions

-7-

without deducting any treating, processing and transportation

costs incurred, notwithstanding Rule 3.l3b. of Regulation 8.

No payment of royalty will be required on water if

it is used in. plant operation for c·::>oling or generation of

electric energy or is reinjected into the sub-surface. No

royalty shall be paid for geothermal by-products used or

consumed by Lessee in his production operations.

Gross proceeds shall not be deemed to include

excise, production, severance or sales taxes or other taxes

imposed on the Lessee by reason of the production, severance

or sale of geothermal resources or geothermal by-product~.

B. Readjustment After Thirty-five Years

Royalty rates on geothermal resources and geothermal

by-products shall be readjusted, subject to the limitations

specified in the regulations and in accordance with the pro

cedures prescribed therein at the expiration of the thirty-

fifth (35th) and fiftieth (50th) years of the Lease; provided,

however, that such readjustment shall be only as to.the

royalty rate and not as to the basis for determining payment

to the Lessor.

If the royalty rates for any ensuing period have

not been determined prior to the expiration of the preceding

period, the Lessee shall continue to pay the royalty rates

effective for the previous period, but the Lessee shall,

within thirty (30) days after the new roy~lty rates have

been so determined, pay the deficiency, if any.

c. Deadline for Royalty Payments

The Lessee shall make ~ayments of royalties to the

Lessor within thirty (30) days after the end of each calendar

month following such production and accompany such payment

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with a certified true and correct written statement by the

Lessee, showing the amount of geothermal resource and geo

thermal_by-product produced, sold, used and/or othe~ise

disposed of and the basis for computation and determination

of royalties. The Lessee shall furnish such other data as

may be necessary to enable the Lessor to audit and verify all

royalties due and payable to the Lessor.

o. Royalties-Production (absolute open flow

potential)

If the Lessee supplies steam to any electrical

generating facility from wells on both the leased lands and

other lands and there is producible from all such wells in

aggregate a quantity of steam greater than the maximum quantity

utilizable by said electrical generating facility, Lessee-

agrees to. produce and sell or use steam from the leased lands

in a proportion no less than'the proportion that the absolute

open flow potential (the absolute open flow potential as used

herein is the rate of flow in pounds of steam per hour that

would be produced by a w~ll if the only pressure against the

face of the producing formation in the well bore were atmos

pheric pressure) of the wells on the leased lands bears to

the total absolute open flow potential of all such wells from

which Lessee supplies steam to such electrical generating

facility. For purposes of this section it shall be deemed

that the Lessee supplies steam from a well to an electrical

generating facility when such well is capable of producing

geothermal resources in commercial quantities to such facility.

The absolute open flow potential of all s~ch wells whether

on the leased lands or other lands shall be determined by the

Lessor and shall be based upon tests performed by the Lessee

as prescribed by the Lessor. In this regard, Lessee shall,

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upon completion of each of such wells, and prior to the

placing of such wells on commercial production, perform, and

deliv~r to the Lessor the results of, the following tests:

1. Pressure Test - Pressure-buildup tests

to determine static reservoir pressure and well bore

conditions. If pressure-buildup tests are based on

shut-in wellhead data, then static well bore temperature

surveys must also be conducted:

2. Isochronal Flow Tests - Isochronal flow tests

or two rate flow tests to establish a back pressure

curve and the absolute open flow potential:

3. Other Tests-Static Reservoir Pressure -

Other tests as deemed to be necessary by the Lessor.

After commencement of commercial production from

each of such wells, Lessee shall annually, or more fre-

quently if requested by the Lessor, determine static

reservoir pressure and complete any other tests as

specified by the Lessor.

E. Geothermal By-Products Testing

The Lessee shall furnish the Chairman the results

of periodic tests showing the content of by-products in the

produced geothermal resources. Such tests shall be taken

as specified by the Chairman and by the method of testing

approved by him, except that tests not consistent with

industry practic~ shall be conducted at the expense of the

Lessor.

F. Interest and Penalties

1. Interest - It is agreed by the parti£:s hereto

that any royalties, rentals, or other monetary considerations

arising under the provisions of this Lease and not paid when

due as provided in this Lease, shall bear interest from the

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day on which such royalties, rentals, or other monetary

consideration were due at the rate of 12% per annum or such

higher rates as l1'.ay be permitted by law until such roya.lties,

rentals, or other monetary considerations shall be paid to

the Lessor.

2. Penalty - It is agreed by the parties hereto

that any royalties, rentals or other monetary considerations

arising under the provisions of this Lease and not paid when

due as provided in this Lease, shall be subject to a five

(5%) percent penalty on the amount of any such royalties,

rentals, percentage of net profits, or other monetary cons i-

derations arising under the provisions of this Lease.

3. Definition of Royalties, etc. - It is agreed

by the parties hereto that, for the purpose of this secti~n,

"royalties, rentals or other monetary considerations arising

under the provisions of this Lease and not paid when due"

includes but is not limited to any amounts determined by the

Lessor to have been due to the Lessor if, in the judgment of

the Lessor, an audit by the Lessor of the accounting statement

required by paragraph 28 below shows that inaccurate, unrea

sonable or inapplicable information contained or utilized in

the statement resulted in the computation and payment .to the

Lessor of less royalties, rentals, or other monetary consi-

derations than actually were due to the Lessor.

6. REQUIREMENT TO COMMENCE MINING OPERATIONS

Lessee shall commence mining operations upon the

leased lands within three years from the effective date of

this Lease, excluding a~y research period which has been

granted; provided, that so long as the Lessee is actively

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and on a substantial scale engaged in mining operations on

at least one geothermal resources mining lease, the covenant

to commence mining operations shall be suspended as to all

other leases held by the Lessee, covering lands on the same

island.

7. TAXES

A. Real Property Taxes

Lessee shall pay any real property taxes levied

on that portion of the surface of the leased lands utilized

by Lessee, according to the value allocated thereto by

Lessor or other appropriate State or County agency based on

the use of the surface of the portion of the land by Lessee

and the use of the remainder of the land by others entitled

thereto. Lessee shall also pay any real property taxes levied

on the structures and improvements placed thereon and utilized

by Lessee; provided that all subsurface rights and any geo

thermal resources underlying the leased lands under this

Lease shall be deemed to have only nominal value for real

property tax assessment purposes until such time, if any,

as specifically authorized by law. If Lessor has exercised

its rights under paragraph 2 herein, said taxes shall be

prorated according to Lessee's interests.

B. Other Taxes

Royalties paid hereunder shall be in lieu of

any severance or other similar tax on the extracting, pro

ducing, Winning, beneficiating, handling, storage, treating

or transporting of geothermal resources or any product into

which the sam~ may be processed in the State of Hawaii;

nevertheless, if any such tax should be assessed, then such

tax shall be deducted from any royalties otherwise due here-

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under. As to any and all other taxes of any nature assessed

upon geothermal resources or geothermal by-products there

from or assessed on aCCjunt of the production or sale of

geothermal resources or geothermal by-products from the

leased land, Lessor and Lessee each shall bear such tax in

proportion to its respective fractional share of the value

of such production.

s. UTILITY SERVICE

Lessee shall be responsible for all charges, duties

and rates of every description, including water, electricity,

sewer, gas, refuse collection or any other charges, arising

out of or in connection with Lessee's operations hereunder.

9. SANITATION

Lessee shall keep its operations and improvements

in a strictly clean, sanitary and orderly condition.

10. WASTE: USE OF PREMISES

a. Lessee shall not commit, suffer or permit to

be committed any waste, nuisance, strip mining or unlawful

use of the leased lands or any part thereof.

b. Negligence - Breach - Non-Compliance - Lessee

shall use all reasonable precautions to prevent waste of,

damage to, or loss of natural resources including but not

limited to gasses, hydrocarbons and geothermal resources, or

reservoir energy on or in the leased lands, and shall be

liable to the Lessor for any such waste, damage or loss to

the extent that such waste, damage, or loss is caused by (1)

the negligence of Lessee, its employees, servants, agents or

contractors; (2) the breach of al·y provision of this Lease

by Lessee, its employees, servants, agents or contractors,

or non-compliance with applicable federal, state or county

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statutes or rules and regulations; provided, however, that

nothing herein shall diminish any other rights or remedies

which the Lessor may have in connection with any such negligence,

breach or non-compliance. With respect to any other such

waste damage or loss, Lessee agrees to indemnify, save the

Lessor harmless and, at the option of the Lessor, defend the

Lessor from any and all losses, damages, claims, demands or

actions caused by, arising out of, or connected with the

operations of the Lessee hereunder as more specifically

provided under paragraph 16 hereof. Lessee shall not be

obligated to defend the Lessor's title to geothermal resources.

11. COMPLIANCE WITH LAWS

Lessee shall comply with all valid requirements

of all municipal, state and federal authorities and observe

all municipal, state and federal laws and regulations per

taining to the leased lands and Lessee's operations hereunder,

now in force or which may hereafter be in force, including,

but not limited to, all water and air pollution control laws,

and those relating to the environment; provided, however,

no revision or repeal of the regulations as defined in

paragraph 34 subsequent to the effective date hereof shall

change the rental, royalty rate, term, or otherwise subs tan-

-tially change the economic terms under this Lease; provided,

further, however, that the State of Hawaii, acting in its

governmental capacity, may by such regulations or amendments

thereto made at any time regulate the drilling, location,

spacing, testing, completion, rroduction, operation, main

tenance and abandonment of a well or wells or similar activity

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as well as the construction, operation a'nd maintenance of

any power plant or other facilities in the exercise of its

police powers to protect the public health, welfare and

snfety as provided in the regulations.

Lessee shall have the right to contest or review,

by legal procedures or in such other manner as Lessee may

deem suitable, at its own expense, any order, regulation,

direction, rule, law, ordinance, or requirement, and if able,

may have the same cancelled, removed, revoked, or modified.

Such proceeding shall be conducted promptly and shall include,

if Lessee so decides, appropriate appeals. Whenever the

requirements become final after a contest, Lessee shall .

diligently comply with the same. Lessee also agrees that

in its employment practices hereunder it shall not discriminate

against any person based upon race, creed, sex, color, national

origin or a physical handicap.

12. INSPECTION OF PREMISES AND RECORDS

Lessor, or persons authorized by the Lessor, shall

have the right, at all reasonable times, to go upon the leased

lands for the purpose of inspecting the same, for the purpose

of maintaining or repairing said premises, for the purpose

of placing upon the leased lands any usual or ordinary signs,

for fire or police purposes, to protect the premises from any

cause whatever, or for purposes of examining and inspecting

at all times the operations of Lessee with respect to wells,

improvements, machinery, and fixtures used in connection

therewith, all without any rebate of charges and without

any liability on the part of the Lessor f9r any loss of

occupation or quiet enjoyment of ~~e premises thereby

occasioned.

Lessor or its agents may at reasonable times inspect .

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the books and records of Lessee with respect to matters

pertaining to the payment of royalties to Lessor. Complete

information shall be made available to Lessor. In o?ddition,

qualified representatives and/or consultants designated by

Lessor may examine the reports specified in this Lease and

all other pertinent data and information regarding wells on

the leased lands and production therefrom. In the event of

surrender of all or a part of the leased lands Lessee shall

furnish Lessor all data with respect to such surrendered •

lands including interpretations of such data for use in future

lease negotiations with third parties. Lessee agrees on

written request to furnish copies of such information to

Lessor's qualified representatives or consultants.

13. GEOTHERMAL OPERATIONS

Lessee shall carryon all work hereunder with due

regard for the preservation of the property·covered by this

Lease and with due·regard to the safety and environmental

impact of its operations and in accordance with the following

terms and conditions:

A. Removal of Derrick.· Lessee shall remove the

derrick and other equipment and facilities within sixty (60)

days after Lessee has ceased making use thereof in its

operations.

B. Operating Sites. All permanent operating sites

shall be landscaped or fenced so as to screen them from public

view to the maximum extent possible, as required in the dis-

cretion of the Department of Land and Natural Resources. Such

landscapin~ or fencing shall be approved in advanc~ by the

Lessc.r an~"-nr·-CJood cond;i.:tion.

(~,;~ c. Site Selection. p-;icir to commencing a particular

"'~ ~ operat~Ene-~urfI~e=~:the leased lands, Lessee will

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consult with the occupier and submit the details concerning -------------------_.-

the proposed operation, such as the location or route of any

drill site, facility site, installation site, surface area,

road, pond, pipelinu, power line, or transmission line, as

the case may be, to the occupier by certified mail for the

occupier's approval. If the occupier does not approve such

proposal, occupier will submit within thirty (30) days an

alternate written proposal. If occupier does not submit an

alternate proposal, Lessee may proceed with its operation

as originally proposed, subject

. 23 .-~~he occupier and Lessee ~_/

to the provisions of paragraph

cannot agree, the matter will

be submitted to arbitration.

D. Drilling Operations. All drilling ahd production .. operations shall be conducted in such manner as to eliminate

as far as practicable dust, noise, vibration, or noxious

odors. The operating site shall be kept neat, clean and

safe. Drilling dust shall be controlled to prevent widespread

deposition of dust. Detrimental material deposited on trees

and vegetation shall be removed. Lessee will take such

steps as may be required to prevent damage to crops. The

determination as to what is detrimental will be made by the

Lessor.

No well shall be drilled within five hundred (500)

feet of any residence or building on the leased lands without

first obtaining the occupier's written consent.

In any well drilled by Lessee hereunder sufficient

casing shall be set and cemented so as to seal off surface

and subsurface waters, any of which would be harmful to

agricultural or o~her operations.

E. Water Quality-- Waste Disposal. Lessee shall

file wit~ the Lessor a repor~ of any proposed waste discharg~.

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Wastes shall be discharged in accordance with

requirements and prohibitions prescribed by the Lessor. The

Lessor and any other state agency having jurisdiction over

the affected lands 'shall also approve the place and manner of

such waste disposal.

F. Fish and Game Notice - Interference. Lessee

shall communicate with the Division of Fish and Game prior

to any operations which may adversely affect fish and wildlife

resources. Lessee shall conduct its operations in a manner

which will not interfere with the right of the public to fish

upon and from the public lands of the State and in the waters

thereof or will not preclude the right of the public to use

of public lands and waters.

G. Damage to Terrain. Any operations disturbing

the soil surface, including road building and construction

and movement of heavy equipment in support of or relating to

specific geothermal exploration or development activities

shall be conducted in such manner as will not result in

unreasonable damage to trees and plant cover, soil erosion,

or in degradation of waters of the State, including fish

and aquatic life habitat. Lessee will conduct its operations

in a manner that will not unreasonably interfere with the

enjoyment of the leased lands by the occupier or persons

residing on or near the leased lands.

H. Pollution. Pollution of the ocean and tide

lands, rivers, or other bodies of water, and all impairment

of and interference with bathing, fishing, or navigation in

the waters of tl~e ocean or any bay or inlet thereoi is pro

hibited, and no brine, minerals, or any refuse of any kind

from any well or works shall be permitted to be deposited on

or pass into waters of the ocean, any bay or inlet thereof,

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rivers, lakes or other bodies of water, without specific

written State authorization.

No Leased Substances which may be produc~d, from

any well drilled upon the 1(3ased lands shall be blown, flowed,

or allowed to escape into the open air or on the ground in

such a manner as to create a nuisance, which shall specifically

include but not be limited to noise, air or other pollution,

and other activities which disturb the occupier's or his

Tenant's use of the leased lands. Subject to the foregoing,

Lessee may bleed Leased Substances to the atmosphere so long .

as such operations are lawfully and prudently conducted in

accordance with good geothermal drilling and production

practices and are not otherwise violative of the provisions

of this Lease.

I. Filled Lands. No permanent filled lands, piers,

platforms, or other fixed or floating structures in, on, or

over any tide and submerged lands covered by this Lease or . otherwise available to Lessee shall be permitted to be con-

structed, used, maintained, or operated without obtaining

any and all permits required , under applicable State and

Federal law, rules and regulations, and complying with all

valid ordinances of cities and counties applicable to Lessee's

operations, and without securing the written permission of

the Lessor specifically authorizing the activity.

J. Road Maintenance. Lessee will take such

steps at Lessee's own expense as are necessary to insure that

its roads, well sites, plant sites and other operation areas

will b-. kept as dust fre~ as is practicable so that dust will

not decrease ,the market value of adjacent growing crops or

interfere with the occupier's or his tenant's uses.

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Lessee will use existing roads where such are

available for its operations. All roads, bridges and culverts

used by Lessee will be maintained by it and roads surfaced

or treated in a manner that will prevent dust from inter

fering with agricultural or residential use of the leased

lands. Lessee shall be responsible for the maintenance of

and repair of damages caused to roads used by Lessee on or

serving the leased lands. The occupier and Lessor and their

agents, tenants and licensees shall have the full use of

roads constructed by Lessee but shall be responsible for the

repair of any unusual damage caused to such roads by their

use. In constructing roads, Lessee shall install necessary

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culverts or bridges so as not to interfere with the irrigation

or drainage of the leased lands.

K. Timber Damaged. In the absence of any agree

ment to the contrary, timber damaged, destroyed, or used on

the leased lands shall be compensated for at market value to

the surface owner. Borrow pit material shall not be obtained

from the leased lands without permission and payment of

market value to the surface owner.

L. Improvements - Protection from Damage.

Improvements, structures, telephone lines, trails, ditches,

pipelines, water developments, fences, crops and other pro-

perty of the State or surface owners, other lessees or per

mittees shall be protected from damage and repaired or

replaced by Lessee when damaged by Lessee.

M. Damages - Payment. In the event any buildings

or personal property or crops shall be damaged or destroyed

because of Lessee's operations on the leased lands, then

Lessee shall be liable for all damages occasioned thereby.

Lessee in its operations on the leased lands shall at all

times have due and proper regard for the rights and con

venience, and the health, welfare and safety of the occupier

and of all tenants and persons lawfully occupying the leased

lands. In the event that Lessee's operations result in any

condition, including but not limited to water table or depo

sition of chemicals, or harmful substances, which adversely

affects the continued production of crops or then beneficial

uses and purposes of the land, occupier at his option may

require Lessee to reimburse the occupier, his tenants and

persons lawfully occupying the leased lands as to the affected

acreage in accordance with subparagraphs N 1 and 2 of this

paragraph 13.

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N. Damages to Surface or Condition of Land.

Lessee shall pay the surface owner for the surface of each

acre of land or fraction thereof utilized, taken or used or

rendered substantially unusable by the Lessee in its operations,

pursuant to the terms of this Lease, for farming or stock

raising operations or other uses or purposes for which the

land is then being used or for which the surface owner had

made other plans, which shall include, but not be limited

to, the lands occupied by drill sites, facility sites, road-

ways constructed by Lessee, ponds, pipelines, utility lines,

power and transmission lines, production facilities, and

other facilities and structures, together with other uses

of the surface, save and except certain plants and buildings

provided for in subparagraph 0 below, in accordance with

one of the following methods to be elected by surface owner.

1. Lessee shall pay the surface owner annually

from the date of acquisition a rental equivalent to the fair

rental value which is being paid each year for like property.

2. Lessee shall pay surface owner severance damages

if any to the surrounding land and purchase the surface acreage

required by Lessee for its fair market value with right of

surface reverter in the surface owner when no longer utilized

by Lessee in its operations.

o. Power Plants. In the event Lessee, or a public

utility, pursuant to Lessee's operations hereunder, desires

to construct any plant or building site and is required to

have fee title for such purpose, then Lessee shall pay

occupier the fair market value for the surface of such plant

or building site and the severance damages, if any, to the

parcel from which such plant or building site is taken.

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P. Agreement with Surface Owner. In the event

that the Lessor does not own the surface of the leased lands

and if the geothermal developer who is responsible for developing

the resources on the leased lands enters into a lease with

the surface owner, then the provisions of such lease from

the surface owner shall supercede the foregoing paragraphs

13.K. through 13.0 and 14 relating to surface use, and such

paragraphs shall thereafter have no force and effect where

it is inconsistent with the lease with the surface owner.

Q. Drilling Mud. Drilling mud shall be ponded

in a safe manner and place, and where required by the Lessor,

posted with danger signs, and fenced to protect persons,

domestic animals, and wildlife. Upon completion of drilling,

the mud shall be disposed of, or after drying in place,

covered with a protective layer of soil.

Lessee agrees to fence all sump holes and exca-

vations and all other improvements, works, or structures

which might interfere with or be detrimental to the activities

of the occupier or other adjacent or nearby users of the

land, and to build sumps and to take all reasonable measures

to prevent pollution of surface or subsurface waters on or in

the leased lands. Upon abandonment of any well on the

leased lands, or on the termination of this Lease, or upon

quitclaim or reverter of any leased land by Lessee, then as

to such leased land Lessee shal~ level and fill all sump holes~

and excavations shall remove all debris, and shall leave those

areas of tne leased lands used by Lessee in a clean and

sanitary condition suitable for farming or in the condition

it was at the inception of this Lease if its use was other

than farming, and shall pay. the occupier for all damages to

occupier's buildings, structures, or other property caused

by Lessee.

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R. Facility Sites. Areas cleared and graded for

drilling and production facility sites shall be kept to a

reasonable number and size, and be subject to Lessor's approval.

Unless economic and technological considerations

will not permit, wells will be drilled directionally in order

to minimize the number of drill sites required. Well sites

and facility sites will be shaped and located to the extent

practicable to interfere as little as possible with the

occupier's operations including the spacing, location and

operation of the occupier's improvements, planned and con-

templated uses, grading, utility and drainage sy~tems, and

roads, and to prevent undue interference or danger to the

occupier's or his tenant's farming and other operations.

Where economically and technologically feasible, wells shall

be drilled directionally from a single well site. Drill sites

may also be located on unused portions of the leased lands.

The drill sites will not ordinarily exceed five (5) acres

in size but will vary in accordance with the number of wells

drilled from such site and the amount of production equipment

placed thereon. Plant or facility sites will be limited in

size to approximately ten (10) acres per site.

s. Construction of Terms. The above are in

addition to, and not to be construed as limitations upon,

all other rules, regulations, restrictions, mitigation

measures and all other measures designed to restrict, limit,

modify or minimize the environmental impact of operations

carried out pursuant to this Lease as set forth in this

Lease.

T. Spacing, Production, Etc. - The Lessor may

determine the spacing of wells and the rate of development

and production of such wells to prevent the waste of geo-

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thermal resources and to promote the maximum economic

recovery from, and the conservation of reservoir energy in,

each zone or separate underground source of geothermal

resources. Such determination shall be based on recognized

engineering standards and shall be consistent with prevailing

economic and market conditions.

u. Drilling - Notice - Plan - Lessee, before

commencing the drilling of a well, shall notify the Lessor

of its intention to drill, and such notice shall contain the

location and elevation above sea level of derrick, proposed

depth, bottom hole location, casing program, proposed com

pletion program and the size and shape of drilling site,·

excavation and grading planned, and location of existing and

proposed access roads. Where the surface of the leased lands

is under the jurisdiction of a State agency other than the

Department of Land and Natural Resources, Lessee shall provide

at the same time such information listed above as is pertinent

to that agency.

v. Drilling, etc. - Circulating Medium - All

drilling, redrilling, perforating, or work-over operations

within the leased lands shall be done with an accepted

circulating medium.

w. Generating Plants - Approval - No generating

plants, buildings, structures, production equipment, metering

systems, pipelines or roads for the production, sale or use

of geothermal resources (hereinafter referred to as "geo

thermal facilities") shall be installed or constructed except

on prior Lessor's approval and the approval of any other

governmental agency having jurisdiction over such installation

or construction. Any contract entered into by Lessee with a

Public U~ility or any other person or entity for the install-

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ation or construction of geothermal facilities shall contain

provisions requiring the Public Utility, or other person or

entity to obtain the approval of the Lessor and other govern-

mental agencies before installation or construction of geo-

thermal facilities.

14. LIENS

Lessee will not commit or suffer any act or neglect

whereby the estate of the Lessor or the surface owner or

occupier of the leased lands shall become subject to any

attachment, lien, charge or encumbrance whatsoever, and shall

indemnify and hold harmless the Lessor, surface owner and

occupier, against all such attachments, liens, charges and

encumbrances and all expenses resulting from any such act or

neglect on the part of the Lessee.

Lessee will, before commencing construction of any

improvements or any drilling operations or laying any pipe

lines or doing any other work on or within the leased lands,

deposit with Lessor, surface owner and occupier of such lands

a bond or certificate thereof naming Lessor, said surface

owner and occupier as obligees in a penal sum of not less

than one hundred per cent (100%) of the cost of such con

struction, drilling or pipe line work and in Iorm and with

surety satisfactory to Lessor, the surface owner and occupier

"guaranteeing the completion of such work free and clear of

all mechanics' and materialmen liens.

15. ASSIGNMENT OR SUBLEASE

Lessee shall have the right to transfer this lease

to any person qualified under the applicable law and regu

lations by assignment, sublease, or other transfer, of any

nature including the creation of security interests in

Lessee's interest in this Lease and Lessee's rights hereunder,

-26-

~~~~~~-------------------------, .. -

•

'. . "

.. , ) .. -"

) / oj ~

in whole or in part, and as to all or a part of the leased

lands, subject to the approval of the Lessor, which approval

will not unreasonably be withheld. Upon approval, Lessor

may release the transferor from any liabilities or duties

except for any liability or duty which arose prior to such

approval.

16. INDEMNITY

The Lessee agrees to hold harmless and indemnify

the State of Hawaii and its divisions, departments, agencies,

officers, agents and employees, together with the owner or

lessee of the ,surface of the leased lands, if any, from any

and all liabilities and claims for damages and/or suits for

or by reason of death or injury to any person or damage to

property of any kind whatsoever, whether the person or pro

perty of Lessee, his agents, employees, contractors, or

invitees, or third persons, from any cause or causes whatso-

ever caused by any occupancy, use, operation or any other

activity on the leased lands or its approaches, carried on

by the Lessee, his agents, employees, contractors, or invitees,

in connection therewith; and the Lessee agrees to indemnify

and save harmless the State of Hawaii, the Board, the

Chairman, the Department, owner or lessee of the surface

if there be one, and their officers, agents, and employees

from all liabilities, charges, expenses (including counsel

fees) and costs on account of or by reason of any such

death or injury, damage, liabilities, claims, suits or losses.

The foregoing indemnity specified in this Lease and

in the regulations is not intended to nor shall it be con

strued to require the Lessee to defend ~~e Lessor's title

to geothermal resources and in case of 1i,tigation involving

the titles of the Lessee and the Lessor, Lessee and the

-27-

Lessor will join in defending their respective interests,

each bearing the cost of its own defense.

17. LIABILITY INSURANCE

Prior to entry upon the leased lands the Lessee

or transferee shall obtain, at its own cost and expense,

and maintain in force during the entire term of this Lease,

a policy or policies of comprehensive general public lia

bility and property damage insurance from any company

licensed to do business in the State of Hawaii covering

liability for injuries to persons, wrongful death, and

damages to property caused by any occupancy, use, operations

or any other activity on leased lands carried on by Lessee

or transferee, its agents or c~ntractors in connection

therewith, in the following minimum amounts:

a. Comprehensive General Bodily Injury

Liability - $300,000.00 each occurrence,

$1,000,000.00 aggregate.

b. Comprehensive General Property Damage

$50,000.00 each occurrence, $100,000.00

aggregate.

Liability coverage for injury or damage to persons

or property caused by explosion, collapse and underground

hazards are to be included prior to initiation of operations

.to drill a well for geothermal discovery, evaluation or

production. Lessee shall evidence such additional coverage

to the Chairman prior to initiation of drilling operations.

If the land surface and improvements thereon covered by this

Lease are o~ed or leased by a person other than the State

of Hawaii, the owner and lessee, if any, of the surface and

improvements shall be a named insured. The State of Hawaii,

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· \. .. "

the Hawaii State Board of Land and Natural Resources, the

Chairman of the Board of Land and Natural Resources, and

the Department of Land and Natural Resources, shall also be

named insureds.

No cancellation provision in any insurance policy

shall release the Lessee of the duty to furnish insurance

durinq the term of this Lease. A signed and complete certi-

ficate of insurance, containinq the special endorsement

prescribed in the requlations and indicatinq the coverage

required by this paraqraph,shall be submitted to the

Chairman prior to entry upon the leased lands. At least -

thirty (30) days prior to the expiration of any such polley,

a signed and complete certificate of insurance, indicating

the coverage required by this paragraph, showing that such

insurance coverage has been renewed or extended, shall be

filed with the Chairman.

IS. BOND REQUIREMENTS

The Lessee and every assignee, sublessee or

transferee hereof shall file with the Board, a bond in the

amount of $10,000.00 in a form approved by the Board and

made payable to the State of Hawaii, conditioned upon faithful

performance of all requirements of Chapter 182, Hawaii

Revised Statutes, the regulations thereunder and of this

Lease, and also conditioned upon full payment by the Lessee

of all damages suffered by the occupiers of the leased lan~s

for which Lessee is legally liable. If the Lessee holds more

than one (l) geothermal resources mining lease from the

State of Hawaii, it may file with the Board, in lieu of

separate bonds for each lease, a blanket bond in the amount

of $50,000.00.

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.' , · ',. 0'

19. REVOCATION

This Lease may be revoked by the Board if the Lessee

fails to pay rentalE and/or royalties when due or fails to

comply with any of the other terms of this Lease, law, or

regulations, or if the Lessee wholly ceases all mining

operations for a period of one year without the written

consent of the Board for reasons other than force majeure or

the production of less than commercial quantities of geothermal

resources or by-products. However, before revocation of

this Lease for defaults other than the failure to pay rents

and/or royalties when due, the Board shall give the Lessee

written notice of the claimed default and an opportunity to

be heard within thirty(30) days of such notice. The Lessee

shall be allowed sixty (60) days to correct such default or,

if the default is one that cannot be corrected within sixty

(60) days, to commence in good faith and thereafter proceed

diligently to correct such default, following written notice

of a determination after hearing by the Board that such

default exists. Failure to comply with the foregoing shall

be deemed sufficient cause for revocation. Defaults arising

because of failure to pay rents and/or royalties when due

must be cured within sixty (60) days of a written notice of

default; otherwise this Lease may be revoked. In the alter-

native the Lessee may surrender this Lease as hereinafter

provided.

Upon the revocation of this Lease, Lessor shall

have the right to retain the improvements or require the

Lessee to remove the same and restore the leased lands to

a similar condition prior to any dev~lopment or improvements,

to the extent reasonably possible and, upon failure by the

Lessee to do so, the Lessor may recover the cost thereof,

-30-'~--------------->,~,,".,--

..... , .. ".

'.

-) /-~,

./

~ 0

in addition to imposing any penalties as provided by law or

regulations.

20. SURRENDER

If Lessee has complied fully with all the terms,

covenants and conditions of this Lease and the Regulations,

Lessee may surrender, at any time and from time to time, this

Lease in its entirety or with respect to any portion of the

land described in this Lease. For the purposes hereof, if

there are no deficiencies with respect to the land to be

surrendered pertaining to public health, safety, conservation

of resources and preservation of the environment, Lessee will

be deemed to have complied fully with'all of the terms, .

covenants and conditions of this Lease and the Regulations

if Lessee shall have paid all rents and royalties due here

under and an additional two years' rent for all of the leased

lands or, in the event of a partial surrender, two years'

rent prorated by reference to that portion of land described

in this Lease which is to be surrendered. No deficiencies

shall be deemed to exist unless, within sixty (60) days after

delivery of the document of surrender, the Lessor has notified

the Lessee in writing of any deficiency claimed to exist.

If there are no deficiencies as aforesaid, such surrender .

shall be effective as of the delivery to Lessor of the

document of surrender executed by Lessee describing this

Lease or that portion of the leased lands which is to be

surrendered. If there are claimed deficiencies with respect

to the land to be surrendered pertaining to public health,

safety, conservation of resources and preservation of the

environment at the time of delivery of the document, such

surrender shall not become fully effective until such time

-31-

. ~ . .

as such deficiencies have been corrected or determined not

to exist. However, provided that if Lessee corrects such

deficiencies within sixty (60) days of notification thereof,

or if the deficiencies cannot be corrp-cted within sixty (60)

days, commences in · .. good faith and thereafter pro·ceeds dili-

gently to correct such d~ficiencies, then, in such case,

although the surrender shall not be fully effective upon

delivery of the document of surrender, the Lessee shall be

relieved of any other or further obligations and liability

as to this Lease or as to that portion of the leased lands

which has been submitted for surrender, whether such liabi-

lities or duties arise out of this Lease or the Regulations,

including, without limiting the generality of the foregoing,

all obligations to pay rent, to commence mining operations

or to be diligent in exploration or development of geothermal

resources. During the notification and correction periods

above described, this Lease shall not be subject to revocation

by the Lessor except for a failure by the Lessee after noti

fication to·correct such deficiencies within the time period

and in the manner hereinabove described or a breach of the

terms of this Lease as to any of the remaining leased lands

or rights retained by the Lessee; provided, however, that

should Lessee contest the validity of any claimed deficiency,

. the Lessee's obligation to correct shall be suspended pending

appeal to and determination by a court of final jurisdiction. ~

Except as aforesaid, nothing herein contained shall constitute

a waiver of any liability or duty the Lessee may have with

respect to the land or Lease surrendered as a result of any

activity conducted on the leased land or under this Lease

prior to such surrender. Upon the surrender of this Lease

.'

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· . '.

as to all or any portion of the land covered thereby, or upon

any other termination of this Lease except by revocation,

the Lessee shall be entitled to all equipment, buildings,

and plants placed in and on the leased lands and the Lessor

may require the Lessee to remove the same and restore the

premises to a similar condition prior to any development or

improvements, to the extent reasonably possible. This Lease

may also be surrendered if as a result of a final determination

by a court of competent jurisdiction, the Lessee is found to

have acquired no rights in or to the minerals on reserved

lands, nor the right to exploit the same, pursuant to this

Lease, and, in such event, the Lessor shall pay over to the

person entitled thereto the rentals, royalties and payments

paid to the Lessor pursuant to this Lease.

21. ACCEPTANCE OF RENT AND ROYALTIES NOT A WAIVER

The acceptance of rent or royalties by the Lessor

shall not be deemed a waiver of any breach by the Lessee of

any term, covenant or condition of this Lease, nor of the

Lessor's right to give notice of default and to institute

proceedings to cancel this Lease in the manner set out in

paragraph 19, and the failure of the Lessor to insist upon

strict performance of any such term, covenant or condition,

or to exercise any option conferred, in anyone or more

instances, shall not be construed as a.waiver or relinquish-

ment of any such term, covenant, condition or option.

22. EXTENSION OF TIME OF PERFORMANCE

That notwithstanding any provision contained herein

to the contrary wherever applicable, the Lessor may f~r good

cause, as determined by the Board, allow additional time

beyond the time or times specified herein to the Lessee, in

which to, comply, observe and, perform any of the terms, con-

-33---------------_ .. _ ..... ,,-

" . " .

ditions, and covenants contained herein.

23. NO WARRANTY OF TITLE

The Lessor does not warrant title to the leased

lands or the geothermal resources and geothermal by-products

which may be discovered thereon; this Lease is issued only

under such title as the State of Hawaii may have as of the

effective date of this Lease or may thereafter acquire. If

the interest owned by the State in the leased lands includes

less than the entire interest in the geothermal resources

and geothermal by-products, for which ro¥alty is payable, as

determined by the courts or otherwise, then the bonus, if

any, rentals, royalties and other monetary considerations

paid or provided for herein shall be paid to the Lessor

only in the proportion which its interest bears to said

whole for which royalty is payable, and the Lessor shall be

liable to such persons for any prior payments made and

adjudged by the courts or otherwise; provided, however, that

the Lessor shall not be liable for any damages sustained by

the Lessee.

This Lease is issued subject to all existing valid

rights at the date hereof and such rights shall not be

affected by the issuing of this Lease. In the event the

leased lands have been sold by the State, subject to mineral

. reservation, Lessee agrees to follow such conditions and

limitations prescribed by law providing for the State, and

persons authorized by the State to drill for, produce and

take geothermal resources, and occupy and use so much of

the surface of the leased lands as may be required for all

purposes reasonably connected ~with. Wlthout--1..L'1ti-t-i

the effects of the foregoing, ~re Lessee is not the surface

owner, Lessee agrees that before entering, occupying, or

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. , t. . .

) o

using any of the surface of the leased lands, for any or all

purposes authorized by this Lease, Lessee will first secure -the written consent or waiver of the owner of the surface of (.----------_._- .. ---'~"" --.-.. -.-~.~-----~ .. --~---.. -~.".-.--.. -..... -the leased lands or occupier; second, make payment of the -------... _-_ .......... ,.-, ..... _,.-.> ... "'" ...-

damages to crop~or ... Qther tangible improvements to the owner

thereofior third, in l~:~Of either of the foregoing provisions, ~:~"~ ....... ::;~~,,,,-.:..;.:r.~.~, .... ,-;...~ .. ", ,. .... ' -",

execute a good and sufficient bond or undertaking, payable

to and in an amount specified by the Lessor for the use and

benefit of the surface owner or occupier of such land, to

secure payment of such damages to the crops or tangible

improvements of the surface owner or occupier of said'land

as may be determined and fixed in an action brought upon the

bond or undertaking in a court of competent jurisdiction

against the principal and sureties thereon, such bond or

undertaking to be in the form and in accordance with the

rules and regulations. In the event that the State owns

only the mineral resources, this Lease is issued subject to

any and all right, title and interest of the purchaser,

title holder or owner of the surface of the leased lands,

and any successor in interest to any such purchaser, title

holder or owner of the leased lands, any other provision in

this Lease to the contrary notwithstanding.

24. COMMINGLED PRODOCTION - PLANS - APPROVALS - ACCORACY

Subject to testing the absolute open flow potential

of wells, whether on the leased lands or other landS, as set

forth in paragraph 5D hereof, geothermal resources from any

two or more wells, regardless of whether such wells are

located on the leased lands, may be commingled when the

metering system used to measure geothermal resources has been

approved by the Lessor. Prior to the installation of the

metering system, Lessee shall submit for approval a schematic

-35-

" .

.~

\ ~

'I' q-/

drawing of the proposed system and specifications of the

major equipment components. The Lessor will determine if

acceptable standards of accuracy for measuring geothermal

resources have been obtained, and may approve commingling of

geothermal resources. The metering equipment shall be main

tained and operated in such a manner as will meet acceptable

standards of accuracy. Use of the equipment shall be discon

tinued at any time upon determination by the State that standards

of measurement accuracy or quality are not being maintained,

with such commingling stopped until measurement accuracy has

been obtained. In the event that the quality and composition

of the geothermal resources to be commingled are substantially

different, it shall not be approved by the Lessor until accept

able standards and methods of payments are established. If

less than the total flow is to be utilized in a plant or

facility, then the reduction in flow for each well shall be

in the proportion which the total open flow of each contri

buting well bears to the total open flows of all contributing

wells.

25. SUSPENSION OF OPERATIONS

In the event of any disaster or pollution, or

likelihood of either, having or capable of having a detrimental

effect on public health, safety, welfare, or the environment

. caused in any manner or resulting from operations under this

Lease, the Lessee shall suspend any testing, drilling and

production operations, except those which are corrective, or

mitigative, and immediately and promptly notify the Chairman.

Such drilling and production. operations shall not be resumed

until adequate corrective measures have been taken and autho

rization for resumption of operations has been made by the

Chairman.

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o

26. DILIGENT OPERATIONS REQUIRED

The Lessee shall be diligent in the exploration and

development of the geothermal resources on the leased lands.

Failure to perfc.rM diligent operations may subject this Lease

to revocation by the Board. Diligent operations mean explo-

ratory or development operations on the leased lands including

without limitation geothermal surveys, heat flow measurements,

core drilling, or the drilling of a well for discovery,

evaluation, or production of geothermal resources.

The provisions hereof shall be construed and applied

with reference and in relation to geological and engineering

determinations and economic and market conditions with respect

to geothermal resources in the area or field in which the

leased lands is situated. In the event Lessor believes,

based on reasonable cause, that Lessee has failed to perform

diligently, Lessee may request a hearing and determination,

in accordance with paragraph 19 hereof, of the particulars in

which Lessee has failed to conduct diligent operations, and

if after such hearing Lessee is found not to be diligent in

its operations, then if Lessee does not, within ninety (90)

days thereafter, commence and in good faith continue remedying

such finding of lack of diligence, Lessor may revoke this

Lease as herein provided.

27. PRODUCTION OF BY-PRODUCTS

Lessee shall have no obligation to save or process.

any geothermal by-products unless such saving or processing,

independent of revenues or value received from the production

of other geothermal resources, including other geothermal

by-products, is economically feasible.

-37-

,

>;

, ~\ J

28. RECORDS AND REPORTS

(a) Accounting Data. No later than the twenty

fifth (25th) day of every calendar month following the effective

date of this Lease, Lessee shall submit a detailed accounting

statement for lease operations specifying all charges paid

and credits received under this Lease, including but not

limited to information showing the amount of gross revenue

derived from all geothermal resources produced, shipped, used

or sold and the amount of royalty due. The Lessee shall, at

the option of the Lessor, provide more detailed statements

and explanatory materials to aid the Lessor in interpreting

and evaluating Lessee's accounting statement. All such

statements are subject to audit and revision by the Lessor

and Lessee agrees that the Lessor may inspect all Lessee's

books, records and accounts relating to operations under this

Lease, including but not limited to the development, pro-

duction, sale, use or shipment of geothermal resources at

all reasonable times. Any statutory or other rights that

Lessee may have to object to such inspection by the Lessor

are hereby waived.

(b) Exploration Data. Lessee agrees to supply

to the Lessor within thirty (30) days of the completion

thereof, or the completion of any recorded portion thereof,

.all physical and factual exploration results, logs, surveys

and any other data in any form resulting from operations

under this Lease or from any surveys, tests, or experiments

conducted on the leased lands by Lessee or any person or

entity acting with the consent of Lessee or with information

or data provided by Lessee. Lessee agrees to supply to the

Lessor within thirty (30) days of the completion thereof, or

-38-

· . . ... ... ..

the completion of any recorded portion thereof, the results

of all geological, geophysical or chemical tests, experiments,

reports and studies, including but not limited to reservoir

studies and tests, experiments, reports or studies relating

to reinjection or reservoir depletion irrespective of whether

the result of such tests, experiments, reports or studies

contain sensitive or proprietary or confidential information

or trade secrets. Lessee further agrees that any statutory

or other rights or objections it may have to prevent disclo

sure of any such tests, experiments, reports or studies

referred to in this paragraph by the Lessor are hereby waived.

Notwithstanding any provisions hereof, however, all data" and

documents supplied by Lessee pursuant to this section shall

be deemed to have been "obtained in confidence" and may be

disclosed to other persons only with the written consent of Lessee or upon a determination by the Lessor that such dis-

closure is in the public interest or as otherwise provided

by law or regulation.

(c) waiver by Lessee. Lessee' "hereby waives any

and all rights and objections it may have to prevent an

examination of the books and records at'reasonable times

of any individual, association, or corporation which has

transported for, or received from Lessee, any geothermal

resources produced from the leased lands. Further, Lessee

waives any and all rights and objections it may have to

prevent an examination and inspection of the books and records,

at reasonable times, of any such individual, association or

cor,?oration with respect to such individual's, association's,

or corporation's, or to Lessee's operations, wells, improve

ments, machinery and fixtures used on or in connection with·

-39-

the leased lands.

Lessee does hereby waive any statutory or other

right or objection to prevent disclosure to the Lessor or

a duly authorized employee or representa~ive of the Lessor

of any information, reports; data, or studies of any kind,

filed by Lessee with any public agency, federal, state or

local, relating to the leased lands, the geothermal resources

thereunder, or any operations carried out in connection with

this Lease irrespective of whether such information, reports,

data, or studies of any kind contain sensitive or proprietary

or confidential information or trade secrets. Any and all .

such information, reports, data, or studies of any kind filed

by Lessee with any public agency, federal, state or local,

including all information filed with the Lessor pursuant to

any paragraph of this Lease, shall be available at all times

for the use of the Lessor or its duly authorized represen-

tatives for any purpose. Notwithstanding any provisions

hereof, however, any information, reports, data or studies

obtained by the Lessor from any public agency and which are

not public records shall be deemed to have been "obtained

in confidence" and may be disclosed to other persons only

with the written consent of Lessee or upon a determination by

the Lessor that such disclosure is in the public interest.

29. FORCE MAJEURE

If the Lessee is rendered unable to wholly or in

part by force majeure to carry out its obligations under

this Lease, Lessee shall give to Lessor prompt written

notice of th·~ force majeure. Thereupon, any obligations of

the Lessee to perform so far as they are affected by the

force majeure shall be suspended during the continuance of

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.~

~ 0

the force majeure and the primary term or any continuation

period shall be extended for a period equal to the period of

suspended performance caused by the force majeure. Lessee

shall use all possible diligence to remove or correct the

force majeure, but this shall not require the settlement of

strikes, lockouts or other labor difficulties. In no event

shall any extension affect the sixty-five (65) year maximum

term of this Lease.

30. UNIT OR COOPERATIVE PLANS

The Lessee may, with the written consent of the

Board, utilize the leased lands or portions thereof under a

unit, cooperative or other plan of development or operation

with other State, Federal or privately owned lands for the

drilling and production of one or more wells in accordance

with Rule No. 3.15 of the Regulations.

31. NOTICES

Pursuant to Rule 8.2 of the Regulations, Lessor

may give any notice or deliver any document hereunder to

Lessee by mailing the same by registered mail addressed to

Lessee at BA]U~LL GEOTHERMAL CORPORATION, 2828 Paa Street,

Suite 2085, Honolulu, Hawaii 96819

-------------------------------------------------------or by

delivering the same in person to any officer of Lessee.

Lessee may give any notice or deliver any document hereunder

to Lessor by mailing the same by registered mail addressed

to Lessor at DEPARTMENT OF LAND AND NATURAL RESOURCES,

P. O. Box 621, Honolulu, Hawaii 96809 ----------------------------------------------

or by delivering

the same to Lessor in person. For the purposes of this

paragraph, ,either party may change its address by written

notice to the other. In case of any notice or document

delivered by registered mail, the same shall be deemed

delivered when deposited in any United States Post Office,

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· ' . "

properly addressed as herein provided, with postage fully

prepaid.

32. RESTORATION OF PREMISES

Upon the revocation, surrender or expiration of

this Lease, the Lessor or surface owner may require the

Lessee to restore the leased lands to their original condition

insofar as it is reasonable to do so within ninety (90) days

thereof, except for such roads, excavations, alterations or

other improvements which may be designated for retention by

the surface owner, the Lessor or its agency having jurisdiction

over said lands. When determined by the Lessor, surface

owner or such State agency, cleared sites and roadways shall

be replanted with grass, shrubs, or trees by the Lessee.

33. HEADINGS

The paragraph headings throughout this Lease are

for the convenience of the Lessor and the Lessee and are not

intended to construe the intent or meaning of any of the

provisions thereof.

34. REFERENCE

Unless specifically indicated otherwise, the

regulations referred to in and governing this Lease shall

be Regulation No. 8 relating to Regulations on Leasing of

Geothermal Resources and Drilling for Geothermal Resources

"in Hawaii approved and adopted by the Board on March 10,

1979, and all terms used herein shall be given the meaning

as set out in Rule 1.5 of said Regulation 9.

35. INSOLVENCY

In the event the Lessee at any time during the

term hereof is insolvent under any of the provisions of the

Federal Bankruptcy Act, or makes a voluntary assignment of

his assets for the benefit of creditors, or is adjudged a

-42-

, . . "

bankrupt, either upon Lessee's voluntary petition in bank-

ruptcy, or upon the involuntary petition of Lessee's creditors,

or any of them, or should an attachment be levied and permitted

to remain for any unreasonable length of time upon or against

the interest, rights or privileges of Lessee in or to any

geothermal res?urces produced from the wells drilled by Lessee

upon the leased lands, then, upon election by the Lessor,

all of the interests, rights, and privileges of Lessee in

and to all geothermal resources produced and s4ved from the

leased lands by reason of Lessee's operations thereon, shall

terminate upon receipt of written notice from the Lessor

advising that the State has so elected. In such event the

Lessor shall have, and Lessee, by the acceptance hereof,

hereby gives the Lessor the right, option and privilege to

cancel and terminate this Lease and all of the terms and

provisions granted hereby, and all of the rights and privi

leges of Lessee in and to or upon the leased lands and in and

to any geothermal resources produced and saved from the

leased lands by reason of Lessee's operations thereon, and

all of Lessee's rights and privileges granted by this Lease

shall terminate immediately, upon receipt of written notice

from the Lessor that the Lessor has so exercised its option.

36. SUBSIDENCE. Any subsidence to the leased or adjacent

lands shall be considered pursuant to 7.7 of Regulation 8.

37. WORKMEN'S COMPENSATION INSURANCE

Lessee shall at all times in any and all operations

under this Lease and in any and all work in and upon the

leased lands carry full and complete Workmen's Compensation

Insurance covering all employees.

38. SUCCESSORS

. The term "Lessor" qerein shall mean and include

-43-

',.

Lessor, its legal successors and assigns, and the term

"Lessee" herein or any pronoun used in place thereof shall

mean and include the masculine or feminine, the singular or

plural number, and jointly and severally individuals, firms

or corporations, and their and each of their respective heirs,

successors, personal representatives and permitted assigns,

according to the context hereof.

39. SEVERABILITY

If any provision herein is judicially determined,

to be invalid, it shall be considered deleted herefrom and

shall not invalidate the remaining provisions.

40. GEOTHERMAL OWNERSHIP

If the Lessee hereunder is the surface landowner

it is mutually agreed that issuance of this Lease by the

Lessor and acceptance thereof by the Lessee shall not be

deemed or construed to be a waiver of, and shall be without

prejudice to, any claim of ownership to the geothermal

resources by the Lessee and Lessor incidental thereto.

41. LEASE TERMS VS. REGULATION 8

Unless indicated otherwise herein, Regulation 8

shall supersede any of the lease provisions herein which

conflicts with said Regulation.

42. APPLICABILITY OF LEASE

This lease is being issued to the Lessee as assignee

and holder of the occupier's rights to a mining lease and

shall not be applicable to those parcels of lands where the

" Lessee has not acquired such rights.

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o

IN WITNESS WHEREOF, the parties hereto have caused

these presents to be executed this 10~ day of ;:\1 i r) •• <!-

19 Cf:,\

APPROVED BY .THE BOARD OF LAND AND NATURAL RESOURCES

AT ITS MEETING HELD ON

~~N .. U\.h.<.( '0) ''\$1 cs

APPROVED AS TO FORM:

-0

STATE OF HAWAII

LESSOR

BAru~WELL GEOTHERl4AL CORPORATION

By ~I~t-s----------------------------

LESSEE

-45-

,

, ..

STATE OF HAWAII

COUNTY OF

On this

) ) SS )

______ day of , 19 ___ ,

before me personally appeared -------------------------------and _______________________________________ to me known to be

the person(s) described in and who executed the foregoing

instrument and acknowledged that executed the same ------as free act and deed. ----

Notary PUblic, State of Hawaii


~TA'!a~",PF HAWAII )

f..)I V\.. J J""- _I . . ,. • }) SS C UN'l'Y OF .JtJU / ~

On this z41b day of q~. . 19fjL.

before me appeared ~.JJ. J(1h?,/~ and C:dl ~~ , to me personally

known, who, being by me duly sworn, did say that they are the

~"b tilt &NJ..~ 9Ivtt ~ ~nd p~

--------------------, respectively, of

gm~QQ)9~ , and that the seal affixed to

the foregoing instrument is the corporate seal of said cor

poration, and that said instrument was signed and sealed on

behalf of said corporation by authority of its Board of

--=('f\{Y\lgYU~_---.;;,JJ_. JCt _____ n __ :'6~· ___ ~_ and Directors, and the said

__ <J~0l~ __ ~~ ______ · ______________ acknowledged that they executed

said instrument as the free act and deed of said corporation •

. Notary public, State of Hawaii


c'

, . . .

EXHIBIT A

Lands situate at Kapoho, Kaniahiku, Keahialaka and Pohoiki, Puna, Hawaii, being all of those certain parcels of land (portions of the land described in and covered by:

1. Royal Patent 4497, Land Commission Award No. 8559, Apana 5, to C~ Kanainai

2. Royal Patent Grant No. 3209 to Robert Rycroft; and

3. Land Patent No. 8094, Land Commission Award No. 8559-B, Apana 15, to Wm. C. Lunali10 designated by Tax Map Key as follows:

TAX MAP KEY TAX MAP KEY AREA

1-3-45:9 ~ 1-3-46: 60-1-3-45:10 / 1-3-46: 61~ 1-3-45: 14/ 1-3-46:62· 1-3-45: 16/ 1-3-46:63 1-3-45:17/ 1-3-46:64

1-3-45 :25 I 1-3-46:65 1-3-46:66

1-3-45: 22/ 1-3-46:67 1-3-45:21/ 1-3-46:68 1-3-45 :18/ 1-3-46:69

1-3-46:70/ 1-3-46:2/ 1-3-46:71 1-3-46 :3/ 1-3-46:72, 1-3-46 :4/ 1-3-46:73' 1-3-46 :5/ 1-3-46:74", 1-3-46 :13/ 1-3-46:29 1-3-46:14/ 1-3-46:30/ 1-3-45:15/ 1-3-46:33/ 1-3-46 :16/' 1-3-46:34 1-3-46:17/ 1-3-46:35 1-3-46:18/ 1-3-46:36' 1-3-46:191 1-3-46:37 1-3-46:20/ 1-3-4&:38 1-3-46:21/ 1-3-46:39 . 1-3-46:22/ 1-3-46:40 1-3-46 :23/ 1-3-46:41 1-3-46:24' . 1-3-46:42 1-3-46:25/ 1-3-46:43

1-3-46:44 1-3-46:761" 1-3-46:45 1-3-46:78' 1-3-46:46 1-3-46:79' 1-3-46:41 1-3-46:81 1-3-46:48 1-3-46:82

1-3-46:49 1-3-46:84' 1-3-46:52 1-3-46:50 (Subtotal of 1-3-46:53 1-3-46:51 foregoing) 77.0000 acres 1-3-46:54' 1-3-46:55 1-3-08:06' 140.0000 acres 1-3-46:56 l-3-46:51 1-3-08:01/ 160.2920 acres 1-3-46:58 1-3-46:59 1-3-0a:19/ 227.5910 acres

1-3-09: 07/ 119.1800 acres

1-4-0-1: 20 /(portion) . 45.0738 acres

TOTAL 769.1368 acres

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INTj;~NAT!CNAL, U'K.

Environmental Baseline Report

Prepared for Geothermal Exploration and Development Corp.

by S.M. and B.Z. Siegel

26 January, 1981

~-----------------.,-

... o

CONTENTS

Summary

A. Chemistry of Air and Soil

B. Plant Sampling

C. Avifauna

D. Botanical Survey

E. Archaeological and Historical

Site Reconnaissance

F. Maps

G. Personnel

o

•

'.,.

... o o

SUMMARY

A standard environmental baseline study was carried

out at the Tokio Corporation geothermal prospect which

extends northeasterly from the area S. of HGP-A to the

area W. of the Daiichi-Seiko Prospect (see maps, Section F).

Environmental chemistry suggests a weak trend toward

HGP-A area-like features at Stations 1 and 2 to Daiichi-like

characteristics at prospective drill locations 5 and 6.

The area is disturbed, ecologically and heavily repre

sented by exotic and non-endangered native birds.

Although there is good evidence for Hawaiian agricultural

practice, no evidence of pre-historic or early historic

era sites was noted.

A few areas of concern and caution are pointed out

including old Hawaiian use of, lava tubes and nesting areas

of the Hawaiian Hawk. Of the potential endangered plant

species, none were found.

------'-------------_ ... , .. ,-

I .-r o o ,

A. Chemistry of Air and Soil

o o Over the range of proposed exploratory sites fixed gases

showed no variations of interest or significance, being

generally below detection levels. (Table 1)

Air mercury levels were highest toward HGP-A (site 1)

and fell to a minimum at sites 5 and 6 on the edge of the

Daiichi prospect (Table 2). This is-fully consistent with

previous independent aerometrics data taken over an extended

period of s~udy. The significance of the high values around

HGP-A is not clear. but it is related to Kilauea East-Rift

activity, not to a local wellhead source of mercury.

The air mercury trend which varies from a low of 0.51 ~g.m-?

or by 58% is not paralclled in soil levels, which seem to

fluctuate randomly around a mean of 48 ~g.m-3 by about +10-11%

(Table 3).

Soil arsenic,·unlike mercury, shows a possibly significant

trend from sites 1 and 2 to sites 5 and 6 (Table 4). All

arsenic values were in fact low, but the distributions of the

lowest toward HGP-A is again consistent with earlier baseline

studies.

•

o o

Table 1 Fixed Gases at the Exploratory Sites

26-29 December 1980**

Gas Site No. H2S 502 CO CO2 NO x

ppb ppm ppm % ppm

1 <5(3)t <0.05(2) <10(2) 0.033 <0.03

2 <5(3) <0.05(2) <10(2) '0.035 <0.03

3U* <5(3) <0.05(2) <10(2) 0.037 <0.03

3 <5(3) <0.05(2) <10(2) 0.034 <0.03

30* <5(3) <0.05(2) <10(2) 0.034 <0.03

4 <5(3) <0.05(2) <10(2) 0.033 <0.03

5 <5(3) <0.05(2) <10(2) 0.034 <0.03

6 <5(3) <0.05(2) <10(2) 0.035 <0.03

0

*3U and 3D are respectively, 300 m upwind and downwind of Site 3.

**During this period, temperatures of 22-250 C and light trades of ca 5 knots were recorded. Sky <10% cloud cover.

t() ~ No. of replications

•

',. o o

Table 2 Air Mercury, Sites as in Table 1,

26-29 December, 1980

Site No. Sample Sample AV~3 a b l1go m

1 0.68 0.92 0.80

2 0.60 0.72 0.66

3U 0.52 0.56 0.56

3 0.48 0.52 0.50

3D 0.60 0.48 '0.54

4 0.56 0.48 0.52

5 0.55 0.50 0.52

6 0.50 0.53 0.51

Air samples are ~ 2 hr. averages and represent minimum sample volumes

of 0.2 m 3, more typically 0.35-0.5 m3•

Site

I

2

3U

3

3D

4

5

6

o

Table 3 Soil Analysis for Mercury

Sample a

48

42

°48

56

43

50

48

49

Sample b

39

46

44

48

47

46

58

59

Samples of 12-16 g prepared by HN03 digestion

o

Ave ppb

44

47

46

52

45

48

53

54

o 0'

Table 4 Soil Analysis. for Arsenic

Site Sample Sample Ave a b ppm

1 0.10 0.13 0.12

2 0.18 0.12 0.15

3U 0.18 0.16 0.17

3 0.22 0.19 0.21

3D 0.19 0.26 0.23

4 0.30 0.26 0.33

5 0.35 0.33 0.34

6 0.37 0.32 0.35

Soil samples of l2-l6g prepared by HCI dige.stion

.. ,

o

. B.' Plant Sampling

\

Site

1

2

3U

3

3D

4

5

6

o Q

Table 1 Leaf" Tissue Mercury Analysis

Species

a Metrosidcros (ohia) b Psidium (guava) c Pluchca . d Dicranopteris

a Ohia b P1uchea c Dicranopteris d Nephrolepis

a Ohia b Guava c Pluchea d Rubus e Nephrolepis

a Guava b Rubus

·c Pluchea. d Nephrolepis

a P1uchea b Dicranopteri:s c Nephrolepis

a Guava b Pluchea c Dicranopteris d Nephrolepis

a Obia b Guava c Pluchea d Dicranopteris

a Ohia b Guava c Pluchea d Dicranopteris

*Based on 8-12g leaf samples

Hg Content* ppb

200 89

206 88

170 168 81 80

139 170 1,60 100

80

106 91

151 72

155 71 80

96 169 117

76

130 ·106 186

76

136 112 196 84

•

..

Table 2 Maximum Expected Rare, Threatened or Endangered

Species 1n Tokio Geothermal Prospect

Family

Apocynaceae

Campanulaceae

Goodeniaceae

P1ttosporaceae

Rubiaceae

Species

Rauvolfia remotiflora Deg. & Sherff

Clermont1a hawaiiensis (Hbd.) Rock var.Uilwniiensis

Scaevola kilaueae Deg. var. K11aucae

Pittospor1um hosmer1 Rock var. hosmer1

Bobell t1mon1oides (Ho.ck.) Hbd.

o o . , .

•

~3u.

' .. o o

Among the six potential exploration sites, Pluchia was

found at a11i guava, and the fern Dicranopteris, were found

at 5 locations; and Ohia, with the fern Nephrolepis was found

at 3 (Table 1).

At station 3, indicated species are differentiated, with

open ohia-guava woodland to the NE (wpwind and mak~i) and a

denser, less diversified' fern and ~erb community on the makai .

(downwind and SW) side of Pohoiki road.

With respect to leaf mercury content. there' is suggestion

of a down-trend in ohia and in guava, starting from station 1,

but it is of questionable significance. Other species were

clearly random.

For the same species (Pluchea, Nephrolepis) at site 3,

there is only a normal variability in the. range of ±S-1%.

The area of the 6 exploratory sites is known to harbor

rare threatened or endangered species in 5 families (Table 2).

None of these was found.

Typical vegetation at sites I, 3v, 3 and 5 is depicted.

These views are not unique to one or another, but are common

through the Puna District.

o o

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•

C. Avifauna

o

There were six study sites covered durine the survey. Arbitrarily

assigned site number$ are shown on the map (sec. F). Due to similarities in'

~ite characteri~tics, primarily vegetation type and location, sites 1 and

2 and sites 5 and 6 are treated as single unit$ in this report. Sites 3 and 4

consist largely of cleared lands with some second growth ve8etation that is

dominated by exotic plant species.

Sites 1 and 2 arc dominated by native plant species in roughly three

different communities: 1) mesic 'ohi'a (Mct~osideros collina) forest with I

a native under$tory of small trees, shrubs, and herbs, 2) 'ohi'a-uluhe

(Dicranopteris linearis) scrub, 3) Andropor,o~ virr,inicus-native shrub~native

herb second growth. Some exotic plants are fou~d in all three communities.

Because the sites are so close and cover such a small area, birds on the site

move freely from one community to another, so I did not attempt ~o characterize

the three communities separately. It should be noted that the actual work

area on site 2.had been cleared at the time of the survey.

Site 3 has been recently cleared, apparently in preparation for papaya

planting. Second growth forest with 'ohi'a, lama (Diospvros sandwicensis),

christmasberry (Schinus.terebinthifoliun), mango (Manr.ifera indica),

Eucalvptus spp., hala (Pandanus spp.), guava (Psidium r.uajava), strawberry

guava (~. cattleianum), and an understory consisting mostly of exotic plant

species.

Site 4 has also been cleared, though clearing must have occurred some years

ago. . Second growth forest contains nearly all exotic species except for

'ohi'a. Exotic plants on the site inClude rose apple (Eucenia jambos),

mango, hala, Albizia spp., guava, strawberry guava, and kukui (Aleuritos

moluccana). Understory plants include thimbleberry (Ruhus rosaofolius),

o o molasses grans (Melinu3 minutif!ora), ti (Cordyline terminalin), honohono

(Commelina diffuna), and Pluchea.

Sites 5 and 6 have been cleared in part. Cleared areas have second

growth ~crub forest including hala, guava, strawberry guava, albizia, 'ahi'a,

molanses grass, sword fern {Nephrolepis spp.), banana, sugar cane, Lantana

camara, and tie Uncleared areas consist of' mesic 'ahi'a forest with native

trees shrub.s and herbs in the understory. The two communities were treated

as one site during the survey because the area is of such small size in relation

to bird movements.

Methods

The six sites were surveyed on 29 and 30 December, including an evening

search for owls. Each site was censused twice although on the cleared sites

bird species present were recorded but not counted. Table 1 contains scientific,

Hawaiian and vernacular names (according to Pyle 1977) on the species recorded,

as well as the survey results.

Data from censuses on sites 1, 2, 5, and 6 were used to calculate two

population measures for each species: percent frequency and relative abundance.

Species not observed during formal census periods are listed, but were not

included in the calculations.

Percent frequency, which gives some indication of the uniformity of

distribution on the site is calculated using this formula.

number of censuses on which species is .det~cted

percent frequency = total number of census x 100

The percent relative abundance, which gives an indication of numbers of

individuals of species relative to one another., is calculated as follows:

percent' relative abundance number of ind~vid\l"lls countC'd in each srecies

= number.of individ~ls counted in all species

-~---.--.-

.. . o o

Percent relative abundance and percent· frequency do not provide estimates

of absolute species densities. However, these values are easily replicated

by other investigators and are appropriate for a baseline survey such as this one.

Results

As the data in Table 1 show, only one native Hawaiian bird, the '10 or

Hawaiian Hawk, occurs in the vicinity of the six sites. Although the scrub

and mesic 'ohi'a forests found on sites 1, 2, 5, and 6 are si~ilar to forests

in which native passerines (~ongbirds) like the 'Apapane and 'Amakihi occur

(Banko and Banko 1979, Conant 1980), they di~ not occur on these sites. This

is probably due to the fact that native plant communities are patchily'

distributed and limited in extent in the general area of the proposed drill

sites. Furthermore, it seems likely that future land uses (e.g., papaya

orchards) are likely to decrease the quality of habit~t for native birds.

The avifauna or the site is typical of disturbed lowland mesic forests

in the Puna district of the Big Island. The exotic bird species present ~n

the sites are among the most common urban and lowland forest birds in Hawai'i.

Impact Assessment and Abatement

Noise generated by proposed drilling is likely to have a disturbing effect

on both native ~ndexotic birds. It is appropriate that mitigative measures

be taken during the breeding season of the '10 (approximately May through

August). ?revention of disturbance to this endangered species by baffling . .

. wells and appropriately timing noise production at wells. is strongly recommended.

o L~terature Cited.

Banko, P. C. ·and W. E. Banko. 19·79. Historical trends in passerine populations in Hawaii Volcanoes National Park and vicinity. Proceedings Second Conference on Scientific Research in the National Parks, 26-30 November 1979, San francisco, California.

Conant, S. (in press) Status and distribution of birds in the Kalapana Extension of Hawaii Volcanoes National Park. Western Birds.

Pyle, R.L. 1977. Preliminary list of the birds of Hawaii. 'Elepaio 37: 110-121.

TABLE 1. List of birds at proposed geothermal site (* = endangered, E = endemic, I = indigenous, X = exotic).

Scientific name

Family Accipitridae (Hawks, Eagles) *Buteo solitarius - E

i~milY Tytonidae (Barn Owls). Tvto alba - X -----

Family Columbidae (Pigeons, Doves) Streptopelia chinensis - X

Family Ti~aliidae (Babblers) Garrulax canorus - X

Family Zosteropidae (white-eyes) Zostercps japonicus - X

Family Ploceidae (Waxbills, Hunias; Weaver Finches) Lonchura punctulata - X

,.~ilY Fringilidae (Cardinals, ( Fir.ches) ", . Cardinalis cardinalls - X

'Carpodacus mexicanus - X

Hawaiian and Vernacular Names

'10 or Hawaiian Hawk

Barn Owl·

Spotted Dove (Chinese Dove)

Melodious Laughing-thrush. (Hwa-mei)

Japanese White-eye

Spotted Kunia (Ricebird)

Cardinal

House Finch (Linnet. Papayabird)

n • Frequency e atlve Sl'te 3

Abundance

observed by workers on· site, but not during survey

heard on site

probable-not recorded

50\ 2\

10,0\ 38\

observed on site

75\ 6\

100\ 54\


. probable-not recorded


observed on site

observed on site

observed on site

observed on site.

observed on site

Site 4




observed on site

observed. on site'

observed on site

observed on site

observed on site

observed 0:

site

heard on site

50\ 6\

75\ 10\

100\ 26\

25\ 3\

100\ 10\

100\ 45\

o •

D. Botanical Survey

,

o o

....

Exploratory sites 1 through 6 near the HGPA plant in PlUla were

visi ted on January 13, 1981. A walk-through survey of the vegetation

wa~ conducted at eadl site, focusing on the structure and specics comp-I

osition of thc plant coveT. Structural aspects included height and

closure of the tree canopy, range of trce trunk diallletcrs, vegetation

layers prescnt, plant lifefonns present (ie. '- shrubs, ferns, vines, etc.),

and relativc age of the vegetation. Aspects of species composition

included relative species diversity on the sitc and specie~ type by

origin, ic., ~~tive, Polynesian, or exotic species. Native specics are

those which· are tllought to have reached the Hawaiian Islands without

the aid of man. Polynesian species are those carried to the Islands by

Polynesian (Hawaiian) ilIllligrallts. Exotic spccics are those introduced

to the Island..c; by JIl'ln since the arrival of Qlptain Cook in 1778. No rare

native pl:mt species were encolUltercd during this survey.

As used in this report, the terms "scattcred",. "open", and "closed"

refer to degree of cmopy closure or cover. In a "scattercd" canopy

the CTO\i1lS of the trees cover 5-20 percent of the ground arca; "open"

. c:mopy covers 20-60 percent; "closed" canopy covcrs 60-90 perccnt.

Site 1.

Location: 2800 1 from IIGPA lieU si tc' at headjng umo , or approximately

600 1 from the \'1est cnd of lIina10 Street at heading 1~lOo.

o

Description: TIle forest in this area is successionally yOlUlg and ' ,j

domin:lted hy native species. "Ohi' a (Metrosideros collina) trees from

4 to 10m tall fonn an open canopy, wi th scattered taller 'ohi' a to

15m he ight. TIlcse trees are from 2 to about 2San in diameter, the

average tree heing about Scm in diameter. Below this tree layer is a . .

scattered shruh layer of shorter 'ohi 'a. The ground is entirely covered

in uluhe fern (Dicranopteris linearis), a native species. which f01111S

dense mats from 1 to 3m, deep on the site •. While species di,versity is

relatively low, the uluhe mat hosts scattered individuals of a native

sedge (Machaerina angustifolia), an exotic grass (AndI"QJl?gon virginicu.c;),

an exotic orchid (/\rundina hmnhu."aefolia),. arid an exotic s.hrub (Pluchea

odornta ). Large mango trees grow both to the north and to the east of

the site. Otherwise, evidence of Polynesian or other cultiva:t:ion is slight

on si te 1.

Site 2~

Location: 1840' from the HGP/\ plant at heading 1470 , which places the .

sitc inullediately west of the first bend in the first southerly dirt· road

cast of llinalo St. .

l)cscriptiot~: TItis site ho~ts a t:l11 statured stand of relntively old,

largc trees. TIle canopy is closed in places, more open else,,,here, \vi th

a fl.'\" emergent 'ohi' a at ile:lrly 20m. Generally, the canopy is 12 to 16m

tall :1I1d composed of 'ohi 'a, Person americana, and a few other native and .

exotic·tret' species. A second tree layer reaches to about 8m and is

largely of the n~ltive PsydlOtria .:2. and the exotics Persea americana

and Eugt'nia J:unhos. TI1C vegetation is quite diverse in form; in addition

to the native .md exotic trees, the site is shared hy native and exotic

o o

vines, grasses, shrubs, ferns and native tree ferns. The understory is

open under the tall trees. r~va thickets lie to the north and remn~t

sugarcane field to the south of the site's center. Site 2 shows consider

able evidence of Polynesian occupation, including a Polynesian-introduced

yam (Dioscorea pent!!J?hylla) and the culturally important natives. Pipturus

h:lWaiensis and Freycinetia arhorea in ahluJdance. nle vegetation is

gen~rally of very mixed origin, indicative of frequent ~nd widespread

dis turhance in the pac; t.

Site 3.

Location: 2800' from the IIGPA wbll site at heading l22°.

l~scription: Site 3 lies mostly on recently cleared land south of the

Pohoiki Road. A strip of mixed native and exotic· forest from SO to 200'

wide lies parallel to and south of the road and horders the site. TIlis is

a remnant of relatively old 'ohi'a forest generally taller than 10m and

of high species diversity. TIle vegetation of the site itself, lv-her intact,

is~ mostly scattered YOlUlg 'ohi '~a from 1 to Sm tall, 3em average diameter,

\D\ucrl:1in hy a ~p3rsC shruh laycr. nlC yOWlS a' a upon which this vege-·

tation stands is everywhere covered hy lichens.

Site 4.

I.oc."ltion: 40(lO' from IIGPA well site at heading 10So.

fcscription: 1\"0 v<"get."ltion t)l"lC'S occupy site 4. ~tudl of the site

hosts scattered 'ohi' a of small (ahout oem) averagc di arncter and 2 to

8m height underlain hy a solid mat of U1W1C fern. Exotic shruhs arc

... o o

frequent in this fern mat. These inclucle Psiclium gU:Jjav:J, Pluchea

000 rata , ancl Tihouchina semiclecmdra. Exotic grasses and the bandJoo

orchid (Artmdiml hamhusaefolia) also share the site. Adjacent to this

scatterecl 'ohi 'a/uluhe vegetation is an 'ohi 'a stand of 6 to 14m in

height, ahout lUcm average diameter, ancl wi th an open or occassionally

closed canopy. A second, shorter layer of 'ohi' a reaches to 3m. TIlis

stand is also tmderlaih by a mat of uluhe fern with occassional exotic

specics.

Sitc 4 shows little or no sign of Polynesian cultivation. Spccies

diversity is relativcly low.

Sitc s. IDeation: 4S()() , from IIGPA wcll site at 860 , or about 1000'. from the

west cnd 'of Lauone St. at 860 •

l~scription: n,C vcgetation on site 5 is a very mixed mosaic of native,

Polynesian, and exotic types. n,C area has heen altered to a high

degree hy man's activities. An "ishmd" of tall trees on the site is

composed of matuN 'ohi 'a (6 to 13m tall, 2Scn avcrage diametcr), a few

other nativc tree species, ancl large Polynesian and cxotic tree components.

Shruh~ and vincs are scattercd tmdor this tree layer and arc mostly

exotic species. Exotic gr:lsscs cover much of thc grolmil. n,is "isl~nd"

is surrolulJcd hy a mosnic of renU1:mt sugnrcanc ficld, gU:lva thicket,

. uluhc fern mat, anJ dcn~ely vcgctated ~pcning~ wi th Andropog2!!. vi rginictL<t,

ATlUlclin:l hamhu~al'foli:J, and P~iditml c,uai:lva domin"ltin~. n,C sitc ~hows _______ L , '

mudt cvhk'llcc of POl)'ll'~inn culti vation, inc1u~ing patches of Aleuri tcs

mol1U"·'Ul:l , Pand:mus odoratissintll.';: Cordylinc tcnninn1is and Zinl~iher

%.cTlunhet. Spccies divcr~i ty i~ relatively high. RcnUlant nativc species

o

are indicative of a relatively old and large-statured original forest.

Site 6.

Location: 4200' from lIGPA well site at heading 730 , or 500' from cast

end of llinnlo St. at heading 460 •.

Description: TIlis site overlaps an wldisturhed 'ohi' a/uluhe forest and a

highly disturbed power-line right-of-way. In the intact forest on

ei ther side of the cleared right -of -way the 'ohi' a is successionally

young, of Scm average diameter, and fonns an open C3J10PY of 8· to 12m

in height. Uluhe fern forms a thick (.S to 2m) IMt throughout the tUlder~

story. Species diversity is·low, exotic invasion slight, 3J1d there is

little evidence of Polynesian cultivation. TIle cleared right-of~way

includes much of the southern half of the site. The vegetation here is

young, with scattered 'ohi'a from .S to 2m height. Exotic shrubs, grasses

and ferns dominate the clearing ~ith a considerable native sedge and fern

component as well.

Older native' forest occurs nearer the end of !finalo St. Species

diversity is high, and evidence of Polynesi3J1 pl3J1ting is abundant. TIlis

are:) m:ty host several interesting n:ltive species not found W'i"thin the

actual houndaries· of site 6.

. 1

· . o o

E. Archaeological and Historical )

Site Reconnaissance

o o . ,

On January 5, 1981, a walk-throuch reconnain~ance was conducted to ansess

the archaeolo~ical and historical resources within or adjacent to the six

two-nero proposed ~eothermal.well drilling sites: As Mr. William Bonk of the

Univer:::ity of Hawaii at l1ilo wa:3 previouoly contracted to provide the pre-

con:3truction acsessment of these resources, the purpose of this roconnaiscance . .

and report is to .evaluate the presence or absence of such· remains within the

framework of probable prehistoric or early historic land-lIse patterns dis-

cussed in two earlier Environmental Baseline Report:3 prepared by Drs. B.Z. and

S.M. 5ie(,;01. Adjacent areas were also considered as plans for more .extensive .

facilitie:3 could arise if these wells prove successful. The exact location

of the areas surveyed was determined by marked aerial photo~phs and tax-key

maps provided by Geothermal Exploration and Development Corporation, in addition

to a site visit with l·1r. Edward Craddick.

Of the six well sites visited~ four had been bulldozed or so severely

altered that any possible remains have been disrupted beyond recOGnition. In

concurrence with Mr. Bonk's results (E. Craddick, personal communication), no

evidence of prehistoric or early historic land use was noted on the two unaltered

well sitos. Although both these sltes support a dense and continuous cover of

matted ferns (Dlcr~nopt.cri~ sP.) that obscures most cround features. the probabil-

1 ty appears low that sur!'ace remains went undot.ected, as prehistoric land

utili~~tion and modifica.tion were generally less intensive on relatively young

lava flows than on older, nei~hborin~ subntrates better suited to ar,ricultural

and other nativities. Older substrates adjacent to three of the well sites

(well sitos II, V, and VI, as defined belOW) havo a higher probability of cont.ainin~

•

o o surface remaino, ac each supports r.ither a ve~etation type or a number of plant

,species potentially indicative of Hawaiian land une.

A brief description of each proponed well site fo110wp in the order that

they occur from cast to weott

1. Well site located at the western ed~e of Hina10 3treet, Lanipuna Gardens

subdivision or Nw of Puu1ena Crater.

This we1l'site and the immed1ate vicinity i~ underlain by a

relatively you~ pahoehoe flow supporting predominantly native early suc

cessional ve~etation characterized by open-canopy low-stature (3-12 m

tall) ohia (Metro:;ideri~ co11in3.) with a dense underst'ory of matted

fern coveri~~ 95-100~ of the ground surface. No evidence of former

land use was noted in the several surv~y sweeps attempted thro~~h the

dense underbruoh.

2. Well site located N of Puulena. Crater.

As this well site had already been bulldozed, three vegetation

types ad jacent to thin cleared plot were sampled. 'rwo of t.hese vege-

tation communities contained no surface modifications or direct

evidence of land use. One, south to southeast of the drill sito, con-

sists of t.all-stature (16-22 m tall) closed-canopy ohia forest with a

fairly diverse and structurally complex understory composed mainly of

native specios and restinc on rough pahoehoe or aa. The second veeeta-

'lion type, northoa.~t of tho drill site, appe3.rs to grow on the same, or

a very similar, lava flow, but was composed of 3. dense (10-12 m tall)

oven-~ed stand of rose apple (Eur,enla jambos) with only a sparse

undore:row1~h of exotic r,x'3.SSCS and herb specie,s. Fire spreadi~ 'from

the nei~hborin~ cane fields or another source may explain tho ori~in of

this monospoclflc secondary vcr,ctation, particularly as the lava flow

surfaco appears unaltered.

' .. o o

The third ve~etation type liea on an old cinder cone or vont,

coverqd and partially surrounded by a fairly deep Goil dep03it north

to northweat of the drill nite. Components of thi3 ve~etation community

includ.,.l a mix of native npecies, l'olynesian i~troductions, and

hlntorically introduced exotica. 3cattcrcd laree-ataturc ohia

(18-22 m tall) form an cmer~ent layer above a dense 8 meter tall canopy

of ~ava (Pnidlum ITQajava) and an herbaceous layer dominated by ho~ohono

(Comm'el1na diffur-.a), Oplinmenin hirt.ellun, Bonton fern (Hephrolepis

exaltata) and the Polyneaian Introduced vine, pia. (Dio::;corea. pentaphylla).

Nat1ve spec1es such aD hapuu (Cibotium claucu~ amau (Sadleria sP.) and

lIIamak1 (P1pt.UNC sp.) plus suspected Polynesian introductions such as .

t1 (CorOy1ina termIna1I::;), kukuI (Aleurites moluccana), banana (Musa sp.),

and coconut (CocUG nucifer.a).

As d1scussed in the prevIous reports, plant communities such as' this

may be ~ood indicators of l!awal1an-type land use even in the absence of

defin1 ti ve . surface remaina because they .contain ouch a hiGh percentage

and d1versity of Hawaiian introduced and utilized species in addition to

exotic species that were introduced and became common colonizers of'

d1sturbed lands,durincr the early historic period (i.e. 1800-1850). No

evidonce o£ sur£aco modi£ication or structural remains was ap~arent,

other than a sllla11 collection of bottles and a very rusted cylindrical

mo{al drum.

3; Wall si t.e located. W of tho road leadill8 from the Pahoa-Pohoiki road to

tho University of Hawaii Bxperimental 5tation.

A larr,a.tract of land curroundl~ and lncludin~ this proposed

well site Wa3 recently cleared completely by bulldozing. Older

•

o aerial photo~raphs of the area showin~ a tall and dense canopy su~cre~t

that this substrate wa~ relatively old.

4. lIell site located S of the Pahoa-Pohoik1 road and E of the Un1 vcrsi ty of

Hawaii Experimental !3t.ation road.

'this wcll site and the surroundi~ plot had been previously bull-

dozed, a3 evidenced by the eround surface and older aerial phot.ocraphs.

The ve~etation resemblcs the early successional oh1a-uluhe (matted fern).

community dencribed for well sito I with the exception of smaller-stature

ohia and additional exotic species. Fairly deep pockets of orcanically

der1ved soil mixed with bulldozed lava fraements indicate the sub-

strate's~eater aBe and theoretically.~ive it hi~her probability of

havi~ supported some form of Hawaiian land use.

5~ Well site located a1. the end of Lauone Street, Lanipuna Cardens subdivision.

Both the ve~etat10n and ~ound surface at this well site appear

substantially altored. Scattered stands of s~ar cane, and relatively

.deep .deposits of ·soU mixed with lava blocks and fI'at,:,;mcnts suitable

for suear cane cultivation, sueeest that· this area w~ once under cane

cultivation and abandoned, as were several other nearby ficlds. The

present secondary growth community consists of a thick and diverse

stand of predominantly exotic shrubs and yo~ trees (2-6 m tall) with

a dense Ground cover of exotLc grasses. The only evidcnce of possiblc'

Jlawa1ian-type ,land use wa,s .~tchen or indi vidua.l.s of ti, banana, and .

kultui ~owin~a,lon~ the periphory of this vet;etation type and on or

around isolated knolls or out.crops.

6. ~.Joll aHe off the castern odl~o of Bina,lo St.reet, Lanipuna Gardens subdivision.

This unaltered ail or roUOh pahoehoe flow supports.an early suc

cessional open-to-closed c~nopy stand of ohla (R-IO m tall) with a

o 0 dense Cround cover dominatod by matted fern3. No ourface remains were

noted and, an wlth well slto I, the prob~b1l1ty of flndin~ evldenee of

Hawaiian land une on this relatively young 5ubntrate ,10 low.

:Jurroundin~ i.his well si to io a papaya fii!ld to the north, an

evon you~or lava tlow to the west, a bulldozed swath to the south,

and a tall-stature (22 m tall) clooed-canopy ohia forest with a

sub-canopy of lama (l.Jla.~pmn ferrea.), 'ret.raplas.-'lndra hawalnnnln',

and several kukui. A1thou~h this latter veBetation type is more likely

to contain ourface remainn, particularly in association with kukui,

dense ground cover acrain reduced ground vin1bility and mob1lity, and

no remainn were found.

Recommendations

In termo of p~enervi~~ the cultural resources and history of this area, any

further construction or expansion of geothermal well facilities should be placed

on previounly bulldozed or severly altered sections of 'the propert.y. For well

sitos I and VI the bent alternative areas are those covered by the ohin and

matted fern community as the probab1lity of prehistoric or historic remains ls '

low. Duo to the frequent use of lava tubes by the Hawaiians as shelter, burial

chambers, and other activlties, any lava tubes uncovered duri~ construction

should. be, checked for evidenco of human use and, if found, .:I.rl archaeolor;lot should

b~ c.ont.acted.

A more lntonsivo arc~~eolocical reconna1s~~ce ls recommended if expansion

of woll facllltieo includes the older substrate northwest of well slte,II and

went or'well sUss V and VI, as t.he probability of cultural remalns ln these areas

1s still relativoly hi~h. If substantial prehistoric ntructural features are

•

o d1ocovcrcd, dcc1sione on t~o ocope of work required and the sicrnif1cance of

such. remains could be made in conjunct1on w1th the respon~ible State of Hawaii

aeency (1I1~tor1c Sitca 3ect1on of the D1v1~1on of State Parke, Department of

Land and Natural Roeourcoo).

-

o o Bibliography

Bevacqua, R. 1972

and T. Dye

Crozier, S.H. 1971

Ellis, w. 1969

Archaeological Reconnaissance of Proposed Kapoho-Kalapana Highway, District of Puna. Island of Hawaii. Report 72-,). Dept.. Anthropology, B.P. Bishop Mus.

and D .B. Barrere Archaeological and. Historical Survey of the Ahupua' a of Pualaa. Puna District, Island of Hawai1. Report. 7.1-1. Dept. Anthropology, B.P. Bi:mop Mus.

Polynesian Researches. Hawa1i. Rutland, ·Vermont. Charles E. Tuttle Company~

Ewart. N.D. and. M.L.K. Luscomb 1974 Archaeological Reconnaissance of Proposed Kapoho-Keaukaha

Highway, District of Puna, Island of Hawa1i. I1s in Anthropology Department. Bernice P. Bishop Mus.

Handy, E.S.C. and E.G. Handy 1972 Hative Planters in Old Hawaii. Their Life, Lore, and

Environment. B.P. Bishop Mus. Bull. 2)).

Lyman, C. 1924

Pickering, C. 1840-41

Around the Horn to t.he Sandwich Islands and California, 184.5-18.50. Being a Personal Record Kept by Chester Lyman. Hew Haven. Yale University Press.

Journal Kept While on the U.S. Exploring Expedition, 18.38-1840. Ms in the Academy of Natural Sciences, Ph11~elph1a, Pa.

Soil Conservation Service 1972 Soil Survey of the Islands of Hawaii. Washington D.C.

Wilkes, c. 1845

U.S. Government Print.ing Off1ce.

Harrative of the United States Exploring Expedition During the Years 18)8-1842, Under the Command of C. Wilkes, U.S.N. Vol. 4. Philadelphia. Lea and Blanchard.

• o O . The following summarizes some aspects of the known cultural hiotory of

thin port.io~ of South Puna, baaed on early historic journaln, ethnOGraphic

material and Dorot.hy 9. 13arrere's historical survey of Pualaa., an ahupuaa.

north of the :;~.udy area. Keahialaka, the ahupuaa. in which the six ~eotherma1

well oiteo lie, is mentioned in several early journals an a populous coactal

vi1l~~e but these accounts provide little or. no specific descriptions of the

vil1aee or the adjacent upland slope.

ElliS', in hin journal of an 1823 tour of /lawaii Island, states that his

coastal path from Kaimu north to Keahialaka was, other than portions of Kona,

the most populous· otretch of land on the Island of Hawaii (Ellis 19691290-297).

The relative importance of Keahialaka within this populous stretch may be

indicated by its havine boen the residenco of "the chief or eovernor"'of Puna

in 1823 and that as an ahupuaa it extends farther inland (i.e. to an ~levation l

of about 1,100 ft.) and truncates the immedia~ely neiehborin~ ahupuaa.

Arter an archaeolo~ical survey of ·coastal South Puna (1.e. Kapoho to

Kaimu) Bevacqua and Dye s~cest that, of the seven early historic villages

reported in this stretch, only Keahialaka and two other vill~~es still have

det.octn.ble out'face remains. These remains include the Mahinaa.kaka Helau, a

brackish pond, and several probable ~ricu1tura.l complexes (e.a. walled

enc10ouroo and mounds) (Bevacqua and Dye 1972115-16,24). From the early

accouni.o, it. :1ppearn tMt most of the 1301.0 prchistoric.- early h1storic

population in South Puna was concentrated in settlcmonto scattered alon~ the

. coast aceomp:\.nied by cultivated. areas or plantations of varying size. The

distribution a.nd oxtent of t.he:.o settlemonts and cultivated areas most

stronr.ly reflect tho roeion'A topocraphy and mosnie of hiGhly variable sub-

st.rato types resultl~~ from Puna's act1ve volcanic history. Areas with

conot.al confll~uratlons amenablo to flshi~, . and underlain by older substrat.es •

o o with accumu1ationo of or~anic soi10, tended to support 1ar~er more concentrated

populations.

Land-use pattornc of the inland rc~ionn are 1enn clear, as is tho rcla-

tionnhip between thccoantal and inland rc~ionn. Tho pnly nubstantial inland

settlement 1n th1s section of Puna (W1lkes 1&~5Il8J,222) wan located ncar the

present day Pahoa. It is described as beinu ourrounded by laree plantations of

dryJ.and or non-1rril!ated. taro, .banana, cuear cane, and,.ti,s1mllar to tho:Je

found on Kapoho Cone and possibly ~ther areas, such an well slte II, wlth

comparable ash sUbntrates. Several accounts describ1n~ the inland region

south of Pahoa tell of trails crossin~ a ro~h varied~erraln, a few scattered

plantations, and several overn1r,ht shelters.

The use of the inland. areas for agriculture is discussed by Handy and

Handy in their work ~n traditional Hawaiian practices~ Generalizing from

various sourcec, they succest that much of the upland slopes and "forested"

lands from Kapoho to upper Kapn.a.hu, except where interrupted by young lava

flows,- wari planted tn dry-land taro (Handy and lIandy 1972:541) t Other crops

and useful plants such as ti, b:lnana, and kuku1 'could accompany thece taro

patchca, bc1nr; pl:mtcd in either a scattered ma.nner or organ1zed 1nto

"w1ndbreak" or boundary-markinc hodeea. A.D. LobenstQ1n's 1885 map dep1ctlnc

"Ancient Cult1vatinc Grounds" de:f1ned by different subEltrate types, sU{",r:ests

a patchy distr1bution for some inland plantat10ns (Croz1er and Uarr~re

From the o.'11'ly 1800' n on, the population of 30uth Puna ste~ily dec11ned

due to a. nerien of !'Iovere opidemics and cmlc;rotion of the people to lart';cr

vi1lar,es and 1.own'Scaterinr, to increased trnde, G~ar cnne cultivation, and

ranchinr.. Barrhro believes that most of the nub~ictcncc-1cve1 land-use

practices were osncntia11y ~onc by lA50. After a.n 1850 la.w enabled Hawaiian

. . . "

" .

o o commoners to claim ownerohip of lando (l.e. kulcana lands) they had cultlvated

for gencrationo, only two ouch claims were awarded in all of Puna compared

with numerou~l awards claimed and granted elsewhere. Ownership of much of the

land was ret.ained in lar~e un1 ts by eleven alll and the go:vernment. Wlth the

ahupuna of Pualaa as a representat.ive example of the re~ional depopulation as

depicted in the Tax Asscssment Books, the number of recorded taxpayers, other

than the owner, dropped from eight in 1859 to two in 1865, to one in 187',

and finally to none bet.wcen 1875 and 1889 (Cro7.ier and Barrere 1971:16-19).

Land una in Puna from 1870 to the 1940's focused on cattle ranchi~ with I .

variouo 1e~~ees and owners runnina loosely tended herds on marginal pacture

lando, small scale ventures in coffee and other crops, the harvestin~ of

timber and hapuu (Clbotium spp), quarry1n~ stone,' and the growint; of cugar cane.

Primarily in support ot 3~ar cane cultivation, the Hawaii Consolldated Rai1-

way, Ltd. operated a railroad alona a 4O-foot casement that rUns northeast to

southwest rouch1y a half mlle south of the six well sites.

Rocont lava flows and trends in land use that utilize bulldozers for

c1oarinr; ~~icu1tural plots (e.~. for papayas, ant hurl um.s, orchids, etc.) arid

subdlvision lots are rapidly reduclng the amount of unaltered land posslbly

containing evidence or prehistoric land usc. Such developments make the proper

study of tho archaeolo~ical or historical remains found in this region even

more import.ant to understandinr; the cultural history of Puna.

· ,. o o

P. Site Maps

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•

o o

G. Personnel

. .f. f

•

Q'

PERSONNEL

1. General Operations and Environmental Chemistry for Ecotrophics

S. M. Siegel

B. Z. Siegel

2. Avifauna S. Conant

3. Botanical Survey R. A. Holt

4. Archaeology, History H. McEldowney'

o

' .. •

c o KNCY.ffl AND POTENTIAL GEOTHERr-1AL RESOURCES

The southern part of the Island of Hawaii is

dominated by an asymmetrical shielf volcano (Kilauea)

and its associated east rift zones. The active East

Rift of Kilauea, which passes through the Puna District

as a linear, zone approximately 3 mile ±nland f'rom the

coast, was recently proved prospective for geothermal

resources at a site drillled by the Hawaii Geothermal

Project (HGP) near' Kapoho. The HGP-A well is located

adjacent to the lands cited in this application. That

well yielded temperatures and pressures from a geothermal

reservoir capable of generating up to 3 megawatts of

electrical power-- a resource of commercial significance.

The BGP-A wellsite was selected on the basis of geophysical

anomalies together with other evidence. Similar anomalies

exist at other locations along the East Rift Zone from

kilauea Crater to Cape Kumukahi, and establish a geothermal

resource potential on the property proposed to be leased.

Geophysical studies indicate that the geothermal

reservoir tapped by the BGP-A well extends in an elliptical

~aspion·around the well. However, in order to make a

definitive determination of the existing reservoir boundary,

. exploratory wells must be drilled.

Exhibit "B"

..

~

•

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© @ To: Planning Cou,mdssion, County of Hawaii

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CD

•

The undersigned, a partner in Ecotrophics, is environmentally familiar with, those parts of the Puna District currently of interest for geothermal resource exploration. This includes the area within an arc of approximately 3 miles radius extending from the ENE (toward Kapoho) to due S. of Lava Tree Monument (toward Opihikao). Within this area of ca 28 sq. mL, about 4 sq. mi., or 14% has been intensively sampled ornithologically, botanically, ecologically, geoChemically and archaeologically. Environmental baselines have been determined for HCP-A (Univ. of Hawaii), Ashida (GEDCO) and DaiichiSeiko (GEnCO) prospects. The results of these are available in a series of reports including

a •. 'Rerlsed Environmental Impact Statement for the Hawaii Geothermal Research Station Utilizing the HGP-A Well at

,Puna, Is~and of Hawaii. 22 March 1978.

b. Bawa:1:1. Energy Resource Overviews. Work done under a grant from the U.S. Department of Energy by contract (03415609) through the Lawrence Livermore Laboratory of the University of ' California. B.Z. Siegel, Project Manager. Hawai'i Natural Energy Institute and the Pacific Biomedical Research Center, University of Hawaii. In 7 Volumes, June 1980.

c. tnv. Baseline Reports prepared for GEDCO by Ecotrophics on 20 MarCh 1980 and 20 September 1980.

On the basis of 11 years experience in the study of the environmental impacts of natural geothermal processes in Hawaii and over 5 ,years experience at HGP-A I submit herewith the following recommendations in re the current GEDCO request for permission for geothermal. exploration atthc!' well field. consisting of port~ons of L.P. 8094, L.C. ~ 8SS9-B, Apana 15 to Wm C. Lunalilo and Grant 3209 to Rubert Rycroft, ~e.ahialak.a and Pohoiki. Puna Bawai~'.

~n as lINch as one-half of the sites proposed for drilling lie within 0.15 mi. of intensely studied areas and the remainder W'ithin 0.36 lid. or less of thos'a aforement~oned, well characterized areas, there are no hazard-~ E!. adverse impacts anticipated ,!!:2!!. ~ activities and operations prior ~ actually contact:ing geothermal fluid .!!. depth ,~ bringing !!E!. water, steam, gases .!:!!! dissolved solids II !!!!. surface.

And' inas much as the nec$Ssary baseline studies for future assessment of env1ronment~ degradation is in progress and will be completed by Ecotrophics within 30 days fo1~owing this hearing date of 17 December, 1980, I reC01ll-~nd that permission be granted GEnCO to carry out the exploratory drilling program as proposed.

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INTERNATIONAl. INC.

EXHIBIT ftC"

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G. Personnel

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June 15, 1981

MEMORANDUM

TO: Mr. James Detor

FROM: Robert T. Chuck

SUBJECT: Plan of Operations, Barnwell Geothermal Corporation

We have reviewed the material submitted to you by Barnwell Geothermal Corporation as their Plan of Operation concerning Lease No. R-3. The material, specifically the "Geothermal Drilling Program for Barnwell Geothermal Corporation", does not adequately fulfill the requirements of Plan of Operation as outlined in Section 7.2 of Regulation 8.

We recommend the following be submitted:

o A Plan of Operation that includes all of the items as outlined in Section 7.2 of Regulation 8.

o Sectional drawings of each proposed well and well head facilities.

o Detailed plan map of each well site, access roads, water supply reservoirs, and other construction plans, in cluding surveyed property boundaries.

o Up-dated information and records on the recently drilled Lanipuna No. I Well.

ROBERT T. CHUCK

DL:ko

r

GEORGE R. ARIYOSHI

GOVERNOR OF HAWAII

MEMORANDUM

TO:

FROM:

SUBJECT:


Robert Chuck DOWALD

OIVISION OF LAND MANAGEMENT

P. O. BOX 621


April 6, 1981

James J. Detor Land Management Division

J-

Geothermal Resources Mining Lease No. R-3, Barnwell Geothermal Corporation

DIVISIONS: CONVEYANCES FISH AND GAME FORESTRY LAND MANAGEMENT STATE PARKS WATER AND LAND DEVELOPMENT

Transmitted herewith for your review is a copy of Barnwell's March 30, 1981, letter together with the material which accompanied it. Let me know if the plan of operations is okay and we will list it for Board action.

Attachments

cc: Hawaii Board Member Hawaii District Land Office

, o o -.

J BA~'Wt~B GEOTHE~Mj~'{CORPORATidN

8/ APR 1 . A/O: (J March 30, 1981

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Ll!VD D-l .. WATfR-' i:.'ICLOPMENr :~;. :; .\...> ",:,,~I:;':,:r''''

Mr. Susumo Ono, Chairman State of Hawaii Department of Land and Natural Resources P. O. Box 621 Honolulu, Hawaii 96809

Reference: Geothermal Resources Mining Lease No. R-3

Dear Mr. Ono:

Enclosed please find our check in the amount $770.00, as requestect:;~ _; in payment of the first years minimum rental.

We are also enclosing our plan of operations, as required under Rule 7.2 of Regulation 8, comprised of:

1. Geothermal Dri 11 iog Program.

2. Location map showing drilling sites, and access road. Water supply will be provided by 400,000 gallon reservoir at site and shallow disposal pit which will be excavated alongside the drilling rig.

3. A baseline study with revision for follow up monitoring by Dr. S. M. Siegel.

4. Geological data as covered in our application for lease repeated herein for ready reference at this time.

We keep sound measuring devices on hand at the drilling sites, and will take periodic readings during the course of operations.

ECC/sm Enclosures

Very truly yours,


cc: New York Office - W/enc1. Mr. S. Eisenstat, N. Y. - W/encl. Mr. C. Lum, Hilo - W/encl.

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2828 PAA STREET. SUITE 2085· HONOLULU. HAWAII %819 • TELEPHONE (808) 839-mo· TELEX 7238672 • TELECOPIER (808) 833-5577

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GEOTHERMAL DRILLING PROGRAM

FOR

o


PREPARED BY: Willis R. Craddick Clarence J. Mason (Water Resources International, Inc.)

FEBRUARY 1, 1981 (REVISED COPY)

THIS IS THE SOLE PROPERTY OF BARNWELL GEOTHERMAL CORPORATION AND IS NOT TO BE USED OR REPRODUCED WITHOUT THEIR PERMISSION.

o

TABLE or"CONTENTS

GENERAL DRILLING INSTRUCTIONS

SPECIFIC DRILLING INSTRUCTIONS FOR GEOTHERMAL WELL:

General Scope of Work

Site Preparation

Mobilizati.on

Drill ing Pr.ogram, All Measurements RKB Phase I - Conductor Hole Phase II - Surface Hole Phase III - Intermediate Hole Phase IV - Production Hole Phase V - Production Test

Drilling Fluids Program Phase I - Conductor Hole Phase II - Surface Hole Phase III - Intermediate Hole Phase IV - Production Hole

El ectri c L.o.gging Program

Casing Program

Cementing Program

Coring and Testing " .

Deviation Surveys

Well Records

o

"Page

1-2

2-3

3

3

3

4

5

5-6 6"

6

6-7 7

7-9

9

9

10

10

10

. 10

o o General Drilling Instructions

1. Run Totco deviation survey every 120 feet or as needed to control well bore deviation. Hang Totco wire1ine sheave on hook to enable movement of drill pipe while "running inll, and IIpulling out". Keep drill pipe moving, except while shot is gOing off to prevent differential (wall) sticking.

2. Enter on daily log mud temperature 1I0ut ho1e ll and lIin ho1e ll once every tour until we reach 1200 feet. After 1200 feet take temperature every 4 hours and enter on daily drilling log.

3. Each crew is to have one simulated "blow-out drilP per week, with the results entered in the daily drill log. Limit "dri11 11 to 15 minutes. At no time during a "blow-out drill", is mud to be actually pump'ed into the hole with any preventer closed.

4. Have core barrel (in good working order) on the location for use, if required.

5. Strap weld all subs and/or bits run under hole-openers.

6. Run drill pipe float valve in 8-3/4" hole and keep a "wet plug ll

with valve in open position on rig floor at all times.

7. Keep Bagasse, Nut Hulls, Cot~on Hulls, Je1-f1ake, Mica (coarse and fine), Lignite, Bentonite, etc. on-site at all times. Keep covered and protected from the rain at all times.

8. All measurements will be from the ~ of the Kelly Bushing (RKB).

9. Keep hole full of mud at all times, except when drilling without returns.

10. Check operation of B.O.P.E. each round trip or daily, whichever occurs first. Enter in the daily log.

11. Do not use spinning chain on drill collars, use chain tongs ~. Torque 11 II drill collars to 110,000 ft. lbs. Torque 811 drill collars to 56,000 ft. 1bs. Torque 6-3/4" drill collars to 36,000 ft. lbs.

12. Make entries of all pertinent information on drilling recorder chart.

13. Fill out daily drilling reports complete. Log all voids and loss circulation zones.

o o 14. Procedure for mixing air foam mix - ADD to 100 barrels of water in

the fo 11 owi ng sequence:

a. 75 1bs. soda ash over 15 minutes period, b. 1250 1bs. bentonite over 45 minutes period, c. 40 1bs. CMC along with bentonite over 45 minutes period, d. 30 gals. detergent directly into suction pit as mix is

being transferred from mixing pit to suction pit. Over the period of time it takes to transfer the mix.

15. Hold weekly safety meetings (15 minutes) and document with weekly safety meeting attendance records.

16. Contact State Department of Water and Land Chairman or his designated representative well in advance so that he has time to travel to the drill site to witness the pressure tests, etc. Phone numbers are: 961-7279 - Hilo, and 548-7643 - Honolulu.

17. All operations to be conducted in accordance with the State Regulation No.8, Rule 9 governing Geothermal Resources and Drilling, June 1978.

18. Geologist will be on site as soon as circulation is established or after the 13-3/8" casing is set.

Specific Drilling Instructions for Geothermal Well

WELL PROJECT: LOCATION: OPERATOR: PARTNERSHIP: CONTRACTOR: CONSULTANTS: PREPARED BY: Bill R. Craddick/C1arence J. Mason APPROVED BY:

Operator

APPROVED BY: Consultants

" "General "Scope"of"Work:

1. Prepare access road and well site, mobilize drilling rig.

Date

Date

2. Drill a 26 inch hole and case with 22 inch casing to a depth of 68 feet.

-2-

o o 3. Drill a 17-1/2 inch to 20 inch hole and case with 13-3/8 inch

casing to depth of elevation -400 feet.

4. Drill a 12-1/4 inch hole and case with 9-5/8 inch casing to a depth of 3800+ feet.

5. Drill a 8-3/4 inch hole to total depth of 7000+ feet, or as required by the operator. -

6. Flow-test well, install geothermal well head, demobilize drill rig and restore drilling site.

A. SITE'PREPARATION

1. Prepare access road, drill site, and reserve pit - per GEOCO Plan No. 7904.

2. Construct water reservoir (240,000 gals. capacity), and install liner.

3. Construct cellar per GEOCO Plan No. 7903.

4. Install IIdead-men"(guy line anchors).

B. MOBILIZATION

1. Mobil i ze WRI dri 11 ing ri g #4.

2. Mobilize Cement Pumping Unit, Bulk Storage Unit, and extra storage capacity as needed.

3. Mobilize WRI electri.c logging unit.

C. "DRILLING PROGRAM, ALL MEASUREMENTSRKB

Phase'I'~ Conductor'Ho1e 1. Dr; 11 a 12-1/4" p; 1 ot hole with mud to 102 feet. Start pi 1 at

hole by center punching inside existing 30 inch casing with 26 inch hole opener and 12-1/4 inch pilot bit.

2. Open 12-1/4 inch hole to 17-1/2 inch to 100 feet.

3. Open 17-1/2 inch hole to 26 inch to 68 feet.

4. Bail mud out of hole down to 68 feet.

5. Cut off 30 inch pipe at cellar floor and remove same.

6. Run 22 inch casing and cement. (Refer to casing and cementing programs).

7. Nipple up flow-line and air drilling head to 22 inch casing.

-3-

o o Phase II - Surface Hole l~ Drill a 17-1/2 inch hole with air mist, depending on compressor

availability, or mud (refer to drilling fluids program) to a depth of 600 feet or elevation +20 feet. If air mist is circulation media, change over to mud at elevation +20 feet. Notifyrepresentative·of·the State'upon reaching elevation +20

·feet.

2. Bail hole until clear water is obtained. Catch three, one gallon samples. Turn over a one gallon sample to State representative.

3. Run wireline water probe to establish water level. Enter results on daily drilling report.

4. Run wireline temperature survey-top of water and bottom of hole and enter results on daily drilling report.

5. Finish drilling 17-1/2 inch "pilot hole" with mud to 13-3/8 inch casing depth to elevation -400 feet. (Make 10 feet extra hol e).

6. At this point, an attempt to establish full (100%) circulation with mud will be made - (refer to drilling fluids program on page 6). The results will determine the 13-3/8 inch casing, cementing method.

7. Condition hole for running casing.

8. Run 13-3/8 inch casing - refer to Casing Program on page 9.

9. Cement 13-3/8 inch casing - refer to Cementing Program on p.age 9. WOC time will be determined by retardation of cement.

10. Cut off 22 inch casi~g at cellar floor.

11. Cut off 13-3/8 inch casing and nipple up as per GEDCO Plan No. 7902. Test the weld on 13-3/8 inch l-IKM Braden Head before nippling up B.O.P. stack complete with choke manifold and kill 1 ines. ,I .

12. Pressure test casing,. choke manifold valve and flanges with blinds rams closed - 600 PSIG for 30 minutes. Pre'ssure test pipe rams and Hydril after starting in hole - 600 PSIG for 30 minutes. All pressure tests to be witnessed by State.

13. Drill out with 12-1/4 inch Mill Tooth Bit and water. Pressure test casing (600 PSIG for 30 minutes) after drilling out each tool. After drilling out cement to 10 feet above the shoe, pressure test entire 13-3/8" casing at 600 PSIG for 30 minutes.

-4-

o o Phase III - Intermediate Hole 1. Drill a 12-1/4 inch hole with mud (refer to Drilling Fluids

Program on Page 8), and TCI Bits to 9-5/8 inch casing depth, (casing depth to be determined by bottom hole temperature minimum .250°F) and Lithology. Land casing in solid formation.

2. Condition mud and hole for logs {make "short trip" to check for fill ).Delay'this operation~ ifpermissible by the State.

3. Run logs - (refer to Logging Program on page 9). Delay this operati on ~ . if· permi ss i b 1 e . by . the State.

4. Condition hole for running 9-5/8 inch casing.

5. Lay down'dril1 collars.

6. Run 9-5/8 inch casing - {refer to casing program on page 9}.

7. Cement 9-5/8 inch casing to surface - {refer to cementing program on page 10}, WOC to be determined by retardation of cement, or minimum of 24 hours.

8. Cut off 9-5/8 inch casing, install WKM expansion spool, and lay down 5 inch drill pipe. Install expansion spool and nipple up as per GEDCO Plan No. 7902. Change pipe rams to 4 inch.

9. Pressure test casing, well head flanges, and choke manifold with blind rams closed - 1000 PSIGfor 30 minutes. (To be witnessed by State Representative).

10. Pick up 8-3/4 inch Mill Tooth Bit, 6-3/4 inch drill collars and 4 inch drill pipe.

11. Pressure test pipe rams and Hydril - 1000 PSIG for 30 minutes.

12. Drill out with water all cementing staging tools, float collar, and cement to within 10 feet of casing shoe. Pressure test casing after drilling out D.V. tools if any and also after drilling 10 feet above the cement shoe, pressure test at 1000 PSIG for 30 minutes. (To be witnessed by State Representative).

·Phase·IV·~·Produttion·Hole 1. Drill out cement and casing shoe with 8-3/4 inch rerun Mill

Tooth Bit by-passing all 'contaminated mud to reserve pit.

2. Drill 8-3/4 inch hole with TCI Bits to total depth with mud.

3. Test after reaching minimum temperature of 390°F, as indicated by drilling break or lost circulation.

-5-

o o 4. Condition hole for logs.

5. Run logs . (refer to Logging Program on page 9) if no further hole drilling is required.

Phase·V·-'Ptoduction'Test 1. Displace mud in hole with water using 4 inch drill pipe (no

collars) float Bit Sub and 8-3/4 inch bit at bottom of 9-S/8 inch casing.

2. Using high pressure air compressor, depress fluid in the hole to the bottom of the 9-S/8 inch casing. Shut in the well and let the fluid heat up to 1000 C+. Release the pressure out of the choke line and flow the well.

3. Flow test well - (under direction of GeothermEx).

4. Kill/cool well with water.

5. Make trip with drill string to check depth and clean out to bottom. If hole stays open, proceed to step #6.

6. Lay down drill pipe and tools. NOTE: Continue to pump water down 9-S/8 inch casing during step#S and #6 to assure well control. If hole does not stay open during flow-test, a slotted 7 inch liner will be considered.

7. Close 10 inch WKM Valve, remove B.O.P. stack and nipple up geothermal well head.

D. DRILLING FLUIDS PROGRAM

'Phase'I'~·ConductorHole 1. Spud-Mud, Water, Bentonite and Lime. Viscosity sufficient to

clean hole.

'Phase II ~ Surface Hole 1. Drilling.blind with mud, use freshwater/gel mud with the

following properties, and maintain: .

a. PH-8.S-9.S with caustic soda - ADD to make up water.

b. .WT.-below 9.3 lbs. per gallon.

c. Vis.-SO/80 (as needed) with Bentonite.

d. W.L.-No control.

e. No samples - drill cuttings.

2. Drilling with circulation or partial circulation, use fr~sh water,' gel/chemical, low sol ids mud with the following properties, and maintain:

-6-

o o a. PH-8.S-9.S with caustic soda - ADD to make up water.

b. WT.-be10w 9.3 lbs. per gallon with water - AODED at shale shaker.

c. Vis.-4S/80 (as needed) with Bentonite.'

d. W.L.-10/lS cc (100 PSIG-30 min.) with CMC.

e. Gel strengths-Int.-O, 10 min.-10/20, with Tannex - ADD at flow-line through chemical barrel.

f. Sand content-below 1% of volume.

g. LCM-S/15% as needed to maintain circulation.

h. ,Samples: 2 sets, 10 feet intervals, WID.

3. Drilling with air mist (using 1-1050 CFM Compressor).

a. Inject 12/15 GPM of air foam mix into air stream. Air foam mix formula and procedure for mixing in General Drilling Instructions.

b. Samples: 2 sets, '10 feet intervals, WID.

PhaSe III -Intermediate:Hole 1. Use fresh water gel/chemical low solids mud with following

properties, and maintain:

a. PH-10.5-l1.5 with caustic soda - each tour will maintain treatment through chemical barrel at flow-line.

b. WT.-below 9.3 lbs. per gallon with water at flow-line.

c. Vis.-45/50 sec. (1500 cc in-l qt. out with marsh funnel).

d. W.L.-below :10 "cc OO~PSIG"30 min.) with CMC - ADD slowly through hopper with bentonite).

e. Gel strengths-Int.-O, 10 min.-0/5 with CC-16 depending on loss circulation. _

f. Sand content-below 1% of volume.

g. LCM-S% or as needed to maintain circulation.

h. Samples: 2 sets, 10 feet intervals, WID.

PhaseIV'~'Pt6duttion'H61e 1. Use fresh water gel/chemical low solids mud with following

properties, and maintain:

-7-

---------______ ,_'\~

o a. PH-10.S-ll.S with caustic soda - (each tour will maintain

treatment at flow-line through chemical barrel).

b. WT.-below 9.3 lbs. per gallon with water at flow-line.

c. Vis.-38/40 sec. with bentonite.

d. W.L.-below 10 cc (100 PSIG for 30 minutes) with high viscosity CMC. ADD through hopper slowly along with bentontie.

e. Gel strengths-Int.-O 10 min.-O with Spersene and XP-20.

f. Sand content-below 1% of volume .

. "g. LCM none-unless partial loss circulation occurs.

h. Samples: 1 set, 10 feet intervals, WID.

2. Procedure to establish full circulation at completion of 17-1/2 inch Surface Hole, Phase II.

a. Pullout hole.

b. Establish fluid level with wire1ine fluid probe.

c. Go in hole with drill pipe (open-ended) to within 50 feet of bottom.

d. Pump in through drill pipe previously mixed mud (slug) with heavy c·oncentration of l01 (15/20%). Monitor fluid level while pumping. Continue to pump mud slug, if fluid is rising as mush· as 65% or more,of input until circulation is established. If fluid rise 'of 65% or more is not achieved~ stop pumping and pull drill pipe up above mud level. Wait two hours and monitor fluid level or until fluid level stabilizes, and then repeat procedure. NOTE: Watch for bridges or fill, when running drill pipe back in hole. Pos'ition bottom of drill pipe 50 feet above fill, . for repeati.ng procedure. After several attempts with negative results, attempts to establish full circulation' will be abandoned.

e. If full circulation is established, continue to circulate by passing shaker screen for three full circulations.

f. Trip out with drill pipe-pick up one double of drill collars (8 inch) and bit sub (no float), (remove jets from bit). Go in hole and clean out to bottom, closely monitoring pit levels.

-8-

------_.-.-

o o g. If full circulation is maintained, reduce concentration

of LCM, closely monitoring pit levels, to 5% by volume, by screening out excess LCM. If full circulation is not maintained severity of loss circulation will determine if further attempts should be made.

E. ELECTRIC LOGGING PROGRAM

Phase I -'None

'Phase II -'None

Phase III - Open hole 10gs-FOC, 'CNL, BNC, IES, and HRT log. C.B.L. and casing caliper aft~r 9-5/8 inch casing is cemented and cleaned out of within 10 feet of shoe, or as required •

. 'Phase IV - HRT, Kuster Geothermograph, CNL, FOC, BHC and Sonic Log, or as required. All logs to be' run after 8-3/4 inch hole is drilled to total drilling depth.

F. ., CAS I NG ' PROGRAM

Phase I - 68 feet, 22 inches x 3/8 inch wall welded casing, set on bottom of 26 inch hole. Bevel bottom joint. '

Phase II - elevation -40afeet ~13-3/8 inch, J-55-54.50 lbs. feet. Buttress thread casing set 2 feet off bottom of 17-1/2 inch hole. Casing strings makeup will be determined by cement method. Weld shoe' and ta'ck weld bottom four couplings (top and bottom). Torque joints to API specs.:13-3/8,inch stab-in and shoe should be on the site.

"Phase'III ";'3800+ (actual depth to be determined by hole temperature) 9-5/8 inch, J-55-;40 lbs~/feet buttress thread casing. Set 3 feet off bottom to allow for thermal expansion. Casing string will consist of guide shoe, automatic fill up float collar, centralizers 10 feet above shoe and on every third coupling to surface cement staging tool or tools positioned at depths determined by hole conditions and cement baskets on joint below tools. Weld only on float equipment, cement stagi,n9 tools and bottom four couplings. (Tack weld bottom of couplings). NOTE: '9-5/8 inch casing will have to be' centered in 13-3/8 i n'ch Braden Head to assure pro'per sealing of thermal pack off element. Pick up B.O.P. stack for visual . inspection before cement is brought to surface.

, 'Phase'IV - Evaluation of flow-test will determine the necessity of a 7 inch slotted liner.

-9-

o o G. CEMENTING PROGRAM

Phase I - Cement to cellar floor with ready mix cement consisting of a 8000# construction grade cement, and 2% calcium chloride, ~o be poured from surface.' Have 100% excess on location. Wait 30 minutes after initial pour in annulus (1 yard) then proceed to pour, monitoring rise in annulus and inside 22 inch casing. (Stop pour, if cement is going down hole or coming up inside 22 inch casing. Wait 30 minutes and continue pour).

Phase II - Cement to cellar floor with thermal cement (to,be blended on location under the direction of Howco representative) by.method to be determined by hole condition.

1. Conventional cementing utilizing stab-in shoe.

'Phase'III-.Cement to surface Braden Head Valve with.thermal cement, blended on location under the direction of Howco representative, conventional multi-stage cementing to be determined by hole conditions.

H.CORING AND TESTING

Coring intervals to be determined by GeothermEx and Operator.

I. DEVIATION 'SURVEYS

Every 120 feet of new drilled hole or as.necessary to control well bore deviation. Wing stabilizers or roller reamers positioned in the drill collar_string may be necessary in the 8-3/4 inch hole to control well bore dev'iation and/or differenti a 1 sti eking of the drill collars.

J.WElL'RECORDS - To be filed with the State.

-10-

~ " -.- c o BARNWELL GEOTHERMAL CORPORATION

Mr. James J. Detor Land Management Administrator State of Hawaii

August 27, 1981

Department of Land and Natural Resources Division of Land Management P. O. Box 621 -Honolulu, Hawaii 96809

Reference: Plan of Operations-Geothermal Resources Mining Lease No. R-3 Your Letter of July 2, 1981

Dear Mr. Detor:

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We are enclosing supplementary information requested by DOWALD. It will be noted that certain information was previously submitted and responds to some of the items in Section 7.2 of Regulation 8 as identified by us in this supplement.

Work on Lanipuna Well No. 1 is not yet completed. A report will be made by Geothermex and submitted to you as soon as this has been compiled on completion.

ECC/smEncl.

cc: ~ALD Mr. R. Higashi Mr. G. Taguchi

Very truly yours,


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2828 PAA STREET, SUITE 2085· HONOLULU, HAWAD 96819· TELEPHONE (808) 839-7720· TELEX 7238672 • TELECOPIER (808) 833-5577

-.

o o Supplementary" Information "Requited"Under"SeCtion"7.2"o f"Regu1ation 8

a. Proposed locations - refer to location map previously submitted. Elevation is +600 feet above derrick. See typical well design drawing attached.

b. Existing road - refer to location map. Short lateral road approximately 100 feet dozed northwest to the site with gate.

c. Water is hauled from Pohoiki stand pipe in 6000 gallons tanker to 400,000 gallons pit type, butyl lined reservoir at site. A meter has been installed at the Department of Water Supply stand pipe.

d. No campsites or air strips will be used.

e. No other potential surface disturbances are contemplated.

f. Slopes are gentle in a seaward direction, with rapid drainage into the porous formation.

g. Excavated pit beside the rig holds any effluent or waste.

h. See Dr. Siegel's report previously submitted.

i. See Geologist's report previously submitted.

j. See Plan of Drilling Operations previously submitted.

k. Follow up monitoring to be performed by Dr. Siegel.

1. Drawing of typical well and well head facilities attached.

ECC/sm-8/27/81

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GEORGE R. ARIYOSHI

GOVERNOR OF HAWAII

29 DEPARTMENT OF LAND AND NATURAL RESOURCES

P. O. BOX 621 ',I th- W/~ fER &


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Bonorabl. AI14l"ew Leyin Houe of "pres.tau .. The Bleventh Legi.lature State of 8awail Honolulu, Bawaii

Dear Sir.

'ua_u ODo .M ..... CHAIRMAN BOARD OF LAND" NATURAl RESOURCES

EDGAR A. HAMASU DEpuTY TO THE CHAIRMAN


Thank you for your letter of April , •• ndin9 me a copy Of Audrey Bear lupaty·. complaiat on the Barnwell Geotthezmal Corporation well.

Ttle well in question i. located on private land in wbJ.ch 'the ain ... l r:"hta are aot ra.erve4 to the State. BoVeYer, the Laft4 Board ha. appro.,.d a lea.. to Bunwell oOYU'iaCJ other pri vau land in "hich the Stat.e 408. haYe the lliaeral rl,h"s but. the 1 .... baa not been 's.ue4 a. yet.. Acaor4iJl,ly, we will awaltt r •• olut.ion of the noi •• staRda .. d complaint. before aotuall! issuing the 9eothermal lea.. an4 will oheck wit.h the Bea ~ Department and count.y ill thi. retard.

very t.ruly yours,

SUSUMU ONO Chalr.Ban of the Board

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~ ;om: iF; D~t~: ~/(2:J;( FI~~ .. ~ 1 To Initial . i //" 1< ~.,. J

~./1 ': ."'\ i Robert T . Chuck I ~\ e Me I'":?,, 1----~ _ Takeo FuJU _Take action by

I -------! James Yoshimoto _Route to your branch

1 ---------

------------

Manabu Tagomorl

George Morimoto Hong Fong Chang Herbert Morimatsu George Miyashiro

Harold Sakai Leslie Asari

Albert Ching George Matsumoto Daniel Lum Paul Matsuo, Noboru Kaneshiro

--- Edwin Sakoda

i .

... - --- --------

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Review & comment.

_Draft reply by ___ _

For Information

Xerox distributed

_Acknowledge receipt

Jane Sakai -----Doris Hamada ---Lorraine Nanbu ---Jean Slarot -----ElsIe Yonamine ---

---a. """-_________ _

o 0 Spe~NRY HAAUUO PETE~Ll; HOUSE OF REPRESENTATIVES ViceSpeokeT v'?HE ELEVENTH LEGISLATURE DANIEL J. KIHANO \ Ma' 't Leader ~~NIS R. YAMADA ST ATE OF HAWAII (' ,

Majonty Floor Leader STATE CAPITOL C / KATHLEEN STANLEY HONOLULU, HAWAII 96813

;': !~ ,-1"1,' '!

FlI1t District ANDREW LEVIN

Second District RICHARD M. MATSUURA HERBERT A. SEGAWA

Thin! District YOSHITO TAKAMINE

Fourth District VIRGINIA ISBELL

Fifth District MARK J. ANDREWS WILUAM W. MONAHAN

Si~th District HERBERT J. HONDA ANTHONY P. TAKITANI

Seventh District ROBERT D. DODS DONNA R. IKEDA

Eighth District BARBARA MARUMOTO

ttFREDERICK WILUAM ROHLfING Ninth District

TED T. MORIOKA CALVIN K.Y. SAY

Tenth District KEN KIYABU BERTRAND KOBAYASHI

Eleventh District tKINA 'U BOYD KAMAU'I PAUL L. LACY, JR.

Twelfth District DAVID M. HAGINO MAZIE K. HlRONO

Thirteenth District GERALD de HEER CAROL FUKUNAGA BRIAN T. TANIGUCHI

Fourteenth District RUSSELL BLAIR KATHLEEN STANLEY

Fifteenth District BYRON BAKER MICHAEL MINORU LIU

Sixteenth District DENNIS MASARU NAKASATO TONY NARVAES

Seventeenth District GENE ALBANO JOHN WAlHEE

Eighteenth District CONNIE C. CHUN TOM OKAMURA

Nineteenth District CLARICE Y. HASHIMOTO EWISE YAMASHITA TUNGPALAN

Twentieth Disb'ict DANIEL J. KIHANO MITSUO SHITO

Twenty First District JAMES AKI HENRY HAAUUO PETERS

Twenty·Sccond District GERALD T. HAGINO YOSHIRO NAKAMURA

Twenty-Third District CHARLES T. TOGUCHI

Twenty-Fourth District MARSHALL K. IGE TIMMY WONG

Twenty-Fifth District WHITNEY T. ANDERSON JOHN J. MEDEIROS

Twenty-Sixth District RUSSELL J. SAKAMOTO

Twenty-Seventh District RICHARD A. KAWAKAMI TONY T. KUNIMURA DENNIS R. YAMADA

t Minority Leader ttMinority Floor Leader

c"-,-

April 9, 1981

Mr. Susunu Ono, Chairman State Board of Land and

Natural Resources Kalanimoku Building Honolulu, Hawaii 96813

Dear Mr. Ono:

Enclosed are copies of letters from Audrey Bear Zubaty, which were already sent to the Hawaii County Planning Department and the Hilo office of the State Health Department, regarding noise generated from a geothermal well of Barnwell Geothermal Corporation.

Ms. Zubaty's complaint about noise is another in a long line of complaints about the same subject from numerous residents in the Lower Puna area on the Big Island. Although I thought this problem had been corrected, apparently it has not.

I have requested from George Yuen and Sidney Fuke of the Hawaii County, a review and some corrective action in this matter. It has been suggested that Barnwell was supposed to install a muffler system but has not. If this is accurate, I would hope that both the State and County of Hawaii would do whatever is necessary to force the company to meet its obligations to our residents.

As the head of the board which approves land leases for geothermal energy exploration and development, I am calling your attention to this matter, as it is my understanding that a condition of the agreement between the State and a lessor is the strict compliance to noise standards.

It is my further understanding that leases must be secured for lands with state mineral rights and that Barnwell is in the process of applying for a lease but may not have been operating on such lands at the time stated in Ms. Zubaty's complaint. In any case, my staff has confirmed that the noise pollution laws of the State and County of Hawaii do apply.

----------------,-~,-.,-

o

Mr. Susumu Ono Page Two April 9, 1981

o

Due to a question of whether compliance has been made with respect to noise standards, I feel that an investigation of Barnwell Geothermal Corporation is warranted at this time before any state lease is granted for this company's future activities on the Big Island.

May I please hear from you on this matter at your earliest convenience. ~

lk

Enclosures

Very truly yours,

ANDREW LEVIN, Representative First District of Hawaii

cc: Audrey Bear Zubaty

---------------------------"~''''-

t .. o State Dept. Of Health Environmental Health Services 75 Aupuni st. Hilo, HI. 96720

Dear Health Dept:

o P.O. Box 1125 Pahoa, HI. 96778

Enclosed you will find a co~y of a letter sent to the County Planning Dept regarding excessive noise levels emittin5 from the Barnwell geothermal well near Leilani Estates in ~una.

It is illy u..'1derst:3.nding that your d~partment is empowered to monitor the dB! levels, and set appropriate standards which are applicable to the peaceful rural nature of the area, which the geothermal developers will then be required to follow. At the present, there are no u..'1iform st~ndards or requirements for sound bafflement.

The noise level appears significantly higher after midnight, and monitoring, when it pccurs, s~ould be done in the Malama Street area at that time, as well as during the day.

Tes tine of our CE.. tc -(lme;} t ,~:':.. tar sys terns is a!"~other im;>orta ~l t CaLC e rn. ~e de0end ~olely on catchment ~Bter for our source of potable water. Base line studie3 of &t least five different combinations of collection sv3te~s 10cE..ted in Leilani ~3t~~S Gust be made im:ned ia te ly bef ~re the COIrl :'081 -tion of heavy :Iie tals is s i5nif1can tly altered "Dy t~.e iril1ing. _;::a::;;18::; of vs.r1ous collection com-o:"na tions are : b2~\.scl s;.:':.-,)el roof and dou;h'oo;;r pool, 81:in:;:le :'001 and concrete block t~tl"l};:, ;slvaniz::d iron roef and 2tainless steel tar..}:. The Health D2-:-t :::Just set sts.rJ.dards for the "dE..ter systew3, <ind should arr&nge a scteduls of ~eriojic te~tinG forthe l~ter, in order to ~ssure that citizens will not 3uffsr ill effect2 from hea vy mets.ls.

~lea~e have a re~r~s2ntative contact ~e at 965-9373 to 1st me kno"\\" wh3. t the o.e3Jart::e;.:t :pla.:ls to jOe

cc: CoUuty ?lannins Dept. Dept. of land and natural resouraes (state) Hr. Tom Fujii ;·~r. Andy Levin

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DIVISION

'rom: ~. Date: ,f

fo Initial

Robert T . Chuck ---Takeo FuJU ---James Yoshimoto

/..,..--- Manabu Tagomorl ---___ George Morimoto

Hong Fong Chang Herbert Morimatsu George Miyashiro

Harold Sakai --- Leslie Asad

--- Albert Ching . / ___ George Matsumoto -;7- Daniel Lum --- Paul Matsuo --- Noboru Kaneshiro --- Edwin Sakoda

See Me

_Take action by ____ _

_Route to your branch

Review & comment

_Draft reply by ____ _

For Information

Xerox distributed

_Acknowledge receipt

Jane Sakal -----Doris Hamada ---Lorraine Nanbu ---Jean Siarot -----' Elsie Y onamlne ---

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Dear Mr. Ohairman;

P.O. Box 11 25 Pahoa, HI 9677.'3 April 1, 19.'31

Enclosed are copies of letters sent to the Hav'raii County Planning Denartment and the state Board of Health. I live in the Leilani Estates area of the Puna District on the Big Island, w-hich is covered by Tax Map Keys 313 011-044. It is located across the street from the original geothermal test site. Barnwell Industries present drilling site is about .~ to 1 mile away.

The noise from that site is excessive. Someone within the governmental system must be responsible. Since you are the who just had the hearing on Maui (1) approving the Kapoho geothermal sites, then you must have some control over the methods of drilling and pollution levels~

ones

Perhaps you and your commission could meet here in Pahoa and speak directly to the concerned citizens about your role in the geothermal plan for our district. Please contact me at 965-9.'373 and we can arrange a convenient time.

Sig.ned .. , ~~~~. '~ (lul. [;.K«J au::> AUdrey~ear Zubaty

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State Dept. Of Health Environmental Health Services 75 Aupuni St. Hilo, HI. 96720

Dear Health Dept:

Q P.O. Box 1125 Pahoa, HI. 96778

Enclosed you will find a copy of a letter sent to the County Planning Dept regarding excessive noise levels emitting from the Barnwell geothermal well near Leilani Estates in Puna o

It is my understanding that your department is empowered to monitor the dB! levels, and set appropriate standards which are applicable to the peaceful rural nature of the area, which the geothermal developers will then be required to follow. At the present, there are no uniform stsndards or requirements for sound bafflement.

The noise level a~pears significantly higher after midnight, and monitoring, when it pccurs, should be done in the Malama Street area at that time, as well as during the day.

Testing of our catchcl1ent lrater systems is another important concern. ~'re depend solely on catchment l'rater for our source of potable water. Base line studiea of at least five different combinations of collection systems located in Leilani Estts.3 must be made immediately bef~re the com::,osi1ion of heavy metals is significantly altered by t!'le drilling • .-::x8.:r..ples of various collection combinations are : baked enq'~el roof and doughboy pool, shingle roof and concrete block tanIr, galvanized iron roof and stainless steel tank. The Health D2")t must set standards for the ,,;a tel' systems, and should arrange a schedule of "]eriodic testing forthe 1ffi tar, in order to essure that citizens will not suffer ill effects from heavy metals.

~lea8e ?lave a re~)r~ssntative contact Ule at 965-9373 to let me knoiv wha t the depart:::::.ent plans to do.

cc: County ?lannins Dept. Dept. of b,nd and natural resouraes (3tate) Mr. Tom Fujii I'lr. Andy Levin

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Dear Mr. Chairman;

.0 P.O. Box 1125 Pahoa, HI 96778 April 1, 1981

Enclosed are copies of letters sent to the Halraii County Planning Deoartment and the State Board of Health. I live in the Leilani Estates area of the Puna District on the Big Island, I'Thich is covered by Tax Map Keys 313 011 -021-4. It is located across the street from the original geothermal test site. Barnwell Industries present drilling site is about ~ to 1 mile awayo

The noise from that site is excessive. Someone within the governmental system must be reS1JOnsible. Since you are the ones who jus t had the hearing on Maui (I) approving the Ka'poho geothermal sites, then you must have some control over the methods of drilling and pollution levels o

'-:'~\"-";'I"f"" Pe'rha'ps'yoti."and' your commission could meet ,here, in' 'Pahoa "and"",.·."-<""",;·,·,, ,'.' speak directly to the concerned citizens about your role in the geothermal plan for our district. Please conts,ct me at 965-9873 and we can arranke a convenient time.

Signed, '7 I Y. !lvi H.-r Pet?r to.A:J(l. tW

Audrey'13ear Zuba ty{/

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o State Dept. Of Health Environmental Health Services 75 Aupuni3t. Hilo, HI. 96720

Dear Health Dept:

o P.O. Box 1125 Pahoa, HI. 96778

Enclosed you will find a co~y of a letter sent to the County Planning Dept reg~rding excessive noise levels emitting from the Barnwell geothermal well ne~r Leilani Estates in Puna.

It is illy underst3.nding that your department is empowered to monitor the dB! levels, and set appropriate standards which are applicable to the peaceful rural nature of the area, which the geothermal developers will then be required to follow. At the present, there are no uniform st~ndards or requirements for sound b~fflement.

The noise level a~De3.rS signific~ntly higher after midnight, and ::lonitoring, lihen it poours, :;hould be done in the Malama Street area at that time, as well as during the day.

Tes ting of our oa tch:"!len t "ira. ter sys tems is another import~::.t t c one ern. ~Ie de rend solely on C3. tcllmen t ,,)'a ter f or our source of pota ble w~ter. Base line studies of at le~st five different co~binations of collection systeills located in Leil~ni Esttes must be made im:ned ia te ly before the com:,os i tion of heavy ill3 tals is s ignificar:. tly altered by t~:e drilling. _~JCa:y.ple::; of various collection comb=-nations are : ba~~d en~~el roof and dou;hboy pool, shingle roof and ooncr3te block tank, ;alvanized iron rocf and stainless steel tank. The Healt~ D2~t must set standards for the ~~ter sy3te~s, and should arrange a scl:edule of :;erio:iic testing forthe Iratsr, in order to assure t~at citizens will not suffer ill effects from hea vy metals.

:::lea::;e ?lav8 a re~:;r~s.:;ntative contact ~e at 965-9373 to let me kr:.01i wha t the depart::eYlt plans to :io.

cc: County ?lannins Dept. Dept. of l~nd and natural resouraes (3tate) Mr. Tom Fujii l'~r. Andy Levin

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i To InJUal , -. i Robert T . Chuck 1---~ .' Takeo FuJll

! g;~ James Yoshimoto , _ ' Manabu Tagomori

l' George Morimoto

Hong Fong Cha --- Herbert Morl tsu ---___ George Miya

___ LeSli~arl

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__ / . Gyorge Matsumoto v /Daniel Lum

I =,/ Paul Matsuo. _ / ' ,,= Noboru Kaneshiro V-. , flf} Bdwin Sakoda

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See Me

_Take action by ___ _

_Route to your branch

Review & comment

~raft reply by ___ _

For information

Xerox distributed

~cknowledge receipt

Jane Sakai -----.;:OOris Hamada

Lorraine Nanbu ---__ ---=J ean Slarot Elsie Yonamlne ---

--- .... ------------

" o BARNWELL GEOTHERMAL CORPORATION

Mr. Susumo Ono Chairman of the Board State of Hawaii

March 5, 1981

Department of Land and Natural Resources P. O. Box 621 Honolulu, Hawaii 96809

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THE DEVELOPMENT OF 'GEOTHERMAL "ENERGY" IN HAWAII

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The electricity supply system in Hawaii is at present fed from a multiplicity of thermal power plants which include diesel engines, steam turbines and a gas turbine. This preponderance of fossil fuel-fired power plants has made the Hawaii Electric Light Company and its consumers particularly vulnerable to the recent drastic increases which have taken place in oil prices.

In an effort to obtain relief from this situaion investigations have been made into the possibilities of indigenous alternative energy sources existing in Hawaii. Attention has been focused upon geothermal energy as the most promising alternative to the importation of fuel oil. Barnwell Industries believes that the development of the geothermal potential of Hawaii offers a means of providing the population with a dependable supply of power divorced from rate increases attendant to the soaring price of fuel oil. Barnwell's faith in geothermal energy as a viable energy source for Hawaii is evidenced, not only by its past program of scientific testing, but also its corrmitment to the exploration drilling program in which it is actively engaged at present. This activity is a natural continuation of the exploration and investigations carried out by Barnwell and its associates in the field of geothermal energy since 1973.

"Geothenma1 Cost Factors The generation of geothermal power depends entirely upon an explo

ration process which is attended by a measure of uncertainty. Using the best scientific testing equipment available, there can be no guararitee that any particular well will produce steam in acceptable quantities, under usable pressure and temperature conditions. The cost of producing steam from individual wells is obviously affected by all these factors. In addition, some wells are found to be dry, having either nO output or

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2828 PAA STREET, SUITE 2055 • HONOLULU, HAWAU 96819 • TELEPHONE (808) 839-mo • TELEX 7238672 • TELECOPIER (808) 833-5577

Mr. Susumo Ono DLNR

o o March 5, 1981 Page Two

insufficient output to be judged economically viable. Therefore, the drilling success ratio has a considerable impact on the cost of producing geothermal steam.

Once a geothermal field is in successful operation, it will require a continuing maintenance program to sustain production. Such a program, including drilling new wells and reworking old wells, would involve considerable expense and increase the cost of producing electricity from the associated power station.

The cost of a geothermal power plant is easier to estimate, but even here there are uncertainties arising from such aspects as dissolved solids, non-condensible gases and pressure and temperature conditions which can affect plant costs. It is clear therefore, that any attempt to develop a specific price before the relevant well output data has been collected, and the characteristics of the reservoir determined would be premature.

Pricing Aspects When an electric utility contemplates the purchase of geothermal

power, its economic break-even point occurs when the average geothermal cost per kilowatt hour equals its avoided cost represented by the least cost alternative method of generation (avoided cost). This concept has been recognized in the Pub.lic Utility Regulatory Policy Act (PURPA) which requires a utility to purchase electricity from renewable energy sources by paying up to its avoided cost. If the price of geothermal power were rraintained strictly at the level of avoided costs there would be no financial benefit available to the consumer from the development. of an indigenous energy source •.

Barnwell Industries believes that electricity consumers should receive some financial advantage from geothermal development. Strict adherence to the principle of parity with avoided costs is, therefore, contrary to Barnwell's approach to the subject of geothermal development ·in Hawaii.

It is to the rising total of fuel cost savings that electricity consumers will look for financial relief following the corrmissioning of geothermal power plants. While accepting this in principle, Barnwell Industries believes that such savings should not be solely reserved for electricity consumers and that the developer should also benefit. The obvious sourt:e of these funds would be a portion of the fuel cost savings, and the pricing formula' suggested by Barnwell Industries recognizes this. . .

. '

Mr. Susumo Ono DLNR

o o

Pricing'Formu1a for·theSupply Of Geothermal Power

/

March 5, 1981 Page Three

As mentioned, the passage of the Public Utility Regulatory Policy Act established the principle of pricing electricity from geothermal power plants at the level of the utility's avoided cost. This resulted in various formulae being developed, all aimed at ensuring avoided cost parity. Si~ce Barnwell Industries beleives that pricing based upon strict avoided cost parity is not appropriate to Hawaii it has elected to put forward a formula based on a pricing philosophy b~1oW-,a.votded costs rather than to rely on a formula developed througfl1)OE studies.

The fo 11 owi ng provi s i ona 1 formul a has, therefore, been developed from first principles by Barnwell and its associates. The formula is intended to apply to an alternative plant installed in lieu of a traditional fossil fuel plant and must be re-evaluated for each additional increment of geothermal capacity. It is proposed with a view to meeting the desires of the Sate of Hawaii and at the same time preserving an equitable balance between the interests of both the electricity consumers and the developer.

Provisional Formulafor·theCosting of Electricity . GeneratedfrOm'GeOthermal . Steam

Cost $/Kwh = FpA+BA + Ce- + D~ JA. L:Kilowatt Hours Generated

A = Capital cost of proposed alternative generation plant.

B = Cost of fuel consumed by such plant during initial year of operation.

C = Cost of operation and maintenance for such plant during initial year of operation.

D = Cost of administration and management for such plant during initial" year of operation.

p = Variable constant factor to cover interest and depreciation escalation over the life of the generation plant.

~ = Yearly escalator component reflecting increase in cost of heat consumed over base year.

~ = YearlY,escalator component reflecting increase in plant operation and maintenance costs over base year.

c(> = Yearly escalator component reflecting increase in administrative and management costs over base year.

>L = Reduction constant factor to reduce cost per kilowatt hour generated to meet Barnwell pricing philosophy.

Mr. Susumo Ono DLNR

SUl11l1ary

o March 5, 1981 Page Four

Barnwell Industries and its associates have faith in the development of geothermal power in Hawaii - a faith which is being demonstrated tangibly by the drilling program at present under way for geothermal steam. Barnwell believes that the development of an economically viable source of geothermal power will be of considerable benefit to Hawaii in several ways.

Firstly, the State will receive tax and royalty revenues which could be used to improve local conditions. Secondly, the development of this indigenous energy source would reduce dependence on the price escalations of the international oil market and offer some protection against future oil shortages. Thirdly, by buttressing electricity prices against oil price increases, electricity will become relatively cheaper, and economic activity thereby encouraged.

In making this presentation, Barnwell Industries recognizes the fact that the State is anxious for geothermal development to bring financial gains to electricity consumers as well as result in a reduction in imported fuel oil. Barnwell pledges its support to these objectives while continuing to acknowledge the many uncertainties attendant upon any exploration project.

Respectfully submitted,


/J~~ -Andrew F. Blumenthal Vice President and Assistant Secretary

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COUNTY OF HAWAII

o RECEIVED_

PLANNING DEPAR1.\~v1ENT

25 Aup8nY[hGJE!r . AllLQ, OivAII 08720

DIV. OF WATER & LAND DEVELOPMENT

Dear Property Owner: TMK: / -3-07; 7; ;131 ;;Jb) 31 /-I.f.-OZ; 1/

Special Permit Application Keahialaka, Puna, Hawaii

Tax Map Keys 1-3-08:Portions of 6, and 1-3-09:Portion of 7

HElWEHTT. MATA YO~III Ma~·o,

SIDNEY 1\1. FlJKE UI'r<'IO'

DUANE KAMJlL\ Deputy llI,enu,

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You are hereby notified that a request for a special permit to allow a geothermal exploration and evaluation by drilling up

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to sixteen ~J:§) wells on approximately 724 acres of land situated wi thin t.he State-"Laii"a-Use Agricultural District ~s been submitted· by the p~.!:i tioner, BarnYlell Geothermal Exploration. --"--

The property involved is located along the south side of the Pohoiki Road and about 1,500 feet from the HGP-A well, at its nearest point, adjacent to and on the makai side of the Leilani Estates and Lunipuna Gardens Subdivision, Keahialaka, Puna, Ha~aii.

A public hearing on the subject among others will be held beginning at 7:30 p.m. on Wednesday, October 15, 1980, in the Councilroom, County Building, South Hilo, Hawaii.

You are invited to comment on the application at the hearing or subrr.i t vlri tten comments prior to the hearing date.

smn

Sincerely,

~~-J t)lanning Director

Enclosure

cc: State Land Use Commission

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sPCCIAL PeRMIT REQUeST

GeOTHERMAL EXloLORATION

POHOI KI 'C$ I'(EAH IALAI'(f'.., PUNA, HAIAlAIi

lAX MAl"" K~ : I-::~-OS: CP,"?, IV AND 1-3-0V:7

APPl-ICA"-lT : iBARNlI'JELL 6EOTHeRMAL CORPORATiON

HfJMIQ

KAHO:"UA 0 KAHAWAL~ CRATER C,

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GEORGE R. ARIYOSHI GOVERNOR OF HAWAII

. Z~ \i '2: L\ 1) STATE OF HAWAII


Mr. B. C. Craddick President.

DIVISION OF LAND MANAGEMENT

P. O. BOX 621


Barnwell Geothermal Co~r.tion 2828 Paa Street, Suite 2085 Honolulu, HI '6819

Dear Mr. Craddick:

Sua_u Ono ..... xxx

CONVEYANCES FISH AND GAME FORESTRY LAND MANAGEMENT STATE PARKS WATER AND LAND DEVELOPMENT

Subject: Geothermal Resources Mining Leue No. R-3, Barnwell Geothermal Corporation

This will aclmowled •• the receipt ·of your '. CDBISunication of Maroh 5, 1981, detailing your pricing methodology relative to the qeothermal lease approved by the Board .t. ita .. etiDg' of February 13, 1'81. We will new finali •• the 1 •••• document and will let you know wben it is ready for .xecut.ion. In the interim please forward a check in the a~unt of $770, in payment of the first yea .. minimum rent.al.

~hi. will also acknowledge the receipt. of your indemnity bonds (Nos. 901789 and 901790) and d.signations of agent for Lanip.a Well No. l.aDd No.2. As soon as the plan of oper.tions required under Rule 7.2 of Requlation 8 has- been submit.ted to U8 and approved by t.~. Soard of Land and Natural Resource., we will issue the drilling permit:8.

Enclosure

t!C: Hawaii Board Member

Very truly youra,

SUSUMU OJfO Chairman of the Board

Hawaii District Land Office ·/fJowALD

J·.Jt)syd

ROLL CALL

MINUTES

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MINUTES OF THE MEETING OF THE BOARD OF LAND AND NATURAL RESOURCES

DATE: February 13, 1981 TIME: 9:00 A. M.

PLACE: DLNR Board Room, Room 132 Kalanimoku Building

1151 Punchbowl Street Honolulu, Hawaii

Chairman Susumu Ono called the meeting of the Board of Land and Natural Resources to order at 9: 05 A. M. with the following in attendance:

MEMBERS

STAFF

OTHERS

Mr. Moses Kealoha Mr. Takeo Yamamoto Mr. Stanley Hong Mr. Roland Higashi Mr. Thomas Yagi Mr. Susumu Ono

lVIr. Kenji Ego Mr. Libert Landgraf lVIr. Robert T. Chuck Mr. James Detor lVIr. Wayne Hirata Mr. Herbert Yanamura Mr. Mason Young Mr. Roger Evans Mr. Ralston Nagata Mr. Charles Neumann Mr. Noah Pekelo Mrs. Joan K. Moriyama

Deputy A. G. Dona L. Hanaike Deputy A. G. Johnson Wong Mr. Clifford Lum (Item F-7) Mr. E. C. Craddick (Item F-3) Mr. S. M. Eisenstat (Item F-3) Ms. Judith Forster (Item F-10) Mr. Francis Yamada and

Mr. Robert Tom (Item F-24) lVIr. George Masuoka (Item F-33) Mr. Norito Kawakami (Item F-34) Mr. Robert M. Cool (Item F-34) Mr. Boyd C. Saderup (Item F-34) Mr. Boyce Brown (Item H-5) Kauai Bible Church Rep. (Item H-l) Mr. Peter Garcia

The minutes of January 9, 1981 were unanimously approved as circulated, on Mr. Hong's motion and seconded by Mr. Yamamoto.

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o o He specifically referred to today's board actions on the hiring of a young man (Item C-2) and a young woman (Item C-3). They both have participated in the Forestry's YACC programs. Mr. Landgraf said it has given the young unemployed adults an opportunity to do on-the-job training to qualify and to enter into the adult professional employment ranks.

ITEM D-1 APPOINTMENT OF SOIL & WATER CONSERVATION DISTRICT DIRECTOR

ACTION The board, on Mr. Yagi's motion and seconded by Mr. Hong, unanimously appointed Mike O'Keefe as a Director of the Molokai-Lanai Soil and Water Conservation District for a term ending on June 30, 1983.

PERMISSION TO ENGAGE THE SERVICES OF BISHOP MUSEUM TO PROVIDE ARCHAEOLOGICAL SERVICES FOR THE LALAMILO AGRICULTURAL PARK

ITEM D-2 SITE

ACTION

ITEM F-3

ITEM F-7

-----------------------------------------------------------------Unanimously approved as submitted. (Higashi/Yagi)

The board deviated from the printed agenda and took up the items in the following order to accommodate those people in the audience.

BARNWELL GEOTHERMAL CORP. APPLICATION FOR GEOTHERMAL MINING LEASE ON RESERVED LANDS AT KAPOHO, KANIAHIKU, POHOIKI AND KEAHIALAKA, PUNA, HAWAII

This was an application for a direct lease of geothermal resources on reserved lands in the Puna area. The applicant, Barnwell Geothermal Corporation, has been assigned the occupier's rights by the land owners who were listed in the submittal. The terms and conditions of the proposed lease were the same as the other two geothermal leases which the board acted on previously.

Mr. Detor said the applicant has submitted a criteria, which were circulated to the board members, under which they propose to operate.

Mr. Higashi questioned whether the applicant shouldn't be J . T. Trading Company, Ltd., Auto Imports of Hawaii, Inc. and Promised Land Corporation, instead of Barnwell Geothermal Corporation as indicated in the submittal, and mentioned the subleases that came up at the last board meeting on the Lyman's properties.

Mr. Detor explained that since Barnwell Geothermal Corporation has been assigned the occupier'S rights by the land owner, they are the applicant. In the case of the Lyman property, Mr. Detor said the land owner is not Kapoho Land Partnership. The owner assigned the occupier's rights to Kapoho Land Partnership, who in turn are subleasing it to the Dillingham-Thermal joint venture.

The board was not clear in this area and suggested that the staff check this out. While waiting for the answer, the board took up the next item.

(See pages 5 to 7 for further discussion and action on Item F-3.)

W. A. LAVALLEE REQUEST FOR REVIEW OF VALUE ESTABLISHED FOR ABANDONED RAILROAD RIGHT-OF-WAY SEGMENTS RUNNING ACROSS LOT 721, WAIAKEA HOMESTEADS, 2ND SERIES, WAIAKEA, SOUTH HILO, HAWAII

This was a request for reconsideration of the price set on the sale of an

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ACTION

-7 ITEM F-3

o Mr. Hong said their logic is that the value should be lower because they are nothing but a detriment to the parcel. However, without those remnants, the applicant won't be able to consolidate and subdivide, so the value should be greater, Mr. Hong said.

Mr. Lum said that is true. except that in May 1978, the highest and best use of that area was Ag-3 .

Mr. Higashi had no objection to the request for deferral for sixty days, and so moved. Mr. Hong seconded, and the motion was unanimously carried.

(Continued from Page 3)

The board was prepared to discuss Item F-3.

Mr. Detor said the question was whether people who have been assigned the occupier's rights can be considered the applicant. He said the statutes and the rules and regulations bear that, so they can be the applicant.

Mr. Higashi asked whether the applicant is prepared to follow the guidelines set up by the board, and also whether they are aware that we have a criteria set up in which they have to show justification why we should issue a direct lease, rather than to go through public auction.

Mr. E. C. Craddick. representing the applicant, said they have outlined those areas in their application. He also referred to page 4 under Summary of Public Benefits and highlighted some of the benefits.

Mr. Ono asked how long it will take to get locally-trained crews to work independently. Mr. Craddick said they have a crew of four on each shift. They have all Hawaiian crews. He said it took them about five years to train the real well qualified, eager men. Mr. Craddick said it is anticipated that this training. program will ultimately provide experienced local trained 'contractors and eliminate the need of hiring mainland employees.

Mr. Hong asked what would they say is the net worth of that partnership today, and referred to the Financial Resources Section. Mr. Craddick said the net worth is the same. When you drill a well it becomes a capitalized item, so it becomes a net worth item. Barnwell Geothermal Program, Hawaii limited partnership, was initially capitalized in exress of $3 million, Mr. Craddick said.

lVIr. Hong said on the commencement and completion dates of the well, they have three years to begin drilling. He asked what their time schedule was.

Mr. Craddick said they already started on the first well on Monday. He said it takes them about a mqnth or two to test it.

Mr. Ono asked to comment on the consumer benefits on page 5.

Mr. Craddick said they paid a lot of attention to this. They realize the importance of not only developing an alternate energy source, but developing this in an economical manner so it would have a favorable impact on the price of energy in the state, particularly on the Big Island. Their policy is that they don't consider it a success unless they do provide it at a price

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------------------,.,,., ... -~.,,

,.. t

ACTION

.~

' ..

o

under the fossil fuel rates. At the present time, he said there is a Federal law that requires the utility to buy an alternate energy source at the available cost. Mr. Craddick said one stipulation they have on this is whatever savings that are realized is passed on to the public. That describes their policy.

Mr. Higashi asked whether they are going to use Public Utility Regulatory Policy Act (PURPA) as a vehicle for pricing. Mr. Craddick said they don't intend to use that in the methodology or structure in their pricing.

Mr. Higashi said when he met with Mr. Craddick, they discussed the methodology. He said he had assumed that a ·copy of the methodology of figuring the price would be submitted with their proposal.

lVIr. Craddick said the problem is they don't want to disclose too much of the precise methodology that they used. He said there are other competitors.

Mr. Higashi realized that, but he said the prior applicant did supply the board with some formula, based on cost and on a very complicated process. They also submitted to the board a pricing methodology as a philosophical point as to how they are going to sell energy.

Mr. Higashi said if he had something in writing, which was promised sometime ago, he was going to introduce that today. He would feel more comfortable, he said, in issuing a direct lease if he had something like that. He realized that the prior applicant discussed the same feeling that it is complicated, but they cooperated.

A Mr. Eisenstat said they have taken the position from the outset that they would not key their price to the price of fossil fuel. He said the record will indicate that they did this on their own initiative. They will initially start it out low, and then they will escalate it in a manner that is not keyed to fossil fuel, and they are prepared to put that in writing. With reference to the question of PURPA, he said Mr. Craddick set forth their position very clearly. Their biggest problem is in dealing with the utility. They will not rely on PURPA, but the presence of PURPA hopefully will remove the utility towards coming together with them and the other developers in the area.

Mr. Higashi said he would like to ask for deferral of this item until such time as we have some methodology as to the way of arriving at the price.

Mr. Eisenstat promised the board that they can submit this information within twenty-four hours, and asked the board to consider this request, subject to them submitting this information within twenty-four hours.

Mr. Higashi said according to the county permits, there is no setback as to boundaries. lVIr. Eisenstat said no. They will go out of their way to insure that any inconvenience caused to the local residents will be kept to the minimum. They have established their own monitoring equipment at their own expense to monitor the level of the well. He said it is their feeling that they have to live in a community and they have to have the local people understand them and be happy with them.

Mr. Higashi moved to approve this request, subject to the applicant submitting additional information on the methodology of pricing, and subject further to review and approval by the chairman and a board member of such material;

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, < 7- o o and forwarding the material with a transmittal from the chairman to the PUC for possible use by PUC for their decision-making process. Mr. Hong seconded, and the motion was unanimously carried.

JUDITH FORSTER REQUEST FOR PERMISSION TO CONSTRUCT AN ADDITIONAL DWELLING ON LOT 21 OF THE LALAMILO FARM LOTS, WAIMEA, SOUTH

ITEM F-10 KOHALA, HAWAII

This was deferred at the last board meeting. Under the provisions of the original conveyance of the Lalamilo Farm Lots, only one dwelling is allowed on the land, provided, however, the board may, at its discretion, authorize additional dwellings. The particular conveyance also states that the land shall be used for agricultural purposes only and cannot be put to some other use unless that use is authorized by the board. Agricultural use is defined and limited to the growing of orchard and truck crops.

Mr. Detor stated that Mrs. Kawasaki, owner of Lot 21, has subdivided the lot and she is in the process of selling 20.103 acres of the 26 acres to Judith Forster, who has asked the board for permission to erect a dwelling on the 20-acre portion of Lot 21. There is already a dwelling on that part of the lot that Mrs. Kawasaki is going to retain. Mrs. Kawasaki is in her 70's and is retired.

In addition to that, Ms. Forster wants to raise protea. Mr. Deter said technically that is not an agriculture use within the framework of the provisions covered in the patent.

Mr. Detor said the board in previous instances have approved additional dwellings for employee housing, but not for subdivision purposes.

Mr. Detor further stated that about a year or more ago the board adopted a policy of denying all requests for construction of additional dwellings on subdivided portions of these lots.

The applicant is asking for one because she is going to operate it as a farm, and she wants to have a place from which to operate. The land has been subdivided.

Mr. Detor pointed out that when the board adopted the policy of refusing to allow dwellings on subdivided portions, it was not in recognition of Ag-5 zoning. The department is trying to avoid a proliferation of 5-acre lots which would turn it into a residential-type subdivision. The idea was to keep the farm character of the subdivision as much as possible.

Ms. Judith Forster, who has been selling real estate for the last three years, briefly addressed the board. She has arranged to purchase the 20-acre portion of the 26-acre parcel. To go into this project, she said she needs to live there and manage i-to She said the land is not being used now and the area has not been fully farmed.

Mr. Higashi said it really is not necessary to live on the lanq, and Ms. Forster agreed. He said the merit of the project should be based on production.

lVIs. Forster said Mrs. Kawasaki lives on the property, so there is some degree to safeguard it. However, Ms. Forster said the land is very big and Mrs.

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:iEORGE R. ARIYOSHI GOVC"NOft 0" HAWAII

STATE OF HAWAII

DEPARTMENT OF LAND AND NATURAL. RESOURCES

DIVISION 01" LAND MANAGEMENT

P. O. BOX Szt

HONOLULU, HAWAII .saoe

February 13, 1981

DIVISIONS: C:ONVKYANC: ••

"'.M AND GAM.

"OIiUTIlY

STAT.I"AIIO

Board of Land and Natural Resources

Honolulu, HI 96813

Gentlemen: HAWAII

Subject: Direct Lease of Geothermal Resources on Reserved Lands to Assignee of Occupier's Rights, Kapoho, Kaniahiku, Keahialaka and Pohoiki, Puna, Hawaii

STATUTE:

APPLICANT:

FOR:

ZONING:

LAND OWNERSHIP:

Chapter 182, Hawaii Revised Statutes, and Regulation No. 8 of the Department of Land and Natural Resources

~~~~~THERMAL CORPORATION, a Hawaii \ corp~on, assignee of the occupier rights ~~ .. T. TRADING COMPANY, LTD., AUTO IMPORTS

OF HAWAII, INC., and PROMISED LAND CORPORATION, pursuant to Section 182-5, Hawaii Revised Statute~.A~ .,,, /' i;7'.~...t"~~/"'.A-~" (At

u;(!;;r. ;t "" C

Direct issuance of a geothermal lease on reserved lands at Kapoho, Kaniahiku, Keahialaka and Pohoiki, Puna, Hawaii, being all of those certain parcels of land (portions of the land described in and covered by: Royal Patent 4497, Land Commission Award No. 8559, Apana 5, to C. Kanainai Royal Patent Grant No. 3209 to Robert

. Rycroft; and Land Patent No. 8094, Land Commission Award No. 8559-B,Apana 15, to Wm. C. Lunalilo) designated by Tax Map Key as follows:

Tax Map Key

1-4-01:20 1-3-08:07 1-3-08:06 1-3-08:19 1-3-09:07 1-3-45:various

Area -45.0738

160.2920 140.0000 227.5910 119.1800

acres acres acres acres acres

1-3-46:see Exhibit A . res ' Total 769.l~ es ~

State Land Use Commission: Agriculture 7tl~'~J {:t, . .,:.;, County of Hawaii: Agricul ture YVlM'fv~ t',,:

J. T. Trading Company, Ltd., Auto Imports of Hawaii, Inc., and Promised Land Cqrporati·on·

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--_.------------

',Board of Land an~tural Resources c;~uary 13, 1981

MINERAL RIGHTS:

MINERAL TO BE MINEO:

TERM:

COMMENCEMENT AND COMPLETION OATES OF DRILLING OPERATION:

PAYMENT FOR THE RIGHT TO EXPLOIT GEOTHERMAL RESOURCES:

ROYALTY:

Expressly reserved to the State of Hawaii in Royal Patent No. 4497 on Land Commission Award No. 8559 and in Royal Patent Grant No. 3209. Land Patent No. 8094 on Land Commission Award No. 8559-B, Apana 15, contains no express reservation but is classified by the State of Hawaii as subject to an implied mineral reservation.

Geo~ermal resources, classified as a min~-~Section 182-1, Hawaii Revised Statutes

The lease shall have a maximum term of sixty-five (65) years; provided that there shall be a primary period of ten (10) years from the effective date orthe lease (and if during this primary period, geothermal resources are being produced or utilized in commercial quantities, the lease term shall continue for so long thereafter as geothermal resources are produced or utilized in commercial quantities, subject, however, to the sixty-five-(65) year limitation).

Continuation or termination of the lease after the primary ten (10) year period shall be in accordance with (Rule No. 3.11 of) Regulation No. 8 of the Department of Land and Natural Resources.

The Lessee shall covenant and agree that Geothermal Resources mining and drilling operations on the reserved lands shall commence within three (3) years from the effective date of the lease, and that at least one geothermal resource well for production shall be completed within four (4) years of the effective date of the lease.

The Lessee shall pay to the State of Hawaii the amount of $770 per annum for the right to exploit Geothermal Resources reserved to the State. Such payment shall be a credit against production royalties due and accrued during anyone-given year, if there be any. The annual rental due in a given year shall not be credited against production royalties due in future years.

a. Ten percent (10%) of the gross amount or value of the geothermal resources produced under the lease as measured at the wellhead and sold or utilized by the lessee for the first 15 years of the lease. No deduction for treating, processing and transportation cost, notwithstanding Rule 3.l3b of Regulation 8.

b. Five percent (5%) 'of .the gross proceeds received by the lessee from the sale of any geothermal by-product contained in and extracted from the effluence produced under the lease as measured at the wellhead and as specified by Rule No. 3.13 of Regulation No. 8 of the Department of Land and Natural Resources.

2

Jo~rd of L~nc ~r.~ c::> N3tural Rc~ourc~s

c;:) February 13, 1981

PAY~T:

REOP~ING OF ROYALTY RATE:

ROYALTIES ON OTHER MINERALS:

l-1..ETERING:

TESTING OF MINERALS:

ASS I Gm!.ENT Ar."lC StJBIZl'TING:

:aOl'ID :

The ~essee shall make payments of royalties to· the Board at its Honolulu office within thirtv (30) days after the end of each month and • accompany such payment with a written statement by the lessee, showing the volume of each gec~~ermal resources and its by-products seld, used, or othe~~ise disoosed of. The Lessee shall furnish suc~ ot~er data as cay be necessary for the Board to audit ar.d verify all royalty paiments.

Royalty rates shall be subject to racp~~ing at the end of the 35th and 50th years of the lease term. Royalty rates for the new period shall be dete::mined by independent appraisal but shall be no less than -the royalty rates at the time of reopening, nor shall it be higher than the max±mum rate 'allowable under Regulation No.8.

In the event the L~ssee desires to mine mL~erals other than Geothermal Resources, the Lessee shall before mining such other ~inerals, so notify the Board in writing, and the ~essee shall negotiate and fix the royalty rates tor such other minerals" as may be allowed to be mined by the Board.

Meterinc equipment shall be maintained and . operated by lessee in' such a manner as to ceet

acceptable standards of accuracy consistent with geothermal L~dust--y practices.

The Lessee shall on a calendar semi-a~nual basis furnish the Board the results of periodic tests showing the content of by-products in ~~e produced geothermal resources. Such tests shall be consistent wi~~ acceptable method of testing practices by the industry.

The Lessee shall not assign and/or sublet the whole or any portion of the rights herein leased, without the ~rior approval of the Board of Lar.d and Natura~ Resources, provided, that any assigr.ment and/or sublease so made shall b'e to

. persons or persons, partnerships, co=?orations, etc., who has obtained from the owner of the lands the right to occupy and conduct geothe:ma: resources minin~ operation ~~ereon.

The Lesse~ shall within thirty (30) days of receipt of the completed lease cocument, file with the Board, and'keep in force for the terill of the lease, a PEUOR.'1A.~CE BOND, in t.~e a..-noun t of S10,000.00, conditioned upon fai~~ul observance and eerfo~nce of all reauiraments of - -the lease. Said Bond shall name the Oepar~~e~t of Land and ~atu:al Resources, State of Hawaii, as obligee.

3

Board of Land ~ Natural Resources

LIABILITY INSURANCE:

RULES AND REGULATIONS:

ENVIRONMENTAL CONCERN:

REMARKS:

RECOMMENDATION:


The Lessee shall secure and maintain in force during the term of the lease, Comprehensive General liability and property damage insurance and products liability insurance naming the State of Hawaii D~~R as additional insured in the following minimum amounts:

a. Comprehensive General Bodily Injury Liability $300,000.00 each occurrence,

. $300,000.00 aggregate.

b. Comprehensive General Property Damage $50,000.00 each occurrence, $100,000.00 aggregate.

c. Products liability in the single minimum limit of $250,000.00.

The lease shall include other applicable provisions required by law and as contained in Regulation No.8.

The Lessee shall comply with all water and air pollution control laws, rules and regulations of the State or its political subdivision. The Lessee shall also comply with all applicable State and County laws relative to Environmental Impact Statements.

Barnwell Geothermal Corporation, assignee of the landowners, has made application as occupier for a geothermal lease on land in Puna which is subject to reservation of mineral rights in favor of the State of Hawaii or is classified by the State of Hawaii as subject to an implied mineral reservation. Application was made in accordance with Section 182-5, Hawaii Revised Statutes (mining leases on reserved lands).

Since the lands are zoned agriculture, it was necessary that special permits be obtained from the County of Hawaii. Six (6) special permits were issued by the County on December 16, 1980.

Under Section 182-5, Hawaii Revised Statutes, the Board may by vote of two-thirds of its members, without public auction, grant a mining lease on reserved land to the occupier thereof.

That the Board approve a direct grant of a geothermal resources mining lease to the assignee covering the lands listed above, subject to the terms and conditions above mentioned, which are by reference incorporated herein, in addition to such other

4

Board of Land a~ Natural Resources


terms and conditions required by law, Department of Land and Natural Resources Regulation No.8, and as may be prescribed by the Chairman. '

Respectfully submitted,

&-"'"t--

JAMES J. DETOR Management Administrator

APPROVED FOR SUBMITTAL:

P:CJh-. S~· ONO, Chairman

5 ________________________________________ "1"'I~'1o' '~

..

BLOCK

1 1 1 1 1 1 1 1 1 1 1 1 .1. 1 1 1 1

2 2 2 2 .2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

3 3 J 3 3 3 3 3 3 3 3 3 3 3

LOT

2 3 4 5 13 14 15 16 17 18 19 20 21 22 23 24 25

1 3 4 6 7 9 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68

4 5 8 9 10 11 12 13 14 15 16 17 18 19

EXHIBIT "A" Page 1

~

Q TAX MAP KEY

1-3-46:2 1-3-46:3 1-3-46:4 1-3-46:5 1-3-46:13 1-3-46:14 1-3-46:15 1-3-46:16 1-3-46:17 1-3-46:18 1-3-46:19 1-3-46:20 1-3-46:21 1-3-46:22 1-3-46:23 1-3-46:24 1-3-46:25

1-3-46:76 1-3-46:78 1-3-46:79 1-3-46:81 1-3-46:82 1-3-46:84 1-3-46:52 1-3-46:53 1-3-46:54 1-3-46:55 1-3-46:56 1-3-46:51 1-3-46:58 1-3-46:59 1-3-46:60 1-3-46:61 1-3-46:62 1-3-46:63 1-3-46:64 1-3-46:65 1-3-46:66 1-3-46:67 1-3-46:68 1-3-46:69 1-3-46:70 1-3-46:71 1-3-46:72 1-3-46:73 1-3-46:74

1-3-46:29 1-3-46:30 1-3-46:33 1-3-46:34 1-3-46:35 1-3-46:36 1-3-46:37 1-3-46:38 , 1-3-46:39 1-3-46:40 1-3-46:41 1-3-46:42 1-3-46:43 1-3-46:44

----------------------------------.-.--- --- .....

, ..

BLOCK

3 3 3 3

5 5 5

7 7 7 7 7

8 8 8 8

LOT

2Q 21 22 23

1 2 3

9 10 14 16 17

12 15 16 19

EXHIBIT "A" Page 2

TAX MAP KEY

1-3-46:45 1-3-46:46 1-3-46:47 1-3-46:48

1-3-46:49 1-3-46:50 1-3-46:51

1-3-45:9 1-3-45:10 1-3-45:14 1-3-45:16 1-3-45:17

1-3-45:25 1-3-45:22 1-3-45:21 1-3-45:18

-----------------------------------""-.. ')~

GEORGE R. ARIYOSHI

GOVERNOR OF HAWAII ;. ~ : -• ' C","'

f'j') P 'l.: Z, STATE OF HAWAII .\ 'L(.. '6EPARTMENT OF LAND AND NATURAL RESOURCES

DIVISION OF LAND MANAGEMENT

P. O. BOX 621


January 2l t 1981

Mr. E. C. Craddick, President Barnwell Geothermal Corporation 2828 Paa Street, Suite 2085 Honolulu, Hawaii 96819

Dear Mr. Craddick:


This i8 to acknowledge the receipt ot your application tor a geothermal mining 1.... on certain reserved lands at Kapoho, Kaniah1ku, Pohoiki and Keahialak.a, Puna, Hawaii and to inform you that we .re scheduling the matter tor the consideration of the Board of Land , Natural Resources at its meeting scheduled for February 13, 1981.

The meeting will be beld in the Board Room of the Dep.rtment of Land & Natural Resources located on the first floor of the Kalanimoku Building, 1151 Punchbowl Street, Honolulu, and will commence at 9:00 A.M. It would be appreciated if you could be represented at the meeting to answer any questions the Board may have.

co: Mr. R. Higashi Mr. G. 'faguchl DOWAI~D c/

BARNWELL 1~'rA-rRIES, INC. · May 15,2002 RE: Barnwell Geothermal Corporation Geothermal Resources Lease Bond for Geothermal Resources Mining Lease No. R-3 As per the attached cover

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