Project Review Continued

ESTIMATED COST AND REVENUES OF MED DEAD/LAKE SHALOM PROJECT

1. Assumptions and Basic Elements of the Project:

A. Detailed design and construction of the Project will take 7 years to complete. Assuming this begins in 2011, the Project will become operational in 2018. The estimated cost of the Project will be $5,900m consisting of the tunnel, sea inlet, Lake Shalom reservoir, penstock tunnel and ancillary facilities @ $3,200m, 1800 MW hydropower plant @ $1,600m and first desalination plant (1000mcm/yr) @ $1,100m.

B. At Start-up in 2018, we assume the surface of the Dead Sea (DS) will be, conservatively, at 433 meters below sea level (mbsl). (As of 2009, the DS is at 423mbsl; it is declining at 1.3 m/yr). This decline is due primarily to the continuing evaporation of the DS and evaporation at the mining operations run by Israel and Jordan. During the first 7 years of operation (until the DS is “full”), we project the average evaporation and outflow less inflow to be approximately 1.25 billion cubic meters (bcm) per year, and approximately 1.5bcm per year thereafter (see Addendum).

C. Our target level for the DS is 395mbsl, the desired elevation to maximize available “room” in the DS (as well as the surface area, to increase evaporation), while not flooding the evaporation ponds in the southern DS. A dam is planned between the northern DS and the evaporation ponds, with Med Sea water (on top of the deep DS water) north of the dam, and DS water south of the dam, conveyed through the dam by a large diameter conduit from the deep DS water. This dam will be designed and constructed in consultation with Arab Potash Company and Dead Sea Works.

D. The amount of “room” available in the DS (aside from ongoing evaporation) during the first 7 years of operation (from 433mbsl to 395mbsl) will approximate 25.5bcm (see Addendum).

E. The operating head of the hydropower plant will vary as the DS is being filled. At Start-up, the head will be 408 meters (433m – 25m). (For purposes of calculating head, the operating level of the Lake Shalom Reservoir is at 25mbsl). When the DS is “full” (at 395mbsl), the head is 370 meters. The average head during the first 7 years will be 387 meters (412m – 25m).

F. We assume the average price for electricity produced by the Project (green power and peaking power) to be $.18/kWh during the first 7 years of operations and to increase thereafter, as set forth below.

G. The Project’s storage and operations are similar (in storage reservoir and hydropower capacity) to the 1600MW Raccoon Mountain pumped storage facility in Tennessee, owned and operated by the Tennessee Valley Authority (TVA). Raccoon Mtn. runs at 87% efficiency; we assume 85% efficiency for the Project (Although the increased specific gravity of sea water will increase efficiency, fouling from marine organisms may decrease efficiency). Raccoon’s total operating costs are about $12m/yr. With respect to our Project, we estimate that the annual operating cost will be less than $.008 per kWh.

H. We project income from desalinated water to be $.52/cm, the price for water at the Ashkelon plant in Israel. The price of water will be kept as low as possible to encourage its use and to create more “room” for Med Sea water to flow through the turbines into the DS.

2. Volume of Med water through hydro plant until DS is “full”:

a. 25.5bcm to fill the DS from 433mbsl to 395mbsl

b. 8.75bcm evaporation and net inflow/outflow from the DS (average of 1,500mcm/yr x 7 years)

c. 7bcm of Med water will be desalinated in the first 7 years (1000mcm/yr x 7 years) Total: 41.25bcm in 7 years (a+b+c).

3. Quantity of power produced per cubic meter (cm) in first 7 years:

Power = Head x Flow x Gravity x Specific Gravity - With Power measured in Watts, Head in meters, Flow in liters per second, and acceleration due to Gravity in meters per second per second (approximately 9.81 meters per second per second). Specific Gravity of Med Sea water is approximately 1.04g/ml, or 1040grams/liter.

Electricity produced per cm: 387m Head X 1 cm (1000 l)/sec Flow X 9.81 m/sec/sec Gravity X 1.04 Specific Gravity = 3,927,924 Watts = 3928 kilowatts /3600 sec/hr = 1.09 kWh per cm X .85 Efficiency = .932kWh per cm passing through the hydro plant the first 7 years.

4. Income from sale of electricity in first 7 years:

Electricity produced in first 7 years: 41.25bcm X .932kWh/cm = 38.5bkWh Assuming the rate for electricity is $.18/kWh (average of peaking power and base load), income will be 38.5bkWh X $.18 = $6,900 total for 7 years

5. Total income from sale of desalinated water in first 7 years:

1bcm/yr x $.52/cm = $520m/yr; for 7 years: $520m X 7 = $3,640m

6. Income in first 7 years:

$6,900m + $3,640m = $10,540; or, an average of approximately $1,500m/yr.

7. Income from sale of electricity and water after the DS is “full”:

As the DS is being filled, an additional 1.5bcm/yr combined capacity of desalination plants, by Jordan and Israel (MVC desalination to reduce brine volume) would be built, near En Gedi and Potash City, to be operational when the DS is “full”. This will keep the surface layer of Med Sea water renewed by the annual replacement of about 3bcm desalination feed water flowing to the south, and being removed from the top meter of the surface layer ( . This would allow the flow of 4bcm/yr through the hydro plant, with 1.5bcm for evaporation less inflow, and 2.5bcm/yr desalinated water.

Electricity produced: 370m Head X 1 cm (1000 l)/sec X 9.81 m/sec/sec X 1.04 = 3,774,888 Watts = 3775 kilowatts /3600 sec/hr = 1.049kWh per cm X .85 efficiency = .89kWh per cm passing through the hydro plant during each year

Assuming the rate for electricity has increased to $.22/kWh, income/yr from the sale of power = .89 kWh/cm x 4bcm = 3.56b kWh x $.22/kWh = $783m/yr Plus, $1,300m (2.5bcm x $.52/cm) of income/yr from the sale of desalinated water Total income/yr: $783m + $1,300m = $2,083m/yr

9. Other Revenues:

In addition to the revenues to be derived from the sale of electricity and water, we expect enormous revenues for the Dead Sea Basin from real estate development (including tourism) and other commercial activities enabled by the electricity and water and infrastructure associated with the Project.

10. Revenues thereafter:

Additional desalination plants may be added as needed, so long as the total brine discharge from the desalination projects does not exceed 1.5bcm/yr. (see Addendum, Desalination) Depending on contractual arrangements, after an agreed time, the Project can be transferred to a multilateral entity owned by the constituent parties, who will receive the continuing benefits from the Project.

Foregoing are estimates; actual costs and revenues may vary. Prepared by Randolph Gonce and Michael Brendzel, Dead Sea Vision LLC. This information is the property of Dead Sea Vision LLC, copyright applies. January 20, 2010

PRELIMINARY PROJECT ORGANIZATION PLAN FOR THE MED-DEAD/LAKE SHALOM PROJECT

The intent of the organization plan is to ensure the monetary backers remain in control of planning, construction, and operation to prevent cost over-runs and maximize return on investment. This requires more day-to-day intervention by monetary backers (or their delegate). Historically, backers discovered their investment was in trouble past the point of no return.

Stages of Project Execution

Stage 1 - Preliminary Planning

The execution team and the financial backers will be incorporated as a limited liability company (hereafter referred to as “company”). The country of incorporation will be selected based on assessment of best terms (taxation, government regulations). It is envisioned that the funding provided by backers will be considered as a loan to the operating company with voting stock issued as collateral until the loan is satisfied. The backers would have the option to convert the funding (loan) to an ownership position at any point based on the loan value outstanding.

It is envisioned that the earlier backers would receive a premium in collateral stock as recognition of the higher risk involved in investing in a project in the earlier stages. Also, the initial members of the execution team will be remunerated in company stock for their unpaid efforts in project development work prior to Stage 1 Planning.

The real ownership and control of the company is by the stock owners (hereafter called "shareholders").

Stage 1 is estimated to be completed in one year at a cost estimated at $2 to $3 million. There will be weekly meetings (hereafter called “meetings”) either in person or via teleconferencing between the shareholders. The meetings will continue through the remaining stages – with the frequency of meetings during the later stages as agreed.

Stage 2 - Detailed Planning

Once the funding appears solid, and the political path to permit the process becomes sold – Stage 2 will begin. During this stage the design will be finalized, all permits will be secured, constructability optimized, facility operation planned and optimized against construction costs.

A company board of directors will be created (which in reality will have no real power) will be created (hereafter called the “board”). In reality it is all the political forces which the project must deal with including governments, government agencies, international agencies, and representatives from the stockholders. It is envisioned the board will meet monthly, and will be used to clear roadblocks. Once formulated, the board will stay in existence throughout all remaining stages.

Before Stage 2 is completed, and in line with schedule requirements and securing permits – Stage 3 work will begin as agreed between the shareholders. Prior to Stage 3 beginning, the final project costs and funding will be locked.

Stage 3 - Build Construction Infrastructure

A complete detailed geotech investigation of the right of way. Build haul roads. Construct camps. Build precast yards. Construct logistical facilities / laydown areas.

Stage 4 - Construction

Stage 5 - Startup

Stage 6 - Operation

Initial Project Plan Philosophy

To make money and at the same time provide real benefit to the inhabitants of Palestine and Israel.

Walk in knowing the company will end up making concessions to the political authorities to be able to execute this project. We need to focus on what we can give away and still maintain the overall economic viability.

Avoid trading off operational costs for construction cost savings. This means the project operation team must begin involvement during the design phase.

Simple design changes can result in substantial construction savings. Construction team members must begin involvement during the design phase.

The majority of cost of the project is construction. This is where the costs must be controlled to avoid project over runs. To avoid the historical problems, the company will control and be involved in day to day management of construction by the subcontractors. Whilst this approach shifts some of the risk to the company, it avoids claims surprises which are the root cause of cost overruns and project delays. This will necessitate subcontract agreements payment provisions to allow flexibility of approach.

Every effort will be made to subcontract on a performance basis – specifying what need to be built and trying to avoid how to build except where necessary such as for compatibility, permit compliance or durability.

The company will maintain a minimal construction ability to perform minor permanent construction work, as well as build temporary facilities. This construction unit will evolve into the maintenance unit for the operation of the project.

The project will be broken down into as many as needed construction teams. Each team will be a company execution team with a subcontractor. The intent is to maximize Palestinian labor, involvement by Palestinian and Israeli companies to the extent economically possible.

This plan was prepared by Steven Hanson, retired former project manager for Bechtel.

http://www.haganescruises.com/steven f hansen.pdf





Confirmation for hydroplant estimate from Anton Mitteregger, Voith Hydro, 2010

Mitteregger, Anton
to me
Feb 24

Dear Randolph,
  thank you for your enquiry which has been forwarded to me. As we had been in direct contact a year ago, please let me know how and in which respect we can assist you further.
  Best regards, Anton Mitteregger
Voith Hydro GmbH & Co. KG
-HVT
Linzer Straße 55
3100 St. Pölten, Austria
Tel  +43 2742 806 22677
Fax  +43 2742 806 42677
Mobile +43 664 833 6895
anton.mitteregger@Voith.com
http://www.voithhydro.com
A Voith and Siemens Company

Mitteregger, Anton to me Mar 18

Dear Randolph,
  thanks for the comprehensive information on the project. We assume that the Lake Shalom reservoir, control gates, intake- and outflow structure will not belong to the hydropower plant, but the penstock tunnel between reservoir and power house could be allocated. This beeing taken into account and compared with other plants, the estimated specific invest value of  900 USD/kW seems to be reasonable. Please note that we as equipment supplier do not have the expertise for cost verification in civil engineering tasks, which represents usually 60 to 70 % of total cost. As far as the turbine equipment is concerned, we would like to draw your attention to corrosion resistance aspects. Special corrosion resistant material qualities and coatings have to be applied in order to prevent corrosion damages, which occur additional equipment-cost.
  Best regards,
Anton







A Vision For Peace and Prosperity

Ezek 47:1-12

47:1 Then he brought me back to the door of the house; and behold, water was flowing from under the threshold of the house toward the east, for the house faced east. And the water was flowing down from under, from the right side of the house, from south of the altar.
2 He brought me out by way of the north gate and led me around on the outside to the outer gate by way of the gate that faces east. And behold, water was trickling from the south side.
3 When the man went out toward the east with a line in his hand, he measured a thousand cubits, and he led me through the water, water reaching the ankles.
4 Again he measured a thousand and led me through the water, water reaching the knees. Again he measured a thousand and led me through the water, water reaching the loins.
5 Again he measured a thousand; and it was a river that I could not ford, for the water had risen, enough water to swim in, a river that could not be forded.
6 He said to me, "Son of man, have you seen this?" Then he brought me back to the bank of the river.
7 Now when I had returned, behold, on the bank of the river there were very many trees on the one side and on the other.
8 Then he said to me, "These waters go out toward the eastern region and go down into the Arabah; then they go toward the sea, being made to flow into the sea, and the waters of the sea become fresh.
9 "It will come about that every living creature which swarms in every place where the river goes, will live. And there will be very many fish, for these waters go there and the others become fresh; so everything will live where the river goes.
10 "And it will come about that fishermen will stand beside it; from Engedi to Eneglaim there will be a place for the spreading of nets. Their fish will be according to their kinds, like the fish of the Great Sea, very many.
11 "But its swamps and marshes will not become fresh; they will be left for salt.
12 "By the river on its bank, on one side and on the other, will grow all kinds of trees for food. Their leaves will not wither and their fruit will not fail. They will bear every month because their water flows from the sanctuary, and their fruit will be for food and their leaves for healing."
New American Standard Updated