(GP/GT) for Additional Water Supply in the Lower Rio Grande

economic techniques because cash flows are accounted on a real-time, common
dollar basis. This common dollar basis is obtained by discounting all
after-tax cash values to a PV cash value using a discount rate. This discount
rate is a percentage by which future value dollars are reduced year to year to
a present value. Because the discount process substantially reduces the PV of
projects with economic lives >5 a year, selection of a discount rate is a very
important consideration. A 15% discount rate is a commonly accepted discount
rate in developing mineral resources while a 26% discount rate allows for a
higher risk typically associated with gas and oil development. Because the
cascaded or multi-use of the geopressured-geothermal brine increases the
complexity while also diversifying the product mix, a 15% discount rate was
assumed.
Results of this study are presented in a discounted payback and NPV
analysis. (The breakeven analysis was not used because of the array of
combinations available and assigning market ratios between each product).
Discounted payback is defined as the minimum time required for the project to
generate enough discounted revenues to equal the initial investment of the
project. Investors and lending institutions typically use this method to
assess the time to recover their investment. The shorter the payback, the
less risky the investment because market conditions are less likely to change
in the shorter period of time than in a longer period of time. NPV is another
method of analysis that determines the net value added to an investment. As
the name implies, the initial investment is subtracted from the present value
of operating revenues less costs. Again, investors and lending institutions
typically use this method of analysis to assess the overall profitability of a
project, selecting the project with the greatest NPV.
DESALINATION ECONOMICS
There has not been sufficient replication under similar conditions to
warrant extrapolation of prior economic data. Regardless of the desalination
process, there are a number of variables that will affect the cost of a
facility:
1. Quality and quantity of raw geopressured fluid
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