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Dunleavy bill updates geothermal statutes
Proposal switches from permits to licenses, extends time to work geothermal prospects, almost doubles acreage individual can hold Kristen Nelson Petroleum News
Alaska Gov. Mike Dunleavy has introduced a bill to revise statues related to the state’s geothermal resources.
Senate Bill 161 was introduced Jan. 22 and assigned to Senate Resources.
In his transmittal letter, dated Jan. 21, Dunleavy said the “bill removes obstacles for exploration and development of Alaska’s geothermal resources” and would reclassify “the current permit system as a license system similar to that for oil and gas exploration.” The oil and gas exploration license program makes areas available for licensing on a competitive basis and requires a work commitment, expressed in dollars. Upon completion of the work commitment, a license area - or a portion thereof - could be converted into oil and gas leases. The governor also said the bill “more clearly defines what constitutes geothermal resources available for lease.”
The bill would increase time available for exploration to 5 years from the current 2 years (with a potential 1 year extension) and nearly doubles maximum geothermal acreage a person may hold from 51,200 acres to 100,000 acres, “to account for the tendency of geothermal resources to be dispersed over large areas.” The larger acreage is expected to attract more interest because “developers will have a greater opportunity to explore the appropriate area to delineate geothermal systems.”
Current system Geothermal resources, like oil and gas, fall under the Department of Natural Resources’ Division of Oil and Gas. Existing geothermal regulations allow issuance of permits for exploration, development or use of geothermal resources.
Under the proposed legislation the division would issue licenses, similar to those for oil and gas exploration, requiring, as do licenses in oil and gas, work commitments and also having the potential for licenses to be converted to leases once work commitments are complete.
Currently the division may issue prospecting permits or leases for exploration and development of geothermal resources, with disposal of land for geothermal exploration requiring that those lands be “designated as proposed geothermal disposal area and a best interest finding is issued authorizing the disposal.”
The division has issued best interest findings for the Mount Spurr area and for Augustine Island and held competitive geothermal lease sales in those areas, for Mount Spurr in 2008 and Augustine Island in 2013.
Geothermal exploration There has been prior leasing for geothermal exploration in the Cook Inlet area in Southcentral Alaska with Ormat Technologies taking 15 geothermal leases in 2008 on the flanks of Mount Spurr and evaluating the leases with aerial surveys and gravity and electromagnetic measurements, followed by the drilling of two core holes in 2010 to depths of 1,000 feet and a 4,000-foot well in 2011. According to a presentation to the Alaska Senate Resources Committee the 4,000-foot well encountered rock that does not hold heat particularly effectively, did not encounter hot water and found subsurface temperatures no higher than 140 degrees Fahrenheit.
Ormat had planned further field work, but in 2015 the company discontinued its Mount Spurr venture, writing off the $7.3 million it had invested.
Current interest Last March DNR’s Division of Oil and Gas called for applications for geothermal exploration near Mount Spurr, proposing to allow exploration on 12 tracts covering 28,800 acres about 40 miles west of the village of Tyonek.
When the division posted updated activity maps in mid-January the Cook Inlet map said the division was reviewing an application from Salt Lake City-based Raser Power Systems for a geothermal prospecting permit on three Mount Spurr tracts. The division said the application was in response to a Feb. 20, 2019, call for applications involving 12 tracts on acreage east of Lake Chakachamna, northwest of Trading Bay and 40 miles west of Tyonek.
-KRISTEN NELSON
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