|
Geothermal bills goal to encourage resource exploration & development
Alan Bailey for Petroleum News
Two bills, Senate Bill 104 and House Bill 135, introduced by Gov. Mike Dunleavy during last year’s legislative session to revise statutes relating to geothermal energy exploration and development, are continuing to move through the Senate and House. On Jan. 21 officials from the Alaska Department of Natural Resources talked to the House Resources Committee about HB 135.
The concept is to better align the statutes governing geothermal activities with those governing oil and gas exploration and development, while also encouraging geothermal exploration. The bills would also modernize the statutes by using a new definition of geothermal energy, in particular allowing for the fact that modern technology enables the production of geothermal energy from lower temperature resources than had been possible in the past.
Key changes To better align the geothermal statutes with those for oil and gas exploration, under the revised statutory language proposed in the bill a prospecting permit would in future be termed a prospecting license. To encourage new exploration, the maximum possible land area encompassed by a prospecting license would be increased to 100,000 acres relative to the current maximum of 51,200 acres for a prospecting permit. In addition, a prospecting license would be able to run for five years, rather than for the two-year duration of a prospecting permit.
As with an oil and gas exploration license, there would be the possibility of converting a geothermal prospecting license to geothermal leases, if the licensee can demonstrate the completion of work commitments and the development of an acceptable exploration plan.
The existing statutes for geothermal land leasing would not change - as with oil and gas leasing, the state can conduct periodic geothermal lease sales for prospective state land. However, the rules for the unitization of leases would be brought into alignment with those for oil and gas. The issuance of geothermal leases confers exploration and development rights on the leased land.
Apply only to commercial operations Under the proposals, a prospecting license would not be required for the exploration and development of geothermal resources for domestic, noncommercial or small-scale industrial use. However, a current provision giving surface landowners preferential rights for geothermal exploration under their lands would be eliminated.
No impact on water rights Committee members expressed some concern regarding whether the revised statutes might impact a surface property owner’s water rights, should a nearby geothermal development be approved. During a follow-up committee meeting on Jan. 24 to address this issue state officials assured the committee that there would be no conflict between any geothermal development and water rights - geothermal water typically comes from much deeper levels than potable water and contains contaminants that render it unsuitable for drinking. Moreover, water rights would have priority.
During the Jan. 21 meeting Steve Masterman, director of the Division of Geological and Geophysical Surveys, also commented that a surface owner’s use of heat pumps would not be impacted - heat pumps tend to operate at very shallow depths relative to the typical depths in excess of 1,000 feet of commercial geothermal resources, he said.
Alaska geothermal resources Alaska has known geothermal resources in several regions of the state. The challenge is to establish commercial viability for a development, especially if the resources are located far from a significant demand center for electrical power.
Over the years there has been interest in the geothermal potential of state land on the flanks of Mount Spurr, an active volcano on the west side of the Cook Inlet. The volcano presents an obvious potential source of geothermal energy, while its location, only around 40 miles from the nearest point on the Railbelt electricity grid, offers the possibility of generating electricity for the Railbelt.
Last year the state issued two prospecting permits for geothermal exploration on the southern flank of the volcano.
In 2009, following the acquisition of leases in a Mount Spurr geothermal lease sale, geothermal company Ormat Technologies conducted geothermal exploration in 15 state leases covering a fairway on the south side of Mount Spurr. The company drilled three boreholes, on the southeastern side of the mountain some distance from the volcanic crater but failed to find a hot water source. The company formally discontinued its exploration program in 2015. The new prospecting permits encompass land and geothermal prospects not tested by Ormat.
The state has also conducted geothermal lease sales for Augustine Island on the west side of the Cook Inlet. The volcano that forms this island presents potential geothermal resources but is distant from the nearest point on the Railbelt grid.
Other areas of interest include the Pilgrim Hot Springs, a known potential geothermal resource near Nome.
A geothermal system at Chena hot springs in the Interior has supported local power generation for a number of years. And a new geothermal power generation system is being developed on the eastern flank of the Makushin Volcano in the Aleutian Islands, to provide power for Unalaska and the port of Dutch Harbor. There are also a number of locations of known geothermal resources in southeast Alaska.
- ALAN BAILEY
| 