By Abigail Sawyer, California Energy Markets; September 20, 2019; No. 1557
Abigail Sawyer interviewed Jim Faulds for this news story, and she and California Energy Markets graciously allowed us to print the text of this copyrighted article below.
California Energy Markets; September 20, 2019; No.
1557, page 16
Copyright © 2019, NewsData LLC. Unauthorized
reproduction is strictly prohibited.
[SUMMARY, page 1]: “Recent research on geothermal potential
in Nevada, improved technology, and increasing interest in carbon-free and
renewable energy resources is driving geothermal interest in the state, experts
say. Geothermal lease sales continue in the largest-ever offering of parcels on
federal lands following a Sept. 17 auction that brought in nearly $638,000 in
bids in the state. At , geothermal heating up in Nevada.”
[STORY, page 16]: “A federal Bureau of Land Management
geothermal lease sale in Nevada on Sept. 17 attracted more than three times as
many bidders as a similar auction held last year. The auction was the largest,
by acreage, of any geothermal lease sale BLM has ever held, according to a news
The auction alone brought in nearly $638,000 from lease
sales on 102,403 of more than 384,000 acres offered. An additional 64,000 acres
were leased in noncompetitive sales the following day, Alex Jensen, geologist
and geothermal program lead for BLM Nevada, said in an interview. Parcels
offered as part of the original auction remain available for noncompetitive
lease-purchase for two years, Jensen said.
In October 2018, BLM sold leases on 2,321 of more than
27,000 acres offered and brought in $26,422 in receipts, according to the
bureau’s Nevada office.
Jensen said the auction indicates growing interest in
geothermal power generation, which he attributes to interest in renewable
generation resources generally and geothermal’s ability to provide
zero-emissions baseload power with a lower per-acre disruption footprint than
solar and wind.
Advances in research and exploration technology and
regulatory pressure to meet renewables portfolio standards and greenhouse
gas-reduction goals are other factors that make geothermal attractive, Jim
Faulds, director and state geologist with the Nevada Bureau of Mines and
Geology at the University of Nevada, Reno, said in a phone interview.
Geothermal’s main drawback, Jensen said, is upfront costs
for exploration. “It costs between $2 million and $7 million” to drill a well
between 3,000 and 8,000 feet deep in the hope of finding a system, he said.
With Nevada’s fault-controlled systems, he explained, the well must hit a fault
precisely in order to generate power.
“If you miss by 200 feet you could have spent $2 to $7
million on an unusable well,” Jensen said. It’s extremely capital-intensive to
take a project all the way to production, “but it essentially means you’re
buying the next 35 years’ worth of fuel for your power plant,” he said.
The largest bid in this week’s sale, $20 per acre for a
4,800-acre parcel, came from Western States Environment and Resources of
Houston, according to the BLM release. WSER beat out Terra-Gen to pay $96,000
for the parcel, located immediately adjacent to Terra-Gen’s 67-MW Dixie Valley
Power Plant in Churchill County.
Churchill County is the “epicenter” for geothermal in
Nevada, Faulds said. He and his team are nearing completion of a five-year
project funded by the U.S. Department of Energy that resulted in the
identification of two new geothermal systems in the state. The three-phase
project involved studying the characteristics of known geothermal systems,
doing a detailed study of five promising areas, and then drilling preliminary
wells to demonstrate the existence of a system.
The area in the Granite Springs Valley system identified
in the project received bids in the sale, Faulds said. The second system, in
Gabbs Valley, is even more promising from a geothermal perspective, he said,
but it runs adjacent to a wilderness area and was not offered in this sale.
Bidders realize that certain parcels come with
environmental strings attached, affecting their usefulness, Jensen said. If a
parcel is located in a bighorn sheep habitat, for instance, exploration must
cease during lambing season. A lot of the unsold parcels were on sage grouse
habitat, he said.
As long as bidders diligently explore and develop their
parcels, pay their annual rent and comply with BLM rules and environmental
regulations, the leases are valid for 10 years with an option to extend. Once a
geothermal power plant goes into production on a parcel, that parcel is held as
long as the plant is operational. At that point, the leaseholder pays royalties
rather than rent.
Interest in geothermal speculation spiked in 2008 and
remained high in 2009, Jensen said. Since that time, “a lot of companies
learned it was a lot more difficult and expensive than they had realized.”
During that time, DOE distributed “a decent amount of
money” for geothermal research, which has remained stable due to congressional
support, Faulds said.
The BLM in its release said the Nevada lease sale
reflects the Trump administration’s goal of promoting America’s energy
independence. DOE’s Geothermal Technologies Office 2019 GeoVision report
suggests that “improving the tools, technologies, and methodologies used to explore,
discover, access, and manage geothermal resources would reduce costs and risks
associated with geothermal developments.” Such reductions, the GTO estimates,
could increase geothermal generation to 60 GW of capacity by 2050.
Jensen said tremendous geothermal resources exist across
the country, particularly in Western states, Alaska and Hawaii. He estimated
that as much as 1.5 GW of potential in the Salton Sea area of California could
go on line within 10 years if there were incentives to explore and develop the
“You could drill anywhere on Earth, and there’s no chance
you won’t hit heat eventually,” he said.”