Geothermal heats up in Oregon

Published 5:00 am Monday, August 27, 2012

More geothermal activity has come to the surface across Oregon.

The state has 16 commercial-scale energy-generating projects in some stage of development, more than all other states except Nevada and California, according to an April report from the Geothermal Energy Association. That’s up from nine last year. And there could be more.

“A lot of these are real new to me,” said Toni Boyd, senior engineer at the Geo-Heat Center at the Oregon Institute of Technology in Klamath Falls.

The increase in activity could stem from the pending expiration of federal tax credits that plant developers can tap if their facilities start before the end of 2013, geothermal developers said.

“Collectively, these benefits … have a present value equivalent to approximately 30 percent to 40 percent of the capital cost of a new power plant,” Ormat Technologies, a longtime geothermal developer, stated in its annual report in February.

Oregon’s renewable-portfolio standard, which mandates that 25 percent of utility companies’ energy come from renewable resources by 2025, and changes in utility prices for renewable energy also factor in, said Bob Fujimoto, the Portland-based lead for the U.S. Forest Service’s national geothermal program.

And the federal government’s American Recovery and Reinvestment Act allocated $368 million for geothermal exploration and development, according to the U.S. Department of Energy.

In Malheur County, U.S. Geothermal Inc., based in Boise, Idaho, plans to start generating electricity from a 22-megawatt, $143 million geothermal plant near the Bully Creek Reservoir west of Vale before the end of the year, according to a U.S. Securities and Exchange Commission filing. U.S. Geothermal received a nearly $100 million federal loan guarantee to build the plant.

A 28-megawatt second phase does not have a projected opening date or a power customer.

After Neal Hot Springs goes online, a 1.75-megawatt geothermal plant on the OIT campus should come next, to cover 60 percent to 70 percent of the college’s power needs, Boyd said, followed by a 3.1-megawatt commercial geothermal plant on ranch land in the Lake County city of Paisley.

Other projects around the state are in earlier stages.

The Bureau of Land Management in April approved AltaRock Energy’s enhanced geothermal testing near the Newberry National Volcanic Monument in Deschutes County. The Energy Department will cover half the project’s $42 million cost, according to The Bulletin’s archives.

At Glass Buttes, just south of the Deschutes County line in northeast Lake County, Ormat was awaiting for permits to start exploratory drilling, according to a June project update from the BLM. It received a $4.3 million grant from the federal Department of Energy.

Ormat is also conducting exploration studies at Foley Hot Springs in Lane County, as well as at Goose, Silver and Summer lakes, all in Lake County, in addition to others the company had previously reported, according to the annual report.

A spokeswoman for Ormat, based in Reno, Nev., declined to elaborate on the company’s activities at those sites.

The potential for generating geothermal energy at the lakes and hot springs has long been known. The BLM awarded two geothermal leases to Dallas-based Hunt Oil Co. in 1982, according to The Register-Guard in Eugene.

Still, at Foley Hot Springs, “nobody has really done any serious exploration there in the past,” Fujimoto said, adding that by “serious” he meant drilling.

The April industry report makes reference to two exploratory projects at Olene Gap, about nine miles southeast of Klamath Falls.

One company, Reno-based Kodali Inc., has drilled a well there and has gotten a power-purchase agreement from Pacific Power, said the company’s CEO, Dr. Jagadeeswara Kodali. Kodali declined to disclose power-production figures or costs.

Olene KBG LLC, a subsidiary of Reno-based Klamath Basin Geopower, probably will start drilling in the Olene Gap area in an unrelated project in September, said Boyd, of OIT.

One project that didn’t make the industry group’s April list lies on more than 8,000 acres of BLM land in Hood River County, a few miles northeast of Mount Hood. Portland General Electric secured geothermal leases on the land in March 2011.

The company applied for the leases in 1976, according to BLM documents. The request sat in a BLM backlog until 2008, said Joe Eberhardt, project manager for the PGE project.

Since obtaining the leases, utility employees have been taking water samples and determining underground rock density to figure out if the company could produce power there, Eberhardt said.

“We don’t know what’s there,” he said. “That’s just it. We don’t know. There’s no hot springs in the area. There’s no geysers there — nothing that’s a strong indicator of a presence of geothermal activity other than the fact that you have a good heat source in the area, and that’s the volcano.”

The leases expire in March 2021.

Fujimoto, who has been involved with geothermal energy since the 1970s, acknowledged an uptick in projects in the past five years.

“I would’ve hoped to see more development by now,” he said.

The state has plenty more sites with geothermal potential though. Hot Lake Springs in the La Grande area, for example, has an average water temperature of 208 degrees.

“If they actually explored out there, they could probably generate power,” Boyd said.

But federal tax credits are set to expire, and utilities are willing to pay more for natural gas than for geothermal energy, said Dan Kunz, CEO of U.S. Geothermal.

That’s why his company is looking abroad.

“There’s a project in Guatemala that will be taking our attention in the next wave here,” he said of a planned $118 million, 25-megawatt project outside of Guatemala City.

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