The Pagosa Springs Town Council voted to enter into an operating agreement with the Geothermal Greenhouse Partnership (GGP) regarding Centennial Park during its regular meeting on Thursday, Aug. 17.
The agreement states that structures in place at Centennial Park that were funded by various grants will be owned by the town…
[At a recent meeting of the Town Council, Greg Schulte] talked of a grant that was awarded by the Colorado Department of Local Affairs (DoLA) to the town.
“As a virtue of receiving that grant, the things that were paid for by that grant become town property,” explained Schulte. “On the same token, the GGP received a CWCB (Colorado Water Conservation Board) grant and essentially, as the recipient of those funds, the things that were purchased with that become property of the GGP.”
Continued Schulte, “In a very, sort of, general sense, the CWCB money was paying for the stuff that was below the ground, we paid for most of the stuff above the ground.”
Schulte went on to explain that, in a conversation with GGP board of directors, the question was posed of whether the GGP really cares if the town was in possession of underground pipes or not, with the GGP responding that they didn’t mind.
“So, basically this operating agreement does detail how we operate together, but it’s going to move forward on the premise that, essentially, the GGP is going to convey to the town their interest in the infrastructure that was paid for by the CWCB,” explained Schulte. “So, essentially, what this means is that … the town does have a land lease with the GGP for a significant period of time along with the geothermal water … the infrastructure becomes part of the overall land lease.”
Schulte added that the town doesn’t anticipate one day owning the domes or foundations on the property.
“What we’re intending to do is to move forward with the premise that the DoLA money and the structure funded by the CWCB will essentially be owned by the town going forward,” said Schulte.
The new Zinke team, including appointments to Bureau of Reclamation, will need to learn quickly about the complexities of Colorado River water law and the drought-induced woes facing Lake Mead
By a comfortable 68-31 margin, the U.S. Senate today confirmed President Trump’s nominee for Secretary of the Interior, Ryan Zinke.
The former Montana member of Congress will head a department that manages around 500 million acres of land and waterways in the United States.
Zinke’s department also includes the federal Bureau of Reclamation, the agency responsible for the system of dams and reservoirs on the Colorado River, the waterway that is integral to the livelihood of 40 million U.S. citizens living in the Southwest.
In a statement declaring his approval of the appointment, Arizona Sen. Jeff Flake said he looked forward to working with Zinke’s department, notably on behalf of Arizona’s Colorado River allotment.
Scientists with the U.S. Geological Survey (USGS) recently completed an assessment of our Nation’s geothermal resources. Geothermal power plants are currently operating in six states: Alaska, California, Hawaii, Idaho, Nevada, and Utah. The assessment indicates that the electric power generation potential from identified geothermal systems is 9,057 Megawatts-electric (MWe), distributed over 13 states. The mean estimated power production potential from undiscovered geothermal resources is 30,033 MWe. Additionally, another estimated 517,800 MWe could be generated through implementation of technology for creating geothermal reservoirs in regions characterized by high temperature, but low permeability, rock formations.
Solar panels, such these at the Garfield County Airport near Rifle, Colo., need virtually no water, once they are manufactured. Photo/Allen Best
Wind farm Logan County
Click here to read the whole interview. Here’s an excerpt:
“We need to innovate and do research on all different forms of energy,” [Martin Keller] said. “It would be a mistake to write off any — as long as the energy is carbon neutral. That’s the biggest thing, [because] burning fossil fuels is changing the environment.”
Keller took the reins at NREL, part of the network of laboratories run by the U.S. Department of Energy, at the end of November 2015. He hails from a sister DOE facility in Tennessee, the Oak Ridge National Laboratory, where he served as the associate laboratory director for energy and environmental sciences.
He succeeds Dan Arvizu, who announced plans in March 2015 to retire from the lab after more than 10 years as its director.
The Colorado School of Mines recently completed a preliminary study of Rico’s geothermal resources and presented three potential development options during a town meeting Aug. 25…
Paul Morgan, senior geologist and geophysicist for the college, reported that surface hot springs in the Rico area have low toxic elements, and have temperatures ranging between 93 and 111 degrees Fahrenheit…
Becky Lafrancois, School of Mines economics professor and co-author of the study, evaluated the business potential for a small hot-springs spa, commercial-grade geothermal greenhouse, and district-level heating of buildings.
According to 18th century Scots poet Robert Burns, “The best laid plans of mice and men often go awry.”
Pagosa Verde owner Jerry Smith must have this line of poetry running through his mind all the time when dealing with the federal, state and local government, and Monday night’s meeting of the Pagosa Area Geothermal Water and Power Authority was probably no exception.
The authority, which consists of three town councilors (David Schanzenbaker, John Egan and Mayor Don Volger), the three county commissioners (Michael Whiting, Steve Wadley and chairman Clifford Lucero) and one at-large seat held by Mike Alley, just barely had enough members show up at Town Hall to achieve a quorum for the meeting.
Town Manager Greg Schulte, along with County Administrator Bentley Henderson and County Attorney Todd Starr, acts as staff for the authority, began by giving some background information for the people in the audience who may not have attended the authority’s previous meetings.
The original intent of the authority, as spelled out in the agreement between the town and the county, was to enter into an agreement with Pagosa Verde to form a separate entity — Pagosa Waters LLC — as a public/private partnership.
Pagosa Waters would then consist of three people: one appointed by the authority, one appointed by Pagosa Verde and one at-large member. The point being, this arrangement would ensure joint ownership of the project between the two local governments and Pagosa Verde, while at the same time allowing the project to be managed by a full-time, working board instead of part-time government volunteers.
According to Schulte, a wrinkle in the plan occurred because of a recently awarded grant from the Colorado Department of Local Affairs worth nearly $2 million. Archuleta County was the official applicant for the grant because DOLA only deals with local government bodies, not private companies.
The $2 million grant from DOLA counts as matching funds for a $4 million grant from the U.S. Department of Energy, which was awarded earlier this year to Pagosa Verde. However, since Pagosa Verde is a privately owned, for-profit company and Pagosa Waters LLC would be a public/private partnership, DOLA had concerns about the legality of Archuleta County funneling its funds into the project.
Schulte then alluded to a meeting held last week involving himself, town attorney Bob Cole, Starr and another attorney, Russ Dykstra, who has some experience with similar situations.
Starr then took over the briefing, explaining, “He has been involved in some very large public/private partnerships … and his suggestion was that, from everybody’s stand-point, an LLC is probably not the form we want to take. Some sort of concession agreement is the best way to do it because we can take care of all of Jerry’s requirements and all of our requirements.”
Nobody doubts that the Colorado town of Pagosa Springs has hot water. It bubbles to the surface at around 140 degrees and in quantities sufficient to sustain a large commercial spa and several more public pools along the San Juan River.
As well, the hot water heats 13 businesses and 5 homes in downtown Pagosa Springs plus the Archuleta County courthouse, delivering this energy at a cost roughly 20 to 25 percent below the going rate for natural gas and 30 percent less than electricity.
But is there sufficient hot water available to produce electricity, warm 10 acres of greenhouses, and deliver heat to 600 homes?
Geologic modeling suggests there is, but until additional wells are drilled, as is expected later this summer, there’s no way of knowing for sure. If those exploratory wells confirm large volumes of hot water, then two large-bore wells will be required to extract the hot water and, after the heat is transferred from the water, return it underground.
Federal and state grants this year have given the project traction. The U.S. Department of Energy delivered $3.9 million, followed by $1.9 million from state sources. The town and county governments created a consortium called the Pagosa Area Geothermal Water and Power Authority to provide 30 percent in local funds, or $520,000, as required by the federal grant.
A private company, Pagosa Verde, which is pushing the project, came up with an equal amount in in-kind services. It owns 20 percent of the project and has the backing of a South Carolina-based investment firm called Natural Energy LLC.
Another milestone occurred in late May, when Colorado Gov. John Hickenlooper stopped in Pagosa to sign H.B. 14-1222 into law. The law, co-sponsored by Sen. Ellen Roberts, a Republican from Durango, and Sen. Gail Schwartz, a Democrat from Snowmass Village, lengthens the repayment period and otherwise provides great flexibility for private-activity bonds issued with the backing of the state government for geothermal and other renewable energy projects.
Michael McReynolds, policy advisor at the Colorado Energy Office, says the new law recognizes the large costs of proving the geothermal resource exists before development can occur.
However, other areas of the state are interested in replicating the business model of diverse revenue streams being assembled at Pagosa Springs. “It really depends upon the specific communities and what they want to pursue,” he said when asked if the new law will be used to finance other community renewable energy projects.
Jerry Smith, the chief executive at Pagosa Verde, says the new law was “huge” in allowing the project in Pagosa Springs to go forward.
In providing access up to $16.7 million available for as little as 2 percent interest, Smith’s project can now proceed. He estimates the need to spend $26 million before revenue can be gained.
“It’s a community-scale project, replicable throughout the Rocky Mountain states. I wanted town and county citizens to own it,” says Smith. “They only way they could participate was by forming an authority, similar to a housing authority. It’s a quasi-governmental authority.”
The public-private partnership is called Pagosa Waters LLC.
Because of the lower-cost money produced by the state and federal grants plus the clear bonding authority enabled by the new state law, he sees a financial path opening up.
Bonds will be just 2 percent. “That’s essentially free money,” he says. “We can borrow as much as we need to secure revenue for the project, “and it’s a way we go.”
Cheap borrowed money also relieves the onus of finding extremely hot water and arranging for sale of electricity, says Smith. If tests reveal merely hot water, such as bubbles up in the local springs, then that’s still hot enough for greenhouses and living rooms.
From the Romans forward
Hot water originating underground has long been put to practical uses. Romans at Pompei used hot water to heat buildings.
The Idaho Capitol Building has been heated with water drawn from 3,000 feet below ground, but 86 buildings with more than 5.5 million square feet of space are also heated by a separate geothermal heating district, according to Jon Gunnerson, geothermal coordinator for the City of Boise Public Works. It is the largest geothermal heating system in the United States, he says.
Commercial electrical production from geothermal sources began in 1911 in Larderello, Italy. The first commercial electrical production in the United States began in 1960 at The Geysers in California.
In 2013, according to the Geothermal Energy Association, the United States had 3,386 megawatts of installed geothermal capacity, or about three times as much as the trio of giant coal-fired power plants found in the Comanche complex near Pueblo, Colo.
Less prominent than photovoltaic panels, geothermal was nonetheless responsible for 0.41 percent of all electrical generation last year, ahead of solar at 0.23 percent. Biomass, wind, and hydro all produced more than geothermal.
California far and away has the most geothermal installed capacity, followed by Nevada, then trailed more distantly by Hawaii, Utah, and Idaho.
In Colorado, geothermal resources have been used to heat small greenhouses associated with the Mt. Princeton Hot Springs, near Buena Vista, as well as commercial springs. But no electrical production has been achieved because of concerns that new uses will rob existing users of their heat.
“Until very recently, Colorado’s geothermal potential for generating electricity has been assigned little promise,” notes the Colorado School of Mines at its geothermal website. “This appears to be based more on a lack of study, rather than on sound science.”
The website article goes on to note that a 2008 report from the Massachusetts Institute of Technology found that Colorado is the top state in the nation for potential commercial development of its heat, mostly if deep wells are drilled near Rico, Trinidad and other hot spots in a process called enhanced geothermal recovery.
Potential in Pagosa
Just how much electricity the Pagosa project could produce depends upon the heat of water. Colorado School of Mines studies concluded a strong likelihood of substantial hot water 2,000 to 5,000 feet under the land leased by Smith’s company about two miles south of downtown Pagosa Springs. Hot water for the downtown heating district is drawn from a depth of 300 feet.
Smith says it’s a cinch that the water found 2,000 to 5,000 deep will be at least 140 degrees Fahrenheit, the temperature of the water found closer to the surface. If so, it should be enough to produce four megawatts of round-the-clock electricity, what is called base-load generation.
If the water is 250 degrees, as the geological modeling suggests, it could generate 12 megawatts—and still have residual heat for the greenhouses and the homes.
Archuleta County altogether has baseload demand for 20 megawatts of generation. Another renewable source, a proposed biomass plant that would burn forest products to generate electricity, would generate 5 megawatts. Both biomass and geothermal generators probably need to get paid more for their electricity by the local electrical cooperative, La Plata Electric, than what the cooperative currently pays.
Biomass plant proponent J.R. Ford last winter said he needed 15 to 20 percent more than what the La Plata and other electrical cooperatives pay wholesale provider Tri-State Generation and Transmission. Tri-State’s power comes primarily from coal, natural gas, and hydroelectric.
Both the geothermal and biomass projects in Archuleta County are representative of small sources of electricity called distributed generation. In a famous 1976 essay published in Foreign Affairs, Aspen-area resident Amory Lovins advocated more localized generation as necessary to shift power production from giant but often distant coal-fired power plants. In that same essay, Lovins also stressed that more local sources of electricity would reduce the vulnerability of the grid to terrorism.
“Distributed energy is what the world needs to get to,” says Smith, who cites Lovins as one of his heroes.
Smith moved to Archuleta County in 1989 after a career in the entertainment industry in California. He describes himself as a “liberal arts guy who values things that most people find technical and dry.”
Geothermal is wet, of course, but whether it moves forward in Pagosa Springs depends upon the outcome of a review by the U.S. Fish and Wildlife Service. The 600 acres of land leased for the drilling between the San Juan River and Highway 84 has a plant species, the Pagosa skyrocket (Ipomopsis polyantha), which has been listed as endangered under the Endangered Species Act.
The plant grows one or two feet tall, often in the understory of Ponderosa pine, and has been found in only three places, all near Pagosa Springs.
The federal grant money triggered the need for a biological assessment, which will be the basis for a biological opinion. If adverse effects can be avoided, such as by using care in the placement of wells, the Fish and Wildlife Service can approve the drilling this summer.
Existing wells reach a maximum 1,200 feet, but Smith expects to need wells 2,500 to 5,000 feet deep. The working hypothesis is that the underground rocks at the site are fractured than those that provide the water for the commercial hot springs and downtown heating district.
How will anybody know if the new wells are tapping a new source of heat instead of robbing the existing geothermal resource? Smith says his company will inject heat and pressure gauges on all local hot-water wells, “so they know immediately whether we are tapping the resource.” Colorado law and new regulations in Archuleta County protect existing geothermal users in case of damage to their resource.
Chris Gallegos, who administers the town’s geothermal heating district, says it’s “an unknown” whether Smith’s project would impair the existing users. “Through the test wells we should be able to determine whether the extraction of that heat would affect us or not,” he says.