Click here to load reader

State Policies for Geothermal Development · PDF file Powerplant Development 26 Flashed Steam Plant 26 Binary Fluid Plant 27 Total Flow Plant 28 Geothermal Power Costs 28 Hydrothermal

  • View
    0

  • Download
    0

Embed Size (px)

Text of State Policies for Geothermal Development · PDF file Powerplant Development 26 Flashed Steam...

  • State Policies for Geothermal Development

    OISTRIBUTION OF THIS DOCUMENT IS UNLlMlTED 1,/ /i·. ,

    \

  • This publication was made possible through a grant (ISR 74-1552) from the Division of Intergovernmental Science and Public Technology of the National Science Foundation. Any opinions, findings, conclusions or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the National Science Foundation.

    NSF/RA-760230

    The National Conference of State Legislatures, formed from three previously existing legislative organizations in January 1975, is the only nationwide organi- zation representing all state legislators and their staffs. It is headquartered in Denver, Colorado, with state-federal offices in Washington, D.C. Executive Director: Earl S. Mackey

  • State Policies for Geothermal Development Uncovering a Major Resource

    Douglas M. Sacarto

    RENEWABLE ENERGY RESOURCES PROJECT

    Patrick Binns Director

    Douglas M. Sacarto Research Assistant

    Dena K. Bellows Project Assistant

    National Conference of State Legislatures 1405 Curtis St. 23rd Fl. Denver, Colorado 80202

  • CONTENTS

    Figures ix

    Forward xiii

    Acknowledgements xv

    1. SUMMARY AND RECOMMENDATIONS 1

    The Value of Geothermal Resources 1 Obstacles to Geothermal Development 2 State Policies for Geothermal Resources 3 Suggested Policies 3 Notes 6

    2. FEATURES OF THE RESOURCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7

    Origin and Potential 7 Plate Tectonics 7

    Geothermal Acreage 8 High-Temperature Reservoirs 12

    Magma and Hot Dry Rock 12 Hydrothermal Convection Systems 12

    Medium-Temperature Reservoirs 13 Geopressured Reservoirs 13

    Geothermal Byproducts 14 Geothermal Reserves 15

    Conclusions 17 Ownership of Geothermal Resources 18

    Land Ownership 18 Mineral Ownership 19 Groundwater Ownership 19 Geothermal Leasing 19

    Notes 20

    3. EXPLORATION AND DEVELOPMENT 21

    Exploration 21 Exploration Costs 21 Exploration Risk 21

    Reservoir Development 24 Field Development Costs 24 Field Development Risk 25 Reservoir and Well Lifetimes 25

  • Contents

    Powerplant Development 26 Flashed Steam Plant 26 Binary Fluid Plant 27 Total Flow Plant 28

    Geothermal Power Costs 28 Hydrothermal Systems 28 Geopressured Reservoirs 30

    Geothermal Investment and Marketing 32 Magnitude of Investment 32 Stimulating Investment 32 Marketing 33

    Notes 33

    4. TAXATION 35

    The Scope of Taxation 35 Property Taxes 35 State Taxes on Gross Receipts 36 State Income Taxes 37

    Arizona 37 California 37 Louisiana 38 Oregon 38 Utah 38

    Federal Income Tax 38 Oil and Gas Model 38

    Tax Benefits 39 Current Deduction 39 Percentage Depletion 40 Tax Benefits for Geothermal Development 40 Tax Benefits and Investment 41

    Notes 42

    5. STATE GEOTHERMAL LEASING AND DEVELOPMENT REGULAnONS 43

    Introduction 43 Leasing: Resource Definition 43

    Resource Categories 43 Physical Portrait 44 Modifications of the Federal Definition 44 The California Definition 45 Conclusions 46

    Leasing: Resource Access 46 Acreage Limitations 47 Rentals and Royalties 48 Lease Terms and Adjustments 48 Modified Bidding 49 Conclusions 49

    Development Regulations 52 Reservoir Management 52 Environmental Protection 56 Conclusions 58

    Notes 58

    APPENDIXES 61

    1. State Laws and Regulations Regarding Geothermal Resources 61

    2. Federal Geothermal Leasing and Development Regulations 63

    Access to Federal Lands 63 Geothermal Operations on Federal Lands 65 Notes 67

  • Contents

    3. Federal Geothermal Lease Summary 69

    4. Federal Geothermal Steam Act of 1970 (P.L. 91-581) 73

    5. Federal Geothermal Energy Research, Development, and Demonstration Act of 1974 (P.L. 93-410) 77

    6. Federal Regulations for the Geothermal Loan Guaranty Program 81

    SELECTED BIBLIOGRAPHY 89

  • Figures

    1. Geothermal Regions of the World 2

    2. Geothermal Energy Use 3

    3. Earth Cross-Section 8

    4. Classified Geothermal Acreage 8

    5. Map of Classified Geothermal Acreage in Alaska 9

    6. Map of Classified Geothermal Acreage in California, Nevada, Oregon anet Washington 10

    7. Map of Classified Geothermal Acreage in Rocky Mountain States 11

    8. Map of Potential Gulf Coast Geopressured Resources 12

    9. Hydrothermal Convection Reservoir Schematic 12

    10. Subsurface Pressure and Boiling Temperature of Water 13

    11. Section of Idealized Geopressured Reservoir 13

    12. Maximum Temperatures Recorded in Boreholes in Cameron County, Texas 14

    13. Temperature, Pressure and Methane Content Expected for Gulf Coast Geopressured Reservoirs 14

    14. Volume and Electrical Energy Potential for Thirteen Well-Explored Geothermal Systems 15

    15. Area Comparison for Identified and Potential Hydrothermal Convection Systems 15

    16. Heat Content of U.s. Geothermal Resources 16

    17. Recoverable Energy from U.S. Hydrothermal Convection Reservoirs 16

    18. Recoverable Energy from Onshore Geopressured Reservoirs 17

    19. Land Ownership in the Fifteen Geothermal States 18

    20. Mineral Acreage held by States 18

    21. Acreage Patented with Minerals Reserved to the United States 19

    22. Acreage of State and Federal Geothermal Leases 19

    23. Exploration Costs for 7500-acre Tract 21

    24. Broadlands Geothermal Field in New Zealand 22

  • Figures

    25. Schedule of Probable Successes and Statistical Costs in Exploration 22

    26. Alaska North Slope Petroleum Lease Bids 23

    27. Electric Power as a Function of Well Flow 23

    28. Locating a 200 MW Field within 7500 Acres 23

    29. Estimates of Exploration Success Rates 24

    30. Wells to Supply 200 MW as a Function of Reservoir Temperature 24

    31. Wells to Supply 200 MW as a Function of Flow-Rate 25

    32. Drilling Costs for Geothermal Wells 25

    33. Amortization of Exploration Costs 25

    34. Power Plant 11 at The Geysers 26

    35. Percentage of Hot Water Flashing to Steam as a Function of Temperature and Pressure 27

    36. Effect of Noncondensible Gases on Net Power Output and Cost 27

    37. Comparison of Geothermal Power Systems 27

    38. Power Costs for Representative Hot-Water Reservoirs 28

    39. Financing and Tax Assumptions for Hot-Water Reservoirs 28

    40. Initial Capital Investment for Hot-Water Reservoirs 28

    41. Distribution of Total Power Costs for Hot-Water Reservoirs 29

    42. Distribution of Power Costs Related to Hot-Water Powerplant Costs 29

    43. Distribution of Energy Supply Costs for Hot-Water Reservoirs 29

    44. Results of Sensitivity Analysis for Hot-Water Reference Reservoir B 30

    45. Well Costs for Geopressured Reservoirs 30

    46. Characteristics of Gulf Coast Geopressured Reservoirs 31

    47. Well Productivity for Geopressured Zones 31

    48. Internal Rate of Return for 300°F Zone III Geopressured Reservoir, Electricity plus Natural Gas 31

    49. Internal Rate of Return for 300°F Zone III Geopressured Reservoir, Electricity Only 31

    50. Capital Costs for Geothermal Development 32

    51. Calculation of Property Tax Assessment for Vapor-Dominated Geothermal Reservoir 36

    52. State Tax Rates on Corporate Net Income 38

    53. Tangible and Intangible Costs for a Geopressured Well 39

    54. Benefits from Current Deduction compared to 20-year Amortization 40

    55. Expenditures for Oil and Gas Wells (1959) Classified by Tax Treatment 40

    56. Net Benefit of Percentage Depletion and Deduction of Drilling/Development Expenses 40

    57. After-Tax Value of Percentage Depletion for Geothermal Resources 41

    58. Tax Benefits for a Geothermal Well 41

    59. Types of Definitions Adopted by the States for Geothermal Resources 44

    60. State Geothermal Exploration Permits 47

  • Figures

    61. Leasing of State Lands 48

    62. State Geothermal Lease Provisions 50

    63. Expansion Loops in Steam Lines at The Geysers 53

    64. Statewide Regulatory Powers 54

    65. Directional Drilling 54

    66. Noise Levels at The Geysers and from Familiar Noise Sources 56

    67. Steam from Producing Wells at The Geysers 57

    68. Total Dissolved Solids of Various Waters 58

    69. Unitization Schema for Federal Lands 66

  • Foreword

    The Renewable Energy Resources Project was established in the spring of 1975 to help states define policies suited to the development of new energy sources, especially solar energy and geothermal resources. The project's final report concerning geothermal resources is presented here as State Policies for Geothermal Development. This report has been the work principally of Douglas Sacarto, with the assistance of Dena Bellows. The project as a whole has been directed by Patrick Binns, and was made possible through financial support from the National Science Foundation's Division of Intergovernmental Science and Public Technology.

    State Policies for Geothermal Development reviews for the states various techni- cal, economic and institutional aspects of geothermal development. The report summarizes research results from numerous specialists and outlines present state and federal policies affecting the geothermal industry. From this material key policy areas have been identified and several s

Search related