Steam power isn't cooling down

An auction of geothermal leases on federal lands in Nevada last week drew tepid interest from a small handful of companies that are developing the renewable source of power generation.

But development of steam power is by no mean cooling down in the state, industry executives say.

Last week's auction, which put 51 parcels on the block at the Reno field headquarters of the Bureau of Land Management, netted just $456,000 in bids for 17 parcels. Leases on the remainder weren't sold.

By way of comparison, the BLM's 2008 geothermal lease auction netted a record $28.2 million, which translates into a decline of more than 98 percent in bids in two years.

However, geothermal industry executives say that last week's decline in leasing activity reflects the reality that companies are interested in simply filling in around their existing geothermal claim blocks. They have much less interest in leasing new land for prospecting in greenfields areas.

Vince Signorotti, vice president of land development for Terra-Gen Power, which owns and operates the Dixie Valley geothermal plant in Churchill County, the state's largest at 67 megawatts, says Terra-Gen and other companies were bent on improving their lease positions in the state.

"We are fine-tuning the lease positions that we have put together over the last two years," Signorotti says. "A number of the other bidders were doing some of the same kind of leasing that Terra-Gen is doing - fine-tuning existing prospects and maybe some greenfields stuff as well. But based on what we know about the parcels that were offered today, we believe it was mostly just filling in the cracks around other projects." Terra-Gen acquired several leases in the Dixie Valley geothermal field, as well three new leases further south in Esmeralda County. New York City-based Terra-Gen currently has two projects in the advanced permitting stage, the Coyote Canyon project near its existing Dixie Valley plant, and the New York Canyon project near the Stillwater Range in Pershing County's Buena Vista Valley.

"We have been working closely with the Bureau of Land Management the past two years. We would hope if we are successful with our exploration drilling that we would bring these plants into commercial service before the end of 2013," Signorotti says.

The annual geothermal lease auction drew similar mild interest from other developers in the state.

Ormat Technologies of Reno picked up three leases, including the highest bid of $60 per acre for a 4,227-acre parcel in Churchill County. Magma Energy of Reno bid on just a single parcel in Churchill County.

Earth Power Resources of Tulsa, Oklahoma bid on three parcels in the Crescent Valley in Eureka County.

President Ronald Barr says much of the reason that bidding activity has dropped significantly is because many of the parcels offered in previous BLM geothermal lease auctions contained test information from exploration drilling by Phillips Petroleum Company in the late 1970s.

"There were a lot of hot-temperature gradient holes drilled, and people had that data in the literature to bid from," Barr notes.

Additionally, says Barr, a former Reno resident who worked for the original developer of the Yankee Steamboat geothermal plant on the hillsides south of Mt. Rose Highway, says severe restrictions on land use have driven all but five or six companies out of active work in geothermal development in Nevada.

Prior to last week's auction, the BLM had a total of 547 parcels of land encompassing more than 1.14 million acres under lease to geothermal companies.

"A lot of companies have secured an awful lot of acreage, and now they have to go out there and do their testing," says Atanda Clark, branch chief of minerals adjudication for the BLM.

The bureau's 2010 auction netted $2.76 million among 75 parcels. Amounts generated from the leases are split between the state, county governments and the U.S. Treasury.