Hot Springs Community Clashes With Hot Energy Source in Colo.

The Bureau of Land Management last week withdrew for the third time what could have become Colorado's first geothermal lease after receiving a slew of questions and complaints from landowners concerned about the impacts potential geothermal developments would have on property values.

The planned Feb. 11 lease of the 800-acre site in Chaffee County, about 60 miles southwest of Denver, had generated fears among some residents and business owners that tapping the region's abundant geothermal heat could spoil picturesque landscapes and harm naturally occurring hot springs that draw tourists to the Chalk Creek Valley, a resort area at the foot of Mount Princeton.

"We received several substantive comments in writing ... that caused us to decide to further review the current stipulations on the parcel," said Greg Shoop, BLM's Front Range District manager. "We want to assure the public that the environmental analysis process was thoroughly followed before the parcel is offered for sale."

Jim Sample, spokesman for BLM's Colorado office, said the agency had received 283 written comments protesting the lease, many of which came from landowners whose property is directly above the subsurface lease.

"There is a necessity to delay the lease for a period of time," Sen. Gail Schwartz (D), who represents the area in the Colorado General Assembly, said in a letter to BLM. "Development could impact the view shed of a highly scenic area, in turn affecting tourism, quality of life and real estate value of local residents."

While supportive of geothermal development as a means for Colorado to meet its 20 percent renewable portfolio standard (RPS) by 2020, Schwartz criticized the "hasty timing" of the lease sale and the lack of public participation in the process.

"The residential nature of this proposed lease threatens the residents of Chaffee County, the likes of which I do not believe BLM has previously experienced," she said.

Sample said the Jan. 14 informational meeting drew about 170 people and lasted more than four hours.

Because of the high level of interest, BLM will review the Chalk Creek Valley lease with respect to potential impacts on recreational uses, noise issues and soil erosion, but no date has been set to re-offer the geothermal parcel.

"We want to be absolutely sure to address the concerns of the community," Sample said, adding that next week's lease sale in Denver will still include 11 oil and gas parcels covering 3,511 acres in other parts of the state.

Minerals rights vs. water rights

The planned lease of the Chaffee County parcel also continues to raise thorny legal questions over how federal geothermal resources can be developed without infringing upon private landowners and water users, whose rights are guaranteed under state law.

Twice before, BLM has delayed leasing the parcel in question, most recently in November at the request of the Colorado Department of Natural Resources. State regulators said they wanted to discuss with BLM what the agencies' respective regulatory roles should be in permitting geothermal developments.

Much of that discussion has hinged on one key factor: BLM considers geothermal heat a mineral resource, while the state maintains jurisdiction over the water that carries that heat.

"They're different [policies] but they're not inconsistent with one another," said Bob Randall, DNR's assistant director for energy and minerals. He said a memorandum of understanding (MOU) between the two agencies clarifying their permitting roles should be ready within the next two to three months.

"It will ensure permitting can proceed by each entity in a way that is coordinated and consistent," he said.

At DNR's request, BLM stipulated in its Feb. 11 lease sale notice that geothermal exploration and production "must not diminish ... the measurable quantity, quality or temperature of any existing allocated water or geothermal resources."

But even with assurances that hot water will not be siphoned off for geothermal energy, many Coloradans remain skeptical of the technology, whose development to date has been in more remote areas of Nevada and California, not in more populated areas like Chaffee County.

"The overlapping jurisdictions were really confusing to landowners," said Fred Henderson, founder of Mount Princeton Geothermal LLC and a resident of Chaffee. "It has left people with a lot of worries and concerns."

Henderson said his company did not nominate the lease in Chaffee but was interested in bidding on it at the Feb. 11 auction.

Split estates

Indeed, Colorado landowners have long tussled with energy companies seeking access to their land to drill for oil and natural gas, but the prospect of geothermal drilling, and possible noisy power plants, represents a new threat to some.

According to BLM, energy companies are expected to make a "good faith" effort to negotiate with landowners to gain access to federal minerals, but precedence is typically given to mineral owners -- not surface rights owners -- when disputes arise.

Officials say they do not expect Colorado's geothermal plants to rival those in California and Nevada, which are much larger. The Western Governors' Association, for example, estimates the state could see a relatively modest 20 megawatts of geothermal energy production in place by 2020 and 50 megawatts by 2050.

But exploration drilling, and the surface infrastructure necessary to support it, has its own visual and noise impacts, and that has fueled concerns among some that geothermal is incompatible with resort areas and landscapes that are prized for their aesthetic appeal.

Thomas Warren, general manager for the Mount Princeton Hot Springs Resort, said his business is fortunate to own the mineral and geothermal rights under the 500-acre property, but that other landowners in the area are not so lucky.

"I can understand why people are very upset by it," said Warren. "A lot of people, when buying a vacation home, don't even dream of encountering something like this."

According to Chaffee County planners, the subsurface geothermal parcel extends under 25 residential lots totaling about 138 acres, as well as the Frontier Ranch, a camp owned and operated by the Christian nonprofit Young Life.

Warren said that while his company is supportive of geothermal energy, it could not take a position on the proposed lease without knowing where developers would operate. Drilling around the clock next to the 400-bed resort and its 35 natural hot spring pools, for example, would be unacceptable, Warren said.

"We make our money from people coming from Denver to get away from precisely these kinds of developments," he said.

Local residents' worries are further heightened by the fact that little is known about the firm that nominated the parcel, Warren said.

Henderson of Mount Princeton Geothermal described his firm as a "bootstrap operation of local people," adding that he has worked directly with resort owners in the past to promote geothermal development on private lands.

That partnership has been much more transparent than the BLM process, he said, and is viewed more favorably by area residents.

BLM does not disclose the names of those who nominate lease parcels until after they have been auctioned, Sample said, adding that two other nominations had been received for parcels in the Gunnison area in Colorado.

If or when geothermal sales are held in the state, any proposals to drill or develop a geothermal plant would likely be reviewed under an environmental assessment, he said.

Skittish investors

Henderson, a geologist, said he hopes to drill a pair of 2,500-foot-deep wells this year that will better define what state geologists say could be a major geothermal resource below Mount Princeton.

If the test wells are a success, Henderson believes he could build a 10-megawatt plant capable of supplying the energy needs for about half of the 17,000-person county. And he said he has secured preliminary agreements to sell the power to a local utility.

And even though his development plan calls for leasing private property, Henderson said BLM's repeated withdrawal of the federal lease parcel raises concerns about the area's future prospects.

For example, his partnership lost two investors who cited fears about potential conflicts with local residents as well as the uncertain regulatory environment surrounding geothermal production in Colorado.

"It was a real impact on our project," said Henderson. "Getting the state and federal government to sign an MOU would be real benefit to geothermal power."

But even with a state-federal agreement, he predicted obstacles to development would remain, especially in the tourism-dependent Chalk Creek Valley.

"There are maybe as many as 50 more hot springs in Colorado which could conceivably produce electricity," said Henderson. "There are people in the valley who, even if we turn off the plant in the middle of the night, will still say they hear it."

Phil Taylor of Greenwire
New York Times