New Geothermal Lease Rules in effect today
From Geothermal-biz.com Newsletter:
The Final Rules on Geothermal Resource Leasing and Geothermal Resources Unit Agreements which regulate geothermal energy production on public lands administered by the Bureau of Land Management (BLM) and the Minerals Management Service (MMS) go into effect on 1 June 2007.
The rules, which were written in response to the Energy Policy Act of 2005, mandate comprehensive changes to leasing and royalty policies to encourage geothermal energy use without imposing additional administrative burdens on industry or government agencies. The new rules require competitive leasing for geothermal development rights on nearly all federal lands designated for this type of development. If no bids are received, these resources would be available for leasing on a non-competitive basis for two-year periods.
The revamped MMS’s regulations offer an easy-to-use fee schedule (in lieu of royalties) for the direct use of geothermal resources that provides incentives to encourage the development and expansion of this alternative energy source. The MMS rules also simplify the royalty calculations for electrical generation leases by basing royalties on a percentage of gross proceeds from the sale of electricity. This would reduce industry’s administrative costs to comply.
The law mandates that 25 percent of the royalties from geothermal production be paid to the counties where the production occurs, increasing those local governments’ revenues initially by $4 million a year. MMS began making direct payments to counties shortly after the law was signed.
The BLM currently administers about 423 geothermal leases; 55 of those are producing geothermal energy, including 34 power plants. The bureau has been expediting the application process for geothermal leases, issuing almost 300 leases since 2001, compared to 20 leases from 1996-2001.
In addition, BLM is in the final stages of completing a new geothermal lease form for the Energy and Policy Act Leases and modifying the LR2000 land record data base to accommodate changes in geothermal regulations (new lease case types and action codes).
For more information, contact Kermit Witherbee, BLM National Geothermal Program Lead, Tel: (202) 452-0385, Kermit_Witherbee@blm.gov.
This is certainly good news for the localities around geothermal lease sites. Perhaps we’ll see more local support for projects as a result.
