Getting into hot water

Pagosa Springs venture seeks to harness geothermal energy

by Allen Best

Nobody doubts 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.

The hot water also heats 13 businesses and five homes in downtown Pagosa plus the Archuleta County Courthouse – all at roughly 20 to 25 percent below the going rate for natural gas and 30 percent cheaper than electricity.

But is there sufficient hot water to produce electricity, warm 10 acres of greenhouses and heat 600 homes?

Geologic modeling suggests yes, but until additional wells are drilled, as is expected later this summer, there’s no way to know 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 return it underground once the heat has been extracted.

Federal and state grants this year have given the idea traction. The Department of Energy delivered $3.9 million and state sources threw in another $1.9 million. 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. The town-county entity owns the remainder.

The public-private partnership is called Pagosa Waters LLC.

Another milestone occurred in late May, when Gov. John Hickenlooper stopped in Pagosa to sign H.B.14-1222. The law, intorduced by Rep. Mike McLachlan, D-Durango, and co-sponsored by Sen. Ellen Roberts, R-Durango, and Sen. Gail Schwartz, D-Snowmass Village, lengthens the repayment period and provides greater flexibility for bonds issued for geothermal and other renewable-energy projects.

Michael McReynolds, advisor at the Colorado Energy Office, says the new law takes into account the high cost of proving geothermal resources exist before development can occur.

Other areas of the state may also want to replicate the business model.

Jerry Smith, CEO at Pagosa Verde, says the new law was “huge” in allowing the project to go forward. He estimates an outlay of $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. “The only way they could participate was by forming an authority, similar to a housing authority. It’s a quasi-governmental authority.”

Cheap money also relieves the pressure 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.

According to the Geothermal Energy Association, the United States has 3,386 megawatts of installed geothermal capacity, or about three times as much as the trio of coal-fired power plants in the Comanche complex near Pueblo.

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 produces the most geothermal, followed by Nevada, Hawaii, Utah and Idaho.

In Colorado, geothermal has been used to heat small greenhouses at Mount Princeton Hot Springs as well as some buildings in Ouray, but no electrical production has been achieved.

Just how much electricity Pagosa could produce depends on 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 Pagosa Verde, about two miles south of downtown. Hot water for heating the downtown is drawn from just 300 feet.

Smith says it’s a cinch that the water found 2,000 to 5,000 deep will be at least 140 degrees, the temperature of the water found closer to the surface. If so, it should be enough to produce four megawatts of electricity round the clock, 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 greenhouses and homes. Archuleta County altogether has a baseload demand of 20 megawatts.

Another renewable source, a proposed biomass plant, would generate five megawatts. Both will probably need to get paid more for their electricity by the local electrical cooperative, La Plata Electric Association, than what the coop pays for electricity from wholesale provider Tri-State Generation and Transmission.

Biomass plant proponent J.R. Ford said he needed 15 to 20 percent more than what LPEA pays Tri State, whose power comes primarily from coal, natural gas and hydroelectric.

Whether geothermal moves forward in Pagosa Springs, however, ultimately depends on the U.S. Fish and Wildlife Service. The 600 acres of land leased for the drilling is home to the Pagosa skyrocket, a plant found in only three locations that is listed as an endangered species.

If the plant can be avoided, as Smith predicts, he expects to drill exploratory wells between 2,500 to 5,000 feet. To ensure they’re tapping a new source of heat and not robbing the existing geothermal resource, heat and pressure gauges will be used. Colorado and county laws protect existing geothermal users.

Chris Gallegos, who administers the town’s geothermal heating district, says it’s “an unknown” whether Smith’s project would impair existing users. “Through the test wells we should be able to determine whether the extraction of that heat would effect us or not,” he says.