Two geothermal energy developers are getting much-needed funding to advance their plan to tap the hot water resource deep underground in Chaffee County. The money is coming from the state energy agency and investors, including one who “grew up with the benefits of geothermal energy” in Iceland.
Hank Held and Fred Henderson, the couple behind Mt. Princeton Geothermal, have partnered with Western Geothermal and Reykjavik Geothermal to explore and tap into the water bubbling thousands of feet beneath the Earth’s surface along the Rio Grande Rift, which stretches from New Mexico to southern Colorado.
Held said Western Geothermal has agreed to match a $500,000 grant that Mt. Princeton Geothermal applied for from the Colorado Energy Office. The office has awarded $7.7 million this year through the Geothermal Energy Grant Program to advance the use of geothermal technology in the state.
The $1 million will allow Mt. Princeton Geothermal to drill two test wells to test a water reservoir believed to be between 4,500 and 6,000 feet deep.
Held said the money “will not be enough for our entire drilling plan, so we are in talks with other potential investors.”
However, if the wells in question prove that there is a reservoir of hot water beneath the ground in Chaffee County that can generate ten megawatts of energy, he said the partnership could bring in a “potentially massive investment” in the range of $40 to $43 million.
The new rules of geothermal energy
The merger with Mt. Princeton preceded the Colorado Energy & Carbon Management Commission’s announcement Monday that it had adopted its first rules governing deep geothermal energy use. Those rules follow the commission’s expansion of its focus to energy and carbon management projects outside of oil and gas that took effect last summer.
Held, Mount Princeton’s CEO, said Tuesday that he had not had enough time to study the new standards, but after a “cursory glance” he realized that they included “broadly speaking” changes that the men had an opportunity to comment on in the spring.
In an interview earlier this summer, Held described some of the hurdles he and Henderson have had to overcome since the ECMC took over.
“Under the current process, we would submit our geothermal drilling application to the Department of Water Resources,” he said. “Because our proposed well meets two criteria – it is likely to be over 212 degrees and deeper than 4,000 feet – our application would be forwarded to the Oil and Gas Commission for approval.”
The Oil and Gas Commission has approved this type of drilling in the past, but the permitting authority before the ECMC took over jurisdiction continued to be the Department of Water Resources, he added. “Now, under the ECMC, all the regulations have changed, and they’re trying to differentiate our type of geothermal – hydrothermal – from enhanced geothermal, which uses fracking. With hydrothermal, we simply go down to what we think is a known hot water source to pump it up, extract the heat and put the water back into the ground.”
Henderson, the chief scientist at Mount Princeton, has said in the past that Colorado’s green energy regulations are among the strictest in the country, making it difficult for project developers to attract investors.
But Gudmundur Heidarsson, one of Western Geothermal’s investors, said: “I have lived in at least three European countries and three US states and I cannot imagine a more helpful government than that of Colorado.”
“Obviously we’re doing something that’s never been done in this state before, so there’s a lot to learn,” he added. “There’s a lot that needs to be changed in terms of legislation and processes. But I’ve found that the officials are easy to reach, they’re helpful and — which I actually really appreciate — they’re also a little cautious about making sure nobody does something that’s hard to reverse.”
Local resistance continues
For years, Henderson and Held have faced significant opposition from residents of the Lost Creek Ranch subdivision, which is about a mile from the proposed drilling site. Opponents say 900 private wells could be affected by a “geothermal project of this magnitude” and that their homes are built on the same fault line as the drilling site, which they say could “increase earthquake risk.” They also fear noise and odor pollution that a proposed plant could cause.
But in closed-loop systems like the one Henderson and Held would likely build, the gases extracted from the well are not exposed to the atmosphere but are pumped back into the ground after releasing their heat. So air emissions are minimal, and Heidarsson says: “We have buildings everywhere, so in some ways this will be no different than any other industry.”
Mt. Princeton Geothermal, Western Geothermal and Reykjavik Geothermal announced their merger at a community meeting in Buena Vista on June 19. Representatives from the Icelandic Ministry of Energy, Business Iceland, Green by Iceland and Chaffee County also attended.
Heidarsson said the meeting went well, which he was very pleased about because “you want to make sure you communicate well with everyone involved and do things in a sustainable way. As an entrepreneur in this field, I appreciate that because it creates trust in the community and opens up the possibility of continuing projects in the future.”
The Colorado Sun reached out to Tom McCracken, a key opponent of the plan in the past, for comment, but he declined because he is running for Chaffee County commissioner, he said. Blane Clark, who McCracken said the Sun was trying to speak with, did not respond to emails Wednesday.
With new investors, new potential
Heidarsson said he and his partners discovered Henderson and Held while searching for a geothermal source in the Leadville area and could not find one suitable for development.
“So we kind of started looking at the (Rio Grande) Rift and basically came across what Hank and Fred had been doing for the last 12 or 13 years,” he added. “And since they had done some of the early water testing and had some seismic data that they had evaluated on the ground, we thought that was interesting and asked if they would be willing to work with us.”
That was the case, so Heidarsson brought in some of his partners from Iceland, as well as some research companies and Reykjavik University, to see how they could connect the dots of the project.
He said it’s a bit late to start drilling in the fall, but he’s optimistic they’ll get the necessary licenses, internal contracts and financing to do the preliminary drilling by spring.
“But geothermal is one of those industries where it just takes time to get things right,” he added. “It’s not just about turning on a tap.”
