Geothermal Energy

Laws & Regs

Public Resources Code, Division 6, Part 2, Article 5.5 – Geothermal Resources Act

Contact

For inquiries or questions regarding Geothermal Energy, please contact the Geothermal Energy team at Geothermal.Public@slc.ca.gov.

Objectives

Staff’s objectives are to manage the orderly and efficient development of geothermal resources on state lands and to contribute to the development of carbon-free electricity generation. Staff’s objectives are also to maximize revenue to the California State Teachers’ Retirement System, ensure public safety, and protect the environment. Staff also support the responsible development of lithium from geothermal brine at State-managed geothermal facilities.

Responsibilities

Staff processes applications for geothermal permits and leases on all State-owned lands, whether managed by the Commission or other state agencies. Staff oversees State-issued geothermal leases and evaluates proposed drilling, workover activities, overall reservoir development, and engineering projects at geothermal facilities, including conducting on-site inspections to assure lease compliance. Staff also monitors geothermal resource production volumes (i.e., steam and water) and verifies royalty calculations and payments.

Permit and Lease Types

Permit Types:

Exploration Permit: Non-exclusive and focused on data-gathering. This allows for less intensive prospecting activities and may qualify for exemption under the California Environmental Quality Act.
Prospecting Permit for Exploration: Requires California Environmental Quality Act (CEQA) review. If provided as a term of the permit, may provide for a preferential right to lease.

Lease Types:

Preferential Right to Lease: The permittee, as the first qualified, has the right to apply to the Commission for a geothermal lease before applications by other entities may be considered.
Lease Issued by a Competitive Bidding Process: The lease is awarded to the highest bidder.
Negotiated Lease: Used when lands are unsuitable for competitive bid due to their small size or other factors. Also issued when the State owns a fractional interest in the lands, or in any situation when the lease is determined to be in the best interests of the State.

A lease authorizes exploratory drilling or production. Some leases may produce under a unitization agreement. Unitization is considered when wells drilled upon private or public lands, including State-owned lands, may drain the geothermal resources from state-owned lands. Under a unitization agreement, the State is paid a percentage based on the leased acres.

Existing law requires lessees to pay a minimum 10 percent royalty rate on the gross value of steam or brines when no minerals are extracted (usually where the resource is used for heat or electricity generation). Leases issued by competitive bid have a maximum royalty rate of 16-2/3 percent, which is in addition to a biddable factor (typically a cash bonus or percentage of net profit). Existing law establishes a minimum 2 percent royalty rate on the gross revenue from the sale of mineral products or chemical compounds recovered from geothermal fluids (e.g., lithium, zinc, manganese).

Resources

California Energy Commission

California Geologic Energy Management Division (CalGEM)

California Geothermal Energy Collaborative

Calpine Corporation

Geothermal Education Office

Geothermal Resources Council

Geysers Geothermal Association

U.S. Bureau of Land Management

U.S. Department of Energy

Lease Portfolio

The Geysers geothermal field

Sonoma, Lake, and Mendocino counties

The Commission’s leases in the Geysers are on lands that are known as school lands. Lease revenue and royalties are deposited into the California State Teachers’ Retirement System fund, rather than being deposited into the general fund. Information about these and the revenue they generate are available in our Annual School Lands Reports. The Commission manages seven geothermal leases that span roughly 7,249 acres of land where the State owns 100 percent of the mineral interest, and two separate parcels (called agreements) totaling 896 acres where the State holds a 1/16^th mineral interest. Geysers Power Co. and CPN Wild Horse Geothermal, subsidiaries of the Calpine Corporation, hold all seven leases as well as leases on surrounding federal and private lands. Collectively, the leases contain 100 production wells that supply seven power plants with steam. Twenty injection wells return about 75 percent (by mass) of the extracted fluids to the reservoir to maintain subsurface pressure levels, preventing subsidence and reservoir pressure decline. Steam production has been stable since the mid-1990s because of consolidated field operations and increased water injection into the reservoir. Nearby reclamation plants in Lake County and the city of Santa Rosa provide supplemental injection water to the field. The Geysers geothermal field currently produces about 28 million pounds of steam annually, generating about 198 megawatts of electricity annually. This supplies about 198,000 homes (at an average of 18 kWh/day per home) in the North Coast region. Royalty rates are 10 percent to 12.5 percent of the gross value of geothermal steam, which is calculated by multiplying the gross value of electric power with the agreed percentage of steam that began initially as 36 percent in 1999, increasing annually to a maximum of 42 percent of the value of electricity.

The Salton Sea geothermal field

Imperial County

Most land around the Salton Sea is privately owned, and the State’s mineral ownership in this area is relatively small compared to the Geysers. The Commission manages five geothermal leases at the Salton Sea geothermal field that total 3,394 acres. ORNI 5 LLC, a subsidiary of Ormat Nevada Inc., holds two leases totaling 2,739 acres where the state owns 100 percent of the mineral interest. Cal Energy/Magma Power Co. holds two leases totaling 615 acres on land managed by the California Department of Fish and Wildlife for wildlife habitat and hunting. The two Cal Energy/Magma Power Co. leases are developed via a unitization agreement. Geothermal development is prohibited on the surface of the habitat. Hudson Ranch I Holdings LLC holds one lease that includes 40 acres and is the only lease located on sovereign land. Except for the ORNI 5 LLC leases which only authorize drilling, all revenue and royalties are deposited into the general fund. The geothermal reservoir underlying the field is liquid-dominated—the resource exists as high-temperature, hyper-saline brine (salt- and metal-laden water). When brought to the surface, a portion of the brine flashes to steam, which is used to generate electricity. The remaining brine is injected back into the reservoir. There are 10 power plants located on private lands in this area, with 437 megawatts of installed capacity. There are about 28 production wells in the field producing over 265 billion pounds of brine annually, and 41 injection wells reinjecting just over 220 billion pounds of produced brine. Efforts are underway to develop lithium and other metals from the geothermal brine. For more information on lithium development, including a factsheet, please refer to the California Energy Commission, Lithium Valley Commission website.

State Lands Commission Geothermal Leases in the vicinity of the Salton Sea.

State Lands Commission Geothermal Leases in the vicinity of Truckhaven California.

State Lands Commission Geothermal Leases Southeast of the Salton Sea.

Lease Summary

Lessee	Location	Acres	Leases	Agreements (1/16th RMI)	Issue Date	Term
ORNI 5, LLC	Salton Sea	2,739	9643, 9644	–	Nov-20	5-years to drill
CalEnergy / Magma Power Co. (on behalf of the CA Department of Fish and Wildlife)	Salton Sea	615	7621, 8916	–	May-11	Continuous if producing
Hudson Ranch I Holdings LLC (assigned from Energy Source, LLC in 2021)	Salton Sea	40	9000	–	Sep-12	Continuous if producing
Geysers Power Co. and CPN Wild Horse Geothermal, subsidiaries of the Calpine Corporation	The Geysers	8,134.58	4596, 4597, 5206, 6422, 7845, 8556, 8844	7179, 8950	05/1971 to 09/2009	Continuous if producing

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