Utah startup hits geothermal jackpot
Dec 24, 2008 - The Associated Press
Within six months of discovering a massive
geothermal field, a small Utah company had erected
and fired up a power plant - just one example of the
speed with which companies are capitalizing on state
mandates for alternative energy.
Anticipation of new energy policies has sparked a
rush on land leases as companies like Raser Technologies
Inc., based in Provo, lock up property that hold geothermal
fields and potentially huge profits.
Raser's find, about 155 miles southwest of Provo,
could eventually power 200,000 homes.
The company said it will begin routing electricity
to Anaheim, Calif. within weeks.
Earlier this month, California adopted the nation's
most sweeping plan to cut greenhouse gas emissions.
"We made a pleasant discovery, let's put it that
way," said Brent M. Cook, the company's chief executive.
The number of government land leases and drilling
permits have risen quickly, said Kermit Witherbee,
who heads up the leasing program for the U.S. Bureau
of Land Management, with more than two dozen companies
now trying to make a score like Raser.
Two years ago, the U.S. Bureau of Land Management
approved 18 geothermal drilling permits. That number
more than doubled in 2007 and has nearly quadrupled
The government leased a staggering 244,000 acres
for geothermal development in the past 18 months.
Another 146,339 acres went up for bid Friday in Utah,
Oregon and Idaho.
All of it was claimed.
Raser's find "has the potential to become one of
the more important geothermal energy developments
of the last quarter century," said Greg Nash, a professor
of geothermal exploration at the University of Utah.
The company quickly redrew its business plan, bumping
up its planned development of 10 megawatts of power
to 230 megawatts. That is in line with the field's
power potential according to calculations by GeothermEX
Inc., a consulting firm.
By comparison, the largest group of geothermal plants
in the world are The Geysers, about 60 miles northeast
of San Francisco. The Geysers geothermal basin produces
about 900 megawatts of energy, enough to power the
city, said Ann Robertson-Tait, a senior geologist
and vice president of business development for GeothermEX.
Geothermal technology creates energy using heat that
is stored in the earth. But geothermal still generates
less than 1 percent of the world's energy, according
to the Paris-based International Energy Agency.
"The outlook for geothermal is great," said Brian
Yerger, an energy analyst for New York-based Jesup
Geothermal companies are relatively small players
in the energy market and have had to scramble to lock
up financing, particularly during a recession.
Merrill Lynch & Co. has pledged to fund Raser's
first 100 megawatts of projects and says it is staying
in the game.
"We've done a lot with Raser," said Merrill Lynch
spokeswoman Danielle Robinson. "We're very committed
to the company."
Cook said his company can raise additional money
from joint ventures and stock sales. "This is where
the money flows, to alternative energy projects that
pencil out," he said. The company made its first major
stock sale Nov. 14 to Fletcher Asset Management of
"We are enthusiastic about our investment," said
Kell Benson, Fletcher's vice chairman. The firm bought
$10 million in stock at $5 a share, with an option
to double the stake.
Raser and its supplier, UTC Power, plan to build
another seven geothermal energy plants across the
western United States by the end of 2009 and 10 plants
a year for the next decade.
The push for geothermal power has been accelerated
by state mandates like those in California, which
this month said utilities must obtain a third of their
electricity from renewable sources by 2020.
Raser, which specializes in low-boil geothermal sites,
started buying leases five years ago on hundreds of
thousands of acres that had been passed over because
of their lower heat potential.
New technology, however, has made low-boil water
useable for geothermal power. Raser buys 250-kilowatt
power units from UTC Power, a subsidiary of United
Geothermal is also being used on a smaller scale.
"These things are slot machines. They make money,"
said Bernie Karl, owner of Chena Hot Springs Resort,
off the grid 60 miles northeast of Fairbanks, Alaska.
On geothermal energy from early UTC prototypes, Karl
powers light bulbs, heats lodges and rooms for 210
guests, warms a greenhouse that grows food and spices,
keeps an ice house frozen and makes hydrogen for resort
Raser hit hot water at a few thousand feet below
the surface circulating inside a zone of porous limestone
a mile deep. The underground "lake" cycles hot water
endlessly under the power of the Earth's internal
heat like a steam engine, throwing up loops of hot
water intersected by wells that return it to the system.
The company holds rights to 78 square miles of land
in the area and believes it has barely tapped the