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Geothermal Lease Auction Signals New Trend in U.S.

A competitive auction of lease parcels for geothermal energy resources on federal public lands last week brought nearly $20 million in bids, including the highest per-acre bid in history. Held in Reno, Nevada, the results of the of the Bureau of Land Management's (BLM) second competitive sale of geothermal leases included a total of 49 parcels -- 43 in Nevada and 6 in California.

"We were extremely pleased with the unexpectedly high interest in our first competitive sale, in June, for lands in Idaho and Utah, and the success of [last week's] sale is a harbinger of continued rising interest in developing the nation's considerable geothermal energy resources, most of which are found on public lands," said BLM Deputy Director Henri Bisson.

More than 2,700 acres in the famed Geysers geothermal field of California brought bids totaling over $8 million, including the historically high bid of $14,000 per acre for a 470-acre parcel.

This bid by Binkley Geo Resources, LLC, of Santa Monica, California, surpassed the previous record of $11,000 per acre, in a 1982 sealed-bid sale of a 440-acre Geysers parcel. The second-highest bid for a California parcel offered in the sale was $420 per acre.

The 122,849 acres in Nevada sold for nearly $11.7 million. The highest bid for lands in Nevada was from Ormat Technologies at $510 per acre on a 5,120-acre parcel, for a total bonus bid of $2.6 million. Other Nevada parcels brought per-acre bids of $300 or more. In the earlier Idaho-Utah sale, leases on eight parcels were sold for a total of $9.4 million.

Fifty percent of all revenues from the lease sale—including bonus bids, rentals and royalty monies collected on the leases—are distributed to the state in which the leased lands are located; 25 percent is distributed to the respective county. The remaining 25 percent is distributed to the BLM.

Under previous regulations, geothermal parcels were leased using a sealed bidding process. The Energy Policy Act of 2005 directed changes in the way federal geothermal resources are leased, including a requirement that leasing be competitive.

Last week's sale offered on a competitive basis parcels that had been requested for leasing under previous regulations. Future geothermal lease sales will offer parcels formally nominated by the public using process outlined in new regulations the BLM published in May 2007 and the new nomination form, available now.

"The new regulations and nomination process implement the direction Congress provided in the Energy Policy Act," Bisson said, "but when you add in the results of the two transitional competitive sales, you begin to see this as a larger, pivotal moment for renewable energy development on public lands. The new regulations and leasing process mean that the BLM is well-prepared to facilitate the development of clean, renewable energy resources. It's exciting to see our efforts beginning to take off already."

Since the Energy Policy Act became law in August 2005, the BLM has implemented a number of the Act's provisions that relate to renewable energy, including program-level impact analysis and policy guidance for wind energy development, policy guidance on solar energy development, and steps to reach the Act's goal of approving by 2015 new renewable energy projects on public lands with the capacity to generate at least 10,000 megawatts (MW) of electricity.

Currently, the BLM administers 29 geothermal power plants, which use Federal resources in California, Nevada and Utah. They have a total capacity of 1250 MW and supply the needs of 1.2 million homes.

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