ENERGY
New leasing rule clears path for geothermal development on state trust lands
It gives the New Mexico State Land Office commissioner broad control over leases, royalty rates
State Land Commissioner Stephanie Garcia Richard said Wednesday that her office finalized a for the exploration and production of geothermal energy on state trust lands, a move she says positions New Mexico to become a leader because of its unique geological history.
The State Land Office rule, which will take effect in May, follows a 238-page last year by Project InnerSpace, a Boston-based nonprofit that promotes geothermal energy, that says New Mexico has the potential to create 163 gigawatts of geothermal power, more than 15 times the power produced on the state鈥檚 electric grids.
The new rule also comes as there is at least one utility-scale geothermal energy project simmering in New Mexico. Early last year, geothermal developer XGS Energy announced a partnership with Meta to develop a 150-MW geothermal plant to support the Facebook owner鈥檚 Los Lunas data center.
New Mexico is one of seven states that has an active geothermal plant, named the Lightning Dock plant in Hidalgo County, the Project InnerSpace report noted.
New Mexico, the report said, 鈥渋s on the cusp of a geothermal boom 鈥� one that could create environmental and economic benefits in cities and rural communities; leverage the state鈥檚 oil and gas industry know-how; and establish clean, secure, always-on power sources with the smallest footprint of any energy source across the Land of Enchantment.鈥�
The new rule gives the land commissioner wide latitude in structuring the leases.
For instance, it allows the commissioner to determine the royalty rate on the revenue received from the sale of geothermal products based on their fair market value. It also allows the commissioner 鈥� whomever it is 鈥� to determine how much geothermal developers will have to post for the state in bonds meant to cover cleanup costs of geothermal wells at no less than $25,000.
The commissioner, under the new rule, can also determine what information is kept confidential when a lessee is awarded rights to develop on state land.
Garcia Richard said the state has a trifecta of political will, geothermal resources and a workforce of oil and gas employees who know a thing or two about drilling into the earth鈥檚 surface for energy resources.
鈥淲e have enough geothermal energy to power the needs of the state,鈥� she said.
Garcia Richard 鈥� a Democrat who leaves office next year because she is unable to run for a third consecutive term 鈥� has made a point to promote renewable energy development on state lands. She has also fought the oil and gas industry over various rules and increased to 25% the royalty rate for premium oil and gas leases.
Garcia Richard said oil and gas are the only resources for which the structure of leases is set in statute.
鈥淭he reason we couldn鈥檛 set (oil and gas leases) at market value is, again, the oil and gas leases are in statute,鈥� she said. 鈥� 鈥� The land commissioner should be the one in charge of setting royalty rates for the market.鈥�
Christine Barber, executive director of the New Mexico Foundation for Open Government, said a part of the rule that allows geothermal developers to keep confidential information about the nature or extent of geothermal resources on state land raises transparency concerns.
The language now in the administrative code reminds Barber of the desire of operators of mines on state lands to keep secret their discoveries.
鈥淚f you have found your mine where all of your wealth is, you don鈥檛 want to tell anyone where it鈥檚 located,鈥� she said. But, she added, the 鈥減ublic has a right to know how their public lands can be used and what鈥檚 going on with them.鈥�
Justin Horwath covers energy and technology for the Journal. He can be reached at jhorwath@abqjournal.com.
