HB 135-GEOTHERMAL RESOURCES  1:04:16 PM CHAIR PATKOTAK announced that the first order of business would be HOUSE BILL NO. 135, "An Act relating to geothermal resources; relating to the definition of 'geothermal resources'; and providing for an effective date." 1:05:44 PM The committee took a brief at-ease. 1:06:23 PM HAILEY PAINE, Deputy Director, Division of Oil and Gas (DOG), Department of Natural Resources (DNR), resumed the PowerPoint presentation [hard copy included in the committee packet], began during the April 23, 2021, meeting of the House Resources Standing Committee, with slide 26, "Examples of Geothermal Systems." She explained that this section of the presentation would highlight the locations in Alaska which could be affected under HB 135. She then deferred to Mr. Masterman to continue the presentation. 1:07:53 PM STEVE MASTERMAN, Director, Division of Geological and Geophysical Surveys (DGGS), Department of Natural Resources, began his presentation with slide 27, "Mt Spurr," showing a map of the Mt. Spurr volcanic system across Cook Inlet from Anchorage, approximately 35 miles from the power lines that service Anchorage. He said that with a surface temperature of about 40 degrees Celsius, Mt. Spurr is classified as a warm spring, so there will be further exploration in hopes of finding warmer water containing more energy. He noted that GeoAlaska LLC and Raser Power Systems, LLC are exploring the area since Ormat Technologies, Inc. found only dry wells and subsequently moved out . He continued to slide 28, "Pilgrim Hot Springs," showing a map of a geothermal system on the Seward Peninsula with a surface water temperature of 50 degrees Celsius, 92 degrees Celsius at drilling depth of 120 meters, and a suspected temperature of 150 degrees Celsius in the reservoir. He noted the hot spring's proximity to Nome and Graphite Creek, each requiring about six megawatts of power but currently using diesel generated power. He said that if the hot water reservoir at Pilgrim Hot Springs is found, the energy generation will be in the tens of megawatts, powering both Nome and the Graphite Creek Mine. He pointed out the areas where drilling has already happened and the nearby fault line which could contain more hot water. 1:18:57 PM REPRESENTATIVE HANNAN referred to slide 24 and asked about the phrase "naturally or artificially in the geothermal system." MR. MASTERMAN explained that some of the new developments of geothermal energy allow for dry systems; for instance, liquids injected into an area of hot rock could be recovered from the same bore hole, creating a closed-loop system. 1:21:28 PM SEAN CLIFTON, Policy and Program Specialist, Division of Oil and Gas, Department of Natural Resources, addressed questions remaining from the House Resources Standing Committee meeting on April 23, 2021. He said that geothermal resource production would be the only instance in which a subsurface mineral resource owned by the state would contain an exemption for private use. He clarified that if a landowner were to find gold or oil on the property to which they own the surface rights, they would be required to go through the state for permits and pay royalties on the resource production. 1:22:49 PM REPRESENTATIVE FIELDS inquired about recent geothermal projects and the associated prices per kilowatt hour. MR. CLIFTON responded that he doesn't have an answer. 1:23:46 PM JEREMY PRICE, Commissioner/Chair, Alaska Oil and Gas Conservation Commission (AOGCC), Department of Commerce, Community, and Economic Development (DCCED), said that DNR worked with AOGCC to identify any areas of concern prior to introducing HB 135. 1:24:22 PM MR. CLIFTON said that, with regards to preferential rights, it's established in AS 38.05.125 that a subsurface owner or lessee must be given reasonable use of the surface for purposes of exploration and production. He explained that if a developer wanted access to private surface property, the developer and surface owner would need to have a private agreement with some form of compensation, such as money or building a road. With geothermal development, he said, free energy could be part of the compensation. He said that private, mutually-beneficial agreements are very common, but if the parties are unable to come to an agreement and the developer can't find other access, DNR may be asked to intervene under AS 38.05.130, with the procedure defined in 11 AAC 86.145. 1:27:17 PM REPRESENTATIVE HANNAN asked what the surface infrastructure would be once a geothermal site is identified for development. MR. CLIFTON replied that the geothermal plant would be built as close to the water source as possible, with power lines stretching to the end of the grid. MR. MASTERMAN explained that there would be a small facility at the well field with a building housing the power turbines and a road or airstrip for access. He said that the facilities would be self-contained, as the only end product is the power that travels along the powerline. REPRESENTATIVE HANNAN asked Mr. Masterman how he would define "small." MR. MASTERMAN replied that geothermal systems producing hundreds of megawatts would require a large powerplant, but a system like Chena Hot Springs that produces hundreds of kilowatts would require only "a small warehouse kind of size." CHAIR PATKOTAK asked about the size of the Pilgrim Hot Springs plant. MR. MASTERMAN noted that it would be helpful to provide some visual examples of powerplants around the world. 1:33:04 PM CHAIR PATKOTAK asked Mr. Clifton whether imminent domain would play a role in geothermal development. MR. CLIFTON replied that imminent domain applies to scenarios within the purview of the Department of Transportation and Public Facilities (DOT&PF) rather than DNR. CHAIR PATKOTAK noted that Mr. Clifton had earlier asserted that the state would intervene if a developer and surface owner couldn't come to an agreement. MR. CLIFTON explained that it would be the DNR commissioner mediating a reasonable agreement between the parties rather than the state seizing the land or forcing a sale. 1:35:24 PM REPRESENTATIVE GILLHAM asked about a possible timeline for a power plant to begin production. MR. MASTERMAN explained that once a geothermal reservoir is found there would be a period of engineering studies, permitting, and economics to be established and confirmed. He said that five to ten years would be a reasonable timeline for a facility in a remote part of the state. CHAIR PATKOTAK noted that it would be a privately owned or co- operated facility. 1:37:18 PM REPRESENTATIVE HANNAN asked what the subsurface rights are under current law. MS. PAINE responded that currently, if a developer requested a geothermal prospecting permit, the surface owner would have 30 days to apply for their own permit, which would have preference. Under HB 135 the surface owner would not be allowed to apply. CHAIR PATKOTAK asked why a surface owner would apply. MS. PAINE replied that the surface owners would most commonly apply for a permit in the hope of reselling the exploration rights to the developer. He clarified that a landowner could still use the subsurface resource for a personal use like a home heat pump. 1:40:18 PM CHAIR PATKOTAK announced that HB 135 was held over.