1. Guidelines for the Exploration and Development of Geo Power Paul Morgan Colorado Geological Survey for the Colorado Geothermal Working Group Final 2011 Meeting Loveland 20 th October, 2011

2. General Guide to the Rules and Regulations Controlling the Exploration and Development of Geothermal Resources of Electrical Power Generation in Colorado “Rather than illuminate, regulatory documents generally highlight the darkness 1 ” 1 Paraphrased from Terry Pratchet, 2008, Guards,! Guards!

3. Where to Start: Who Owns the Land? Private Ownership: Private permission for access; state drilling permitting & generally state resources regulation. State Ownership: State Land Board access and resource regulation; state drilling permitting. Federal Ownership (USFS/BLM): Federal access and resource regulation; state and federal drilling permitting. Spilt Estate – Federal Subsurface: Private agreement for reasonable access required (with reasonable compensation); federal resource regulation; state and federal drilling permitting. All Ownerships: Local government regulations, Neighbors, Local water districts, CDPHE, EPA, PUC, etc.

4. What is / Who Owns the Resource? Private Land: Resource is Water; associated water appropriated by State Engineer and Colorado Ground Water Commission –Tributary water; hydrothermal resource; Owner - People of Colorado –Confined aquifer; and/or hot-dry-rock (HDR) resource; Owner - Land Owner (resource may be severed) –Designated basin; hydrothermal or HDR resource; Owner - Land Owner (resource may be severed) State Land: Resource is Mineral; “Owner” - State of Colorado –Resources managed by State Land Board; royalties may be charged. Associated water appropriated by State Engineer. Federal Land/ Split Estate, Federal Subsurface: Resource is Mineral; “Owner” – Federal Government –Resources is managed by BLM; royalties will be charged. Associated water appropriated by State Engineer.

5. Colorado Designated Basins and Management Districts (Water) Source: Colorado Division of Water Resources/Ground Water/Designated Basins (CGWC): http://water.state.co.us/groundwater/CGWC /Pages/default.aspx

6. Potential Train Wreck – Hot Dry Rock Colorado Revised Statute 37-80.5-103.Definitions –‘(4) "Hot dry rock" means a geothermal resource which lacks sufficient geothermal fluid to transport commercial amounts of energy to the surface and which is not in association with an economically useful groundwater resource.’ (My emphasis) How are these economic conditions known before drilling? Permitting requires designation of the owner, which changes if the resource is tributary or HDR. All rocks below the water table may be considered to be saturated. Lack of geothermal fluid is theoretically not a problem: permeability is commonly a problem.

7. Surface Exploration (No Surface Disturbance) Private Land: Permission of Land Owner State Land: Geothermal Exploration Lease – may include geothermal gradient wells and deep test wells and flow tests Federal Land: Approved Notice of Intent to conduct specified geothermal resource exploration. If split estate – permission of owner of surface estate. If Surface Exploration is positive, suggest consider first PUBLIC INFORMATION MEETING, prior to any drilling.

8. Geothermal Gradient Test Wells & Other Surface Disturbing Exploration Activity Private Land: Permission of land owner and agreement on drill sites. Type A well permits required from State Division of Water Resources. State Land: Exploration lease already required. Type A well permits required from State Division of Water Resources. Federal Land: Approved Notice of Intent for land disturbing activities, federally approved drilling permits and type A well permits required from State Division of Water Resources. Check regulations of local government.

9. Geothermal Leasing Private Land: Suggest enter formal agreement with land owner including agreement for discovery of any non-geothermal resources. Maybe consider similar agreement for surface of split estate? State Land: A Geothermal Exploration Lease is required before this stage. Federal Land/Split Estate Land: A geothermal lease is required before any deep drilling. Land must be nominated for lease before a careful (and lengthy) review of the suitability of the land for lease can begin. If found suitable, the land may be offered for competitive bidding in a public auction, probably with stipulations on the lease. The winner of the lease gains the exclusive right in general to proceed with further exploration during the lease period, but not permission to conduct any specific activities.

10. Informational Meetings With leasing of federal land there is public input into the information gathering process leading to the decision whether or not to lease and the USFS/BLM is highly likely to hold one or more meetings prior to a lease sale. Entities interested in the lease may of may not be invited to these meetings. If there is a ground-swell of negative opinion based on inaccurate information, a carefully considered response is appropriate. Initiating planning meetings with local authorities at this stage is very important to apprise them of your sensitivity to the needs of the community, present an honest picture of where the likelihood of development is at this stage, and discuss the potential benefits vs. few negative aspects of development should a project reach fruition.

11. Deep Test Wells Private Land: Permission of land owner (you did negotiate this in lease agreement?!?). Type B drilling permit from the State Division of Water Resources (DWR) and associated construction permits. State Land: Check with State Land Board – Exploration lease included these wells if originally included. Type B drilling permit from the DWR and associated construction permits. Federal Land and Split Estate Land: Geothermal lease is required before drilling any deep test wells. However, a specific drilling permit is still required for each well from the USFS/BLM together with a type B drilling permit from the DWR and associated construction permits. On split estate lands permission of the owner of the surface estate is required. For All Lands, check regulations of local authorities.

12. Flow Tests – Continuation of Deep Drilling All Lands –Make necessary permit requests at same time as deep well permitting; Surface water disposal regulated by Colorado Department of Public Health and the Environment; Water Injection in Colorado regulated by the EPA; Capture and removal of geothermal fluid –Local Authority regulations; –Public information/education Opportunity for demonstration of environmental stewardship.

13. Final Decision Time Go or No-go –Public Information Meeting EITHER WAY! IF GO: Education –Bring in elected officials, staff and public from other communities that have had geothermal development to meet with local authorities, and public. If not already started, initiate power purchase agreement for any power to be generated.

14. Develop Field: Drill Production and Injection Wells Private Land: Permission of land owner; Type B well permits from DWR and associated construction permits. State Land: Need new Geothermal Lease to cover development of field from State Land Board. Type B well permits from DWR and associated construction permits. Federal Land and Split Estate Land: Drilling permits from USFS/BLM and type B well permits from DWR and associated construction permits. For split-estate land need permission of owner of surface estate. All Lands: Check regulations of local authorities.

15. Reinjection and Power-Plant Design All Lands: –Permit reinjection with EPA –Design in consultation with land owner where constructed, private, state, or federal land. –Design in accordance with all relevant local, state (PUC), and federal regulations and guidelines. –Design to meet all environmental standards and requirements during operation.

16. Illumination? Insert tab A into slot B. Open steam valve. Turn on Power. Illumination! Colorado is a patchwork of lands with different ownerships ranging from private to the federal government. Geothermal energy is old in Colorado, but also new. It is transported by Colorado’s most treasured commodity after her people: WATER. With that background, geothermal regulations in Colorado are remarkably simple.

17. Recommendations Geothermal permitting in Colorado for Idiots – not! Do not try this at home – what you have seen here has been performed by highly trained cheats under simulated conditions If lawyers only spoke English I am sure that we would all be able to understand the law (that goes for science too). Hire a lawyer, but I hope that you now know what you are paying for.

18. THANK YOU  Acknowledgements:  Matt Sares, Colorado Department of Water Resources  Many others who have patiently corrected my misunderstandings of geothermal rules and regulations. However, any remaining errors remain my own!  For Further Information  http://geosurvey.state.co.us/  Programs & Projects  Minerals & Energy Resources  Geothermal  Paul.Morgan@state.co.us