• 1 day PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 1 day Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 2 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 2 days Schlumberger Warns Of Moderating Investment In North America
  • 2 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 2 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 2 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 2 days New Video Game Targets Oil Infrastructure
  • 2 days Shell Restarts Bonny Light Exports
  • 2 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 2 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 2 days British Utility Companies Brace For Major Reforms
  • 3 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 3 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 3 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 3 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 3 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 3 days Rosneft Signs $400M Deal With Kurdistan
  • 3 days Kinder Morgan Warns About Trans Mountain Delays
  • 3 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 3 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 4 days Russia, Saudis Team Up To Boost Fracking Tech
  • 4 days Conflicting News Spurs Doubt On Aramco IPO
  • 4 days Exxon Starts Production At New Refinery In Texas
  • 4 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 5 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 5 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 5 days China To Take 5% Of Rosneft’s Output In New Deal
  • 5 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 5 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 5 days VW Fails To Secure Critical Commodity For EVs
  • 5 days Enbridge Pipeline Expansion Finally Approved
  • 5 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 5 days OPEC Oil Deal Compliance Falls To 86%
  • 6 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 6 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 6 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 6 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 6 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 6 days Aramco Says No Plans To Shelve IPO

Geothermal Elbowing its Way into the Mainstream

Geothermal Elbowing its Way into the Mainstream

As I've mentioned a few times, geothermal looks to be approaching a rolling boil.
A few more positive indicators on the sector presented themselves over the past week.

First came news last week that the state of Alaska will reduce royalty rates for geothermal projects on state lands. Previously, state geothermal royalties had been set at a towering 10 to 15% of gross revenues. Under the new legislation, this will fall to 1.75% during the first ten years of income-generating production. After ten years, the rate increases modestly to 3.5%.

This is a major boost for Alaskan geothermal. A 10% royalty is hefty, even for more established industries like crude oil and gas. It would push most geothermal projects to the brink of viability.

More importantly, the rate change is a sign that things are happening in the sector. The Alaskan government didn't decide on the shift out of the blue. They are seeing increased geothermal activity, which necessitated the policy re-think.

Case in point being geothermal major Ormat Technologies, which announced last week that it will accelerate work on its Mount Spurr geothermal leases in Alaska. The project will likely see drilling of the first test wells this year.

We also got another signal last week that geothermal is elbowing its way into the mainstream. The U.S. Department of Energy announced it will provide developer U.S. Geothermal with a $102 million loan to help construct a 22 MW power plant at the company's Neal Hot Springs project in Oregon.

This is a groundbreaking move from the DOE. And a potential game-changer for the industry.

One of the big challenges for junior geothermal players is the leap from exploration to production. Building a power plant is a big expense, requiring significant debt financing. However, most small geothermal players have few assets to finance against, other than some holes in the ground and a bunch of temperature data.

As such, these companies have historically been mauled on rates for their project debt. They've often been forced to go to non-traditional funding sources, which charge interest rates ranging up to 15%. A serious cost of capital.

DOE loans like the one to U.S. Geothermal will carry ultra-low interest rates. Giving qualifying project developers a big leg up in making the jump to production.

Revolutions never happen over night. They build over years, with the signals going from subtle to strong. Judging from the geothermal news lately, we're getting toward the latter.

By. Dave Forest of Notela Resources




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News