Geothermal Leasing & Permitting
The first step in any geothermal development—be it for direct use or power generation—is to gain access to the land on which the resource is located, either through ownership or leasing.
The second step is permitting—getting legal permission to use a geothermal resource, be it in your backyard or on public land across the way.
"An Introduction to Geothermal Permitting", written by Liz Battocletti of Bob Lawrence & Associates, Inc., helps geothermal entrepreneurs, small businesses, and developers better understand the seemingly overwhelming permitting process.
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"With the right attitude and knowledge, a small business or entrepreneur can weave their way through the geothermal permitting maze with a minimum of wrong turns." |
This webpage presents a brief introduction to geothermal leasing and permitting on federal and state land in the 19 GeoPowering the West states.
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Leasing on Federal land |
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Leasing on State land |
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Useful publications |
Leasing on Federal land
Approximately 90% of the United States' geothermal resources are located on Federal lands. Nearly 50% of the country's production of geothermal energy comes from Federal resources.
The Bureau of Land Management (BLM), pursuant to the Geothermal Steam Act of 1970, as amended, is responsible for leasing Federal lands for geothermal development.The BLM's authority covers approximately 700 million acres of BLM lands, National Forest System lands, and other Federal lands, as well as private lands where the Federal Government has retained mineral rights. For lease applications on Forest Service lands, the Forest Service must concur prior to BLM issuing a lease.
New Federal Leasing Law — John Rishel Geothermal Steam Act Amendments of 2005
President George W. Bush signed the Energy Policy Act of 2005 (H.R. 6) in August 2005. H.R. 6 includes the John Rishel Geothermal Steam Act Amendments of 2005 which changes federal leasing provisions.
For more information, see the Summary of the Geothermal Leasing Provisions of Title II of H.R. 6 prepared by the Geothermal Energy Association.
Leasing Terms
| Primary term | 10 years. |
| Renewal term | Two five-year extensions allowed if minimum work requirements established by the Secretary are met. Minimum work requirements do not apply once production in commercial quantities is achieved. Leases may continue to be held for up to 10 years if commercial production stops by payment of an advance royalty (force majeure, and some other reasons excepted). |
| Rentals | For first 10 years: $1.00 per acre for a noncompetitive lease; $2.00 per acre for the first year and $3.00 per acre in years 2-10 for a competitive lease. After the tenth year, rentals are $5.00 per acre for all leases. For producing leases, rentals are credited against royalty payments. |
| Royalties | New leases shall provide for a royalty between 1% to 2.5% of gross proceeds from the sale of electricity during the first 10 years, and between 2% and 5% thereafter. Credits in kind for value of electricity under a contract with a State of county government entitled to royalties may be allowed. Royalties are shared 25% for the federal government, 50% for the state, and 25% for the county where the producing lease is located. Existing leases not converting to the new royalty system will receive a 50% reduction in royalties owed for their first 4 years of production if they begin production within 6 years of enactment or expand production more than 10% during this same 6-year period. Existing leases may apply to convert to a gross proceeds royalty within 18 months of effective date for new royalty regulations (new gross proceeds rate must yield same royalty payment as would have been received under prior royalty rate). Existing leases may be converted to include direct use fee schedule. |
| Size | Maximum lease size is 5,120 acres. Maximum lease holdings in any one state is 51,200 acres. |
| Direct use | A schedule of fees in lieu of royalty for direct use will be established. Lands may be identified for direct use and made available to the first applicant subject to a 90-day public notice period. If there is competitive interest, they will be offered in the next competitive lease sale. Size of the lease for direct use leases may be modified. |
Leasing on State land
Most of the 19 GeoPowering the West states have regulations regarding geothermal leasing on state lands. The information cited below was drawn in part from a number of studies done by the Washington State University Energy Program.
Alaska |
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| Leasing Agency | Department of Natural Resources - Division of Oil and Gas |
| Relevant Regulations |
Alaska Statutes 38.05.181. Geothermal Resources. |
| Leasing Terms | |
| Primary | 10 years |
| Renewal | 5 years if engaged in drilling and thereafter for duration of commercial production. Beginning 20 years after the initiation of commercial production and at 10-year intervals thereafter, the commissioner may renegotiate the rentals and royalties due on a geothermal lease. |
| Rental | $3.00 per acre per year; rental for a year will be credited against royalties accruing for that year. |
| Royalties | 10-15% of gross revenue derived for products, sale, or use of geothermal resources under the lease. Royalties may be taken in kind if in the best interest of the state. |
| Size | 40- 2,560 acres. A person may not own, or hold an interest in, geothermal leases covering more than 51,200 acres. |
Arizona |
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| Leasing Agency | State Land Department - Minerals Section |
| Relevant Regulations |
Arizona Revised Statutes, Title 27 Minerals, Gas and Oil, Chapter 4, Article 4 - Geothermal Resources |
| Leasing Terms | |
| Primary | 10 years. |
| Renewal | As long as geothermal resources are procured and produced in paying quantities from the leased lands. Drilling leases are valid as long as there is active production. |
| Rental | $1.00 per acre per year. |
| Royalties | Not less than 12.5% of the market value of the gross energy production. |
| Size | Up to 2,560 acres per lease. Lease may contain noncontiguous land. |
California |
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| Leasing Agency | California State Lands Commission - Mineral Resources Management Division |
| Relevant Regulations |
California Public Resources Code 6901-6925.2 - Geothermal Resources Act. |
| Leasing Terms | Leasing is by competitive bid in areas selected for lease by the commission. Prospecting permits are available and may be convertible to a lease upon discovery. |
| Primary | 10 years. |
| Renewal | As long as geothermal resources are being or capable of being produced or utilized in commercial quantities. |
| Rental | $1.00 per acre per year escalating, or prospecting permit. |
| Royalties | Not less than 10% of gross revenue. Not less than 2% of gross revenue of mineral products. The Commissioner may provide for a royalty of less than 10% for direct heat applications. Leases issued pursuant to a competitive lease sale may include in addition to the biddable factors a royalty of not more than 162/3% of the gross revenue. |
| Size | N/A |
Colorado |
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| Leasing Agency | Colorado State Land Board |
| Relevant Regulations |
Colorado Statutes : Title 37. Article 90.5 Geothermal Resources - "Colorado Geothermal Resources Act." |
| Leasing Terms | Leases issued by the State Board of Land Commissioners may be awarded as the result of negotiation or competitive bidding. |
| Primary | Set in lease. |
| Renewal | For as long as production continues. |
| Rental | Set in lease. |
| Royalties | Set in lease. |
| Size | N/A |
Hawaii |
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| Leasing Agency | Hawaii Department of Land and Natural Resources, Land Division |
| Relevant Regulations |
Hawaii Administrative Rules, Title 13. Department of Lane and Natural Resources, Sub-Title 7. Water and Land Development, Chapter 183. Rules on Leasing and Drilling Geothermal Resources |
| Leasing Terms | Leases on state land shall be granted only on a competitive bid basis. Leasing on reserved land may be granted on a competitive bid basis by public auction or without auction to the occupier or to his assignee upon a vote of two-thirds of the Board members. Explorative permits are also available on any state or reserved land. |
| Primary | 10 years. |
| Renewal | Up to a maximum of 65 years. |
| Rental | Set by the Board. |
| Royalties | Determined by the Board. 10-20% of the gross amount or value of the geothermal resources produced under the lease as measured at the wellhead and sold or utilized by the lessee. Royalties on by-products not less than 5%. The board may waive royalty payments to the State for up to 8 years. |
| Size | N/A |
Idaho |
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| Leasing Agency | Idaho State Board of Land Commissioners |
| Relevant Regulations |
Title 47 Mines and Mining Chapter 16 Geothermal Resources 47-1601 to 47-1611 |
| Leasing Terms | Leasing is by competitive bid in areas designated by the Director of the Department of Lands as being in a Known Geothermal Resource Area (KGRA) or where there is competitive interest, i.e. two or more applications are received on the same day for the same site. Other areas are available on a noncompetitive basis. |
| Primary | 10 years. |
| Renewal | The primary term can be extended if lessee is actively engaged in drilling once geothermal resources are proved or utilized in paying quantities. The lease shall be extended but in no event for more than 40 years. After the end of the primary term, the lessee has preferential right to renewal for a second 40 years. |
| Rental | $1.00 per acre per year – first five years; $2.00 per acre per year – second five years; $3.00 per acre per year – thereafter. |
| Royalties | 10% of the amount of value of geothermal resource; 5% of the associated by-products. |
| Size | N/A |
Kansas |
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| Leasing Agency | No Leasing regulations for geothermal development. |
| Relevant Regulations |
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| Leasing Terms | No Leasing regulations for geothermal development. |
| Primary | N/A |
| Renewal | N/A |
| Rental | N/A |
| Royalties | N/A |
| Size | N/A |
Montana |
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| Leasing Agency | Board of Land Commissioners |
| Relevant Regulations |
Montana Code Annotated 2003 Title 77. State Lands, Chapter 4. Geothermal and Hydroelectric Resources Administrative Rule of Montana 36.25.103 and 104 Subchapter 4 Geothermal Rules and Regulations 36.25.401 to 36.25.413 |
| Leasing Terms | All Leasing is by competitive bid. If at the lease sale, no bid is made on the tract for which an application was made, the applicant may negotiate with the Board. |
| Primary | 10 years. |
| Renewal | The lease will continue in effect beyond the primary 10 years if the lessee is engaged in drilling for geothermal resources. The lease shall continue in force so long as geothermal resources in paying quantities are produced. |
| Rental | $1.00 per acre per year. |
| Royalties | 10% of the gross revenue; minimum $2.00 per acre per year. |
| Size | N/A |
Nebraska |
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| Leasing Agency | Board of Educational Lands and Funds |
| Relevant Regulations |
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| Leasing Terms | No Leasing regulations for geothermal development. However, for minerals as well and oil and gas, Leasing is by competitive auction. |
| Primary | N/A |
| Renewal | N/A |
| Rental | N/A |
| Royalties | N/A |
| Size | N/A |
Nevada |
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| Leasing Agency | No Leasing regulations for geothermal development. |
| Relevant Regulations |
Nevada Revised Statutes, Chapter 534A. Geothermal Resources |
| Leasing Terms | No Leasing regulations for geothermal development. |
| Primary | N/A |
| Renewal | N/A |
| Rental | N/A |
| Royalties | N/A |
| Size | N/A |
New Mexico |
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| Leasing Agency | New Mexico State Land Office |
| Relevant Regulations |
New Mexico Administrative Code Title 19 Chapter 14. Geothermal Power |
| Leasing Terms | Leases are available on a non-competitive basis. The Commissioner of Public Lands may reject any application and offer the tract or tracts at public auction. Lands classified as “known geothermal fields” are leased through public auction through either sealed or oral bidding procedure. |
| Primary | 5 years. |
| Renewal | The primary term can be renewed for additional 5 years and thereafter so long as geothermal resources are being produced or utilized or are capable of being produced or utilized in commercial quantities. |
| Rental | $1.00 per acre or fraction thereof per year. Escalates to $5.00 per acre per year after primary lease term. |
| Royalties | 10% of the gross revenue from the sale or use of steam, brines or hot water, associated gases or other forms of heat or energy derived from production with a minimum of $2.00 per acre or fraction thereof per year. A royalty of not less than 2% nor more than 5% of the gross revenue received for the sale of mineral products or chemical compounds recovered from geothermal fluids. A royalty of 8% of the net revenue for the operation of an energy producing plant on the leased land. A royalty of 2% to 10% of the gross revenue received from the operation of the geothermal resource for recreational, space heating, or health purposes. |
| Size | N/A |
North Dakota |
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| Leasing Agency | North Dakota Industrial Commission - Office of the State Geologist |
| Relevant Regulations |
North Dakota Century Code Chapter 38-19. Geothermal Resource Development Regulation |
| Leasing Terms | Leases are negotiated. |
| Primary | N/A |
| Renewal | N/A |
| Rental | N/A |
| Royalties | N/A |
| Size | N/A |
Oklahoma |
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| Leasing Agency | Commissioners of the Land Office |
| Relevant Regulations |
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| Leasing Terms | The Commissioners of the Land Office have not adopted specific rules and regulations relating to the Leasing of school or other public lands for the purpose of geothermal exploration and development. |
| Primary | N/A |
| Renewal | N/A |
| Rental | N/A |
| Royalties | N/A |
| Size | N/A |
Oregon |
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| Leasing Agency | Department of State Lands |
| Relevant Regulations |
Oregon Administrative Rules, Department of State Lands, Division 75. Geothermal Lease Regulations 141-075. |
| Leasing Terms | >Leasing: Leases are available on both competitive and non-competitive bases. |
| Primary | 10 years. |
| Renewal | 5 years extension if resource discovery has been made or is imminent. No lease shall exceed 50 years; lessee has right of first refusal in the event the Division decides to continue >leasing. |
| Rental | Years 1 – 3: $1.00 per acre, Year 4: $3.00 per acre, Years 5 – 10: $5.00 per acre. Renewal geothermal lease: $5.00 per acre. |
| Royalties | A royalty of at least 10% upon the production value of the geothermal resources produced under the lease and sold or utilized by the lessee. The production value shall be determined by the gross sale price paid by the plant or other purchaser for value. On by-products: 1 % of the gross sale price of de-mineralized water sold, exchanged or otherwise disposed of. |
| Size | N/A |
South Dakota |
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| Leasing Agency | Office of School and Public Lands |
| Relevant Regulations |
South Dakota Codified Laws, Chapter 5-1-2 |
| Leasing Terms | >Leasing: Leasing is on a competitive basis by public auction; the commissioner retains the right to reject any or all bids. |
| Primary | 10 years. |
| Renewal | As long as geothermal resources are produced from the leased lands. |
| Rental | Not less than $1.00 per acre per year. |
| Royalties | Not less than 10% of the gross revenue received from the sale of steam brines at the point of delivery to the purchaser. A 5% royalty of the gross revenue from sale of mineral products or chemical compounds recovered from geothermal fluid or chemical compounds. All royalties shall be subject to renegotiation after 10 years from the effective date of the lease and at 10-year intervals thereafter. |
| Size | N/A |
Texas |
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| Leasing Agency | Commissioner of the General Land Office |
| Relevant Regulations |
Texas Natural Resources Code, Title 5 Chapter 141. Geothermal Resources, "Geothermal Resources Act of 1975" |
| Leasing Terms | All Leasing is by competitive bid. |
| Primary | Generally 3-5 years. |
| Renewal | As long as actively pursuing development. Thereafter so long as productive. |
| Rental | Established at the time of bid or negotiated thereafter. |
| Royalties | Established at the time of bid or negotiated thereafter. |
| Size | N/A |
Utah |
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| Leasing Agency | Utah School and Institutional Trust Lands Administration |
| Relevant Regulations |
Utah Code, Title 73, Chapter 22. Utah Geothermal Resource Conservation Act |
| Leasing Terms | In known geothermal areas lands have been withdrawn and are available for sealed bid competitive Leasing upon nomination by a potential lessee. Non-withdrawn lands are available from over-the-counter >leasing. |
| Primary | 10 years. |
| Renewal | Primary term extendable if spudding or drilling wells. The lease is extendable indefinitely so long as in production. |
| Rental | $1.00 per acre per year escalates to $4.00 per acre per year after expiration of primary lease term. |
| Royalties | 10% on production or minimum of $4.00 per acre per year. |
| Size | N/A |
Washington |
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| Leasing Agency | Department of Natural Resources |
| Relevant Regulations |
Revised Code of Washington, Title 79, 79.01, 79.02, 79.12, 79.13 |
| Leasing Terms | Leasing may be by competitive bid or negotiation. |
| Primary | 10 years. |
| Renewal | Up to 55 years subject to approval every 5 years upon approval of plan of development. |
| Rental | Years 1 to 5, not less than $1.25 per acre per year or $250, whichever is greater; years 6 to 10, not less than $2.00 per acre per year or $500, whichever is greater. |
| Royalties | 10% of the gross proceeds received from the sale of such geothermal resources which are derived, generated or manufactured from the premises sufficient for commercial sales, and 10% of the fair market value thereof of products utilized but not sold, and 10% of the gross proceeds for all by-products derived from the leasehold estate. |
| Size | N/A |
Wyoming |
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| Leasing Agency | No Leasing regulations for geothermal development. |
| Relevant Regulations |
Wyoming Statutes, Title 36 Chapter 5. Leasing Generally (36-5-101) |
| Leasing Terms | No Leasing regulations for geothermal development. |
| Primary | N/A |
| Renewal | N/A |
| Rental | N/A |
| Royalties | N/A |
| Size | N/A |
Useful publications
- The Washington State University Energy Program has authored several "Western states geothermal development guides" on geothermal leasing on both the Federal and state levels. For more information, email R. Gordon Bloomquist at bloomquistr@energy.wsu.edu.
- "Geothermal Leasing" by R. Gordon Bloomquist with Matthew H. Brown and Jennifer A. DeCesaro, National Conference of State Legislatures State Policy Options, June 2005. For more information, email Matthew Brown at matthew.brown@ncsl.org.
- Lava Law —
A guide containing insights that Stoel Rives LLP's multi-state Geothermal Team has gained over the past 10 years serving the U.S. geothermal industry domestically and abroad. Lava Law describes the current legal and policy issues most likely to affect the geothermal industry in general, and the development of individual geothermal projects. For more information, contact Cathie Baker at Tel: (503) 294-9661, or email at chbaker@stoel.com .
- "Opportunities for Near-Term Geothermal Development on Public Lands in the Western United States," by Barbara C. Farhar and Donna M. Heimiller, National Renewable Energy Laboratory, 14 April 2003. Identifies 35 "top pick" sites in six western states for near-term development of geothermal energy for power generation. Of the 35 sites, 10 are in Nevada, 9 in California, 7 in Oregon, and 3 each in New Mexico, Utah, and Washington.