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New geothermal system for Pagosa?

With the Pagosa Springs Town Council unanimously approving the signing of a Letter of Intent (LOI) by Mayor Ross Aragon with a company proposing to upgrade the town’s geothermal system, the town has signaled its willingness to enter into a public/private partnership with Hardin Geothermal, LLC (HG) to begin work on the installation of what would effectively be a new system for the town.

Technological innovation aside (which, according to plans provided to council, would be significant), the biggest change would be the involvement of private enterprise in administering the town’s geothermal system. Currently, the town has owned and operated its geothermal system (for heating homes, businesses and sidewalks) as an enterprise since the early 1980s, when the U.S. Department of Energy assisted the town in exploiting its geothermal resource.

However, as reported in the Dec. 2 edition of The SUN, the town’s geothermal infrastructure faces imminent failures due to stresses added to the system during depressurizing and repressurizing processes, along with the age of the pipes delivering geothermal water to its customers. In that article, it was reported that initial needs would run the town about $300,000, with several million dollars required to eventually replace the entire system.

Addressing council last Thursday, HG representatives Jim Hardin (CEO) and Robert Sparks (vice president, engineering) stated that the company would require little more than the town’s geothermal pumps for infrastructure. Furthermore, the infrastructure provided by HG would effectively replace the town’s own system, with new piping small enough to fit through the town’s own aging piping system.

According to Sparks, the HG proposal involves a first phase of construction that would, after two to three years, place as many as 500 residences, 50 businesses and three to four large government buildings or schools on the system. The area serviced in the first phase would be located in the immediate downtown area.

If successful, a second phase of the project would reach to the uptown area, servicing all residents and businesses within the town limits.

At an estimated cost of $15 million, Phase I would create 55 direct jobs for the area, with an additional 110 indirect jobs created during construction of the project’s first phase. On the back end, HG stated that five or six of the direct jobs would result in permanent employment, with 11 permanent indirect jobs created past the project’s completion.

“It’s a proven technology, it’s been around for a long time,” said Phil Starks, geothermal supervisor for Pagosa Springs. “I really hope we can move forward on this.”

According to Starks, the HG system would be a vast improvement on the town’s current geothermal system, more efficiently drawing energy from the available system and so requiring less water for heating.

“Currently, we require over 200 GPM (Gallons Per Minute) for our system. This technology only requires a little over 20 GPM,” Starks said.

“If we’d had this technology in the 1980s, this is what the DOE would have gone with,” Starks told council.

HG has broken ground in several municipalities throughout the U.S., installing geothermal utilities, using a combination of public and private funding for project development. What makes Pagosa Springs unique, however, is that it has the benefit of ample geothermal energy from the various wells accessing the aquifer.

Aside from providing local jobs, Sparks added that another direct benefit is keeping local money local.

“Most homes in the downtown area are heated with gas and that money goes to Arizona. The money for our resource would stay in our community,” Sparks said.

However, Sparks added that the real benefit would be the savings to heating bills made by switching from natural gas to geothermal — as much as 50 percent if a property owner makes an upfront investment in the system or 10-15 percent if the system is financed through the geothermal utility. Even if financed, Sparks said, the property owner would be eligible for federal tax credits, as well as rebates from La Plata Electric Association — between $5,000-$8,000 in tax credits and $500-$1,000 in LPEA rebates, Sparks said.

If adequate funding is secured (Hardin said that, for these types of projects, private enterprise has been more successful in securing federal grants than public entities), Sparks said that HG should be able to break ground in April or May of 2011. Sparks said it should take about three months to see about available state and federal funding, as well as address any legal issues regarding current geothermal leases held by the town.

However, HG is confident that a new geothermal utility will break ground in Pagosa Springs, so much so that an open house has been scheduled for Thursday, Jan. 13, at the Ross Aragon Community Center. That open house is “for all contractors and tradesmen interested in participating in helping to install the proposed Geo Utility,” according to an HG press release.

The press release went on to say, “The certification requirements for participation and the educational opportunities for meeting those requirements will be presented. There will be an open forum for discussion. This meeting will help Hardin Geothermal gauge the availability and level of expertise of the local work force. It will also provide local tradesmen and contractors with information regarding financial and educational assistance that will be available to them. Ideally, Hardin would like to complete the project with 100% local participation.”

Sparks said that HG will help local tradesmen and contractors secure funding for required education, including funds to cover work lost due to time for classwork. Sparks added that the training would take place with the assistance of local community colleges, and that the Archuleta County Education Center would be used as a “virtual classroom” for that training.

In the meantime, Sparks said that HG will schedule a number of community forums to educate the public on its geothermal heating system, how a geothermal utility will benefit the town, and what will be required to switch to geothermal from other, conventional heating systems.

After council’s unanimous vote on Thursday, Aragon signed the LOI on Friday. While the LOI does not commit the town to any contract with HG, it does give HG permission to pursue a preliminary process for establishing a geothermal utility in Pagosa Springs.