Geothermal authority accepts nearly $2 million DOLA grant


The Pagosa Area Geothermal Water and Power Authority (PAGWPA) met Monday morning to formally accept a grant for nearly $2 million from the Colorado Department of Local Affairs (DOLA).

According to the grant agreement, DOLA will give PAGWPA $1,986,000 from the Energy and Mineral Impact Assistance Fund “to confirm the presence of geothermal resources whereby such geothermal resources can be developed as a possible power source for the area.”

The purpose of the Energy and Mineral Impact Assistance Program is to help “political subdivisions” that are socially or economically affected by the oil and gas industry. In other words, only local governments are qualified to accept these funds; they cannot go to private corporations.

The PAGWPA board, however, is structured as a government entity and consists of Mayor Don Volger, town council members David Schanzenbaker and John Egan, and all three Archuleta County commissioners. Mike Alley holds an at-large seat on the board.

PAGWPA is thus able to receive funds from DOLA and use those funds in a public-private partnership with Pagosa Verde, a local geothermal energy company owned by Jerry Smith. This joint venture between PAGWPA and Pagosa Verde is called Pagosa Waters LLC.

Archuleta County Board of County Commissioners Chairman Clifford Lucero also acts as the chairman for the PAGWPA board, which passed a resolution Monday morning authorizing him to execute the grant contract with DOLA.

According to the contract, PAGWPA “will hire a contractor (Pagosa Waters) to perform exploratory geothermal well drilling and data analysis for confirmation of geothermal resources in Archuleta County using on-site exploration, testing and analysis.”

The contract made reference to the work that has already been done by graduate students and professors from the Colorado School of Mines for the past several summers by explaining, “Extensive remote sensing and ground proofing have been used to identify a potential site for geothermal resource development in Archuleta County.”

The contract then goes on to explain what the DOLA funds will be used for: “The next phase is to undertake a subsurface analysis of the potential resource in order to validate and confirm the geothermal resource. Grantee will undertake the exploration of identified three (3) geothermal sites located on land leased by two private landowners and the Archuleta County School District R 50. All lands are located adjacent to the Town of Pagosa Springs on the east side of the municipality.”

More specifically, Pagosa Waters will use the DOLA grant money for three specific tasks:

• “Drill approximately six gradient wells 1,500 to 2,000 feet in depth and analyze the data collected from those wells. An interim report will be developed from the gradient well data that portrays the results and what was learned.”

• “Drill approximately three deep exploration wells, approximately 5,000 feet in depth, into the geothermal water reservoir to determine the resource’s quantity and quality of the hot water resource. A final report will be developed that contains all the data collected and recommendations for further development of the resource.”

• “Site reclamation and stabilization. The gradient wells will be stabilized and reclaimed, and the exploration wells will be shut in and the sites reclaimed.”

The first thermal gradient (TG) well has already been started near where Mill Creek flows under U.S. 84 and can be seen from the county’s Road and Bridge Department facility.

These six wells will provide three types of information: temperature, geophysical and geological.

As far as temperature, Pagosa Waters will chart the changes in water temperature as depth increases. From this data, extrapolations can be made regarding the change in water temperatures for a deeper depth.

For geophysical, the wells will allow Pagosa Waters to develop a geophysical picture of the subsurface geology to determine the sites of hot water faults.

And finally, in terms of geology, Pagosa Waters will take actual rock core samples while drilling to determine if there are geologic indicators of hot water faults.

Once the TG wells are complete and the data analyzed, the next thing the DOLA grant will pay for is the deep exploration wells, which will tap into the sources of geothermal water reservoirs and will flow test the water to determine the amount of hot water present and its sustainability.

The grant contract specified that DOLA would pay $20,000 (with PAGWPA contributing $35,000 in matching funds) for architectural and engineering services, $173,000 (with a $254,500 match) for consultant services, $170,800 (with a $256,200 match) for the TG wells, and $1,622,200 (with a $2,813,975 match) for the deep exploration wells.

The contract specified May 31, 2016, as the date when the grant will terminate and the exploration phase of the project should be done. Once it is all over, PAGWPA will own the data, wells and site improvements.

Then, assuming all the data indicates that there is enough hot water to run it, the next step will be to drill a production well, build a power plant and use the resource to supply electricity to Archuleta County.