Reno Gazette Journal 5-12-10

BLM auctions geothermal rights to hundreds of thousands of acres of Nevada land today

The Nevada Bureau of Land Management generated nearly $3 million in bids Tuesday at its annual geothermal lease sale in Reno.

Eighty-four parcels out of the 114 offered for auction received bids at the event, which auctioned leasing rights to federal land for geothermal exploration.

The parcels that received bids comprise more than 210,000 acres. A total 328,020 acres in land were made available to bidders at the auction.

“This basically lets the winning companies go out and explore new sites for potential geothermal development,” said Atanda Clark, branch chief for minerals adjudication with the BLM Nevada.

Nevada is set to receive half of geothermal revenues generated through the leases, with the rest going to the U.S. Treasury and a reclamation fund.

Winning bids serve as a preliminary fee for the right to lease the land for 10 years. The actual rental fee per year is $2 per acre for the first year and $3 after that. For leases that go beyond 10 years, the annual leasing fee goes up to $5 per acre.

Royalty rates for geothermal energy generated on leased property is 1.75 percent for the first 10 years of production and 3.5 percent for subsequent years.

Winning bids at this year’s auction ranged from $2 per acre to a high of $1,000 per acre. The high bid was posted by Magma Energy of Reno for a 640-acre parcel in Churchill County, placing the bid’s total worth at $640,000.

Although the event generated $2.76 million this year, the number is far below the $8.9 million generated at the same auction last year. This also was the first time in recent years that all parcels offered up for auction were not snapped up. One reason could be the amount of land already leased for development, Clark said.

“We have a lot of acres out there (being leased) already,” Clark said. “We have about 1.7 million acres already leased.”

The auction attracted representatives from key players in the energy sector. Ram Power, Corp., which has a partnership with NV Energy, used the auction to further beef up its presence in Esmeralda County.

“Nevada is one of the premier areas for geothermal power in the U.S. and has the second largest potential after California,” said Paul Zavesov, vice president and chief financial officer for Ram Power. “We focus on Esmeralda County so we participated in this auction to consolidate our resources there. We hope these acquisitions will advance our development in this area.”