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US Geothermal cuts royalty costs with Oregon rights deal

Geothermal developer US Geothermal has acquired mineral rights around its Neal Hot Springs project in eastern Oregon.

The company said buying a 25% interest in one plot and another 25% in another area would cut the royalty payments it pays for generating renewable power from the planned 22-megawatt output.

US Geothermal, which has its head office in Boise, Idaho, acquired mineral ownership interests from GCO Minerals Company, part of International Paper.

It said the two acquisitions would combine to provide it with 600 acres of 50% mineral ownership and 1,510 acres of 25% mineral ownership.

The mineral rights, which partly overlie each other, take in the “heart” of the reservoir from which the Neal Hot Springs project draws its renewable energy.

US Geothermal said it included the two existing production wells and all of the currently planned new production and injection wells.

Reduced burden

Daniel Kunz, President and CEO at US Geothermal, In., said; “We can either lease the energy rights by paying a royalty each year, or we can own them outright and reduce the annual royalty burden.

“With the acquisition of these two mineral interests, the Neal Hot Springs project will have increased annual cash flows,” added the US Geothermal CEO.

Neal Hot Springs is a 9.6 square mile project, some 90 miles northwest of Boise, with a geothermal resource located 2,820 feet below ground level.

Drilling is currently underway, with power to be sold to the Idaho Power Company through a 25-year power purchase agreement.

US Geothermal is currently operating geothermal power projects at Raft River, Idaho, and San Emidio, Nevada, as long as the Oregon site.

The firm has been offered a $102.2 million loan guarantee from the US Department of Energy to support the Neal Hot Springs project (see this BrighterEnergy.org story).