Alaska officials are preparing to hold a lease sale for geothermal exploration rights at Augustine Volcano, a 4,133-foot peak that forms its own cone-shaped island in the southern part of Cook Inlet.
The Alaska Division of Oil and Gas, which manages the state’s geothermal program, issued a formal finding on Jan. 10 concluding that a geothermal lease sale at Augustine would be in the state’s best interest. Such findings are required as precursors to lease sales.
Division officials hope to hold the Augustine lease sale as soon as possible, said Sean Clifton, a spokesperson for the division. A further announcement could come as early as this spring, he said.
Augustine lies about 175 miles southwest of Anchorage and about 70 miles southwest of the Kenai Peninsula city of Homer. Its last eruptions came in a series that stretched over about three months in late 2005 and early 2006, according to the federal-state Alaska Volcano Observatory.
Geothermal energy projects use the heat beneath the earth’s surface. There have been some geothermal projects that have successfully tapped into energy at volcanic sites in the Lower 48, notably in Nevada, where a power plant located on a volcano’s flank has been operating for decades.
An upcoming Augustine geothermal lease sale would offer up to 55,771 acres in 24 tracts, all on the north side of the island and in nearby offshore areas, according to the best interest finding.
The south side of the island would not be available. Anchorage-based GeoAlaska LLC already holds geothermal prospecting permits for that part of Augustine, obtaining the first permit from the Division of Oil and Gas in 2022 and adding to it two years later.
So far, three companies have notified the Division of Oil and Gas that they are interested in exploring geothermal resources at Augustine beyond the area permitted to GeoAlaska, Clifton said. Those expressions of interest are what led to plans for a lease sale, he said.
The first of those companies submitted a proposal that the Division of Oil and Gas received in mid-July. In response to the division’s call for public comments, two more companies came forward with competing proposals.
That led to the lease sale process being carried out under the state’s geothermal program, Clifton said. “Because there is competing interest, we have to do a competitive lease sale,” he said.
The coastline area along the Gulf of Alaska is teeming with active volcanoes, and companies and government officials have tried for decades to harness some of the geothermal energy they hold.
Most interest has been focused on the volcanoes closes to population centers: 11,069-foot Mount Spurr, located about 70 miles west of Anchorage; 5,905-foot Makushin, 16 miles from the busy fishing port of Unalaska/Dutch Harbor; and Augustine.
Although there has been exploration of varying levels at those volcanoes, there has been no energy production at any. There has been more success in Alaska with geothermal energy derived from hot springs.
East of Fairbanks, the Chena Hot Springs resort uses the same geothermal energy that heats its pools to fuel electricity, heat buildings and keep food-producing greenhouse operating.
North of Nome, the heat from Pilgrim Hot Springs has been used since the early 1900s to support food-producing gardens; a modern gardening and greenhouse operation there supplies local produce to Nome consumers.
Past experience shows that tapping into geothermal energy from volcanoes is difficult, Clifton said. He cautioned that the results of any upcoming lease sale are uncertain.
“The initial interest doesn’t always materialize into bidding, so I don’t want to oversell,” Clifton said. “Drilling into a volcano, that’s hard. On an island.”
In the case of Augustine, potential explorers face numerous safety risks that are listed in the best interest finding, including explosive, ash- or lava-producing eruptions, mudslides, landslides and tsunamis. Explorers would also have to take steps to reduce risks to the area’s fish and wildlife habitat, according to the finding.
The Augustine leasing is being planned under the state’s long-standing program and is unrelated to any changes created through a broad energy bill that the Legislature passed and Gov. Mike Dunleavy signed into law last year.
That bill, House Bill 50, focused more on Cook Inlet and Railbelt energy issues, but it included some provisions that are aimed at making geothermal exploration more attractive. Regulations have not yet been completed to enact the changes authorized by that legislation.
Although the potential Augustine lease sale is not affected by that state legislation, new federal legislation might make geothermal energy development there and elsewhere more attractive than it was in the past, the best interest finding noted.
The Inflation Reduction Act of 2022 includes federal tax credits for geothermal power plants and manufacturers of geothermal technologies. There are also opportunities to get loan guarantees for new projects, the document said. “In sum, federal energy policy has shifted significantly since the other noncompetitive permits were issued, which has generated renewed interest in geothermal exploration,” the finding said.