Hearings and Business Meetings

SD-366 Energy Committee Hearing Room 02:30 PM

Mr. Bernie Karl

Proprietor, Chena Hot Springs Resort

Testimony by

Bernie Karl

Proprietor, Chena Hot Springs Resort

Fairbanks, AK

Senate Energy and Natural Resources Committee

Hearing on Geothermal Energy

July 11, 2006



My name is Bernie Karl.  I am the proprietor of Chena Hot Springs outside of Fairbanks, Alaska.  Chena Hot Springs will be the site of the only new geothermal power plant installation in the United States this year.  It will also be the site of the lowest temperature resource (165ºF) ever used for commercial power generation in the world.  Attachments to my written statement contain additional details on this exciting and unique project.


The power generation project at Chena would not be possible without support from the United States Department of Energy’s Geothermal Technologies Program, which is currently threatened with elimination.  I am testifying in support of reinstating and expanding the Department of Energy’s geothermal budget as well as extending the production tax credit for geothermal resources.


Our country faces a number of critical energy concerns including the need for a diverse portfolio of clean, renewable domestic sources of supply. Additional investment in public private geothermal R&D partnerships can open up extensive new opportunities for domestic production of renewable energy. New technologies that hold tremendous promise for tapping moderate temperature geothermal resources, including those associated with oil and gas production are emerging.  Without validation in real world operating conditions and a stable, sustained commitment to financial incentives, the necessary investment will not be made and these technologies will never penetrate the market resulting in lost opportunities for renewable domestic energy production and the associated economic and environmental benefits.


For example, until just a few years ago, it was believed that power generation from geothermal resources lower than 230ºF was uneconomical.  However, that picture is changing as the cost of energy rises, and the technology improves.  Moderate temperature geothermal resources are by far the most prevalent in the United States and around the world.  Estimates indicate there are between 20,000 and 40,000 MW of geothermal electrical energy potential in the US alone in the 190 to 300 degrees Fahrenheit range.


In fact, you could hit those temperatures right here underneath Washington DC if a hole 20,000 feet deep[1] were drilled.  Heat from the earth, whether used for power generation or heating buildings and homes is the most reliable form of renewable energy available to us.  It doesn’t depend on clear skies, windy days, or rainfall, making geothermal a good base load alternative energy.  While using the heat from the earth for heating and cooling is economical throughout the US, our best geothermal resources for power generation are in the western states. 


4% of power generation in the West today is generated from geothermal resources.  However, this existing generation is almost all from high temperature, easily accessible resources.  The next step in geothermal power generation will require new technologies, including enhanced geothermal (EGS), exploration for blind systems, and development of improved technologies for moderate temperature power generation.  All of these areas are being explored by the Department of Energy’s Geothermal Technologies Program and are jeopardized by the Administration’s proposed elimination of funding.


I can testify from firsthand experience that the Department of Energy’s program, with Dr. Roy Mink, and until recently David Garman, at the helm represents the best our government can offer.  They are hands-on managers, who understand the possibilities and are tirelessly working to steer our country in the right direction while keeping a close eye on the bottom line.  Without their support, the geothermal projects at Chena Hot Springs, which have attracted $3 million in private investment alone, would never have come to fruition. 


In the future, the geothermal industry is also going to need to think outside of the box.  There are currently 225,000 producing oil and gas wells[2] in Texas which produce 95% water along with 5% oil and gas.    This water is a waste by product of the oil industry.  However, at temperatures averaging 265ºF, this water could be used in a power generation cycle before being re-injected into the ground. 


If every producing oil and gas well in Texas alone used this technology, the same power generation technology being tested right now at Chena Hot Springs in Alaska, we could generate 5000MW of power from this renewable geothermal resource.  This is the equivalent of 5 new nuclear power plants.  In addition, this technology could extend the life of currently unprofitable oil and gas wells thus providing additional jobs and energy security benefits. With the modular power plant designed and developed by United Technologies in partnership with Department of Energy, this type of power generation could be brought online within a very short time period after the technology is demonstrated and validated in real world operating conditions.


Geothermal energy is also a potentially vital piece of a future ‘hydrogen economy’ in which Congress is investing research dollars.  Hydrogen production over the long run makes sense only from using renewable energy sources.  Therefore, development of those resources should go hand in hand with hydrogen research. 


President Bush has stated repeatedly that we are addicted to oil and as a country we need to wean ourselves from this addiction.  Geothermal energy is part of that solution.  Geothermal development has had success with readily accessible higher temperature sources.  The opportunities for geothermal technology development have not been exhausted; there is still huge potential for additional future generation of heat and power by applying new technologies to abundant lower temperature resources.    


The Department of Energy has historically been the driving force behind new development and exploration in geothermal – the ‘thinking outside the box’ that industry is often reluctant and financially unable to undertake alone.  I believe that reinstatement, and even expansion of the geothermal technologies program budget is critical for the future of power generation in the Western United States. 


In addition, I recommend the Renewable Electricity Production Credit that is due to sunset in 2008 be extended until 12/31/14 as provided in S 2829. The continued R&D investment via cost shared public private partnerships sponsored by DOE coupled with a longer term production credit will provide the market with more certainty and enable sound investment choices.   There are never simple solutions, only intelligent choices.  Thank you for the opportunity to speak on this important and timely topic.