The Geysers, the largest geothermal energy project in the world, generates 835 megawatts of electricity annually. The site, of which 20 percent is on school lands with 7,247 acres leased, is by far the largest source of revenue to CalSTRS.
Production at the Geysers is projected to remain stable for at least another decade. Though infrastructure cost barriers exist, there are exploration opportunities in the northern region of the site that are being marketed to the geothermal industry.
The geothermal energy produced at the Geysers is considered renewable and its use will help satisfy California’s renewable energy requirements for utilities. The field now generates enough electricity to supply 90,000 homes.
The revenue from the geothermal leases at the Geysers should remain in the range of $4.5 million during fiscal year 2013-14.
As part of the California Desert Protection Act exchange program with the Bureau of Land Management, the state in 2002 acquired and leased a 658 acre parcel adjacent to the existing Mesquite Gold Mine.
Idle in 2001 due to low gold prices, mining resumed in 2007 with rapidly escalating gold prices. Mining commenced on the state lease in December of 2011. On August 20, 2012, the Commission approved the extension and amendment of the lease until October of 2022.
For fiscal year 2011-12, royalties to CalSTRS amounted to approximately $200,000. For fiscal year 2012-13, nearly $3.4 million in royalties were generated. In the second quarter of this fiscal year, the royalty percentage escalated to 7 percent from 6 percent due to the new sliding scale royalty rate and the high price of gold.
In 2004, Granite Construction applied to the State Lands Commission for a 151 acre lease within a 414 acre site for a 75 year rock quarry operation. The state also retains a 1/16th mineral interest in an additional 160 acres of the proposed site.
Following six hearings, the Riverside County Planning Commission denied the project on a 4-1 vote in August of 2011. In February of 2012, the Riverside County Board of Supervisors rejected Granite’s appeal. In May of 2012, the Board finalized their rejection while certifying the Environmental Impact Report.
On July 25 of 2012, Granite resubmitted their application for a reduced project. Under the reduced project, the quarry would only have a 50 year life, mining would occur only during daylight hours, the quarry depth would be reduced, mining could not exceed 4 million tons per year and Riverside County would receive a $0.20 per ton of produced aggregate fee.
Granite withdrew their lease application at the end of 2012 and advised the County of Riverside of their withdrawal of their land use applications. The Pechanga Band of Luiseño Indians paid more than $3 million to purchase the surface rights to the property and over $17 million to Granite to abandon the project. The land was considered sacred to the Pechanga Tribe.
Had the project been approved, it would have potentially provided CalSTRS with a significant amount of income over the next 50 years.
SLC staff estimates revenue from the two school lands oil & gas parcels is expected to decline slightly, but will remain close to $2.0 million during fiscal year 2013-14, as high levels of oil production continue, but prices drop under $100/barrel due to increased domestic production.
With the passage of AB 32, the increase in public awareness about climate change, and the rise in energy prices, staff expect more interest in the long-term leasing of school lands for renewable energy projects. Some of these projects will involve utilization of wind as an energy source. If the required wind turbines are installed and operated, these would generate electricity that would be placed in the state’s electrical grid.
SLC staff will continue processing two applications for solar energy leases in San Bernardino County that together would cover almost 11,400 acres of school lands. The two proposed projects, Johnson Valley SEGS and Sorrel Solar Farm, will each be subject to environmental reviews under the California Environmental Quality Act.
Both of these projects are temporarily on hold while the Desert Renewable Energy Conservation Plan is completed. If these two solar projects are successfully completed and the leases are issued, staff anticipate significant revenue from these leases beginning in fiscal year 2017-18.
Tule Wind LLC has a lease application for the Tule Wind Farm on 640 acres of school lands in eastern San Diego County. This is a multi-jurisdictional project projected to have a total capacity 200 megawatts using 134 wind turbines, seven of which are on school lands.
The Tule Wind Project was analyzed in a joint environmental impact report/environmental impact statement prepared by the California Public Utilities Commission and the BLM. New transmission lines and access roads necessary for the project require separate authorization from the Bureau of Indian Affairs for development on tribal land.
If the project is ultimately approved by the SLC and the lease is issued, SLC anticipates significant revenue beginning in fiscal year 2014-15.
For more information, visit http://www.slc.ca.gov/.