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What are geothermal resources?

Regardless of the technical definition of "Geothermal Resource," California la tends to treat the energy an by products derived from geothermal formations as minerals.

  • A "general grant of minerals in, on, or under property includes a grant of geothermal resources, including steam therefrom" Geothermal Kinetics, Inc. v. Union Oil Co., (1977) 75 App. 3d. 56, 58.
  • The Geothermal Resources Act of 1967 (PRC 6901) mirrored, in many ways, the preexisting statuary framework for solid mineral and hydrocarbon lading and exploration.

Harmonizing the statutes provides guidance on defining geothermal reassures and the leasable interest therein:

  • PRC section 6903 - "geothermal resources" shall mean the natural heat of the earth, the energy, in whatever form, below the surface of the earth present in, resulting from, or created by, or which may be extracted from, such natural heat, and all minerals in solution or other products obtained from naturally heated fluids, brines, associated gases, and steam, in whatever form, found below the surface of the earth, but excluding oil, hydrocarbon gas or other hydrocarbon substances.

The PRC makes distinctions regarding resources used for steam vs. other mineral uses.

  • PRC section 3703.1 - Low-temperature geothermal resources are fluids that have value by virtue of the heat contained therein and have a temperature that is not more than the boiling point of ayer at the altitude of occurrence.
  • Commission royalty rates vary on whether a resource has a low-temperature or high-temperature application in addition to how the resource is commercially exploited (PRC Sec. 6913 & 6915)
  • As a "catch all," PRC Sec. 6404 lumps geothermal resources into a large and non-exclusive group of minerals that are sold pursuant to traditional solid mineral/hydrocarbon leasing and royalty provisions.
  • By harmonizing the statutes, the California definition of geothermal resources appears to emulate the federal definition found within 33 U.S.C. Sec. 1001©.
  • Therefore, all heat energy and minerals sourced from geological formations appears to fall into this broad category of geothermal resources.

What does his mean for mineral ownership?

  • Where the state has a mineral interest, it claims all material that, either through common law or statute, can be defined as "mineral."
  • However, the state's statutory royalty/leasing regime only appears to apply when minerals are produced, disposed, mined, sold, or marketed commercially. (Not to discount the legal principles of waste or conversion.)

For more information, see Geothermal Leasing on California State-Owned Public Lands, Presented for the GRC Pre-Meeting Workshop Geothermal Leasing, Unitization, and Water Use Legal Issues September 26, 2014, Joe Fabel, Lead Attorney for Geothermal Leasing and Geotechnical Permitting, California State Land Commission