Texas Geothermal Permitting Process (TX)
The steps of the Texas geothermal permitting process are summarized in the chart below. Roll over each section for a summary of the regulations and permits it covers. Click a section to learn more about the required permits and regulations related to that topic.
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Environmental Review On Site Evaluation Cultural Resources Biological Resources Pre-Existing Land Use Water Quality Air Quality Geological Resources Aesthetic & Recreational Resources
Geothermal Development in Texas
In Texas, geothermal resources, including hot brines and waters associated with the resource, are presumed minerals for regulatory purposes. As such, water removed from the ground in order to obtain geothermal resources is regulated as part of the mineral resource and not otherwise subject to Texas water law. Tx Nat. Res. Code 141.003 and Tx Nat. Res. Code 141.002(4).
Initially, geothermal developers in Texas need to ensure that the applicable city or county Land Use Plan (LUP) allows for geothermal exploration and development projects. Land use planning is delegated to municipalities under Chapter 213 of the Texas Local Government Code (TLCG).
To develop geothermal resources on state land in Texas, developers must obtain a lease and, any required rights-of-way (ROW) easements to access state lands, including any necessary permits to encroach on existing state ROWs. The Texas General Land Office (GLO) manages the leasing of state lands in Texas. The leasing process is generally similar, but the procedures vary depending on what type of state land the developer seeks to lease. The GLO has authority to administer leases on the following types of state land:
- Permanent School Fund (PSF) Land;
- Texas Parks & Wildlife Department (TPWD) Land;
- Land Trade (LT) Lands; and
- Relinquishment Act (RA) Lands.
For ancillary activities related to development and not covered under a geothermal lease, developers may need to obtain an easement or right-of-way (ROW) lease from the GLO. The GLO also issues special permits for access through a coastal zone. For access on most public lands, the developer will need to submit an Application for New Rights of Way / Miscellaneous Easements. For access on coastal zones, the developer will need to submit an Application for State Land Use Lease: Commercial/Multi-Family.
To conduct certain exploration activities on state lands or lands with state interests, developers must obtain either a geothermal lease or, absent a geothermal lease, a prospect permit from the GLO. If the developer will conduct seismic work on state-owned lands, they must also obtain a Seismic Permit from the GLO. Regardless of who owns of the surface rights and mineral rights, a developer is required to obtain a drilling permit from the Railroad Commission of Texas (RRC) before conducting any exploration drilling.
For geothermal development drilling operations, developers must obtain a Drilling Permit from the RRC for exploratory wells, commercial drilling operations, geothermal wells, and co-production wells. If the proposed well is located in a Texas Groundwater Conservation District, then special procedures or restrictions may apply. Developers may be required to obtain special permission for wells which will not comply with Texas spacing and well density rules in 16 TAC 3.
For geothermal operations that include the injection and removal of fluids, developers must obtain an Underground Injection Control (UIC) Permit from the RRC in order to construct and operate geothermal injection wells. RRC regulations and application procedures vary depending on the class of injection well, so developers should contact the RRC to determine which class of well is necessary for their project.
Developers must comply with Energy Facility Registration requirements through the PUCT if they qualify as a ‘Power Generation Company’ or a ‘Self-Generator’ under PUCT Substantive Rule 25.109. Any developer who owns an electric generating facility rated at one megawatt or more and generates electricity that is not intended to be sold at wholesale must register as a self-generator. Any developer who owns an electric generating facility rated at one megawatt or more, does not own transmission or distribution facilities, and generates electricity that is intended to be sold at wholesale must register as a power generation company.
Developers of geothermal resources may choose to obtain approval from the PUCT to participate in Texas’ Renewable Energy Credit Generator program. Following approval, the Electricity Reliability Council of Texas (ERCOT) administers the program in ERCOT and non-ERCOT areas of Texas. Participating in the Renewable Energy Credit (REC) program allows power generating companies to buy and sell RECs.
Developers must obtain a Certificate of Convenience and Necessity from the PUCT before providing service to the public. PURA 37.051(a). A certificate, or certificate amendment, is required for a new generating unit – a new electric generating unit constructed, owned, or operated by a bundled electric utility. A CCN is only required if the power producer is a public utility and a “retail electric utility” as defined in PUCT Sub. Rule 25.101.
Where the geothermal facility requires the use of water for ancillary purposes involved in geothermal development projects (cooling water, dust suppression, etc.), developers will likely need to obtain water through municipal or governmental supplies, private lease supplies, a temporary water use permit, or a new or amended water right.
Federal Regulations and Permits for Geothermal Development
Initially, geothermal developers need to ensure that the applicable Land Use Plan (i.e., Resource Management Plan (RMP)) allows for geothermal exploration and development projects. In order to conduct certain exploration activities, developers need permission from the Bureau of Land Management (BLM) or United States Forest Service (USFS). Exploration activities may require review under the National Environmental Policy Act (NEPA). Whether nominated by the BLM or by a developer, eventually developers need to obtain a Lease for Geothermal Resources (Form 3200-024a) overlying the land for any activities beyond geothermal exploration covered under a Notice of Intent to Conduct Geothermal Resource Exploration Operations (Form 3200-009) (NOI).
For ancillary activities related to development and not covered under a geothermal lease, developers may need to obtain a right-of-way (ROW) over federal land from the applicable surface land management agency. Geothermal development operations, including drilling, require an approved Geothermal Drilling Permit (Form 3260-002) (GDP) and typically an approved Plan of Operations (POO) from the BLM, which will also require NEPA review. In order to produce the geothermal resources and convert the resource to marketable electricity, developers need an approved Plan of Utilization (POU) for the construction of a power plant and related activities. Finally, the developer must plug and abandon geothermal wells that are no longer in use or demonstrated to be potentially useful, if directed to do so by the BLM.
Land Use Planning
Geothermal projects on federal land must be consistent with the applicable Land Use Plan (LUP). Most projects on federal land will be subject to the administration of either the BLM or the USFS. In 2008, the BLM and USFS, in cooperation with the United States Department of Energy (DOE), issued a Record of Decision (ROD) to amend RMPs for geothermal leasing in the western United States. The ROD amended 114 BLM land use plans in the 11 western states and Alaska by using a Programmatic Geothermal Environmental Impact Statement (PGEIS). Geothermal projects sited within the RMP areas affected by the PGEIS will not require a revision or an amendment. Geothermal projects sited outside of the RMP areas affected by the PGEIS may require an amendment to the applicable LUP/RMP.
Generally, developers will obtain a Notice of Intent to Conduct Geothermal Resource Exploration Operations (Form 3200-009) (NOI) on federal lands from the BLM. Exploration activities that “ordinarily lead to no significant disturbance of federal lands, resources, or improvements” 43 CFR 3200.1 qualify as “Casual Use” activities and do not technically require a permit. CU geothermal exploration activities generally include the use of all-terrain vehicles, two-meter probe surveys, magnetotelluric surveys, gravity surveys, geochemical surveys, archaeological surveys, and water sampling. In practice however, developers typically submit an NOI even for CU exploration activities. If the lands are managed by the USFS and not covered under a geothermal lease, developers must obtain an Exploration Permit directly from the USFS. If managed by the USFS but already subject to a geothermal lease, developers will go through the NOI process with the BLM. An approved NOI is tantamount to a permit to explore. In addition to CU exploration activities, an NOI can also allow for seismic surveys, electromagnetic surveys, and the drilling of temperature gradient wells. 43 CFR 3200.1. The aforementioned more invasive exploration activities can still bypass an otherwise more lengthy NEPA review by way of a Categorical Exclusion (CX). 43 CFR 3250. A CX is only applicable to drilling temperature gradient wells so long as there is no new associated well pad or access road construction. Any additional drilling beyond a temperature gradient well required to confirm the existence of geothermal resources will require an approved Geothermal Drilling Permit (Form 3260-002) (GDP). GDPs are not eligible for CX classification for purposes of NEPA review, likely requiring either an Environmental Assessment (EA) or Determination of NEPA Adequacy (DNA). Generally, a DNA will only suffice for subsequent GDP applications, where the original EA contemplated more wells than the amount proposed. Upon completion of exploration operations, if the BLM approved a NOI, the developer must send the BLM a complete and signed Notice of Completion of Geothermal Resource Exploration Operations (Form 3200-010). 43 CFR 3253.11.
In order to obtain federal geothermal mineral rights, developers must obtain a Geothermal Lease from the BLM. A Geothermal Lease conveys the exclusive right to drill for, extract, produce, remove, utilize, sell, and dispose of all geothermal resources in the lands subject to the lease. Lease for Geothermal Resources (Form 3200-024a).
Geothermal resources include:
- All products of geothermal processes, including indigenous steam, hot water, and hot brines;
- Steam and other gases, hot water, and hot brines resulting from water, gas, or other fluids artificially introduced into geothermal formations;
- Heat or other associated energy found in geothermal formations; and
- Any byproducts.
Given the rights conveyed and the applicable definition of “geothermal resources,” developers do not need to obtain a state water right related to the extraction of hot water and brines that are part of the geothermal resource/formation. The right to extract water, brines, and fluids for the purposes of geothermal development is inherent in the rights conveyed under a federal geothermal lease. If the project lands are available for lease, the BLM will hold an oral competitive auction and the lands will be offered to the highest qualified bidder. If no one bids on the leases in the competitive auction, developers may obtain a lease through a non-competitive process.
If the project is located on tribal lands, developers will negotiate with the appropriate tribe for a lease, which must be approved by the Bureau of Indian Affairs (BIA).
Issuing a Geothermal Lease constitutes a “major federal action” that triggers NEPA review. However, the previously discussed PGEIS allows for the issuance of geothermal leases without additional NEPA review by way of a Determination of NEPA Adequacy (DNA) tiered to the environmental review conducted for the amended RMP. For lands not within the 114 RMPs covered by the PGEIS, the BLM must conduct a NEPA review prior to issuing or making lands available for geothermal leasing.
Rights of Way
If federal land is required for ancillary activities related to development and is not covered by the geothermal lease, developers must obtain ROW access from the BLM or other federal agency. Ancillary activities may include transmission lines, roads, and other access. If the aforementioned activities are on USFS managed surface land, developers must obtain a special use authorization from the USFS. Similarly, for ancillary activities on Bureau of Reclamation (BOR) managed land, developers must obtain a Use Authorization from the BOR.
Well Field Development
In order to conduct drilling operations on federal land, developers must obtain an approved Geothermal Drilling Permit (Form 3260-002) (GDP) and POO from the BLM. Title 43 CFR 3261 Drilling Operations: Getting a Permit. If another federal agency manages the surface of the lease, that agency will be involved in the application review process. GDPs require NEPA review, either in the form of a DNA, EA, or Environmental Impact Statement (EIS). Generally, a DNA will only suffice for subsequent GDP applications, where the original EA or EIS contemplated more wells than the amount proposed.
In order to produce the geothermal resources and convert them to marketable electricity, developers need an approved POU for the construction of a power plant and related activities. A POU involves a Utilization Plan, Facility Construction Permit 43 CFR 3272, Site License 43 CFR 3273, and Commercial Use Permit 43 CFR 3274. Developers must participate in an application coordination meeting, which may be combined with the required on-site visit. Developers must complete the environmental review process under NEPA before the Site License and Facility Construction Permit will be approved by the BLM. After construction of the power plant, developers must obtain the Commercial Use Permit prior to commencing commercial operations under a federal lease, a federal unit, or a utilization facility. 43 CFR 3274.10.
Developers may choose to seek status as a Qualifying Facility (QF) under the Public Utilities Regulatory Act (PURPA). QF status provides certain benefits under the law. For example, QFs have the right to sell energy or capacity to a utility, the right to purchase certain services from utilities, and relief from certain regulatory burdens.
Developers may qualify as Exempt Wholesale Generators if they are independent power producers that exclusively sell energy to wholesale customers and complete the self-certification process overseen by the Federal Energy Regulatory Commission (FERC). Obtaining EWG status can exempt the generator from certain reporting and accounting regulations under the Energy Policy Act of 2005 and allows the generator to sell power at market-based rates.
A geothermal lessee/operator is required to promptly plug and abandon geothermal wells that are no longer in use or demonstrated to be potentially useful. Title 43 CFR 3263 Well Abandonment. The BLM may verbally order the operator to abandon a well or the operator may request verbal approval from the BLM to plug a well. In either case, the operator must submit a well plugging or abandonment report upon completion. 43 CFR § 3263.11