Geothermal sites at Gerlach

A Boise company hopes to develop a 27-megawatt plant to generate electricity from geothermal sources near Gerlach.

U.S. Geothermal said it expects to spend $75 million to $85 million on the facility, along with another $10 million to upgrade electric transmission lines. No contracts are in place with buyers of electricity produced at the plant, U.S. Geothermal Inc. said last week, although it's talking with potential customers.

The company has a $16.6 million deal to acquire an existing 3.6-megawatt geothermal plant in the Gerlach area along with about 44 square miles of geothermal leases. The plant and the leases will be purchased from Empire Geothermal Power LLC and Michael B. Stewart of Reno.

U.S. Geothermal said it made a first payment of $11.3 million last week for geothermal leases on 18,000 acres about 28 square miles in northern Washoe County.

It will pay another $5.32 million for the power plant and another batch of leases later this year.

The existing geothermal plant has been operating since 1987 in the San Emidio Desert, just south of Empire and Gerlach and about 100 miles north of Reno. The power is sold to Sierra Pacific Power under a contract that runs through 2017.

The plant originally was built to provide power to an onion and garlic dehydration facility operated by Empire Farms.

Nearly 23,000 acres of geothermal leases surround the plant, and U.S. Geothermal expects to begin drilling wells this year to expand the existing facility to 27 megawatts. (That's enough electricity to serve approximately 16,200 homes in northern Nevada.)

The company said commercial operation of the expanded plant is projected to begin in late 2010 or early 2011, assuming that permits, financing and transmission questions can be resolved.

Also included in the deal with Empire Geothermal and Stewart are geothermal leases on about 5,400 acres six miles north of Gerlach.

Daniel Kunz, president and chief executive officer of U.S. Geothermal, noted that the properties are close to the California electricity market.

The Gerlach plant would be the second for U.S. Geothermal, which in January began commercial operation of a 10-megawatt geo-thermal facility about 200 miles southeast of Boise. It's also studying development of a geothermal facility in eastern Oregon, about 90 miles northwest of Boise.

The publicly held company reported a loss of $3.2 million for the nine months ended Dec. 31. Until it began operation of the Idaho plant this year, it hadn't posted any operating income since it was launched in 2002.