A Slowdown on Geothermal? Not Where DBED's Concerned

posted in: January 1991 | 0

What is the official policy of the state of Hawai`i on the development of geothermal energy?

On June 25, 1990, Governor John Waihe`e, after half a year of hints and intimations that he was rethinking his position on geothermal energy development, publicly cooled toward the idea of exporting geothermally generated electricity from the Big Island to O`ahu by means of an undersea cable and overland power lines. According to the Honolulu Star-Bulletin, Waihe`e said that the “costs and benefits” of the underwater cable “need to be analyzed in a lot better detail.”

“One of the key questions is whether the resource even exists,” the governor was reported to have said.

Compare that to the statement of the then-director of the Department of Business and Economic Development a mere six weeks later. To meet Big Island demand, “we plan to use public funds to verify and characterize the geothermal resource on the Island of Hawai`i,” former DBED Director Roger A. Ulveling said in a letter to a Big Island resident. “Concurrently, we will continue to support planning for large-scale geothermal development.”

Whatever the public pronouncements, actual state policy may be found in the workaday activities of state government — more specifically, in the day-to-day undertakings of the branch of state government that has assumed the lead role in geothermal energy development: the Department of Business and Economic Development. And there, no slowdown in the effort to develop large-scale geothermal energy can be discerned. “Planning for large-scale geothermal development” — to use Ulveling’s words — does indeed continue apace.

Full Steam Ahead

To list but a few of the undertakings in 1990: DBED renewed the contract of a Washington lobbying firm, Cassidy & Associates, to push for congressional approval of $15 million for what Cassidy & Associates labeled a “Geothermal Resource Verification and Characterization Program.” This was described by the governor, in a book published under DBED’s insignia, as “the final step toward commercialization” of geothermal energy. In a nutshell (and in DBED’s dreams), the program calls for the federal government to contribute $15 million, the state on the order of $10 million, and private industry the remainder, in a tri-partite, $50 million cooperative effort to size up geothermal. (The book, much like the 1989 edition of it, was widely circulated on Capitol Hill. Both were closely guarded secrets in Hawai`i, however.) In October, Congress appropriated $5 million as the first of three equal annual installments in support of the geothermal verification program.

Also, DBED worked as closely as it was allowed to with Hawaiian Electric Company in HECO’s selection of and negotiations with a consortium of private investors to develop a geothermal generating capacity on the Big Island, to lay the undersea cable, and to construct the overland transmission lines needed to provide 500 megawatts of baseload capacity to O`ahu. (There was a keen appreciation on DBED’s part that this project did not jibe well with the governor’s professed intention to rethink the need for export of geothermal energy. In a January 25, 1990, memo to Ulveling reporting what was discussed at a meeting that day of the geothermal steering committee, Deputy DBED Director Leslie S. Matsubara reported that the committee’s “biggest concern focused on how the announcement” from HECO of its selection of a winning bid “would impact on the governor’s assessment of geothermal. While the focus or emphasis is on developing the Big Island’s initial plants… the announcement will open the ‘Big Project’ up once again.” Matsubara need not have worried. Newspaper reports of HECO’s announcement did not point out the contradiction.)

Again in 1990, DBED reorganized its Energy Division and gave geothermal energy its own office. Through the services of its public relations consultant, Hill & Knowlton/Communications Pacific, it brought forth a booklet touting geothermal energy as a necessary and key element in the state’s energy future.

(DBED also assumed a new venue and became the Department of Business, Economic Development and Tourism. It eschews the resulting acronym, DBEDT, for reasons it has not fully explained but which empathetic readers may nonetheless understand.)

DBED continued in 1990 to work with a consultant under $1.25 million contract to prepare a “Hawai`i Geothermal/Cable Project Master Development Plan,” including preferred and alternative transmission line routes and an Environmental Impact Statement. Publication of that plan has been delayed. However, the consultant, ERC Environmental and Energy Services Co., has said Chapter 3 of the plan will include “a development scenario” as soon as ERCE obtains “input from Stone & Webster and Chapman consulting services.” Those are the consultants selected by Hawaiian Electric to review the private investor proposals for commercial development and export of geothermal energy to O`ahu.

A Slowdown Perforce

To be sure, the development of geothermal energy is not now as far along now as DBED and its other promoters were hoping it would be at this time last year. In December 1989, the idea was to have a preliminary master development plan completed by March 1990, with a final plan by August 1990. Preparation of a programmatic Environmental Impact Statement would start in May 1990, with completion scheduled for February 1991.

ERCE, as the consultant for the master development plan calls itself, was barely out of the starting gate when trouble began. In announcements publicizing meetings preparatory to plan development, ERCE proclaimed: “Consulting with the public is a priority item in the planning process. Both the State and ERCE are committed to hearing from members of the public, community organizations, government officials, and interest groups about ways to address potential concerns.”

Hear they did — and more than they wanted. The public that turned out for the first meetings was not the public ERCE and the state had in mind. The frustration of DBED officials is evident in a November 7, 1989 memo to Ulveling from Maurice H. Kaya, head of DBED’s Energy Division. “The Master Planning public forums continue to be saddled with questions over the ‘need’ for geothermal and not ‘how’ it is to occur.”

This did not escape the consultants’ notice, either. In a memo to Kaya dated November 14, 1989 from Frank Kingery of ERCE and Steve Okino of Hill & Knowlton/Communications Pacific (working with ERCE on this project), Kaya’s concerns of a week earlier were repeated: “People want to discuss state energy policies and planning before talking about the master plan… Some parts of the community might perceive the master plan as a ‘front’ because the decision to develop has already been made.” The consultants concluded: “The master plan has become the lightning rod for debate over the state’s energy planning and policy.”

The state’s solution: Remove the lightning rod. Hearings scheduled by ERCE for January 1990, on transmission corridors, were canceled indefinitely.

Meetings continued, however — but now by invitation only, with the invitees to “focus group” discussions representing “the silent majority,” as the consultants phrased it in the November 14 memo: “Public meetings attract the vocal opposition. On geothermal issues, that opposition has been well organized. Those who support geothermal development have not been mobilized… While silent on this issue, however, these are the people who influence their communities, who hold significant political power, and who may be the majority of voters. Their viewpoints must be represented.”

Public involvement, ERCE said later, in a May report, was re-evaluated, and a “new planning group design was obtained. The intent of this smaller group design was to concentrate on issues pertinent to the master development plan by providing an environment for meaningful interaction between representatives of the community and the planning team” (emphasis added). By definition, if one opposed geothermal development, or even questioned the need for it, one could not possibly be representing any community interest.

A PR Offensive

In late January and early February, two pro-geothermal organizations announced their creation: The Hawai`i Island Geothermal Alliance and the Honolulu-based Pro-Geothermal Alliance. The former is made up of 10 business groups plus the Big Island Labor Alliance. The latter’s charter members are Hawaiian Electric, True Geothermal and Mid-Pacific Geothermal (which together operate the True/Mid-Pacific Venture operation in Puna), and the Campbell Estate, on whose land the True/Mid-Pacific operation sits.

The virtual simultaneous birth of these organizations — and its timing so close on the heels of ERCE’s identifying the need for them — may be coincidence. However, ERCE prepared in May a status report, recapping ERCE’s work in several areas, including one labeled “Community Involvement.”

“[C]ounsel was provided to the state on communications regarding energy policy issues and on dealing with the controversy generated by the Rainforest Action Network’s activities on the Big Island and on the Mainland. Research was conducted into potential third-party support for development of Hawai`i’s geothermal resources, and that data synthesized into recommendations presented to the Department of Business and Economic Development and the Office of the Governor.” (A subcontractor to ERCE in the contract for the Master Development Plan is Hill & Knowlton/Communications Pacific.)

A Questionable Resource

Ultimately, DBED is up against something more intractable than hearts hardened and minds closed (by DBED’s lights) to geothermal’s possibilities. Not even the best public relations firm can force steam out of a dry hole. The task of finding the hot spots and determining their potential is proving to be more difficult than DBED lets on.

The Scientific Observation Hole program is on the skids. The researchers have spent all the money allowed for in their contract with DBED, and rather than drilling four slim-bore observation wells, they have completed just one, with another under way. Moreover, criticisms have been raised that not enough information can be gleaned from these small-bore wells to make them worth doing in any case. The plan to drill any exploratory wells on Maui has been shelved indefinitely. And DBED seems to be looking with disfavor on the request of the researchers — at the Hawai`i Institute of Geophysics (a part of the University of Hawai`i) — to finance drilling of any more of this type of well. (The Italian consultants retained by the state have advised that the slim-bore holes are a waste of money — that full-scale wells are needed, even in the exploratory phase of the program.)

Further frustrating efforts to characterize the extent of the geothermal “resource,” as DBED calls it, is the reluctance of True/Mid-Pacific Geothermal Venture to share with the state any information on its wells. The state’s “Geothermal Resource Verification and Characterization Program” did not anticipate this. The private sector’s contributions were to be in-kind — not money for independent research, but knowledge gained from their own efforts to exploit the resource commercially.

Congress, as mentioned, did appropriate $5 million to assist the state’s exploratory drilling efforts. No firm decision has been made as yet on who will do the research, where the wells will be drilled, or whether they will be sized for observation only or for full-scale potential development.

At a cost of about $2 million a well, the federal money, combined with a roughly like amount that the Legislature has earmarked for geothermal exploration, will probably be sufficient for drilling five of the 25 or more wells that DBED has said would be necessary to learn enough about geothermal’s potential to allow commercial development to proceed with certainty.

Despite the uncertainties, DBED and its geothermal development allies continue to state that geothermal resources on the Big Island could supply up to 50 percent of the state’s energy needs — or roughly 500 megawatts of electrical generating capacity. This is a moderate statement only in comparison with the 1000 megawatt capacity forecasts DBED’s predecessor agency was making in the early 1980s.

At this writing, the only well known to be able to produce commercially usable power — to the tune of about 3 megawatts — is the notorious and now-closed HGP-Abbott well in Puna. True/Mid-Pacific claims to have hit pay dirt, but its well is as yet contributing nothing to the Big Island’s power grid.

Red Carpet Service

Actually, to deliver the equivalent of 500 megawatts of generating capacity to O`ahu, and to provide also for Big Island needs, as the state has said it is committed to doing, a total geothermal generating capacity of more than 600 megawatts is required: 500 megawatts for export, plus 50 megawatts for local consumption and another 50 megawatts to produce the energy and cover transmission line losses.

DBED may be enthusiastic about the prospects for this; Hawaiian Electric Industries — which, since 1987, wants to tiptoe out the business of generating power, leaving the risk and expense of development to others — also is enthusiastic about purchasing those megawatts. The difficulty lies in attracting investors willing to develop geothermal energy at a per-kilowatt-hour cost that compares competitively with the cost of conventional oil- or coal-fired power plants.

To this end, the state and the federal government paid together roughly $30 million to Hawaiian Electric and its subcontractors to demonstrate the feasibility of laying a deep-water transmission cable from the Big Island to O`ahu. The state has accelerated the permitting process for geothermal development and has also removed the possibility of time-consuming contested case hearings on the granting of those permits. As mentioned earlier, the Legislature has allowed geothermal exploration to occur outside the boundaries of designated geothermal resource subzones. DBED has engaged the services of a consulting firm (ERCE) to prepare a master development plan and a programmatic environmental impact statement — further reducing (by several millions of dollars) the preparatory work of private developers.

Not least, the governor himself has said that “the State must be receptive to ideas for public financial assistance” to geothermal energy developers. “The magnitude of the venture precludes significant direct funding by the State; however, there may be mechanisms for indirect financial support. My administration is willing to explore such mechanisms with those prospective developers … if we are satisfied the project cannot be accomplished without state support.”

But investors are more cautious. Negotiations between Hawaiian Electric and Kilauea Energy Partners, the investor consortium that responded most favorably to HECO’s 1989 request for proposals, ran into heavy sledding for a time and the overall geothermal development timetable has slipped by several months. In mid-December, however, HECO announced that talks were back on course.

Volume 1, Number 7 January 1991

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