Alaska plans geothermal leasing at volcano

ANCHORAGE, Alaska (Reuters) - In Alaska, a state rich in oil and gas, officials are seeking to stir interest in a different source of underground energy -- the geothermal heat simmering beneath the volcanoes and hot springs that dot the landscape that could power thousands of homes.

The state Division of Oil and Gas is preparing a lease sale that would allow companies to explore the geothermal resources beneath Mount Spurr, a snowcapped 11,070-foot volcano along Cook Inlet that could potentially send power to thousands of homes 75 miles to the east in Anchorage.

Officials hope to hold the sale in August, said Kevin Banks, acting director of the state Division of Oil and Gas. Offering about 36,000 acres on the south flank of the volcano, it would be the first such lease sale in 22 years. Banks said he hopes it won't be the last.

"I would like to make a geothermal leasing program a regular part of what we do," he said Tuesday.

The division is also considering offering a separate exploration license that would allow geothermal investigations at another Cook Inlet volcano, 4,134-foot Augustine Volcano, located 171 miles southwest of Anchorage.

Both volcanoes hold the potential to produce something more for Anchorage and other regional communities than the ash they have belched over the past years, Banks said.

"The reasons Mount Spurr and Augustine are attractive is that they're sitting right here in the middle of the market, the biggest market in the state," he said.

Drawbacks are geologic. Like Alaska's numerous other volcanoes, Mount Spurr, which last erupted in 1992, and the more explosive Augustine Volcano, which last erupted in 2006, have heat sources that are deep inside thick layers of earth, he said. That is unlike the easily tapped, widely spread geothermal heat of places like Iceland, he said.

"You can about fall down anywhere in Iceland and find hot water," he said.

In contrast, explorers at Mount Spurr and other Alaska volcanoes will have to look to find groundwater making contact with the heat source, he said. "Here, you have the heat source located in the throat of the volcano," he said.

As for Augustine, which is its own uninhabited and frequently erupting island, there are special safety challenges. "Augustine is going to be cropping bombs on whatever you build there," Banks said.

Past attempts at harnessing geothermal heat at Mount Spurr were cut short by poor economics of alternative energy projects, and no real development occurred at the volcano, Banks said. But it appears that the economic picture has changed, he said. "There seems to be enough interest this time that we'll see activity on site," he said.

In recent years, experts have warmed to the overall geothermal potential in Alaska, which is perched atop the Pacific Rim of Fire and crossed by various networks of hot springs.

There have long been proposals to tap geothermal energy from local volcanoes to power utilities and seafood processors on the neighboring Aleutian islands of Unalaska and Akutan. Each of those projects, like development at Mount Spurr, could produce tens or hundreds of megawatts of electrical power, potentially serving entire communities, according to the Alaska Energy Authority, a state agency.

So far, Alaska's most successful geothermal venture has been at Chena Hot Springs, a resort outside of Fairbanks. There, all operations -- including the devices that chill an outdoor "ice museum" during the around-the-clock daylight of summer -- are fueled by the same underground energy that heats the swimming pools.

(Editing by Christian Wiessner)