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Governor Dunleavy Introduces Bills to Increase Access to Geothermal Resources and Reduce Barriers for Contractors to Engage in Large Scale Projects

Feb 15, 2023

Today Governor Mike Dunleavy introduced bills to increase access to Alaska’s geothermal resources and to cut red tape related to a specific insurance requirement that hinders large scale infrastructure projects.

HB74/SB69 removes obstacles for exploration and development of Alaska’s geothermal resources. Technological advances have made lower-temperature geothermal energy commercially viable, and there are non-commercial uses of heat energy such as heat pumps that rely on shallow subsurface pipes to heat or cool residential structures. The bill updates the definition of “geothermal resources” to allow for modern uses.

The bill also increases the time available for exploration from three years to five years. The bill changes the current permit system to an exploration license similar to oil and gas exploration. The proposed five-year exploration license term allows explorers more time to conduct background research, acquire any related permits, and perform the field work necessary to locate a resource and produce the data necessary to convert a license to a lease.

“Geothermal resources could be an important component of a sustainable energy mix,” said Governor Mike Dunleavy. “Our location on the Pacific Ring of Fire puts Alaska in a prime position to benefit from geothermal energy. This bill makes geothermal exploration more viable for private industry.”

HB74/SB69 also increases the acreage limit for geothermal projects up to 100,000 acres, nearly double the current limit of 51,200 acres. The bill would also allow the Alaska Oil and Gas Conservation Commission the option to pursue state permitting primacy over Class V geothermal wells from the U.S. Environmental Protection Agency in order to provide more expeditious responses to local concerns and projects.

HB75/SB70 removes an unnecessary requirement that prohibits adding additional insureds to Owner Controlled Insurance Programs (OCIPs). Currently, the Division of Insurance is required to enforce certain limitations on OCIPs on major construction projects, including a moratorium on policies naming one or more persons as additional insureds. This current limitation forces an owner or contractor to name all potential contractors and subcontractors at the initiation of a project. Projects such as the Trans-Alaska Pipeline System are not economically viable unless owners and contractors can enter into OCIPs that allow for additional insureds. This bill removes the limitation on additional insureds and creates economic incentives for owners and contractors to engage in large scale contracts that will assist Alaska’s economy.