History of Geothermal Leasing Near Crater Lake NP, 1992

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Report of the Sec. of the Interior under Sec. 7 of Public Law 100-443 on the Presence or Absence of Significant Thermal Features Within Crater Lake National Park, 1992

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V. Appendices

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D. History of Geothermal Leasing Near Crater Lake National Park by the Bureau of Land Management

* IF CONCLUSION IS REACHED THAT THE HYDROTHERMAL SYSTEMS ARE CONNECTED, THEN PROCEED TO SECTIONS VI, VII, and VIII. Attachment 2-1

Geothermal Leasing History and Chronology For

Geothermal Units Mazama I and II

in the Winema National Forest

Adjacent to Crater Lake National Park Oregon

Prepared by the Bureau of Land Management

Oregon State Office. Division of Mineral Resources

Mount Mazama, the collapsed volcano which contains Crater Lake, is often cited in the background and setting descriptions of Crater Lake National Park (CLNP). Mount Mazama is an irregular, east-west elongated, ellipsoidal volcano covering about 100 square miles entirely within CLNP. It is a shield and stratovolcano complex (with certain exceptions) that collapsed from a major eruption some 6800 years ago and created the spectacular Crater Lake caldera. CLNP occupies a roughly rectangular tract that includes additional smaller volcanos and covers about 286 square miles.

Its rocks indicate a history of active volcanism covering more than 400,000 years with the most recent volcanic episode estimated to be about 4,000 years before present. The tectonic/volcanic forces that operated throughout that period still operate today. There are, however, no known hot springs associated with Mount Mazama.

Geologic literature relating to the Mount Mazama area contains information that make it and adjacent lands, an attractive geothermal resource target. Since geothermal leasing is not possible within National Parks, adjoining lands have attracted interest in exploring for geothermal resources.

Lands adjoining Mount Mazama were largely ignored by the geothermal community in the initial surge of leasing from 1974-1980. In the spring and summer of 1982, California Energy Company Inc. (CECI) started to apply for leases on National Forest lands that border the Park. These National Forest lands have been harvested for timber and contain a well developed road network, log landings and clearings that could facilitate access to drill rigs and cleared drill sites.

Additional lease applications in National Forests nearby CLNP continued until the summer of 1985. Total applications reached 110 and covered about 213,199 acres. Presently (5/91) only 46 leases remain covering about 76,516 acres. Leasing interest northwest of CLNP in Douglas and Jackson Counties started in the spring of 1982. The biggest push came in January 1984 when CECI applied for a lease block in the Rogue River National Forest. By the summer of -1985, there were 32 applications - 25 in the Rogue and 7 in the Umpqua National Forests covering 59,942 acres.

From this activity there are now (5/91) only 15 applications pending in the Rogue NF covering 25,712 acres. The Forest Service has never consented to leasing in this area and no leases have been issued.

The two main lease application blocks were in the Winema National Forest on the south and east side of CLNP covering about 85,475 acres. These blocks were formed into Geothermal Leasing Units - called Mazama I and Mazama II. Leases were issued beginning at the end of 1983 through the summer 1985, and contained a "contingent right" stipulation. The stipulation requires that each phase of exploration and development be analyzed and approved by the BLM Authorized Officer.

The Geothermal Leasing Unit rules are governed by the Code of Federal Regulations (43 CFR 3280) and are set up in the interest of cooperative exploration and conservation of the resource. Unit formation and agreements provide environmental benefits, bringing an element of harmony, order and cooperation among otherwise competing interests.

A Geothermal Leasing Unit is a block of land whose size and shape are based on geology and development potential. The Unit is formed by one or a group of lessees, and possibly non-lessees who have land or mineral rights in the unit area. The unit members enter into an agreement with the Bureau of Land Management on a plan of exploration with clear targets and guidelines. After discovery, production and development issues are addressed.

The Unit members agree to share costs for a plan of diligent exploration which is more rigorous than that normally required of geothermal lessees. In return for the rigorous unit commitments, the acreage within the unit is excluded from the member's statewide leasing acreage limitation of 51,200 acres. CECI is the only federal lessee in the two units (Mazama I & II), though the units contained both private and state lands.

At this writing, (5/91) the two units have about 76,516 acres under lease. Due to the uncertainties regarding the future possibility of lease development arising from the Congressional classification of Crater Lake as a Significant Thermal Feature, (P.L. 100-443) the Bureau of Land Management has suspended the leases and all unit obligations in Mazama I and II units.

Two major environmental reviews were completed addressing CECI's Plan of Exploration and proposed revisions to the plan. Both involved cooperative efforts between the Bureau of Land Management, the Forest Service, and the National Park Service, including extensive public participation and review. The reviews resulted in the creation of extensive reports, the involvement and consultation of agency and outside experts, and the development of significant protective stipulations for National Park and National Forest values, as well as public safety and conservation of potential geothermal resources. Both required the commitment of considerable workforce, budget and management attention.

Decisions arising from one of these reviews were challenged by several local and national public interest organizations. Appeal documents were presented to the Interior Board of Appeals (IBLA), and after an extensive eighteen month review, the Bureau of Land Management's decisions were affirmed. Subsequent petitions for reconsideration and a stay of action were dismissed. The integrity and quality of the Government's environmental review process stood the rigorous test and was sustained. No environmental damage of any consequence can be cited as a result of the exploratory work performed since 1984.

In addition to the required environmental work performed in compliance with the National Environmental Policy Act (NEPA) of 1964, the Bureau of Land Management decided to learn more about the noise level generated by drilling. To do this, it was necessary to learn about normal sound level within CLNP. There were no previous sound studies within CLNP to use as a baseline.

Between 1985 and 1988, Bureau of Land Management staff took sound measurements at eight locations selected by CLNP officials within the Park. These were taken during times when both day and night drilling operations were ongoing, and when no drilling took place. While a final report has not been completed, preliminary data indicates that drilling sounds cannot be heard above the normal vehicular, airplane and visitor noise in the park.

In August 1988 CECI addressed the noise issue by simulating the sound of a 120 MW geothermal power plant from the MZ I-11A drill site about a half mile from the CLNP boundary. They used a powerful amplifier and large speakers to broadcast the sound and publicized the test with invitations to the media. The sound was not audible at the nearby Park boundary nor from other locations within the Park. In 1989, CECI began air monitoring work as well.

The Federal agencies involved in or interfacing with leasing activity have cooperatively exhibited a very high level of environmental responsibility and conservative decision making throughout the process. This kind of performance preceded and was independent of the Congressional classification of CLNP as a Significant Thermal Feature.

The Congressional classification of Crater Lake as a Significant Thermal Feature occurred in the midst of an approved exploration plan after about five years of expenditure and investment by the lessee. Continuance of the Significant Thermal Feature classification may impose regulatory and operational delays and costs that could effectively render geothermal leases marginally viable or inoperable and could deter or prevent future development of the geothermal resources nearby the Park.

The following chronology includes milestones and discrete steps in the leasing activity that occurred on Geothermal Leasing Units Mazama I & II (Klamath County):

MAZAMA I (MZ I): No. U-410R L 001G (East of CLNP)
MAZAMA II (MZ II): No. U-410R L 002G (South of CLNP)
Nov. 23, 1983: Unit Applications received by BLM with all supporting information, maps, plans, and geologic report.
Dec. 19, 1983: BLM approves unit agreement after review, coordination, discussion and revision.
Jan. 1, 1984: Agreement and leases take effect MZ I covers a logical unit of 80,690.97 acres, this is composed of: Federal Land 68,832.49 acres; state owned land 2,500.22 acres; and privately owned land 9,358.26 acres. 38 leases cover about 68,284.65 acres. MZ II covers a logical unit of 18,682.66 acres. 12 leases cover 16,642.66 acres.
Mar. 1, 1984: BLM receives a Plan Of Exploration (POE) from CECI and begins work on an Environmental Analysis (EA). The plan calls for drilling 24 slim core temperature gradient drill holes about 4,000' deep, with 4-9 holes to be drilled the first field season.
Mar. 8, 1984: BLM requests comments from public on POE.
April 1, 1984: Suspension of leases in unit takes effect. Suspension due to delays required to perform environmental approval work.
April 2, 1984: Geothermal Drilling Permit (GDP) applications filed for 6 sites in MZ I and 3 sites in MZ II.
May 11, 1984: EA available for public review.
July 3, 1984: Geothermal Exploration Permit approved - Radon/Mercury sampling.
July 20, 1984: Public inspection of drill sites and Crater Lake N.P.
Nov. 9, 1984: BLM issued a decision suspending leases effective April 1, 1984.
Feb. 28, 1985: Forest Service provides concurrence for approval of a modified Plan of Exploration.
April 15, 1985: CECI submitted GDP for drill holes MZ I-11A and MZ II-1.
July 31, 1985: BLM decision issued, suspension of operations on leases in unit is rescinded, effective on date of decision.
July 1985: CECI informally notified BLM that planned drilling (of drill holes in MZ I and MZ II) would be postponed until Aug. 1985.
May 12, 1986: CECI informed BLM that it is relinquishing four leases at the northern end of the unit totalling 8,411.92 acres, so that the remaining Federal lease acreage in Mazama I is 59,872.73 acres. State and private land at the southern end of the unit were also dropped from the unit. BLM acknowledges the unit contraction.
May 27, 1986: CECI submitted an amended unit agreement commensurate with its now reduced acreage in MZ I.
June 3, 1986: BLM accepts the Mazama I amendment (referred to above) which contains specified escalating dollars per acre obligations.
Aug. 7, 1986: CECI submitted GDP application for Sundry Notice for drill hole MZ I-11A.
Aug. 15, 1986: CECI withdraws Sundry Notice.
Aug. 21, 1986: CECI Submitted an amended Sundry Notices (including one for drill hole MZ II-1) covering the size and length of surface casing.
Aug. 29, 1986: BLM approves the Sundry Notice for drill hole NZ I-11A, but postpones action on drill hole MZ II-1.
Oct. 3, 1986: CECI submits Emergency Contingency Plans for both Newberry and Mazama core hole drilling - safety/emergency procedures and H2S contingency plans.
Nov. 3, 1986: CECI submitted Sundry Notice to temporarily abandon drill hole MZ I-11A.
Nov. 4, 1986: GDP for MZ II-1 approved.
Nov. 5, 1986: Drilling of MZ II-1 begins.
Nov. 10, 1986: BLM approved abandonment Sundry Notice for MZ I-IIA.
Nov. 12 1986: CECI submitted Sundry Notice requesting: 1- deepening drill hole MZ I-11A from 4000' to 5500' and 2- drilling without returns. For MZ II-1, drilling reached TD @ 485'.
Dec. 1986: BLM began preparation of a supplemental EA for modifying the approved GDPs.
Jan. 2, 1987: Approved Sundry Notice for temporary abandonment of drill hole MZ II-1, TD-485'.
July 1, 1987: BLM signed a Decision Record approving 1- modifications of the GDPs and 2-permission to drill on previously disturbed sites.
July 28, 1987: Sierra Club and others filed appeal to IBLA of a July 1, 1987 Oregon State Office decision to permit continued temperature gradient drilling, deepening from 4,000' to 5500' and drilling w/o circulation) Case to be known as IBLA 87-735 Appeal of Sierra Club Inc. et. al. (107 IBLA 96).
Aug. 25, 28, and Oct. 29, 1987: CECI requested suspension of lease and unit obligations due to environmental events and litigation connected to drilling.
Nov. 12, 1987: BLM granted suspension of lease and unit obligations effective
Nov. 1, 1986 (the first day of the month in which operations actually ceased.
Aug. 4, 1988: CECI invites the public to witness the simulated sounds of a 120 MW geothermal power plant broadcast from the MZ I-11A site, a halfmile from CLNP boundary.
Sept 22, 1988: Geothermal Steam Act Amendments of 1988 (P.L. 100-443) signed into law; Crater Lake NP classified as a Significant Thermal Feature.
Feb. 1, 1989: IBLA affirmed BLM's decision that no EIS is required and also affirmed BLM's approval of the amendments to CECI's drilling permits (IBLA No. 87-735/107 IBLA 96).
Mar. 24, 1989: BLM rescinded a previous decision (of Nov.12, 1987) suspending CECI's leasing and unit obligations for Mazama I and Mazama II Unit Agreements). Effective May 1, 1989, CECI may resume full enjoyment of its leasing rights and begin fulfillment of its leasing and unit obligations.
April 3, 1989: Sierra Club, Oregon Natural Resources Council, & National Parks and Conservation Association filed with IBLA a petition for reconsideration (of the IBLA 87-735/107 IBLA 96 decision) and a motion for a stay, pending the Board's decision on the petition for reconsideration.
April 27, 1989: Sundry Notice for revised drilling in the Winema NF is approved and sent to CECI.
July 7, 1989: CECI reentered drill hole MZ I-1A.
July 31, 1989: IBLA denied Sierra Club et. al. (April 3) petition for reconsideration and request for a stay on IBLA 87-735 (107 IBLA 96).
Aug. 5, 1989: Drill hole MZ I-11A reached Total Depth (TD); tubing placed to 4670' depth.
Aug. 14, 1989: Re-entry drilling began on MZ II-1.
Aug. 16, 1989: ONRC-Sierra Club appeals decision to withhold some of the Proprietary and Confidential Material.
Sept. 7, 1989: MZ II-1 reached TD @ 2844', well was set up and left for temperature observation.
Sept. 11, 1989: CECI spudded drill hole MZ I-11B.
Sept. 11, 1989: Two Geothermal Sundry Notices approved - Air monitoring stations (footings poured, but stations not yet erected).
Sept 26, 1989: Drill hole MZ I-lB plugged and abandoned @ 270' due to inability to maintain circulation.
Sept. 29, 1989: CECI sent expenditure period and exploration work status report.
Oct. 4, 1989: BLM acknowledged significant exploration expenditures incurred.
Jan. 1990: CECI informally notified BLM of preliminary plans to drill two more holes under existing EA. BLM solicited an opinion from the Sierra Club.
Feb. 16 1990: Sierra Club objected to approving two holes beyond drill hole MZ I-11B.
Mar. 26, 1990: CECI submitted Sundry Notice on MZ II-1 to allow for commencement of drilling operation, planned to begin on June 1, 1990 to a depth of 5500'.
April 24, 1990: MZ II-1 Sundry Notice approved. It allowed drilling to 4830' with drilling below that subject to additional approval.
May 1, 1990: BLM approved Designation of Operator from California Energy Co. to CE Exploration Co.
June 8, 1990: Geothermal Drilling Permit MZ I-1 approved.
Aug. 17, 1990: BLM received request from CE Exploration for suspension and/or extension of unit drilling obligations due to lack of market and extreme fire danger conditions.
Nov. 2, 1990: BLM responded to request for suspension/extension of unit drilling obligations and granted a conditional extension.
Nov. 16, 1990: CE Exploration submitted a unit obligations report.
Feb. 13, 1991: BLM Director Jamison directed that the leases in the Mazama units be suspended to allow time for consideration of the pending report on presence or absence of significant thermal features at Crater Lake NP.
Feb. 20, 1991: BLM issued a formal Decision to the lessee on suspending the Mazama leases effective Feb. 13, 1991.