Feb 21 - San Jose Mercury News

A thick, gray sky spits snow, but Lou Capuano's focus is on another, much warmer type of moisture: steam.

Here in The Geysers, the world's foremost geothermal energy zone, steam is a precious resource - and never more so than right now.

The high cost of oil and the state's growing appetite for renewable energy have brought Capuano to this remote part of Northern California 150 miles from San Jose. Part-owner of the recently reopened Bottle Rock Power Plant, which is one of nearly two dozen facilities turning steam into electricity in Lake and Sonoma counties, Capuano is drilling into Cobb Mountain to find more steam for his plant.

"Geothermal is really nothing (other) than mining," he said. "We mine heat out of the rock. The water is just the media that carries the heat from depth up to the surface."

As Capuano explains it, it's all rather simple. Steam, from two miles or so deep in the ground, flows through pipes to spin a turbine that generates electricity. Then the steam is cooled back to water and injected into the ground to make more steam.

His company, ThermaSource, which has grown from four to 150 employees in recent years, consults on geothermal projects and drills wells to reach the steam below. Capuano owns four drill rigs, capable of reaching 8,000 to 14,000 feet into the Earth, and operates two others. Converted from the oil-and-gas industry, each rig costs between $10 million and $20 million.

Each drill bit can weigh as much as 1,000 pounds and can cost as much as $50,000. Yet, in just 30 to 40 hours of use, it goes from brand new to useless, its metal teeth dulled by hard rock.

When there's not drilling going on, it's all very quiet _ except inside the well-insulated walls of the power plant where the huge turbine's whirl requires ear plugs, and in the condenser towers, where water flows on its way back underground.

On Bottle Rock's Francisco pad, an area where wells connect to pipelines, the only sound on this January morning was a subtle whistling. "That's the steam flowing through the lines _ singin', whooshing. It's just the velocity, the velocity roar," Capuano said.

It's music to the ears of others besides his.

"This is like Florence coming out of the Dark Ages," said Curt Robinson, executive director of the Geothermal Resources Council in Davis, Calif. "Anytime oil ticks up a dollar more a barrel, this becomes a more attractive form of energy."

Power has been generated from steam for decades, but the high price of oil and the growing demand for renewable energy in recent years has turned The Geysers into a busy place lately.

A visit to Bottle Rock offers an inside look at this geothermal boom. The plant was approved in 1980 and began producing power in 1985. But by 1990, it had shut down. It reopened late in 2007, a few years after Capuano and a partner found investors, and now generates power directly to Pacific Gas & Electric.

Generating 20 megawatts of power - enough to electrify about 20,000 California homes, Bottle Rock remains a small player at The Geysers. The Northern California Power Agency, a consortium that includes the cities of Palo Alto and Santa Clara, owns two plants that generate 110 megawatts of power.

Calpine is the big dog here. The San Jose energy company fresh out of bankruptcy runs 17 plants and is in the midst of a five-year, $200 million rejuvenation plan to increase its steam-generation capacity. It makes 725 megawatts of power from steam and wants to boost power production to more than 800 megawatts. Last week, PG&E announced a consolidation and expansion of its contracts with Calpine that will put 57 more megawatts into the grid by the fall. Besides PG&E, Calpine sells electricity generated at The Geysers to Southern California Edison and other utilities.

In all, The Geysers generates 4.7 percent of California's electricity - far more than solar, wind and biomass projects - and its capacity again is growing.

The Geysers is part of a nationwide boom. A recent report from the Geothermal Energy Association in Washington, D.C., showed a 40 percent increase in the number of geothermal projects around the country in just the last year. It said 86 new projects are under way in 12 states with a potential capacity of 3,368 megawatts. In California, one megawatt is enough to power 1,000 homes for a year.

In fact, it's a global phenomenon. "Geothermal is a hot topic around the world," said ThermaSource's Capuano, a big man with a lot of Mississippi still in his voice.

Capuano would know. He's known worldwide in the industry. He's just traveled to Chile. One of his drill rigs is digging for steam on the Caribbean island of Nevis. And he's bidding for jobs in New Zealand and the Philippines.

Still, Geothermal Energy Association Executive Director Karl Gawell offers a bit of caution.

"I wouldn't call them good times yet. That's a little premature," he said.

Geothermal is "at the front end of the upturn," Gawell said, and there's no guarantee the projected growth will fully materialize. Why? It takes years to build a plant once financing is secured. And Congress kicked an extension of the federal tax credit out of the energy bill passed late in 2007. "That could start taking some steam, pardon the pun, off the market," Gawell said.

But for Calpine, it's full speed ahead in getting power from The Geysers.

It has expanded its land holdings from 30 to 40 square miles. A second drill rig, a massive structure 15 stories high, started digging this week.

"It's very deep steam," said Dennis Gilles, Calpine's senior vice president for its western region and its geothermal plants. "To drill down to that kind of depth is expensive. What you really need are energy prices that are high enough to support that higher cost of drilling. Fortunately or unfortunately, depending upon your point of view, energy prices right now with added demand for renewable energy have caused prices to be high enough."

Most people remain unaware of geothermal energy.

Middletown, where Calpine has a geothermal visitor's center, is a 20-mile ride over twisting mountain roads from Calistoga, a town known for its touristy geysers as well as its mud baths. Those same forces - hot, hot rock below the earth's surface and what flows over them - propel The Geysers.

At Bottle Rock, Capuano thinks there's enough steam to grow from the current 20 megawatts to 55 megawatts over the next two years.

He projects The Geysers capacity might increase from between 800 and 900 megawatts to 1,200 to 1,400 in coming years. In California, Capuano said, "the potential is tremendous," perhaps reaching 5,000 megawatts.

Jake Rudisill, an energy consultant in Livermore, isn't convinced. From 1990 to 2002, he ran Calpine's geothermal operations.

"The geothermal industry is setting itself up for a giant fall," he said. A recent Massachusetts Institute of Technology study projected the worldwide potential for 100,000 megawatts of power from geothermal by 2050, up from about 10,000 megawatts today.

But he feels consultants have overestimated the resource. Some wells will hit steam, he said, but many others won't.

Capuano disagrees. Besides, he said, geothermal is an indigenous form of energy.

"It has to be used here," he said. "It can't be shipped away. It's not like oil. It provides local employment, local use of goods, and the electricity comes right back to the region."

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