West Coast Geothermal Development and Finance Workshop May.pptVIP

Water Rights State water law may have special provisions for water used in geothermal drilling or production. See NRS 534.050 2 : waiver of appropriation requirement for exploration. Unitization/Contraction Royalty paid in proportion to acreage in unit or participating area. Can be voluntary per lease terms or forced in some states not for federal units . Contraction: After specified time, Lessee may be required to release non-productive areas from the unit. Lease should specify how contracted acres may be held. Surface Impacts Operational Standards: workmanlike, industry, all commercially reasonable efforts to prevent waste. Compliance with law; exclusive responsibility for obtaining permits and dealing with government – require landowner cooperation Bond lessee prefers only BLM or state bond . Reclamation – state law and negotiated terms. Surface Impacts Operations fencing of operations road use maintenance minimum well, pipeline, and plant distance to structures fire protection and suppression right of inspection Damages repair/replace structures roads market value for crops livestock Fee, Easements Additional rental payments for exclusive surface use for plants, pipelines, wells, lines, and offices. May negotiate to buy fee for plant site. May negotiate to buy an easement for plant, pipelines and transmission lines. Pipelines, roads, transmission lines, etc. may survive the lease for use in connection with adjacent lands. Indemnity Insurance Indemnity Mutual between parties, including contractors, invitees, lessees, officers, employees, etc. Procedure for handling third-party claims Insurance Commercial general liability, comprehensive auto, workers comp Required prior to operations Lessor named as additional insured Information Applications, permits and operating plans – copies to lessor Well logs and cores? Drilling reports? Exploration and production data? Confidentiality provisions Taxes Lessee pays all taxes on operations and lease interest, in