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Searchligt New Mexico Magazine

© 2019 Searchlight New Mexico.  |  All rights reserved. For republishing terms, see Guidelines. 

Images by Don Usner

INDEPENDENT INVESTIGATIVE JOURNALISM

The dangerous side of a renewable energy project

After the publication of this article, Cyrq submitted this letter to the editor (link).

Searchlight’s response to Cyrq’s letter is here (link).

ANIMAS VALLEY — Riding his horse through cattle pasture of brush and brittle mesquite, Randy Walter spotted a steaming, 10-foot geyser spewing from a well that had been capped and padlocked for 12 years. It was March 2016, and Walter had ranched the dry terrain of New Mexico’s Bootheel for as long as he could remember.

If he knew one thing about the Animas Valley, it was this: Water doesn’t just blow out of the ground.

Two miles away, a Utah company called Cyrq Energy had erected a $43 million geothermal electricity plant in 2013. Its green pipes and rectangular pods of turbines rose like stacks of giant Legos in the desert.  

The Lightning Dock power plant was supplying the state’s largest power provider, Public Service Company of New Mexico, with about four megawatts toward the state’s renewable energy goals — roughly enough to power 1,400 houses for a year.

From the outset, local residents had questioned Cyrq’s assertion that it could pump geothermal water from thousands of feet down and reinject it at similar depths without tainting the shallow, freshwater aquifer. Like many places in New Mexico, the health of the local farm and ranch economy is rooted to the water. So are the lives of the scattered people who live in the Animas Basin.

“The valley has been productive through the years and it has sustained a rural community,” said Stan Jones, chairman of the locally elected Hidalgo Soil and Water Conservation District. “That geothermal water is not water that can be used to farm or ranch with. That is why we are so adamant: That’s our livelihood they’re messing with.”

By the time Walter stumbled on the blown well, the spillage had soaked roughly an acre.

Pipes run 250-plus-degree geothermal water to Cyrq Energy’s Lightning Dock power plant in the Animas Valley of New Mexico’s Hidalgo County. Photo by Don J. Usner / Searchlight New Mexico

The landowners — his in-laws, the McCants family — immediately demanded an investigation by the Office of the State Engineer, the agency historically responsible for managing water in New Mexico.

But the state didn’t investigate. 

Instead, with the State Engineer’s blessing, Cyrq plugged the well with cement and welded it shut — permanently.

Water at risk

The dark side of renewable energy is that every form of production carries its own environmental baggage. Without an ecological review, wind farms can put native and migratory birds at risk. Solar farms can interrupt ecosystems by fencing off and shading swaths of desert acreage. And geothermal energy, which has some advantages over wind and solar, can jeopardize freshwater resources.

In Hidalgo County, the deep geothermal water is dirty with naturally occurring contaminants — especially high levels of fluoride, a mineral that, when consumed in excess, is dangerous to bone health.

“Geothermal isn’t terribly new; we just don’t have a regulatory framework for most of this stuff,” said Ben Shelton, legislative director of Conservation Voters New Mexico, an environmental lobbying group based in Santa Fe. “If it seems lacking in New Mexico, it’s because it is lacking.”

On the positive side, geothermal plants typically take up far less acreage than solar or wind farms, leaving a smaller environmental footprint on the surface. The energy, extracted from dry heat or hot water deep underground, generates power around the clock and isn’t subject to changes in the weather.

Nationwide, electricity generated from geothermal grew about 9 percent between 2007 and 2017, according to the Energy Information Administration. Lightning Dock is New Mexico’s only utility-scale geothermal power plant.

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Graphic by Aliya Mood / Searchlight New Mexico

Cyrq, formerly known as Raser Technologies, retooled its business model in 2007 to exploit the growing market for geothermal energy. But it has a checkered past, including two bankruptcies, a retreat from the New York Stock Exchange back into private hands, a falling-out with Chinese creditors and ongoing litigation with an Animas Valley tilapia farm.

Though Cyrq declined multiple interview requests and did not respond to emailed questions, Searchlight’s report is based on hundreds of pages of public testimony, official correspondence, Securities and Exchange Commission filings, and state and federal litigation.

The company’s operating premise in the Animas Valley was for a “closed loop” system: Lightning Dock would pump 250-plus-degree water from the valley’s geothermal resource, pipe it through a plant to generate electricity, then re-inject the hot water back where it came from without consuming it or contaminating the shallow aquifer.

Locals worried that the state, in its zeal to promote renewable energy, was willing to risk their water for a green energy project.

“Not all of the questions are answered,” said Carl Chavez, an environmental engineer with the Oil Conservation Division, at the plant’s grand opening in 2013. “They are proceeding at some risk if there are any water quality issues, any water drawdown issues.”

PNM gambled on the project in part because it had to: The utility was subject to a “diversity” rule that forced it to buy renewable energy from a source other than wind or solar.

“While the plant has had some production shortfalls and a bankruptcy, PNM is committed to this renewable generation,” said spokeswoman Kelly-Renae Huber. “As part of that commitment, we were able to avoid canceling their contract until they were able to improve the efficiency of the project.”

Even before the McCants’ well blew, there were signs that the hydrogeology of the valley was neither cut nor dry.

 

A hot spot for investment

Graphic by Aliya Mood / Searchlight New Mexico

The first person to tap the hot water of the Animas Valley on a grand scale was Dale Burgett. The maverick rose farmer poked holes around the valley in the 1970s, often without state permission, looking for the hottest spot. He found it near what is now the intersection of Geothermal and Hot Water roads, about two miles east of where the well blowout occurred. That’s where the 312-degree water of a geothermal plume swells toward the surface.

The unique hydrogeology of the Animas Valley can be imagined from above like a dartboard where that bullseye is the hottest spot. The hot water — with a chemical makeup that makes it not suitable for consumption by humans or livestock — naturally seeps into the surrounding freshwater aquifer at a rate of 300 gallons per minute. The water flows north underground and becomes progressively cooler and cleaner as it moves away from the center.

Burgett piped the geothermal water through football-field-size greenhouses to warm his rose bushes and, in doing so, became the nation’s largest rose producer. By the early 2000s, Burgett Geothermal Greenhouses was shipping 25 million roses annually — until Latin America captured his market share and his business went south. Burgett died in 2013 at age 88.

Cyrq, meanwhile, acquired $4.9 million in federal and other leases to develop geothermal resources where Burgett’s hulking, dilapidated greenhouses still loom. Hundreds of thousands of his rose bushes still stand in perfect rows, moribund in their buckets.

Across from the rose farm, near the McCants property, Damon Seawright — an entrepreneur with a doctorate in fisheries science — founded a warm-water aquaculture farm in the 1990s called AmeriCulture Inc. He and his wife Libby home-schooled two boys there while building AmeriCulture into one of the largest tilapia hatcheries in North America.

The dilapidated remnants of Burgett Geothermal Greenhouses loom near Cyrq Energy's Lightning Dock power plant. Rose farmer Dale Burgett, deceased, was the first to tap the geothermal water of the Animas Valley on a commercial scale. Don J. Usner / Searchlight New Mexico

When Cyrq ran a red tracer dye through wells to test water flow in 2012, the Seawrights’ tilapia turned the color of carnations. AmeriCulture says that hundreds of thousands of fingerlings died. Before that incident, dozens of locals were already protesting the project at the Office of the State Engineer.

So the state simply eliminated the path of protest. During the 2012 legislative session, before the tilapia turned pink, southern New Mexico Democrats Sen. John Arthur Smith and Rep. Rudy Martinez co-sponsored a bill that took jurisdiction over 250-plus-degree water from the Office of the State Engineer and placed it in the hands of the Oil Conservation Division.

In other words, the hot water was no longer considered water, but energy. The agency historically tasked with managing water in New Mexico was stripped of its authority over the project.  

Nor could residents seek relief from the federal government. Federal regulations place geothermal injection wells in the same category as septic tanks: They are allowed to degrade groundwater.

Hydrology 101

“We get along with everybody in the community,” said Tom Carroll, whose Albuquerque firm handles public relations for Cyrq.

The community’s reluctance to talk candidly about the company suggests otherwise.

Damon Seawright refused to be interviewed, citing ongoing litigation with Cyrq over water issues. The McCants family didn’t return phone or email messages, while state engineers familiar with the project spoke only on condition of anonymity.

One of the people unafraid to speak out is Meira Gault, a 69-year-old cattle rancher who once served in intelligence in the Israeli Army and has been a Hidalgo conservation district official for 11 years.

Gault said she views the well blow-out as the surest sign that the geothermal water simply isn’t going where Cyrq promised it would go.

“It’s the feeling that something is wrong that is bigger than the problems of this or that individual,” she said.

To understand how the well blow-out happened, locals refer back to Cyrq’s 2015 application to drill three new, shallow injection wells. Lightning Dock at the time still wasn’t meeting expectations. Its “closed loop” scheme had proved inadequate to producing the 12 to 15 megawatts, as promised.

When the state approved the new wells, it did so on the condition that they be drilled below “a silicified layer” — a hard rock barrier — to protect the shallow aquifer. Cyrq was then allowed to re-inject hot water far from the central plume, not far from the McCants well.

The state maintains that Cyrq is in compliance with regulations. But residents have for the past two years requested information seeking verification. All documents have come back heavily redacted.

The injection well is “in the same aquifer the ranchers have their windmills in and farmers have the wells in,” said Jim Witcher, a local hydrogeologist. “But we know the water is flowing north into the aquifer; it’s not flowing southeast into bedrock. That’s hydrology 101.”

The long view

The entrance to the Lightning Dock power plant is near the intersection of Geothermal and Hot Water roads. Cyrq Energy is currently delivering 10 to 12 Megawatts of electricity to Public Service Company of New Mexico. Don J. Usner / Searchlight New Mexico

As of January 2018, new state rules govern the development of geothermal projects, and Lightning Dock will be required to apply for new permits by 2023.

But until then, Cyrq enjoys substantial privilege, selling expensive power to PNM. The new state Energy Transition Act of 2019 frees PNM from renewable energy requirements if the electricity costs more than $60 a megawatt-hour. Solar and wind cost half that amount now. Meanwhile, a contract locks PNM into paying Cyrq $97 per megawatt-hour for the next 20 years, as long as the company delivers the power it promised.

This spring, Cyrq will celebrate the second grand opening of Lightning Dock in five years. The reason? According to its spokesman, the plant has finally met its longtime production target for generating 10 to 12 megawatts full-time.

That goal may not be cause for celebration for residents of the Animas Valley, however. It signifies that the plant is re-injecting the geothermal water at a much higher rate, since all the water that comes up must go back down in the ground.

With the McCants well sealed, locals worry that Lightning Dock could contaminate the aquifer without anyone knowing until it’s too late.

“I am not against green energy,” Gault said. “But I’m not sure that it is safer or cleaner. The interest of the money people is not that different on the green side or the oil side.”

Clarification: An earlier version of this story used imprecise language in several places and the location of one of the wells was incorrectly stated. The story has been revised after communication from Cyrq.

Lauren Villagran is a reporter for Searchlight New Mexico. She has covered the financial and energy markets in New York, the drug war in Mexico and immigration and border security in New Mexico.

 

Letter to the Editor submission to Searchlight NM

By Cyrq Energy | March 29, 2019

 

Dear Editor:

 

It is rare to see a story written with such misleading statements, outright falsehoods, and shocking distortions of the truth.  Unfortunately, that’s your story “In hot water,” about the geothermal energy industry in New Mexico. There’s a very positive story about the success of geothermal energy in this state, its low carbon footprint, its round the clock, 100% renewable energy, and its vital role in meeting the renewable energy standards for the state of New Mexico.  

 

Instead, very irresponsibly, your reporter wrote a story that’s outright wrong, with a strong bias against renewable energy, and a shocking disregard for what’s true about the only utility-scale geothermal plant in our state.

 

The main contention of your story is that the Lightning Dock Geothermal plant near Lordsburg has damaged the local aquifer and contaminated the freshwater resources.   Well, absolutely none of that is true and there is no evidence whatsoever that it is. Our system is closed loop, which means the water comes up, provides energy by extracting the heat, and goes back down.  That’s the beauty of geothermal. Over the five years of continuous operation, the plant has consumed no water for energy, and there are no contaminants placed in the water. Never. Thus, the aquifer has not been damaged in any way and there has been no contamination.

 

A few egregious examples of getting your facts wrong. Your story starts with an anecdote about a 10-foot geyser of a well near the plant.  As it turns out, the well wasn’t our well, had been out of compliance for years, there was no geyser that ever came to our attention, and we capped it as a favor to the landowner.  It wasn’t a geyser, but a trickle, and it was a faulty cap, not a geothermal blowout. We just did a good deed for a neighbor. There is also a separate monitoring well very close to this well.

 

Your story stated that our tracer test “killed hundreds of thousands” of fish.  In fact, no fish were killed. How can you say that hundreds of thousands of fingerlings (small fish) died when none did?

 

You say that there is no regulatory oversight and no avenues of protest.  Absolutely irresponsible. We are regulated by the state under the Energy, Minerals and Natural Resources Department and there is an easy and straightforward way to protest, as one of our neighbors did in 2015.  The fact is that there have been relatively few protests in the past few years, because there is nothing to protest.

 

In addition, you refer to the “geothermal toxins” that are contaminating the freshwater resources.  However, since no water actually touches a chemical of any kind in our geothermal plant, there are no geothermal toxins introduced by the plant. Further, the geothermal brine at Lightning Dock meets New Mexico drinking water standards in all categories, except for Fluoride, which has been naturally high in the Animas Valley for millions of years.

 

We could go on with dozens of examples of such outright distortions, written in a biased manner, without consultation.  On that subject, the reporter wrote, “Cyrq declined multiple interview requests and did not respond to email questions.”  What the writer did not say is that we offered her an exclusive to our story, with full cooperation, full access to the plant and all the managers when the plant celebrates its Re-Grand Opening this spring.  She turned that down.

 

Geothermal energy is a great renewable energy that emits no carbon into the atmosphere, provides critical power around the clock and not just when the sun shines, has a very small footprint compared to wind or solar energy, and is an important component for reaching the renewable energy goals in the Governor’s new renewable energy plan.  We need to support it and cultivate it, not tear it down with outright wrong and misleading reporting. We look to the future, with clean, safe, responsible geothermal energy, here for the long run.


 

Nick Goodman

CEO, Cyrq Energy

Lightning Dock Geothermal

Animas, NM

 

Searchlight responds to Cyrq Energy’s op-ed

By Searchlight New Mexico  |  April 10, 2019  

 

Last month, Searchlight New Mexico published an article on New Mexico’s only utility-scale geothermal power plant, run by a Utah company called Cyrq Energy, Inc. The article detailed a community’s struggle to gauge the potential risks to an aquifer north of Animas, in Hidalgo County. Cyrq declined at least eight phone, email or text-message requests for interviews during Searchlight’s reporting. After publication of the article, Cyrq submitted a response to Searchlight and its partners. It is published in its entirety above.

Searchlight stands by its reporting. What follows is Searchlight’s response to some of Cyrq’s contentions.

Cyrq claim No. 1: “The main contention of the story is that the Lightning Dock Geothermal plant near Lordsburg has damaged the local aquifer and contaminated the freshwater resources.”

Nowhere does the article state that Cyrq’s Lightning Dock geothermal plant contaminated freshwater resources. Instead, the article explains local residents’ concerns that the plant could worsen the quality of the freshwater aquifer over time. Here’s how Searchlight determined that their concerns were newsworthy:

Lauren Villagran originally reported on the Lightning Dock geothermal plant as a reporter for the Albuquerque Journal, and those articles addressed locals’ concerns about the Animas Valley aquifer. The first article detailed Lightning Dock’s grand opening in 2014. The second article ran in 2015 after locals objected when Cyrq applied to the Oil Conservation Division to drill new shallow injection wells that would return the deep, fluoride-heavy geothermal water directly into the shallow alluvium — a reversal of Cyrq’s original “closed loop” promise. Both the Hidalgo Soil and Water Conservation District and AmeriCulture, a tilapia farm based in the Animas Valley, opposed the company’s plans. Arguments over the area’s hydrogeology went on for five days in Santa Fe. The state’s Oil Conservation Commission ultimately sided with the locals’ assessment. The OCC permitted Cyrq’s proposed new injection wells but required they be drilled deep, below a “silicified layer” — a hard rock barrier –— to ensure the geothermal water be returned to its deep reservoir and not allowed to mix with the shallow freshwater.

In 2018, two knowledgeable sources approached Villagran, now a reporter for Searchlight, with concerns about the Lightning Dock project. Their water worries were renewed, they said, after a well blew out on a rancher’s property not far from one of Cyrq’s new injection wells. Beginning in February, Villagran followed up, conducting numerous interviews and reviewing Office of the State Engineer reports, Oil Conservation Commission hearing transcripts and email correspondence.

The McCants family owns the property where well 12-7, also known as well A603, overflowed. The Office of the State Engineer inspected the blow-out. Both McCants and the Hidalgo Soil and Water Conservation District requested the state investigate further, but no such investigation occurred. The District spent a year submitting state and federal information requests on Cyrq’s injection well 13-7, the one near the McCants well. Document requests were either denied or issued with heavy redactions.

As noted in the Searchlight article, “The state maintains that Cyrq is in compliance with regulations.” The article reflects that this fact has failed to alleviate locals’ concerns, given that they believe current regulations may fall short. 

As part of its reporting, Searchlight emailed a set of questions to Cyrq about the new injection wells. Among the questions was this: “Could you please describe what occurred when well A603 on the McCants property blew out in March 2016?” To date, Cyrq has not responded to that question.

Cyrq claim No. 2: “Over the five years of continuous operation, the plant has consumed no water for energy, and there are no contaminants placed in the water. Never. Thus, the aquifer has not been damaged in any way and there has been no contamination.”

The article does not state that the plant has consumed water or placed contaminants in the water. However, as the article notes, locals remain concerned as to whether the aquifer has been damaged, or will be damaged, due to potential mixing of fluoride-rich geothermal water into the shallow alluvium. And for some community members, their concern is heightened by what they perceive as a lack of transparency.

Stan Jones, chairman of the Hidalgo Soil and Water Conservation District, told Searchlight that the well overflow suggested that “it was not the closed system that they presented to us. We tried to get some answers from the state — and we really couldn’t get any information.”

Cyrq claim no. 3: “The story starts with an anecdote about a 10-foot geyser of a well near the plant. As it turns out, the well wasn’t our well, had been out of compliance for years, there was no geyser that ever came to our attention, and we capped it as a favor to the landowner. It wasn’t a geyser, but a trickle, and it was a faulty cap, not a geothermal blowout. We just did a good deed for a neighbor.”

 

As noted in the article, the incident was described to Searchlight by rancher Randy Walter, who has ranched for more than a decade on the McCants property, where well 12-7 is located. The article never states that the McCants well belonged to Cyrq.

 

Cyrq’s reference to the well being “out of compliance” is not clear but may refer to the fact that the well had not been plugged with cement. The original well log for well 12-7 indicated it would be “plugged and abandoned.” It was capped and locked instead. Photos attached to the Office of the State Engineer inspection after the blow-out was reported show a well cap fastened with a padlock blown back from its hinge. The cap may or may not have been “faulty,” but two hydrogeologists with knowledge of the blow-out indicated in interviews that it would have taken an immense amount of pressure to push water out of that well hole.

 

Although Cyrq claims that “There was no geyser that ever came to our attention,” the company was concerned enough about water spilling out from the well to contact the property owner, according to correspondence between the property owner and the Office of the State Engineer.

 

As to Cyrq’s objection to the term “blowout,” that term was used in correspondence with the Office of the State Engineer; in other correspondence it was referred to as “an apparent overflow likely caused by fluids injected under high pressure” and as “what appears to be an illicit discharge.” Walter used the term in his description of the geyser. Three expert sources also used the term in interviews.

 

As to Cyrq’s assertion that “We just did a good deed for a neighbor”, a May 2016 letter from the Office of the State Engineer orders Cyrq subsidiary Lightning Dock Geothermal HI-01 LLC and McCants to plug the well. The order came after Cyrq contacted the property owner, according to correspondence.  Cyrq did plug the well, as the article indicates.

 

Cyrq claim No. 4: “There is also a separate monitoring well very close to this well.”

 

This is true. The initial version of the article incorrectly stated that “there are no monitoring wells north of the injection site,” referring to well 13-7. Searchlight has corrected the article online and has issued a correction for its media partners to publish. Monitoring well No. 9, also called A798-POD10, sits about 25 feet north, and 145 west, of Cyrq injection well 13-7. 

Cyrq claim No. 5: “The story stated that our tracer test ‘killed hundreds of thousands’ of fish. In fact, no fish were killed. How can they say that hundreds of thousands of fingerlings (small fish) died when none did?”

Searchlight’s initial article did not attribute the statement directly to its source, AmeriCulture, the owner of the tilapia firm. Searchlight updated the article shortly after publication to add that attribution. All other information related to the red dye test, including photos of pink water and fish, can be found in the Office of the State Engineer report on the incident (p. 76).

Cyrq claim No. 6: “The story says that there is no regulatory oversight and no avenues of protest. Absolutely irresponsible. We are regulated by the state under the Energy, Minerals and Natural Resources Department and there is an easy and straightforward way to protest, as one of our neighbors did in 2015. The fact is that there have been relatively few protests in the past few years, because there is nothing to protest.”

The article doesn’t say “there is no regulatory oversight.” In fact, it says, “The state maintains that Cyrq is in compliance with regulations” and also refers to “new state rules [that] govern the development of geothermal projects.” Cyrq appears to be referring to a quote in the article from Ben Shelton, legislative director for Conservation Voters of New Mexico, who stated that “Geothermal isn’t terribly new; we just don’t have a regulatory framework for most of this stuff.” The quote refers to the state’s lack of a regulatory framework for a comprehensive ecological review of big projects.

The previous avenue of protest for water-related concerns – through the Office of the State Engineer – was effectively eliminated by the 2012 legislation described in the article. The project is now governed by the EMNRD, specifically the Energy Conservation Management Division -- the third entity to take over regulatory oversight of the Lightning Dock plant in eight years. After OSE lost jurisdiction over 250-plus-degree water, the avenue of protest shifted to the Oil Conservation Commission, also part of EMNRD, and AmeriCulture did protest in 2015. The Hidalgo Soil and Water Conservation District intervened as well. Now, the avenue of protest is through the Energy Conservation Management Division, which says there have been no protests since 2015.

Cyrq claim No. 7: “In addition, the story refers to the ‘geothermal toxins’ that are contaminating the freshwater resources. However, since no water actually touches a chemical of any kind in our geothermal plant, there are no geothermal toxins introduced by the plant.”

The article never states that geothermal toxins were introduced by the plant. The term “toxin,” as used in the article, referred to natural contaminants in the geothermal water.  Searchlight has since removed the term “toxin” from the article because it may be subject to various interpretations.

Cyrq claim No. 8: “Further, the geothermal brine at Lightning Dock meets New Mexico drinking water standards in all categories, except for Fluoride, which has been naturally high in the Animas Valley for millions of years.”

The aquifer in the Animas Valley near the Lightning Dock plant is high in fluoride, in large part because the geothermal water flows naturally into the aquifer at a rate of 300 gallons per minute. Local residents don’t want to see that rate artificially increased, which is why the company’s original plan to pull the water from great depths and reinject it at great depths was considered critical – and why the blow-out of the McCants well raised fears in the community that the geothermal water could flow into the aquifer. Cyrq did not answer Searchlight’s question about production and injection rates, but the company testified before the OCC in 2015 that it planned “to produce up to 5,000 gallons per minute of geothermal fluids,” which would require roughly the same amount to be reinjected.