IID to sell land to HKG, retains subsurface rights

IID to sell land to HKG, retains subsurface rights
IID to sell land to HKG, retains subsurface rights

EL CENTRO — Imperial Irrigation District has been negotiating with Hell’s Kitchen Geothermal, LLC (HKG) to transfer land near the Salton Sea to the company, plus allow geothermal drilling of the heated brine and mineral extraction.

Recently, IID entered into negotiations with HKG to transfer approximately 3,144 acres, which includes the 1,880 acres currently under lease with HKG. Documents showed at the IID’s regular Feb. 15, meeting that under the proposed transfer, IID would retain its rights to all subsurface resources, including geothermal and mineral resources.

“You have the largest geothermal reservoir in North America and, globally, the largest lithium reserve,” said HKG Chief Operating Officer Jim Turner. “There are a lot of other valuable minerals in the brine, besides lithium. This is a very important project for us, the Imperial Valley, California, the United States, and the world.”

HKG would only own rights to the surface of the land. This transfer would allow HKG to develop and construct geothermal and mineral extracting facilities on the surface of the land and lease IID’s subsurface resources.

Turner applauded IID’s decision to sell the land. “To let us acquire the surface, this will expedite our progress. Our first wells are constructed, and we plan to start production in 2023,” Turner said. “Time is our biggest hurdle. As the shoreline recedes, we will be right there mitigating dust, wherever we touch the surface, we will be stopping the dust, we will knock the dust down. We live here, too.”

However, the transfer will be subject to three options whereby IID may reacquire title to the land if certain milestones are not met by HKG. The first is that by July 15, 2024, the commercial operation of a 49.9 MW geothermal plant must be operational. The second is the operation of a 200 MW and 20,000 tons of lithium product be established and royalties to IID from the geothermal and lithium by 10 years after the transfer.

“This will ensure the land remains in production,” IID President Jim Hanks said. “If milestones are not met, IID can rebuy the land. We will make sure the land will become productive.”

The last milestone is for a complete drainage system or funds given to IID to complete the work by 10 years from the transfer.

The proposed sale is for $500 for 3,144 acres, but a significant amount of royalty payments will be paid to IID for the successful production of the subsurface geothermal and mineral resources.

“We will pay property taxes,” Turner said. “IID as a non-profit, doesn’t pay property taxes on the land, we will. This helps the County with revenue. Geothermal plants are the County’s single largest property taxpayer and most of it goes to schools. As improvements are made on the land, that will increase the tax rate we pay. We will pay higher taxes.”

Hell’s kitchen Geothermal, LLC entered into a geothermal lease agreement with the IID on March 15, 2016, which was subsequently amended on May 25, 2017; May 21, 2018; and May 26, 2020. Under the lease, HKG has a leasehold interest in approximately 1,880 acres of the surface and subsurface areas of the IID-owned land.



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