Rural Oregon timber county seeks economic revival through renewables

  • Lakeview, Oregon, a conservative former timber town, seems an unlikely place for a renewable energy boom.

    Charles Hathaway
  • Old Perpetual geyser, which burst forth in the 1920s when someone was trying to drill a well, was an early indication of the geothermal potential in Lakeview.

    Jim Gullickson

Lakeview, Ore., sounds like a sleepy place. When four of five local lumber mills closed in the late '80s and early  '90s, wiping out more than 800 jobs, it shrank by a fourth, to 2,750 people. Stranded in southern Oregon's desert, the town lacks traffic lights and fast-food outlets. Western-style storefronts line its narrow main street past a wooden cutout of a waving cowboy.

But on a sunny fall Tuesday, pickups pack the streets, and "no vacancy" signs mark every hotel. The marquee at Hunter's Hot Spring Resort -- a popular historic hotel -- explains why: "Welcome Pipeliners."

Some 800 workers are here to build the Ruby Pipeline, which will carry 1.5 billion cubic feet of natural gas daily from the Wyoming Rockies to the West Coast. They've overflowed the RV park and rows of dormitory trailers -- even rented spare rooms in homes -- and their paychecks are buoying everyone from babysitters to the veterinarian.

"It's a special gift for something like this to fall into our laps," says Caro Johnson, the energetic executive director of the Lake County Chamber of Commerce. That's a common attitude among local leaders. And as the pipeline inches along, local governments are aggressively positioning for a new kind of energy boom -- one they hope will sustain the hum of activity far into the future.

The county sits atop a series of interconnected hot springs that stretch from Klamath Falls to Burns, ranging from 235 to 249 degrees Fahrenheit -- ripe for generating geothermal heat and electricity. With 300 sunny days annually, the area also holds promise for solar power. At the north end of the 85-mile Warner Mountain Range, Lake County has plenty of windy ridges that could host turbines. And south of Lakeview, the desert gives way to forest that sustains the last local sawmill -- run by the Collins Companies -- and provides plenty of fodder for biomass power. Finally, a currently unused major power line that served a former Air Force base connects Lake County to the regional grid.

"We believe we can make the goal of being a net exporter of renewable energy by the end of 2012," says Jim Walls, a former rancher who's now executive director of the Lake County Resource Initiative, which promotes renewable energy. "That's how we branded ourselves: We're going to be Oregon's most renewable county" -- maybe even the nation's.

Locals have long been aware of the area's energy potential. A well drilled near Adel, roughly 20 miles east of Lakeview, erupted a 147-foot column of hot water for six months in the 1950s. And Yellowstone's Old Faithful has little more than height on Old Perpetual, a geyser inadvertently created by well-drilling in the 1920s at Hunter's Hot Spring Resort. But most credit Jane O'Keeffe, a forward-thinking rancher-turned-county commissioner, with kick-starting events that helped locals see economic revival in renewable energy.

When O'Keeffe took office in 1995, the local unemployment rate was 18 percent, partly due to a federal court ruling that curtailed timber harvests on public lands in eastern Oregon in 1990, hammering local mills. As the county's last two mills were teetering towards collapse, O'Keeffe boldly reached out to environmental groups, hoping to end frequent timber-sale appeals and figure out how to keep the remaining Lakeview mill -- and the county -- economically viable. Paul Harlan, vice president of resources at the mill, and Portland-based nonprofit Sustainable Northwest, which helps rural communities achieve economic sustainability, worked with O'Keeffe to bring representatives of Oregon Wild, Defenders of Wildlife and The Wilderness Society from as far away as Seattle for five round-table talks with select locals.

At first, residents reacted angrily. One roadside sign warned: "Eco-Nazis Go Home." But that distrust evaporated when 491,800 acres of forest in the Lakeview Federal Stewardship Unit were reauthorized in 2001. The unit was to be managed, in part, to support the Collins mill and a planned, adjacent biomass plant. By then, the discussion had turned to renewable energy in general. The Lake County Resources Initiative  (LCRI) was born, seeded with funding from Sustainable Northwest, and Walls was recruited from the federal Natural Resources Conservation Service to take the reins.

Since then, Walls has been making deals and galvanizing local renewable-energy use. LCRI has established a revolving loan fund to help residents finance geothermal home-heating systems, and it's certified local engineers, electricians and plumbers to install geothermal furnaces. In 2005, Lakeview's first geothermal heating district -- which uses underground hot water to warm buildings -- helped bring a state prison to town along with 104 permanent jobs. Both Lakeview and the nearby town of Paisley have more such districts planned. One $2.75 million project will heat Lakeview's five schools and hospital, saving each of them up to $100,000 a year in oil costs. Paisley's proposed $2 million district for its schools, which would draw waste heat from a 2-megawatt geothermal power plant now under construction by a local utility, would save $50,000 a year. That project is still seeking funds.

Lake County and Lakeview leaders also set up an enterprise zone for renewable energy in 1999 and reauthorized it in 2009. Companies located in the zone can avoid property taxes for three years -- offsetting between 20 and 25 percent of total project costs -- or negotiate for better tax terms.

Private development has quickly followed those public investments. In November, Iberdrola Renewables, the U.S. division of Spain's Iberdrola Renovables SA, began building a $70 million, 26.8-megawatt biomass facility that will convert slash from the Collins mill and the Warner Mountains into power for the regional grid, employing 20 people in the plant and 50 or more in forest jobs by fall 2012. It's the first fruit of those early roundtable talks. Like the pipeline, the development will create around 250 temporary construction jobs and a retail boom.

The county and Lakeview gave Iberdrola a 15-year property tax abatement in exchange for a $350,000 annual community development fee beginning in 2013, with 3 percent annual increases. The waiver saves the company about 75 percent on its taxes, says spokeswoman Jan Johnson. That's "absolutely essential. Project economics won't work without it."

Meanwhile, Nevada Geothermal Power Inc. is drilling wells for a 30-megawatt geothermal power plant with Ormat Nevada Inc. at the site of that '50s-era accidental geyser. The plant will transmit power to the grid by 2013 and bring 15 long-term maintenance jobs.

Those two projects alone will move Lake County close to its goal of being a net exporter of renewable energy. And development shows no sign of stopping. Landowners near the new geothermal facility have leased out their geothermal rights. Five commercial solar projects totaling more than 30 megawatts are in various stages of development around Christmas Valley, an unincorporated community about 100 miles north of Lakeview. Meanwhile, a number of companies have been authorized to test wind conditions for potential turbines on 55,000 acres of local Bureau of Land Management land.

Though the net benefits of all these projects have not been completely assessed, LCRI's August 2010 economic report projected that if all the planned energy projects in Lake County succeed, they will bring 80 permanent jobs and help retain another 628.

Those opportunities are important, says Lakeview City Manager Ray Simms. Thanks to endowments from its once-thriving timber industry, Lakeview offers college scholarships to graduating high school seniors. But "then they go off to Portland or San Francisco, where they become pillars of their communities. We don't have anything to bring them back," he says. Now, all that may change.

The town once again holds promise for young families, agrees the Chamber of Commerce's Johnson: "Once we believed, once we did the first geothermal, we were on top of the world."

Still, some locals question whether too much is being sacrificed for economic gain. Some Christmas Valley residents have fought incoming solar arrays, even all the way to a state land-use appeals board. They're worried about impacts on wildlife and on their rural lifestyle, and fear the development will make the Oregon Outback look like "outer space."

Meanwhile, Old Perpetual -- which once erupted 60 feet every 90 seconds -- now sprays only rarely. No one knows exactly why, although periods of inactivity can be traced to 1978, when irrigation wells were first drilled in the area, and its manmade plumbing has also failed at times. Geothermal development may have exacerbated the problem. The city's hot-water well, which heats the prison, lies just 200 yards away from the geyser; when its pump failed last September, Jim Gullickson, the resort's new owner, was stunned to see the springs rise three feet overnight.

Lakeview's environmental assessment of the well, conducted for another proposed 200-kilowatt facility that would tap it to sell power to the grid, suggests it lowers water levels belowground between three and 20 feet. That shouldn't impact the geyser much, though, the report says, since water levels routinely drop as much as 30 feet for irrigation during the summer.

That doesn't comfort environmentalist and former National Park Service employee Chris Zinda, whose outspoken views stand out in a conservative county where 74 percent of registered voters went Republican in the last governor's race. Zinda, who founded the website "Save Hunter's Hot Springs," fears continued activity at the city well could endanger unusual cyanobacteria in the surrounding springs. The microorganisms photosynthesize at uniquely high temperatures and have attracted scientists from around the world, including University of Oregon professor emeritus Richard Castenholz, who has spent decades studying them with support from the National Science Foundation. Castenholz, Zinda and others have urged Lakeview to halt future activity at the well until more about its impacts on the hot springs are known.

Lake County has always relied on resource extraction, Zinda says, and this is no different. The timber industry left behind clear-cuts and slash, and uranium mining created a Superfund site. "All those did provide jobs," he says, "but at what cost?"

Brad Winters, a Lake County commissioner who encouraged the region's shift toward utility-scale renewable development, counters that the commissioners are sensitive to possible environmental consequences, carefully weighing new projects against zoning and environmental laws. "I hear, 'Boy, it's terrible,' and, 'Yeah, it's great,' and that's going to be the struggle with all of this," Winters says. He thinks opposition is inspired partly by whether new projects have personal impacts on residents.

Gullickson says it's more than that. He points over his tranquil hot springs pools and dormant geyser to the site of the biomass plant's planned 200-foot smokestack. That unbroken view and these springs are also valuable economic assets, he says -- they draw tourists and people who move to the area for its awe-inspiring landscape. Officials should be more careful about where they allow projects in the future because, he says, "I don't think there's any turning around from the point we're at."

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