State Land Office seeks to improve geothermal lease process through new proposed rule

The State Land Office is proposing an updated rule that could make harnessing New Mexico’s geothermal potential more accessible.

An update to 19.2.7 of the New Mexico Administrative Code streamlining the process of leasing state land for geothermal use could attract developers and help alleviate increased demands for the renewable resource, Public Lands Commissioner Stephanie Garcia Richard said.

“The reason this is happening in this moment is because the Legislature has really beefed up their support of geothermal development with an increase of incentives, and acknowledgement that we already have the technical expertise and sites in New Mexico that could very easily be transferred from traditional oil and gas use to geothermal use,” Garcia Richard said.

The rulemaking process comes on the heels of XGS Energy and Meta Platforms Inc. announcing plans in June to build a geothermal site in northwestern New Mexico to power Meta’s data center in Los Lunas.

Once built, it will join the Lightning Dock in Hidalgo County, the state’s only operating geothermal plant.

Project InnerSpace, a geothermal advocacy group, released a 238-page report in June, “The Future of Geothermal in New Mexico,” highlighting the state’s potential to produce 163 gigawatts of geothermal energy, which is more than 15 times the state’s installed capacity in 2023.

As geothermal has caught the attention of state officials, legislators over the past two sessions have also been working in the background to help incentivize the buildout of the renewable energy source.

In 2024, the Legislature passed House Bill 91, which created the Geothermal Projects Development Fund, which is overseen by the Energy, Minerals and Natural Resources Department, or EMNRD.

An EMNRD spokesperson told the Journal that HB91 essentially has two “buckets” of funds, allocating $2.5 million to grants and another $2.5 million to loans. Other legislation from the 2025 session added another $10 million to the grant bucket.

According to the spokesperson, the $12.5 million in grants can further be broken down, where grants cap at $250,000 for studying geothermal development, but with no monetary caps on grants financing geothermal projects.

HB361, also from the 2025 session, allows EMNRD to authorize the conversion of oil and gas wells into facilities that provide or support geothermal development or energy storage.

Garcia Richard said the proposed change to 19.2.7 NMAC, implemented in 1984, would better align lease terms with current state statutes for geothermal development on state lands. She said the rule discusses a “completely different” technology than what is used today.

“New Mexico is this perfect combination of geology (and) technical expertise, because we already have folks knowledgeable about fracking, a regulatory framework that’s supportive of these projects, and political leadership that’s supportive of these projects,” Garcia Richard said. “This is kind of a perfect time in New Mexico to develop.”

Garcia Richard said New Mexico could stand to power all its energy needs with its own resources, rather than having to import energy from elsewhere.

Geothermal, along with other renewables like solar and wind, goes hand-in-hand with the state’s Energy Transition Act, which calls for 100% zero-carbon resources statewide by 2045, she said.

A public hearing regarding the proposed rule update is scheduled to begin Sept. 30 at the State Land Office in Santa Fe.