Things are to be used and people are to be lovedThings are to be used and people are to be loved

While a man was polishing his new car, his 4 yr old son picked stone &
scratched lines on the side of the car.

In anger, the man took the child's hand & hit it many times, not
realizing he was using a wrench.

At the hospital, the child lost all his fingers due to multiple
fractures. When the child say his father....
with painful eyes he asked 'Dad when will my fingers grow back?'

Man was so hurt and speechless. He went back to car and kicked it a lot
of times..
Devastated by his own actions..... . sitting in front of that car he
looked at the scratches, child had written 'LOVE YOU DAD'.
The next day that man committed suicide. . .

Anger and Love have no limits; choose the later to have a beautiful &
lovely life....

Things are to be used and people are to be loved,
But the problem in today's world is that,
People are used and things are loved.......

Change Your Strategy

Change Your Strategy

One day, there was a blind man sitting on the steps of a building with

a hat by his feet and a sign that read: "I am blind, please help". A

creative publicist was walking by him and stopped to observe he only

had a few coins in his hat, he dropped a few more coins in his hat and

without asking for his permission took the sign, turned it around, and

wrote another announcement. He placed the sign by his feet and left.

That afternoon the creative publicist returned by the blind man and

noticed that his hat was full of bills and coins. The blind man

recognized his footsteps and asked if it was him who had re-written

his sign and he wanted to know what did he write on it? The publicist

responded: "Nothing that was not true, I just rewrote your sign

differently". He smiled and went on his way.

The blind man never knew but his new sign `read: "TODAY IS

SPRING AND I CANNOT SEE IT".

Change your strategy when something does not go your way

and you'll see it will probably be for the best. Have faith that

every change is best for our lives.

how inflation attack

Bitter sweet

Then: 1 kg burfi was Rs 35-40 in 1992
Now: Rs 210-240, a 500% rise in 17 years
Then: At the same rate, 1 kg will cost Rs 1,260-1,440 in 2026

The prices of ingredients used for making sweets have not risen so fast and most of the inflation is due to sharp rise in wage and fuel costs.

80-20 strategy of day trading

1. Yesterday the market opened in the top 20 percent of its daily range and closed in the lower 20 percent of its daily range. 

2. Today the market must trade at least 5-15 ticks below yesterday's low This is a guideline. The exact amount is left to your discretion.

cause of worldwide economic crisis

"Economic crises have been produced by us for the going by no other means than the withdrawal of money from circulation."  - Protocols of Zion

business strategy

The strategist's method...challenge the prevailing assumptions with a single question: Why? and to put the same question relentlessly to those responsible for the current way of doing things until they are sick of it.

Kenichi Ohmae 

Japanese business strategist.

other important strategy is 

Pile it high, sell it cheap.

good quotes

You can judge your age by the amount of pain you feel when you come in contact with a new idea.

We never do anything well till we cease to think about the manner of doing it.

what is simple actually comes hardest.

Whenever you fall, pick up something.

There is an old saying "well begun is half done"—'tis a bad one. I would use instead—Not begun at all 'til half done.

When you can do the common things of life in an uncommon way you'll command the attention of the world.

Markets are not created by God, nature, or by economic forces, but by businessmen.

Pile it high, sell it cheap.

Solve the problem yourself or accept a fate you may not like...from this perspective, the ethic of personal responsibility gains appeal.

The Chinese and US economies are highly interdependent

THE Chinese government is worried about the safety of its nearly $1trillion credit to the US government. In what is described in the US media as an ‘unusually blunt’ bit of ‘scolding’, last week, the Chinese Prime Minister Wen Jiabao criticised America’s “unsustainable model of development characterised by prolonged low savings and high consumption.” “We have lent a huge amount of money to the US. Of course, we are concerned about the safety of our assets,” said Mr Wen, and called on the US government to “maintain its good credit, to honour its promises and to guarantee the safety of China’s assets.” 

    Wait, watch, worry, and occasionally, scold the US government for its profligacy and gross mismanagement of the global financial system. Is there anything else the Chinese government could do to ensure the safety of its humungous share of the US debt and take a leadership role in stopping the global economy from plunging further into recession? 

    For a start, it could stop stashing on US treasury bonds. It could use the nation’s approximately $2 trillion foreign reserves to import goods and services to increase the consumption and welfare of its 1.2 billion people. These reserves belong to the people of the People’s Republic of China. Let them enjoy the fruits of their hard work and savings. Don’t waste these reserves in providing unlimited subsidised credit to US consumers. 

    Next, China could provide generous welfare programmes to put money into the pockets of the millions of Chinese workers who have lost jobs in the economic slowdown. The remaining funds, if there is still anything left, could be invested in foreign countries. Along with the $585 billion stimulus initiative, which is primarily expected to be invested in infrastructure, a boost to domestic Chinese consumption would compensate for the slump in exports to the US that will most likely worsen as the year 2009 progresses. 

    China’s government will perhaps not pay much attention to these suggestions. Worried and wary it may be about the state of the US economy and growingly reckless spendthrift habits of the US government, but China’s appetite for the US treasury bonds is insatiable. Throughout last year, even as signs of deterioration in the US economy were obvious, China continued to purchase US treasury bonds, in larger numbers than ever before. Since 2007, Chinese ownership of the US debt has doubled. As of December 2008, China owned $700 billion in US treasury bills. Its ownership of US debt is believed to be close to $1 trillion as China has also purchased US debt through third countries. 

    Last week, when Washington responded to the Chinese premiere’s remark on his worries about US debt with the statement —‘there is no safer investment in the world than in the United States,’ the Obama administration official was merely describing the behaviour of international investors, especially of the Chinese government. It is totally bizarre. The US economy is in the deepest recession in 70 years, its government is piling on an incredible amount of deficit, and most experts think that these deficits would not be enough to rescue the economy from recession. And international investors think that investing in the US is the safest in the world! 

    CONTINUED acquisition of US debt has put China in a precarious bind. If it begins to sell the US debt in any sizable quantity, the treasury market will collapse lowering the value of the Chinese credit to the US. If China keeps on accumulating US debt, the risk to the safety of its reserves will be enormous. The Chinese economy will become linked to vagaries of the US economy even more than ever. While it is unlikely that the US government will ever default on its debt — it can print as many dollars as it wants — the value of Chinese credit to the US government will decline in the event of a sharp increase in US interest rate or a decline in the value of the dollar. 

    The Chinese and US economies are highly interdependent. Their interdependence is unhealthy for the global financial system. China is America’s biggest creditor and trading partner. Americans buy the goods that Chinese factories produce, and China lends them the money to do so. For years, the US economy has been running massive trade and current account deficits, appropriating the savings of the rest of the world to satisfy its voracious appetite. But the rest of the world, including China and Japan also happily obliged by investing in the US treasuries. China, India, Japan and other Asian countries need to stop buying US treasuries, and invest in their own or in other Asian economies. 

    As foreign governments buy US treasury bonds, the dollar gets strengthened making it difficult for US manufacturers to compete internationally and making international goods cheaper for Americans, thus continuing the vicious cycle in which the rest of the world saves and the US, the richest country in the world, consumes more than it produces. 

    Perhaps the much-needed correction will automatically come with the recession. With the US economy in recession, China has lost its biggest customer. In February, China’s exports fell by 26% and trade surplus declined from $31 billion in January to $4.8 billion in February. With its export surplus declining, China will have less money to purchase American debt. 

    As an aside, the Chinese premiere’s outburst was rather refreshing and an indicator of the changing times. It was not too long ago, when China was among a handful of countries that did not have the most-favoured-nation status with the US. Every year, China had to prove to the US its worthiness for obtaining the most-favoured-nation status. Now it seems that it is the US’s turn to please the Chinese government about its creditworthiness. Last month, on her visit to China, secretary of state Hillary Clinton had to publicly assure China of American creditworthiness. Last week, the White House had to give similar assurances. Not that China will ever sell the treasury bonds in any large amount in the market. Doing so will plunge the treasuries market and along with that the value of the Chinese credit. 

Worry, a legacy we pass down!

Worry, a legacy we pass down!

    WE ARE trained from birth to worry. Worry is an unwanted legacy we pass down from grandparents to parents to children. When parents express constant worry, children grow up thinking that life goes on only because of worry. Understand that life goes on not because of us, but in spite of us! 

    One man had just moved in to a remote part of a village. One day, he was seen throwing handfuls of breadcrumbs around his house. His neighbour who was watching him asked him: “What are you doing?” The man replied, “I am keeping the tigers away.” The neighbour was surprised. He said: “But there are no tigers in these parts!” The man replied: “That’s right. Very effective, isn’t it?” 

    Children are like sponges. They simply absorb the body language and attitude of the parents. If a child hears his parent repeating a certain worry, he internalises it, carries it through out his life, and passes it in turn to his children. The problem is that parents expect their children to worry! If they don’t worry, they brand them as uncaring. It is possible to care without worrying. Care is doing, worry is chattering. There is no use chattering. Chattering is like trying to cross a bridge before we come to it. 

    A young man was driving his mother to the neighbouring village. They were nearing the village when they remembered a particular bridge that used to be very old and unusable. The mother got very anxious and said: “I will never cross that bridge by car.” The son said: “Let’s see how it looks when we come to it.” 

    The mother said: “I’m sure the bridge will break if we attempt to cross it.” The son replied: “Let’s see how strong it is. We won’t cross it without checking it carefully.” The mother said: “If something happens to you or me, your father will never forgive me.” She kept going on like this, becoming more and more upset. Soon they reached the spot where the bridge stood. The bridge had been replaced with a new one! 

    It is not that the son does not care. He just cares without worry. So much energy is spent worrying. Why contemplate over the bridge even before we come to it? By constant worrying, we make negative thoughts a habit within us. 

    We need to look at our worries with awareness. Understand that we are a part of the grand plan of Existence. If we tune in to it, our actions will be fluid and spontaneous like the happenings of Existence. 

    Let us surrender to the Existence. Let us release ourselves from our worries. Be blissful!

SEND EMAIL IN MISSION IMPOSSIBLE STYLE

SEND EMAIL IN MISSION IMPOSSIBLE STYLE

You might remember the world famous scene of Mission Impossible in which after the message has been heard once the message destroys itself. Now it is possible for everybody to have such facility. You can send an E-mail which destroys itself after it has been read once.

Every time that you send an email, copies are stored permanently on multiple email servers as well as the recipient's inbox and anyone they decide to send it to. Your emails can be stored and scanned in more places than you can imagine. Do you want people storing your email messages forever? Do you want something that you type today to be used against you tomorrow, next week, next month or even in the next decade?

Until now, everyone else has had control of the email that you have sent. BigString gives you back control of your email, acting like an automatic shredder for your email. You can self-destruct or change an email that's already been sent or read. Don't leave your messages sitting in peoples' inboxes forever. Get a free BigString email account to protect your privacy.

BigString takes the risk out of email

Now, with BigString, you can finally take the risk out of email and put an end to "sender regret." It is the world's first & only email service that thoroughly protects your safety and privacy.

BigString's exclusive, patent-pending technology enables you to prevent your personal or business information from lingering indefinitely in someone else's inbox. It also restricts private pictures or messages from being indiscriminately spread throughout cyberspace! Now your sensitive photos can't be posted to unseemly web sites or printed for circulation amongst total strangers.

BigString lets you have second thoughts

BigString shifts the control from the recipient to YOU the sender. BigString grants the luxury of second thoughts, the power to limit message viewings, and the choice to delay email transmission.

You can reword a message fired off in anger or haste or completely delete it! You can recall a botched résumé for revision or erase a tasteless joke. You can make a work of art or photograph print-proof. You can prevent a love letter from being forwarded. You can set an expiration date on an emailed price quote or business offer or you can simply pull back an email to eliminate typos.

BigString takes the danger out of clicking

BigString guarantees that clicking "send" will never again be an irreversible disaster. Now YOU decide the fate of your emails. You decide where they end up, who sees them and for how long. BigString emails can be destroyed, recalled or changed even after they've been opened! The freedom is yours, the options are yours, and you're the boss with BigString.

BigString is easy to use

BigString is as easy to use as any other email and there's nothing to download! Don't be resigned to the mercy of your recipient. You don't want your every action to be carved in stone because sometimes you just NEED to take it back!

Here are just a few of the many applications of BigString Erasable, Recallable, Non-Printable Email.

Executives: Protect your business and safeguard your email. Now you never have to worry about sending the wrong attachment or completely forgetting it. Misspelled words, incorrect dates, or other typos can all be fixed even after your message has been sent. You can even "pull an email back" to delete expired price quotes, old business offers or dated legal material. BigString is your email insurance.

On-Line Daters: You don't want your personal information like pictures, phone numbers or intimate notes, circulated around the Internet! BigString prevents your pictures and messages from being printed or forwarded. You can set an expiration date for an email or self-destruct it at will. You can choose the number of times you'll allow a picture to be viewed before it disappears. BigString protects your privacy!

Artists and Photographers: Now with BigString you can confidently email proofs and samples without the slightest fear that they will be printed or saved for later use without your authorization. Use BigString to make your image non-savable and non-printable! Limit the number of times a client can view a piece before you have it self-destruct. You can even recall a sent email to delete an old price quote or alter a new one. You can also prevent it from being forwarded to other customers. BigString protects your rights of ownership!

Copywriters: Spelling or punctuation errors that can cost time, money, or embarrassment are now a thing of the past. With BigString, clicking "send" is no longer an action "carved in stone." Accidentally arranging paragraphs in the wrong order will no longer mean a lost account. With the technology of BigString you can recall that mistake-ridden copy and correct the errors even after your email has left the outbox. You can self-destruct what you sent all together and replace it with a fully revised version. Only you will know this switch has occurred! With BigString you can confidently send non-printable, non-savable sample copy. You no longer have to worry that it will be used without your knowledge. You're the boss with BigString.

Bose-Einstein condensate

The following report is from an August 1995 article in the Encarta Yearbook.

Physicists Condense Supercooled Atoms, Forming New State of Matter

A team of Colorado physicists has cooled atoms of gas to a temperature so low that the particles entered a merged state, known as a “Bose-Einstein condensate.” This phenomenon was first predicted about 70 years ago by the theories of German-born American physicist Albert Einstein and Indian physicist Satyendra Nath Bose. The condensed particles are considered a new state of matter, different from the common states of matter—gas, liquid, and solid—and from plasma, a high temperature, ionized form of matter that is found in the sun and other stars.

Physicists have great expectations for the application of this discovery. Because the condensate essentially behaves like one atom even though it is made up of thousands, investigators should be able to measure interactions at the atomic and subatomic level that were previously extremely difficult, if not impossible, to study quantitatively.

The condensate was detected June 5 by a Colorado team led by National Institutes of Standards and Technology physicist Eric Cornell and University of Colorado physicist Carl Wieman. Their discovery was reported in the journal Science on July 14. Cornell and Wieman formed their condensate from rubidium gas.

Several groups of physicists, including the teams in Texas and Colorado and a group at the Massachusetts Institute of Technology, have been working to form pure condensate in recent years. The goal of the investigations has been to create a pure chunk of condensate out of atoms in an inert medium, such as a diffuse, nonreactive gas. The effort began when methods of cooling and trapping became refined enough that it seemed possible to reach the required conditions of temperature and density.

The Colorado team used two techniques: first laser cooling and then evaporative cooling. The laser technique used laser light whose frequency was carefully tuned to interact with the rubidium atoms and gently reduce their speeds. A number of lasers were aimed at the gas to slow the motion of the atoms in different directions.

The Colorado physicists then switched to evaporative cooling. In this method, the gas is “trapped” by a magnetic field that dwindles to zero at its center. Atoms that are moving wander out of the field, while the coldest atoms cluster at the center. Because a few very cold atoms could still escape at the zero field point of the trap, the physicists perfected their system by adding a second slowly circling magnetic field so that the zero point moved, not giving the atoms the chance to escape through it.

Physicists will now begin to explore the properties of the condensate and see what other materials they can use to form it. One unusual characteristic of the condensate is that it is composed of atoms that have lost their individual identities. This is analogous to laser light, which is composed of light particles, or photons, that similarly have become indistinguishable and all behave in exactly the same manner. The laser has found a myriad of uses both in practical applications and in theoretical research, and the Bose-Einstein condensate may turn out to be just as important. Some scientists speculate that if a condensate can be readily produced and sustained, it could be used to miniaturize and speed up computer components to a scale and quickness not possible before.

The prediction that a merged form of matter will emerge at extremely low temperatures is based on a number of aspects of the quantum theory. This theory governs the interaction of particles on a subatomic scale. The basic principle of quantum theory is that particles can only exist in certain discrete energy states.

The exact “quantum state” of a particle takes into consideration such factors as the position of the particle and its “spin,” which can only have certain discrete values. A particle's spin categorizes it as either a boson or a fermion. Those two groups of particles behave according to different sets of statistical rules. Bosons have spins that are a constant number multiplied by an integer (e.g., 0, 1, 2, 3). Fermions have spins that are that same constant multiplied by an odd half-integer (1/2, 3/2, 5/2, etc.). Examples of fermions are the protons and neutrons that make up an atom's nucleus, and electrons.

Composite particles, such as nuclei and atoms, are classified as bosons or fermions based on the sum of the spins of their constituent particles. For instance, an isotope of helium called helium-4 turns out to be a bose particle. Helium-4 is made up of six fermi particles: two electrons orbiting a nucleus made up of two protons and two neutrons. Adding up six odd half-integers will yield a whole integer, making helium-4 a boson. The atoms of rubidium used in the Colorado experiment are bose particles as well. Only bose atoms may form a condensate, but they do so only at a sufficiently low temperature and high density.

At their lab in Colorado, Cornell and Wieman cooled a rubidium gas down to a temperature as close to absolute zero, the temperature at which particles stop moving, as they could get. The slower the particles, the lower their momentum. In essence, the cooling brought the momentum of the gas particles closer and closer to precisely zero, as the temperature decreased to within a few billionths of a degree Kelvin. (Kelvin degrees are on the scale of degrees Celsius, but zero Kelvin is absolute zero, while zero Celsius is the freezing point of water.)

As the temperature, and thus the momentum, of the gas particles dropped to an infinitesimal amount, the possible locations of the atom at any given moment increased proportionally. The goal of the experiment was to keep the gas atoms packed together closely enough that during this process—as their momentum got lower and lower, and their wavelengths got larger and larger—their waves would begin to overlap. This interplay of position and movement in three dimensions with the relative distances between particles is known as the phase-space density and is the key factor in forming a condensate.

In essence, the momentum of the atoms would become so precisely pinpointed (near zero) that their position would become less and less certain and there would be a relatively large amount of space that would define each atom's position. As the atoms slowed to almost a stop, their positions became so fuzzy that each atom came to occupy the same position as every other atom, losing their individual identity. This odd phenomenon is a Bose-Einstein condensate.

As their experimental conditions neared the realm of Bose-Einstein condensation, Cornell and Wieman noticed an abrupt rise in the peak density of their sample, a type of discontinuity that strongly indicates a phase transition. The Colorado physicists estimated that after progressive evaporative cooling of the rubidium, they were left with a nugget of about 2,000 atoms of pure condensate. Cornell and Wieman then released the atoms from the “trap” in which they had been cooling and sent a pulse of laser light at the condensate, basically blowing it apart. They recorded an image of the expanding cloud of atoms. Prior to the light pulse, when the density dropped after the atoms were released, the physicists believed the temperature of the condensate fell to an amazing frigidity of 20 nanoKelvins (20 billionths of one degree above absolute zero).

The image showed a larger, expanding sphere of particles with a smaller, more concentrated elliptical-looking center. Cornell and Wieman observed that when a gas is constrained and then released (in an extreme example, as in a bomb), thermodynamics specifies that it will expand outward equally in all directions regardless of the shape in which it had been contained. This occurs because the particles in that gas, even if the gas was very cold, were moving in all different directions with various energies when the gas was pushed outwards.

This rule of uniform expansion does not hold for a Bose-Einstein condensate. Because the particles were all acting in exactly the same manner at the time of the light pulse, their expansion should give some indication of the shape of the space they had previously inhabited. The uneven, elliptical-looking clump of atoms in the center of the image recorded by Cornell and Wieman thus gave further proof that a condensate had formed.

Bose-Einstein characteristics have been observed in other systems, specifically, in superfluid liquid helium-4 and in superconductors. It is believed that liquid helium-4 at a sufficiently low temperature is composed of two components mixed together, the colder of which is a Bose-Einstein condensate. Liquid helium-4, which at very low temperatures is also a superconductor of heat, behaves in dramatic ways, trickling up the sides of containers and rising in fountains.

Electrical superconductors are also boson-related phenomena. In superconductors, which are also formed by supercooling, electrical resistance disappears. In this case it is the electrons within a substance's atoms, rather than the atoms themselves, that condense. The electrons pair up, together forming a particle of zero spin. These paired electrons merge into an overall substance that flows freely through the superconductor, offering no resistance to electric current. Thus, once initiated, a current can flow indefinitely in a superconductor.

The BCCI Scandal

Investigations into the multinational firm known as the Bank of Credit and Commerce International (BCCI) created one of the largest international banking scandals in history. Through a global network of branches and subsidiaries, the bank defrauded investors and conducted illegal transactions around the world. In the United States, former Secretary of Defense Clark Clifford and others were accused of aiding the bank in its illegal operations. In this article from Collier’s 1992 Year Book, Christian Science Monitor columnist and editor David R. Francis examined BCCI’s web of fraud and deception, and its discovery in 1991.

Cartoonists portrayed the Bank of Credit and Commerce International as an evil octopus embracing the globe. Wits nicknamed it the Bank of Crooks and Criminals.

According to Manhattan District Attorney Robert M. Morgenthau, the BCCI scandal that came to light in 1991 was "the largest bank fraud in world history." Perhaps no other criminal enterprise has involved or at least embarrassed so many prominent people, from billionaire Arab sheikhs to Third World dictators to present and former leading figures in the U.S. and British governments. Certainly none could match the international web of financial chicanery, political intrigue, and unsavory figures with which BCCI was said to be associated.

The scandal broke on July 5, when, in a coordinated swoop, authorities seized BCCI's assets in the seven countries or territories with its largest operations—Great Britain, Luxembourg, the Cayman Islands, the United States, France, Spain, and Switzerland. The seven governments acted after a special audit commissioned by the Bank of England found that BCCI "generated significant losses over the last decade and may never have been profitable in its entire history."

More than 60 other countries where the bank operated were notified of the action and asked to cooperate. By July 29, when a Manhattan grand jury indicted BCCI, along with its founder and its former chief executive, on charges of fraud, money laundering, bribery, and theft, a total of 44 countries had closed BCCI offices in their respective jurisdictions.

Total claims against the bank worldwide were estimated at $20 billion, while its total assets were believed to be less than $10 billion.

How It Grew

BCCI had been founded in 1972 by a Pakistani banker, Aga Hassan Abedi, and a handful of compatriots whose ambition was to create a world-class bank that would be a Muslim competitor of the big Western financial institutions and would serve the interests of developing countries. Having little capital, however, they needed massive infusions of funds from other sources. The Bank of America initially held in the bank a 25 percent interest, which it sold in 1980. Pursuing its aim of rapid growth, BCCI gambled on futures and options trading and extended high-risk loans. It raised millions of dollars through bookkeeping tricks that inflated profits and helped cover massive trading and loan losses.

To provide an illusion of financial stability, BCCI executives convinced a few members of ruling families in Middle Eastern countries and several businessmen in the region to pose as owners of the bank's holding company. In April 1990, in order to bolster BCCI's sagging financial position, Sheikh Zayed bin Sultan al-Nahyan, ruler of Abu Dhabi, and his government provided $400 million in additional capital, increasing their ownership share from about 30 percent to 77 percent.

By this time the bank had built up a corporate structure so complex that it could operate virtually unregulated all over the world. With more than 400 shell companies, offshore banks, branches, and subsidiaries, it used unregulated accounts in the Cayman Islands or elsewhere to hide crooked operations with fictitious transactions. BCCI was a giant Ponzi scheme: funds from more than a million depositors and at least 20 central government banks, mostly in developing countries, were shifted around or paid out when necessary to maintain the bank's credibility in financial markets, but huge sums disappeared by means of outright theft or "loans" on which the interest or even the principal was not collected. A separate set of books kept by BCCI's top management concealed these activities from auditors.

BCCI found it profitable to help dictators, drug dealers, and terrorists with their finances. Among those said to have used the bank to loot national treasuries, launder drug profits, or conduct clandestine arms deals were Philippine President Ferdinand Marcos, Iraqi President Saddam Hussein, Panamanian leader Manuel Noreiga, and Palestinian terrorist Abu Nidal. According to a report in Time magazine, BCCI had a secret division known as the black network, through which it engaged in its own arms dealing, contraband smuggling, and intelligence gathering, using such enforcement techniques as bribery, blackmail, kidnapping, and murder.

Banking experts say BCCI avoided exposure for so many years partly by seeking out areas where regulation was weakest. Its parent holding company was chartered and headquartered in Luxembourg, where holding companies are not subject to government supervision, and its two principal banking subsidiaries were in Luxembourg and the Cayman Islands, also known for its lax banking regulations. If BCCI encountered a legal impediment, it would often be able to circumvent the problem by creating a new affiliate or acting through one of its myriad existing entities.

U.S. Activities

Because there was no consolidated home-country supervision of BCCI's banking activities, federal regulatory authorities never gave it permission to operate a branch or accept deposits in the United States. For a time BCCI was able to maintain state-licensed agencies in New York, San Francisco, Los Angeles, Miami, and Tampa and Boca Raton, Fla., as well as representative offices in other U.S. cities. A major blow to its standing came in 1988 when a federal sting operation led to the indictment of the bank and ten executives in Florida on charges of laundering drug money. The bank pled guilty and was fined $15 million, and five of its executives were sent to jail. As a result, tighter controls were imposed on BCCI's U.S. operations.

In March 1991, after signs of financial troubles at BCCI, the Federal Reserve required the bank's U.S. agencies to maintain sufficient liquid assets to cover liabilities in these agencies. BCCI, which had already shrunk its legal activities in the United States, scaled them back further.

Although frustrated in its efforts to establish a substantial U.S. presence by legal means, BCCI was found to have used sham stockholders to illegally acquire three American banks, the largest being First American Bankshares in Washington, D.C. On the basis of this finding, the Federal Reserve on July 29 proposed that Abedi and eight other BCCI-linked figures be barred from banking activities in the United States and that BCCI be fined $200 million.

First American Chairman Clark Clifford and President Robert Altman resigned their First American jobs on August 13 and appeared in the fall before congressional subcommittees investigating the scandal. Clifford, a former secretary of defense and adviser to Democratic presidents, and Altman, Clifford's protégé and junior law partner, denied that they had known of BCCI's secret ownership of their bank. However, Abdur Sakhia, a former BCCI executive, told a Senate subcommittee that "it is impossible to believe that he [Altman] did not know." Sakhia said that many important decisions on First American's staff assignments, marketing, and even rental of office space were ultimately made by BCCI. Clifford described as "legal and proper" a deal in which he and Altman used a loan from BCCI to buy stock in First American, which they sold two years later at a profit of several million dollars.

The largesse that Clifford enjoyed from his association with BCCI, whether or not he knew of it, illustrated another of the bank's primary operating strategies: it bought prestige by financially helping, in one way or another, leaders or other influential people in many countries. In the United States, BCCI cultivated close relations with a number of prominent figures in Georgia, where Gaith Pharaon, a Saudi Arabian financier who ostensibly owned one of the other U.S. banks actually controlled by BCCI, had an estate near Savannah. The beneficiaries included former President Jimmy Carter, whose public-policy center at Emory University received more than $8 million in BCCI donations; former U.S. Budget Director Bert Lance, who sold his struggling National Bank of Georgia to First American in 1978; and former Atlanta Mayor Andrew Young, who was paid $50,000 a year for introducing Abedi to leaders of Third World countries. Lance and Young also received large loans from BCCI.

As stories emerged of years of suspicious conduct by the bank, many observers suggested that BCCI's abundance of friends in high places helped to explain why it had been allowed to go unchecked for so long. There were charges that federal officials, including then Attorney General Richard Thornburgh, had ignored repeated warnings about illegal activities in the United States by BCCI and its customers and had blocked investigations. It was also alleged that the CIA secretly used the bank to support anti-Communist guerrillas in Afghanistan, to sell U.S. arms to Iran, and to divert profits from the arms sales to the Nicaraguan contras, as well as to gather information about terrorism and other activities involving BCCI's clandestine clients. The agency's acting director, Richard Kerr, told the Senate on October 25 that the agency used BCCI as "a normal bank, with accounts associated with lawful, authorized activities." He admitted, however, that the CIA had failed to tell the Federal Reserve or the Justice Department what it knew about BCCI's secret control of First American.

Not long thereafter, Edward M. Rogers, Jr., a former White House aide, withdrew from a two-year $600,000 contract to provide legal services to Sheikh Kamal Adham, the former director of Saudi Arabian intelligence and one of those the Federal Reserve had undertaken to have banned from banking in the United States. Rogers said he wanted to avoid embarrassing President George Bush and raising "unfair inferences" about himself.

U.S. Corrective Moves

In mid-November the Justice Department finally obtained its first indictments in the scandal on charges other than money laundering. Abedi and Pharaon, along with BCCI's acting president, Swaleh Naqvi, were accused of racketeering in a conspiracy to take over the Independence Bank of Encino, Calif. They were also charged with fraud in a stock scheme involving the Centrust Savings Bank in Miami.

The following month government officials reached an agreement with BCCI's court-appointed European liquidators under which BCCI would plead guilty to federal and New York State criminal charges and would forfeit more than $550 million (all of the bank's known U.S. assets). About half of the forfeited amount would be used to shore up First American and Independence Bank, and another half would go to a special fund to help reimburse BCCI's depositors worldwide. BCCI was also to pay a $10 million fine to New York State, while the Federal Reserve was to drop its $200 million civil penalty.

To help prevent a recurrence of the kinds of problems caused by BCCI, a banking bill passed by Congress in late November provided the Federal Reserve with new power to police the activities of foreign banks in the United States. Foreign banks would be permitted to accept insured deposits only through incorporated subsidiaries—not through branches.

British Developments

Meanwhile, in Britain, one of the countries most affected by BCCI's collapse, the bank was under investigation by a parliamentary committee as well as the Serious Fraud Office, a prosecuting agency that deals with white-collar crime. Labor Party members of Parliament criticized Conservative Prime Minister John Major for not acting more vigorously against BCCI when he had been chancellor of the exchequer and thus responsible for banking regulation. As in the United States, however, the scandal touched prominent figures in both major political parties; former Labor Prime Minister James Callaghan, for example, had received BCCI consulting fees.

The government of Abu Dhabi protested the July seizure of BCCI's assets, saying it had been trying to implement its own rescue plan, and a British judge delayed the liquidation of the bank's operations in Britain when the owners agreed to create a £50 million fund from which British depositors could borrow against their frozen BCCI accounts. In September, Abu Dhabi authorities detained more than 30 of the bank's executives, including Swaleh Naqvi.

Many BCCI depositors in Britain could expect to recover 75 percent of their deposits, the proportion protected by the British deposit insurance system. However, the system covered only deposits up to £15,000, so that, barring an infusion of cash, a number of businesses and local governments stood to lose almost all of the hundreds of millions of pounds they had in BCCI accounts.

A British judge delayed until early 1992 a decision on whether to liquidate BCCI operations, thereby giving the appointed liquidators time to try to arrange a settlement. Sheikh Zayed of Abu Dhabi offered to supply up to $2 billion to help pay off creditors (including the more than a million depositors around the world) under a plan that might give them as much as 40 cents on the dollar. With the Abu Dhabi government and the sheikh owning most of BCCI, the sheikh was concerned about potential liability in the scandal and demanded that the settlement require creditors to waive any legal claims against majority shareholders.

Depositors in BCCI's affiliate in Hong Kong were initially offered only 25 cents on the dollar for their accounts, whose book value totaled US$1.4 billion. Hong Kong has no deposit insurance, and the July shutdown of the BCCI operation there, three days after the government issued assurances of its safety, sparked a run on other banks. Depositors' chances of recovering most of their money rose in November when the Hong Kong government gave conditional approval for Hong Kong Chinese Bank, a subsidiary of Indonesia's Lippo Group, to buy BCCI Hong Kong.

Third World Impact

Nowhere was the BCCI collapse more devastating than in Africa, where the bank obtained about 11 percent of its $20 billion in nominal assets. The loss of even part of that money would be a severe blow to a continent already desperately poor. The government of Cameroon, for example, had reportedly deposited one-third of its reserves with BCCI in London.

The disgraced bank, however, retained a reservoir of good will in its original home. In Pakistan, where BCCI had cultivated intimate connections with a wide spectrum of political parties and leaders, its troubles were widely seen as part of a Western or Jewish conspiracy to discredit and destroy an upstart Muslim-owned rival. Government authorities made no effort to extradite the ailing Abedi to New York for trial, and in October two other former top officials of BCCI were among those awarded the first private banking licenses that Pakistan had issued in years.

Source: 1992 Collier’s Year Book.

Geothermal Energy

Ever since the first waterwheel was created, human beings have tapped the earth’s resources to power everything from grindstones to rockets. When American dependence on petroleum was underscored by the energy crisis of the 1970s, the search for alternative fuels heated up. Geothermal energy, already used in Iceland and elsewhere, received increased attention in North America. The first article in this sidebar from National Geographic explores the optimistic outlook for geothermal energy in 1977. The 1993 Los Angeles Times article that follows describes the subsequent failure of some geothermal development in California.

The smell of brimstone hung on the air. Steam vents hissed at me like snakes. Craters of boiling mud seethed and burped; black bubbles formed, swelled, and collapsed with rude plops.

Heat had created a scabrous landscape almost devoid of vegetation and stained with yellow streaks of sulfur and the white crusts of mineral salts. It suggested an outpost of Dante's Inferno—although it bore the more earthly name Laguna Volcano.

Only a short distance away, towering plumes of steam sent a muffled roar to my ears. These plumes marked the location of the new Cerro Prieto power plant in northern Mexico. The heat that drove the electric generators of Cerro Prieto was the same heat that had created the wasteland at my feet. It was the terrible heat from inside the earth.

The cold, hard crust of our planet gives little hint of that awesome heat, chiefly the result of decay of radioactive elements. Only where the heat leaks through rifts in the crust —in the molten lava of volcanoes, the hot water of geysers and hot springs, or the steam of fumaroles—does man begin to suspect the titanic forces beneath his feet.

Yet most of earth's 260 billion cubic miles of rock are at or above the melting point—about 2200° Fahrenheit (1200° Celsius). Donald E. White of the United States Geological Survey estimates that just the top 6.2 miles (10 kilometers) of the crust hold 3 x 1028 (300 million billion billion) calories of heat.

"We would have to burn 2,000 times the world's entire supply of coal to generate that much heat," says White.

At a time when fossil fuels—especially oil and gas—are becoming increasingly scarce and expensive, and when nuclear power faces an uncertain future, such a prodigious energy source cannot be ignored, even if much of it can never be used. And, indeed, geothermal ("earth heat") energy has become a warm new prospect. At present nine nations have begun tapping that resource to generate electricity Several, such as Iceland, France, Hungary, and New Zealand, heat homes with the earth's hot water and use the heat for industrial purposes as well.

Despite the magnitude of the earth's heat, capturing it on a large scale for man's use still presents a number of technological and economic problems.

But a few years from now we may well be scrambling for every kilowatt of power we can get. Geothermal energy may then be more available and very welcome. Already it provides more electricity than the world extracts from the sun's heat or from wind power—two other promising sources.

The Federal Government's Energy Research and Development Administration (ERDA) thinks geothermal energy is so important that the agency has included 101 million dollars in its fiscal 1978 budget to encourage development. That's 84 percent more than in fiscal 1977.

And industry is more than mildly interested. In January 1974 the Bureau of Land Management opened up large areas of public lands in the West for geothermal exploration. The demand for leases recalled the frenzy of the Oklahoma land rush. In the first month, nearly 2,500 applications were filed for leases covering 5,280,000 acres in 11 states. Both wildcatters and giant oil companies are beginning to drill on these lands, looking not for oil or gas but for heat.

How much contribution can geothermal energy make? Estimates of its potential in the United States vary widely. Some enthusiasts have suggested that the Southwest could in time get all its energy from geothermal. Some very conservative observers doubt that geothermal could ever provide more than one percent of U.S. power needs.

The truth probably lies between these extremes. A 1975 study by the U.S. Geological Survey foresees 12,000 megawatts (12,000,000 kilowatts) of electricity from hydrothermal reserves, lasting for at least 30 years, at present prices and with current technology. (A thousand megawatts is about the energy needed for a city of a million persons.)

The USGS further estimates that perhaps 12 times this much hot-water energy remains to be discovered in the United States, or awaits higher prices or improved technology before it will be economical to develop.

By far the simplest, cheapest, and best form of geothermal energy comes from the ground in the form of dry steam. It can be used directly to drive turbine generators with a minimum of problems.

Unfortunately, dry steam occurs in only a few places. As Morton Smith of the Los Alamos Scientific Laboratory puts it, "Dry steam is a geological freak." But this highly desirable freak is found in Japan and Italy, and in the United States at The Geysers, in California's Sonoma County about 90 miles north of San Francisco.

I found The Geysers after following the tortuous windings of an old stagecoach road deep into the Mayacmas Mountains. Miles of pipelines streaking along the sides of Big Sulphur Canyon, vapor billowing from rows of generating-plant cooling towers, and roaring jets of steam from vent valves gave the valley an awesome appearance.

The Geysers must have been a frightening place to William Bell Elliott when he discovered its fumaroles in 1847 while hunting a grizzly bear. The explorer-surveyor was overwhelmed by the sight of steam pouring from fissures along the steep canyon.

"I thought I had come upon the gates of hell itself," he told friends.

Today at The Geysers, the Pacific Gas and Electric Company, drawing on a hundred wells operated by Union Oil, produces 500 megawatts of electricity, about half of San Francisco's needs. More wells and new generator units should increase output to about 900 megawatts by mid-1979.

By the 1990's PG and E hopes to develop The Geysers to a level of 2,000 megawatts—almost the capacity of two Hoover Dams or two large fossil-fuel or nuclear power plants.

The earth is stingy with its natural steam. Aside from The Geysers, dry steam has been found in the United States only in Yellowstone National Park, where law forbids development.

But earth's heat is much more readily available in the form of very hot water under pressure. All along the world's earthquake and volcano belts, pockets of magma, or molten rock, have worked their way close to the surface. Water filtering into permeable rock layers above these pockets is heated—often far above the normal boiling point.

Sometimes the superheated water forces its way out as hot springs or geysers. More often, trapped by an impermeable cap rock above it, the water becomes a subterranean caldron under extremely high pressure, waiting to be tapped by wells.

Mexico's Cerro Prieto, not far south of the border city of Mexicali, is a prime example of tapping such a reservoir. As the 570°F water rises to the wellhead, the pressure drops and the water flashes, or boils. About 20 percent turns to steam, which is separated out and piped to the generator turbines. The remaining hot water roars through discharge pipes into large ponds, but it could be used for industrial or household purposes.

Just to the north of Cerro Prieto, in the Imperial Valley of California, I found intensive interest in geothermal water. Signs at the airport predict that this rich agricultural region might become the nation's teakettle as well as its salad bowl.

Oddly enough, were it not for the higher country around it, the Imperial Valley would be an inland sea and therefore worthless for either agriculture or geothermal energy. A flagpole in Calipatria, which advertises itself as the lowest city in the Western Hemisphere, raises its tip 184 feet, to the level the sea would reach if it could get into the valley.

And, strangely, this extremely flat valley, resting upon vast reservoirs of subterranean waters, would be desert were it not for irrigation water brought in from the Colorado River. "Rain for rent" reads the sign of one firm that provides sprinkler systems.

Amid the interminable checkerboard fields of lettuce, cantaloupes, and cotton, the endless rows of baled alfalfa, and the occasional palm trees, evidences of a fledgling geothermal industry are becoming steadily more apparent. At places like Heber and Brawley, Niland and East Mesa, drilling rigs grind day and night searching for hot water. Dozens of completed wells tell of successful searches.

And at Niland, near the Salton Sea, a test facility takes boiling brine from the earth and simulates the conditions of a power plant. This facility, a venture of ERDA and San Diego Gas & Electric in cooperation with the Magma Power Company, tests materials, methods of handling hot brine, and techniques for extracting heat.

I use the word “brine” advisedly, for geothermal waters are sometimes highly saline. Hot water under pressure can dissolve and carry astonishing amounts of salts and minerals from the rocks.

In most places, to be sure, the concentration of such materials is quite low—even much less than seawater's 3.5 percent. But in the Imperial Valley, which holds some of the nation's most important high-temperature geothermal resources, salinity can run high. At Niland it reaches the incredible level of 20 to 30 percent dissolved solids. Such concentrated brine creates major problems. It can be violently corrosive and erosive, swiftly eating away turbine blades and nozzles. Even worse, the minerals precipitate rapidly as temperature and pressure are reduced. I have seen pipes choked by an inch-thick layer of hard rusty scale that deposited in only a few hundred hours of operation.

"The total energy in the Niland area is about equal to the recoverable energy in Alaska's North Slope," an ERDA official, Eric H. Willis, once told me. "But how do you stop it from having arteriosclerosis?"

Until recently these problems seemed likely to block geothermal development in parts of the valley. But new developments alter the prospects.

At the Niland test facility, a four-stage heat exchanger offers one solution. When heat is drawn from the hot brine in several stages instead of all at once, and when the pressure is lowered gradually, scaling is sharply cut.

At ERDA's Lawrence Livermore Laboratory near San Francisco, engineers have developed a new process known as "total flow," which uses a well's entire output, liquid and vapor, to drive specially designed turbines. As part of this work, they believe they have solved the scaling problem by treating the brine with hydrochloric acid.

"Under the worst conditions we add only about 200 parts per million to the brine." Roy Austin told me. "This will probably cost less than two-tenths of a cent a kilowatt-hour. And we get absolutely no sealing in the nozzles. They come out so clean we can still see the machine marks. We have also tested materials that appear promisingly resistant under these conditions."

So far the Imperial Valley seems to offer the nation's richest prospects for geothermal hot-water development. Pilot power plants are already on engineers' drawing boards. By the 1980's the industry expects that imperial Valley electricity will be flowing into the grid, just as it already does at The Geysers.

But the Imperial Valley holds only a few of the 106 geothermal systems in the Western States that have been identified by the Geological Survey as KGRA's (Known Geothermal Resource Areas). Thirty-seven of these yield water at temperatures above 300°F—hot enough for electric-power generation.

For example, near Los Alamos, New Mexico, the Union Oil Company has brought in a number of productive wells inside the Valles Caldera, an enormous volcanic basin some 13 miles across. Union is now negotiating with potential purchasers of the steam.

Around Roosevelt Hot Springs in southwestern Utah, five major companies and several smaller ones are probing a very important new reservoir. On the slopes above an ancient lake bed, amid sagebrush, yellow-flowered rabbit bush, and juniper, drill rigs are sprouting and geologists are measuring heat flow and electrical properties to find likely spots for wells.

At places on this Utah site, one does not have to go far below the surface to find evidence of heat. On one claim I found a prospector's trench scooped into the bank of a wash. Idly curious, I stooped over to scratch at the bottom of the trench. I had flicked away no more than half an inch of soil when I jerked my hand back. I had burned my fingers as surely as if they had touched a hot kettle.

Temperatures of the water from some of the Utah wells exceed 500°F (260°C). But geothermal water in many other places is nowhere near as hot—not even up to the 300°F regarded as minimum for efficient production of electricity. Can these cooler waters be used?

I found abundant answers in Iceland, whose volcanic hills and rifts lie directly on the Mid-Atlantic Ridge. There, where upwelling magma is steadily forcing apart the crustal plates, the inner fires of earth are always close at hand.

When the Vikings first approached Iceland, they saw geothermal steam rising from the area now occupied by Reykjavik. They thought it was smoke, hence the name Reykjavik (Smoking Bay).

As recently as three decades ago, Reykjavik was indeed smoky. Early photographs show it as a filthy, black-stained town shrouded by smoke from coal fires.

Then geothermal energy came to the rescue. Today virtually all the buildings in the Reykjavik area are heated by geothermal water. Some 115,000 persons enjoy one of the cleanest cities in the world.

Simple sheds covering the wellheads, a few low storage tanks, and raised concrete conduits carrying the major pipelines are the only outward evidence of this splendid heating system. The cost? The average householder pays from 130 to 160 dollars a year for heating and hot water—on an island that touches the Arctic Circle!

With two scientists from Iceland's National Energy Authority—Dr. Stefán Arnórsson, a geochemist, and Dr. Kristján Saemundsson, a geologist—I visited other communities in Iceland whose very existence depends on geothermal springs and wells.

Our road traversed a huge lava flow and we passed between volcanic hills that had pushed up under the ice sheet some 20,000 years ago. We saw fumaroles steaming in the snow and little Icelandic ponies standing with their tails to the wind.

Dropping below an escarpment, we came into the valley town of Hveragerdi (Garden of Hot Springs). A thousand souls have settled here since the first house was built in 1928. As in most geothermal towns, escaping steam is ever present. At the center of town, a violently boiling hot spring and an abandoned borehole that erupts at intervals are fenced off for safety.

Large greenhouse complexes make efficient use of Hveragerdi's geothermal water. I visited one owned by Ingimar Sigurdsson. Outside, the sharp winds of February had slashed through any coat; inside, I found springlike temperatures.

The gardener picked a rosebud from one of 50,000 plants. "I'll have blooms," he said, "from now till mid-December."

The borehole for the greenhouse goes down only 2,000 feet, he told us. Water and steam come up without aid of pumps or electricity. The rejected water goes into the river after heating a swimming pool.

Dr. Arnósson told me that Iceland is turning its natural heat more and more to purposes other than space heating. One farmer we visited, for example, uses hot water to heat air to dry his hay.

In the northern part of the island, an industrial plant takes diatomaceous material from a lake bed, dries it with geothermal steam, and produces diatomite for use in filters, insulation, and other industrial purposes.

In addition, Iceland is beginning to develop hot water for electric power. Since much of the water is below 300°F (150°C), and thus will not produce efficient amounts of steam, the Icelanders have considered using the vapor-turbine cycle technique: The water would heat low-boiling-point liquids such as Freon and isobutane, and the resulting vapor would drive the turbine generators.

This technique is being used successfully on the Soviet peninsula of Kamchatka in the northwest Pacific Ocean to supply power to the Paratunka State Farms.

Geothermal heating in the United States goes back even further than in Iceland. Some 350 households in Klamath Falls. Oregon, have long had individual hot-water wells. In Boise, Idaho, homes along Warm Springs Avenue have drawn hot water from a central well for nearly a century. And today, in Boise, the Idaho state government is considering the investment of more than three million dollars to bring geothermal hot water to heat the state university, the capitol, and a number of other state buildings.

Two especially rich sources of geothermal energy glimmer in the future, if they can be developed economically. One, known as "geopressured zones," involves large hot-water reservoirs in the Texas-Louisiana area, both onshore and off. These hot waters, at depths of two to three miles, are trapped below thick sedimentary deposits under abnormally high pressures.

Drilling in such areas is difficult and costly. But dissolved in the waters are vast amounts of methane—the chief ingredient of the natural gas we sought so avidly during the deep freeze of last winter. It is estimated that the potential of the geopressured resource is as much as 115,000 megawatts for 30 years, with the methane of equal value for power. (Total U.S. power capacity last year was about 550,000 megawatts.)

As prices for other forms of energy rise, it may become economically profitable to extract geopressured water and gas.

The other far-out possibility is called "hot dry rock." It refers to many regions of heated rock near the surface that lack reservoirs of water to carry away the heat. Such deposits, much more common than the hot-water reservoirs already being exploited, are found even in the eastern U.S.

Scientists at the Los Alamos Scientific Laboratory in New Mexico believe that this heat can be tapped with water from the surface. Their technique is to force cold water down a well to cause the heated rocks to fracture, circulate the water through the network of fractures, then bring it back to the surface through a second well.

To test this idea, the Los Alamos scientists have been making test drills on the Jemez Plateau near the Valles Caldera. Two holes 250 feet apart, reaching depths of approximately 10,000 feet, have been successfully connected. Fracturing experiments to increase the hot-rock area exposed to the water flow seem promising.

Like all other energy sources, geothermal offers both advantages and disadvantages. On the plus side, it is relatively clean, there is no fuel to buy, and the reserves (of hot water, if not of steam) are thought to be long lasting.

On the negative side, critics note that the best geothermal deposits seem to be localized in the West. However, recent discoveries point to rich potential in the eastern United States as well.

Further, the capital investment for developing geothermal energy is high, and, under present taxes and regulations, prospecting is somewhat limited. The Federal Government is meeting this problem in part by providing for government-guaranteed loans and tax credits.

Then there is the problem of subsidence. If large amounts of water are drawn out of the earth, will the earth sink in that area? The answers are uncertain, and some geothermal plants avoid the problem by injecting the water into wells after extracting its heat.

Finally, there is the problem of pollution. The odor of rotten eggs hangs over some geothermal sites because of hydrogen sulfide gas. More serious is the presence of poisonous arsenic and boron in geothermal waters. But this problem is usually avoided if waste waters are re-injected into wells.

All things considered, then, mining the earth for heat may offer a highly desirable substitute for gas and oil in the not too distant future.

When experts talk about enormous amounts of energy, they often use the term "quads." One quad is a quadrillion (1015) British thermal units, or BTU's. The United States last year used on the order of 74 quads of energy.

I asked Dr. Robert C. Seamans, Jr., then head of ERDA, how he evaluated the contribution of geothermal energy in quads.

"By the year 2000," he said, "geothermal energy might well amount to as much as four quads, and by 2020 as much as fourteen quads. That may not sound like much, but if you think of it in terms of oil, every two quads a year represents a million barrels a day."

And that's not peanuts!

Source: Weaver, Kenneth. “Geothermal Energy: The Power of Letting off Steam.” National Geographic, October 1977.

Ghost Plants Are Legacy of State's Geothermal Fiasco 

Energy: Haste made $450 million in waste at two hurriedly built sites.

Steam fields proved inadequate.

Los Angeles Times

June 16, 1993

By Virginia Ellis

All the signs of human activity are still there. Papers and manuals litter tables and desks. Handwritten charts cover some of the walls. Signs warn that "Ear Protection Is Required" to protect workers from the deafening noise.

Everything is there—except the people.

Echoing through the silent building are the footsteps of Glen Gordon, last manager of the state Department of Water Resources' Bottle Rock Geothermal Power Plant before it was shut down in 1990. Disappointment is etched in his face. "It was a beautiful plant," he says reverently. "Those of us who worked here were pretty proud of it."

Nestled among the lush green hills above Napa Valley, Bottle Rock and its sister plant a few miles away stand as towering monuments to government miscalculations and mistakes. Bottle Rock has not produced a kilowatt of electricity in three years. Its sister, the South Geysers Power Plant, never opened.

When the revenue bonds on the plants are finally paid in 2024, water users will have sunk more than $450 million into the two projects, making them the state's most expensive white elephants. The customers of the Metropolitan Water District of Southern California will have shouldered 80% of the cost.

The two plants were conceived with the loftiest of goals and intentions in the 1970s when clean, cheap sources of energy were being sought to offset high-priced OPEC oil.

The state, often criticized for taking too long to act, moved with such speed on the geothermal project that it was able to move from conception to finished plant in less than a decade. Critics later complained that this was one instance when government moved too fast.

In the haste to bring the facilities on-line, government officials—especially in the case of South Geysers—too quickly accepted the word of geologists and private developers who said that steam was plentiful enough at the sites to run the facilities for 30 years.

As it turned out, there was not enough steam to run South Geysers at all. At Bottle Rock, it lasted five years.

Hidden by hills and virtually inaccessible to casual passersby, the plants are largely forgotten, located near the community of Cobb, population 1,477. Many residents who own vacation cabins in nearby hamlets do not know the plants are there. Once a year they merit eight paragraphs in the Department of Water Resources 370-page annual report on the State Water Project called Bulletin 132.

This anonymity contrasts sharply with the high expectations that once surrounded them.

In the heyday of the geothermal movement, the plant sites were visited frequently by top state officials—including once by Gov. Edmund G. (Jerry) Brown Jr., who brought along an entourage of reporters and photographers to record optimistic predictions of the great potential of geothermal steam.

The impetus for the Bottle Rock and South Geysers plants came in the mid-1970s when America was reeling from the shock of the OPEC oil embargo and spiraling energy costs. For California government, the need for alternative energy was particularly pressing because long-term contracts providing inexpensive electrical power for the massive State Water Project were soon to expire and officials feared large price hikes.

The water project, a critical source of water for 20 million residents, requires billions of kilowatts of electricity each year to carry water from Oroville Dam in Northern California to the end of the state's 444-mile aqueduct at Lake Perris in Riverside County.

Geothermal power seemed an ideal solution. California is one of the few places in the world with large underground steam reservoirs, areas where underground water comes in contact with molten rock near the Earth's surface. To tap the energy, wells are drilled and the steam piped to a power plant where it turns turbines that generate electricity.

The richest of California's steam reservoirs was believed to be the geysers, a geothermal area 90 miles north of San Francisco that was discovered in 1847. Commercial power production began here in 1960 and many companies, including Pacific Gas & Electric Co., had successful plants.

"There was this tantalizing idea that if you develop the geysers, you could find a renewable, reliable resource where the cost would be steady and you could break away from the price escalations and uncertainty of the oil market," said Richard Maullin, who served as Brown's first chairman of the state Energy Commission.

Hoping to get at least one plant on line before power contracts expired in 1983, the state quickly floated bonds to finance construction of two plants. The bonds would be paid off by customers of the State Water Project, and the project's largest customer and biggest user of energy was the MWD.

The plans called for the state to construct and manage the plants, but the steam to run them would be purchased from private companies that would develop, operate and maintain adjacent steam fields.

To determine the availability of steam at the site of the plant, the state Department of Water Resources hastily entered into contracts with private geologists to analyze the steam field at the Bottle Rock site.

Department officials say their reports confirmed that steam would be available to run the plant at its proposed 55-megawatt capacity for 30 years.

Eugene Boudreau, a Santa Rosa geologist who has spent 10 years researching the projects in preparation for a book, maintains that is only part of the story. Although some reports were optimistic, he said others carried warnings that should have alerted officials to investigate the field further.

"But the state turned a blind eye to the negative information and particularly to the lack of information," Boudreau said.

Construction started in 1981 on the $122-million Bottle Rock plant-a facility that state officials boasted would be unlike any other at the geysers. Power plants constructed by private industry often are squat buildings of corrugated metal. The state's three-story structure of reinforced concrete had dark wood paneling in the reception area, a herringbone design etched in the concrete and reflecting glass windows on the top floor to give a panoramic view of the hills.

"We asked the department to consider a simple design," said Joseph Summers, an engineer who represents several water districts served by the state project. "But they wanted to build this symbolic stuff. They were hellbent on having something very elaborate that they could show off." Another official estimated that the state could have saved at least $20 million if the plant had been less ornate.

As construction of Bottle Rock got under way in Lake County, the state moved ahead with its plans to build another plant a few miles away in Sonoma County. The state relied on assurances from the private steam field operator, Geothermal Kinetics Inc., that there would be enough steam available to support the plant.

A later state audit found that the Department of Water Resources insisted that it did not have time for an independent analysis, even though the agency knew P G & E was having problems "locating enough steam for one of (its) plants on property adjacent to the South Geysers property."

As it turned out, the contractor's assurances were based on the drilling of three test wells, all in the same northwest quadrant of the steam field. The wells showed the presence of steam, but they told nothing about its availability on the remainder of the property.

During construction, the drilling yielded bad news. In 1985, the state decided to halt construction, determining that there was not enough steam to run the plant. By then, $55 million had been spent on construction. Today, South Geysers stands as a shell, completed on the outside but unfinished on the inside. Millions of dollars in unused equipment still sits in crates on the ground floor. Some has been sold to the Bechtel Corp. to recoup about $5 million.

Even as the state was throwing in the towel on South Geysers, it was formally opening the doors on what appeared to be its success story—the completed Bottle Rock plant. For the first year, the plant seemed to meet all expectations, pouring out electricity at the promised 55 megawatts-enough power to serve the needs of a city the size of Santa Rosa.

Then the steam field began to run into problems. First, a corrosive element in the steam caused problems with the piping. Then there was an ominous drop in pressure. Meanwhile, the price of oil had begun to drop dramatically. Suddenly power purchased from the private utilities was cheaper than that generated at the geothermal plant.

By the end of the decade, production at the plant had dropped to seven megawatts. Under pressure from water contractors, the state decided in September, 1990, that Bottle Rock should be closed and mothballed. The plant closed, having never generated enough electricity to offset the annual maintenance, operational and financing costs.

Defenders of the state's geothermal venture say the failure of the plants was hard to anticipate at a time when steam field testing procedures had not been perfected and much was still unknown about the behavior of steam reservoirs.

"In hindsight, you're looking at a program that is not successful," said John Pacheco, the department's senior engineer for water resources. "But economics played a big role and the crystal ball of the late 1970s … did not predict the drop in oil prices."

V. John White, executive director of the Center for Energy and Efficiency and Renewable Technology, an joint industry-environmental effort, said the state was an early casualty of a new industry that has learned from its mistakes. He said geothermal steam has proved to be a relatively clean form of energy and today generates 6.5% of California's electricity from plants located at the geysers, Mono-Long Valley, the Imperial Valley and Coso Hot Springs in the high desert near Death Valley.

The geysers in Sonoma and Lake counties were overdeveloped and the state chose to locate its plants at the edge of the receding reservoir; most of the plants that continue to operate are in the center of the reservoir, White said.

He said that despite the state's experience, geothermal energy remains a viable alternative for government. In fact, he said, the Los Angeles Department of Water and Power plans to develop its leases at the Coso geothermal area.

As for the state, it is no longer interested in geothermal power production and would like to sell the plants, said the state's Pacheco. He said a Santa Rosa company has shown interest in reopening Bottle Rock.

Gordon, the former Bottle Rock manager who still works for the state and occasionally inspects the plant, believes that if new wells are drilled and old ones are reworked, the Bottle Rock plant could operate again. "The problem was never with the plant," he said, "and I hope it operates again someday."

For that reason, Gordon said, everything at Bottle Rock was left intact-signs still on the walls, telephones in place and manuals on the desks. All in hopes that someday somebody else would run it again.

Source: Los Angeles Times, June 16, 1993.

Ever since the first waterwheel was created, human beings have tapped the earth’s resources to power everything from grindstones to rockets. When American dependence on petroleum was underscored by the energy crisis of the 1970s, the search for alternative fuels heated up. Geothermal energy, already used in Iceland and elsewhere, received increased attention in North America. The first article in this sidebar from National Geographic explores the optimistic outlook for geothermal energy in 1977. The 1993 Los Angeles Times article that follows describes the subsequent failure of some geothermal development in California.

Geothermal Energy: The Power of Letting Off Steam

By Kenneth F. Weaver

The smell of brimstone hung on the air. Steam vents hissed at me like snakes. Craters of boiling mud seethed and burped; black bubbles formed, swelled, and collapsed with rude plops.

Heat had created a scabrous landscape almost devoid of vegetation and stained with yellow streaks of sulfur and the white crusts of mineral salts. It suggested an outpost of Dante's Inferno—although it bore the more earthly name Laguna Volcano.

Only a short distance away, towering plumes of steam sent a muffled roar to my ears. These plumes marked the location of the new Cerro Prieto power plant in northern Mexico. The heat that drove the electric generators of Cerro Prieto was the same heat that had created the wasteland at my feet. It was the terrible heat from inside the earth.

The cold, hard crust of our planet gives little hint of that awesome heat, chiefly the result of decay of radioactive elements. Only where the heat leaks through rifts in the crust —in the molten lava of volcanoes, the hot water of geysers and hot springs, or the steam of fumaroles—does man begin to suspect the titanic forces beneath his feet.

Yet most of earth's 260 billion cubic miles of rock are at or above the melting point—about 2200° Fahrenheit (1200° Celsius). Donald E. White of the United States Geological Survey estimates that just the top 6.2 miles (10 kilometers) of the crust hold 3 x 1028 (300 million billion billion) calories of heat.

"We would have to burn 2,000 times the world's entire supply of coal to generate that much heat," says White.

At a time when fossil fuels—especially oil and gas—are becoming increasingly scarce and expensive, and when nuclear power faces an uncertain future, such a prodigious energy source cannot be ignored, even if much of it can never be used. And, indeed, geothermal ("earth heat") energy has become a warm new prospect. At present nine nations have begun tapping that resource to generate electricity Several, such as Iceland, France, Hungary, and New Zealand, heat homes with the earth's hot water and use the heat for industrial purposes as well.

Despite the magnitude of the earth's heat, capturing it on a large scale for man's use still presents a number of technological and economic problems.

But a few years from now we may well be scrambling for every kilowatt of power we can get. Geothermal energy may then be more available and very welcome. Already it provides more electricity than the world extracts from the sun's heat or from wind power—two other promising sources.

The Federal Government's Energy Research and Development Administration (ERDA) thinks geothermal energy is so important that the agency has included 101 million dollars in its fiscal 1978 budget to encourage development. That's 84 percent more than in fiscal 1977.

And industry is more than mildly interested. In January 1974 the Bureau of Land Management opened up large areas of public lands in the West for geothermal exploration. The demand for leases recalled the frenzy of the Oklahoma land rush. In the first month, nearly 2,500 applications were filed for leases covering 5,280,000 acres in 11 states. Both wildcatters and giant oil companies are beginning to drill on these lands, looking not for oil or gas but for heat.

How much contribution can geothermal energy make? Estimates of its potential in the United States vary widely. Some enthusiasts have suggested that the Southwest could in time get all its energy from geothermal. Some very conservative observers doubt that geothermal could ever provide more than one percent of U.S. power needs.

The truth probably lies between these extremes. A 1975 study by the U.S. Geological Survey foresees 12,000 megawatts (12,000,000 kilowatts) of electricity from hydrothermal reserves, lasting for at least 30 years, at present prices and with current technology. (A thousand megawatts is about the energy needed for a city of a million persons.)

The USGS further estimates that perhaps 12 times this much hot-water energy remains to be discovered in the United States, or awaits higher prices or improved technology before it will be economical to develop.

By far the simplest, cheapest, and best form of geothermal energy comes from the ground in the form of dry steam. It can be used directly to drive turbine generators with a minimum of problems.

Unfortunately, dry steam occurs in only a few places. As Morton Smith of the Los Alamos Scientific Laboratory puts it, "Dry steam is a geological freak." But this highly desirable freak is found in Japan and Italy, and in the United States at The Geysers, in California's Sonoma County about 90 miles north of San Francisco.

I found The Geysers after following the tortuous windings of an old stagecoach road deep into the Mayacmas Mountains. Miles of pipelines streaking along the sides of Big Sulphur Canyon, vapor billowing from rows of generating-plant cooling towers, and roaring jets of steam from vent valves gave the valley an awesome appearance.

The Geysers must have been a frightening place to William Bell Elliott when he discovered its fumaroles in 1847 while hunting a grizzly bear. The explorer-surveyor was overwhelmed by the sight of steam pouring from fissures along the steep canyon.

"I thought I had come upon the gates of hell itself," he told friends.

Today at The Geysers, the Pacific Gas and Electric Company, drawing on a hundred wells operated by Union Oil, produces 500 megawatts of electricity, about half of San Francisco's needs. More wells and new generator units should increase output to about 900 megawatts by mid-1979.

By the 1990's PG and E hopes to develop The Geysers to a level of 2,000 megawatts—almost the capacity of two Hoover Dams or two large fossil-fuel or nuclear power plants.

The earth is stingy with its natural steam. Aside from The Geysers, dry steam has been found in the United States only in Yellowstone National Park, where law forbids development.

But earth's heat is much more readily available in the form of very hot water under pressure. All along the world's earthquake and volcano belts, pockets of magma, or molten rock, have worked their way close to the surface. Water filtering into permeable rock layers above these pockets is heated—often far above the normal boiling point.

Sometimes the superheated water forces its way out as hot springs or geysers. More often, trapped by an impermeable cap rock above it, the water becomes a subterranean caldron under extremely high pressure, waiting to be tapped by wells.

Mexico's Cerro Prieto, not far south of the border city of Mexicali, is a prime example of tapping such a reservoir. As the 570°F water rises to the wellhead, the pressure drops and the water flashes, or boils. About 20 percent turns to steam, which is separated out and piped to the generator turbines. The remaining hot water roars through discharge pipes into large ponds, but it could be used for industrial or household purposes.

Just to the north of Cerro Prieto, in the Imperial Valley of California, I found intensive interest in geothermal water. Signs at the airport predict that this rich agricultural region might become the nation's teakettle as well as its salad bowl.

Oddly enough, were it not for the higher country around it, the Imperial Valley would be an inland sea and therefore worthless for either agriculture or geothermal energy. A flagpole in Calipatria, which advertises itself as the lowest city in the Western Hemisphere, raises its tip 184 feet, to the level the sea would reach if it could get into the valley.

And, strangely, this extremely flat valley, resting upon vast reservoirs of subterranean waters, would be desert were it not for irrigation water brought in from the Colorado River. "Rain for rent" reads the sign of one firm that provides sprinkler systems.

Amid the interminable checkerboard fields of lettuce, cantaloupes, and cotton, the endless rows of baled alfalfa, and the occasional palm trees, evidences of a fledgling geothermal industry are becoming steadily more apparent. At places like Heber and Brawley, Niland and East Mesa, drilling rigs grind day and night searching for hot water. Dozens of completed wells tell of successful searches.

And at Niland, near the Salton Sea, a test facility takes boiling brine from the earth and simulates the conditions of a power plant. This facility, a venture of ERDA and San Diego Gas & Electric in cooperation with the Magma Power Company, tests materials, methods of handling hot brine, and techniques for extracting heat.

I use the word “brine” advisedly, for geothermal waters are sometimes highly saline. Hot water under pressure can dissolve and carry astonishing amounts of salts and minerals from the rocks.

In most places, to be sure, the concentration of such materials is quite low—even much less than seawater's 3.5 percent. But in the Imperial Valley, which holds some of the nation's most important high-temperature geothermal resources, salinity can run high. At Niland it reaches the incredible level of 20 to 30 percent dissolved solids. Such concentrated brine creates major problems. It can be violently corrosive and erosive, swiftly eating away turbine blades and nozzles. Even worse, the minerals precipitate rapidly as temperature and pressure are reduced. I have seen pipes choked by an inch-thick layer of hard rusty scale that deposited in only a few hundred hours of operation.

"The total energy in the Niland area is about equal to the recoverable energy in Alaska's North Slope," an ERDA official, Eric H. Willis, once told me. "But how do you stop it from having arteriosclerosis?"

Until recently these problems seemed likely to block geothermal development in parts of the valley. But new developments alter the prospects.

At the Niland test facility, a four-stage heat exchanger offers one solution. When heat is drawn from the hot brine in several stages instead of all at once, and when the pressure is lowered gradually, scaling is sharply cut.

At ERDA's Lawrence Livermore Laboratory near San Francisco, engineers have developed a new process known as "total flow," which uses a well's entire output, liquid and vapor, to drive specially designed turbines. As part of this work, they believe they have solved the scaling problem by treating the brine with hydrochloric acid.

"Under the worst conditions we add only about 200 parts per million to the brine." Roy Austin told me. "This will probably cost less than two-tenths of a cent a kilowatt-hour. And we get absolutely no sealing in the nozzles. They come out so clean we can still see the machine marks. We have also tested materials that appear promisingly resistant under these conditions."

So far the Imperial Valley seems to offer the nation's richest prospects for geothermal hot-water development. Pilot power plants are already on engineers' drawing boards. By the 1980's the industry expects that imperial Valley electricity will be flowing into the grid, just as it already does at The Geysers.

But the Imperial Valley holds only a few of the 106 geothermal systems in the Western States that have been identified by the Geological Survey as KGRA's (Known Geothermal Resource Areas). Thirty-seven of these yield water at temperatures above 300°F—hot enough for electric-power generation.

For example, near Los Alamos, New Mexico, the Union Oil Company has brought in a number of productive wells inside the Valles Caldera, an enormous volcanic basin some 13 miles across. Union is now negotiating with potential purchasers of the steam.

Around Roosevelt Hot Springs in southwestern Utah, five major companies and several smaller ones are probing a very important new reservoir. On the slopes above an ancient lake bed, amid sagebrush, yellow-flowered rabbit bush, and juniper, drill rigs are sprouting and geologists are measuring heat flow and electrical properties to find likely spots for wells.

At places on this Utah site, one does not have to go far below the surface to find evidence of heat. On one claim I found a prospector's trench scooped into the bank of a wash. Idly curious, I stooped over to scratch at the bottom of the trench. I had flicked away no more than half an inch of soil when I jerked my hand back. I had burned my fingers as surely as if they had touched a hot kettle.

Temperatures of the water from some of the Utah wells exceed 500°F (260°C). But geothermal water in many other places is nowhere near as hot—not even up to the 300°F regarded as minimum for efficient production of electricity. Can these cooler waters be used?

I found abundant answers in Iceland, whose volcanic hills and rifts lie directly on the Mid-Atlantic Ridge. There, where upwelling magma is steadily forcing apart the crustal plates, the inner fires of earth are always close at hand.

When the Vikings first approached Iceland, they saw geothermal steam rising from the area now occupied by Reykjavik. They thought it was smoke, hence the name Reykjavik (Smoking Bay).

As recently as three decades ago, Reykjavik was indeed smoky. Early photographs show it as a filthy, black-stained town shrouded by smoke from coal fires.

Then geothermal energy came to the rescue. Today virtually all the buildings in the Reykjavik area are heated by geothermal water. Some 115,000 persons enjoy one of the cleanest cities in the world.

Simple sheds covering the wellheads, a few low storage tanks, and raised concrete conduits carrying the major pipelines are the only outward evidence of this splendid heating system. The cost? The average householder pays from 130 to 160 dollars a year for heating and hot water—on an island that touches the Arctic Circle!

With two scientists from Iceland's National Energy Authority—Dr. Stefán Arnórsson, a geochemist, and Dr. Kristján Saemundsson, a geologist—I visited other communities in Iceland whose very existence depends on geothermal springs and wells.

Our road traversed a huge lava flow and we passed between volcanic hills that had pushed up under the ice sheet some 20,000 years ago. We saw fumaroles steaming in the snow and little Icelandic ponies standing with their tails to the wind.

Dropping below an escarpment, we came into the valley town of Hveragerdi (Garden of Hot Springs). A thousand souls have settled here since the first house was built in 1928. As in most geothermal towns, escaping steam is ever present. At the center of town, a violently boiling hot spring and an abandoned borehole that erupts at intervals are fenced off for safety.

Large greenhouse complexes make efficient use of Hveragerdi's geothermal water. I visited one owned by Ingimar Sigurdsson. Outside, the sharp winds of February had slashed through any coat; inside, I found springlike temperatures.

The gardener picked a rosebud from one of 50,000 plants. "I'll have blooms," he said, "from now till mid-December."

The borehole for the greenhouse goes down only 2,000 feet, he told us. Water and steam come up without aid of pumps or electricity. The rejected water goes into the river after heating a swimming pool.

Dr. Arnósson told me that Iceland is turning its natural heat more and more to purposes other than space heating. One farmer we visited, for example, uses hot water to heat air to dry his hay.

In the northern part of the island, an industrial plant takes diatomaceous material from a lake bed, dries it with geothermal steam, and produces diatomite for use in filters, insulation, and other industrial purposes.

In addition, Iceland is beginning to develop hot water for electric power. Since much of the water is below 300°F (150°C), and thus will not produce efficient amounts of steam, the Icelanders have considered using the vapor-turbine cycle technique: The water would heat low-boiling-point liquids such as Freon and isobutane, and the resulting vapor would drive the turbine generators.

This technique is being used successfully on the Soviet peninsula of Kamchatka in the northwest Pacific Ocean to supply power to the Paratunka State Farms.

Geothermal heating in the United States goes back even further than in Iceland. Some 350 households in Klamath Falls. Oregon, have long had individual hot-water wells. In Boise, Idaho, homes along Warm Springs Avenue have drawn hot water from a central well for nearly a century. And today, in Boise, the Idaho state government is considering the investment of more than three million dollars to bring geothermal hot water to heat the state university, the capitol, and a number of other state buildings.

Two especially rich sources of geothermal energy glimmer in the future, if they can be developed economically. One, known as "geopressured zones," involves large hot-water reservoirs in the Texas-Louisiana area, both onshore and off. These hot waters, at depths of two to three miles, are trapped below thick sedimentary deposits under abnormally high pressures.

Drilling in such areas is difficult and costly. But dissolved in the waters are vast amounts of methane—the chief ingredient of the natural gas we sought so avidly during the deep freeze of last winter. It is estimated that the potential of the geopressured resource is as much as 115,000 megawatts for 30 years, with the methane of equal value for power. (Total U.S. power capacity last year was about 550,000 megawatts.)

As prices for other forms of energy rise, it may become economically profitable to extract geopressured water and gas.

The other far-out possibility is called "hot dry rock." It refers to many regions of heated rock near the surface that lack reservoirs of water to carry away the heat. Such deposits, much more common than the hot-water reservoirs already being exploited, are found even in the eastern U.S.

Scientists at the Los Alamos Scientific Laboratory in New Mexico believe that this heat can be tapped with water from the surface. Their technique is to force cold water down a well to cause the heated rocks to fracture, circulate the water through the network of fractures, then bring it back to the surface through a second well.

To test this idea, the Los Alamos scientists have been making test drills on the Jemez Plateau near the Valles Caldera. Two holes 250 feet apart, reaching depths of approximately 10,000 feet, have been successfully connected. Fracturing experiments to increase the hot-rock area exposed to the water flow seem promising.

Like all other energy sources, geothermal offers both advantages and disadvantages. On the plus side, it is relatively clean, there is no fuel to buy, and the reserves (of hot water, if not of steam) are thought to be long lasting.

On the negative side, critics note that the best geothermal deposits seem to be localized in the West. However, recent discoveries point to rich potential in the eastern United States as well.

Further, the capital investment for developing geothermal energy is high, and, under present taxes and regulations, prospecting is somewhat limited. The Federal Government is meeting this problem in part by providing for government-guaranteed loans and tax credits.

Then there is the problem of subsidence. If large amounts of water are drawn out of the earth, will the earth sink in that area? The answers are uncertain, and some geothermal plants avoid the problem by injecting the water into wells after extracting its heat.

Finally, there is the problem of pollution. The odor of rotten eggs hangs over some geothermal sites because of hydrogen sulfide gas. More serious is the presence of poisonous arsenic and boron in geothermal waters. But this problem is usually avoided if waste waters are re-injected into wells.

All things considered, then, mining the earth for heat may offer a highly desirable substitute for gas and oil in the not too distant future.

When experts talk about enormous amounts of energy, they often use the term "quads." One quad is a quadrillion (1015) British thermal units, or BTU's. The United States last year used on the order of 74 quads of energy.

I asked Dr. Robert C. Seamans, Jr., then head of ERDA, how he evaluated the contribution of geothermal energy in quads.

"By the year 2000," he said, "geothermal energy might well amount to as much as four quads, and by 2020 as much as fourteen quads. That may not sound like much, but if you think of it in terms of oil, every two quads a year represents a million barrels a day."

And that's not peanuts!

Source: Weaver, Kenneth. “Geothermal Energy: The Power of Letting off Steam.” National Geographic, October 1977.

Ghost Plants Are Legacy of State's Geothermal Fiasco 

Energy: Haste made $450 million in waste at two hurriedly built sites.

Steam fields proved inadequate.

Los Angeles Times

June 16, 1993

By Virginia Ellis

All the signs of human activity are still there. Papers and manuals litter tables and desks. Handwritten charts cover some of the walls. Signs warn that "Ear Protection Is Required" to protect workers from the deafening noise.

Everything is there—except the people.

Echoing through the silent building are the footsteps of Glen Gordon, last manager of the state Department of Water Resources' Bottle Rock Geothermal Power Plant before it was shut down in 1990. Disappointment is etched in his face. "It was a beautiful plant," he says reverently. "Those of us who worked here were pretty proud of it."

Nestled among the lush green hills above Napa Valley, Bottle Rock and its sister plant a few miles away stand as towering monuments to government miscalculations and mistakes. Bottle Rock has not produced a kilowatt of electricity in three years. Its sister, the South Geysers Power Plant, never opened.

When the revenue bonds on the plants are finally paid in 2024, water users will have sunk more than $450 million into the two projects, making them the state's most expensive white elephants. The customers of the Metropolitan Water District of Southern California will have shouldered 80% of the cost.

The two plants were conceived with the loftiest of goals and intentions in the 1970s when clean, cheap sources of energy were being sought to offset high-priced OPEC oil.

The state, often criticized for taking too long to act, moved with such speed on the geothermal project that it was able to move from conception to finished plant in less than a decade. Critics later complained that this was one instance when government moved too fast.

In the haste to bring the facilities on-line, government officials—especially in the case of South Geysers—too quickly accepted the word of geologists and private developers who said that steam was plentiful enough at the sites to run the facilities for 30 years.

As it turned out, there was not enough steam to run South Geysers at all. At Bottle Rock, it lasted five years.

Hidden by hills and virtually inaccessible to casual passersby, the plants are largely forgotten, located near the community of Cobb, population 1,477. Many residents who own vacation cabins in nearby hamlets do not know the plants are there. Once a year they merit eight paragraphs in the Department of Water Resources 370-page annual report on the State Water Project called Bulletin 132.

This anonymity contrasts sharply with the high expectations that once surrounded them.

In the heyday of the geothermal movement, the plant sites were visited frequently by top state officials—including once by Gov. Edmund G. (Jerry) Brown Jr., who brought along an entourage of reporters and photographers to record optimistic predictions of the great potential of geothermal steam.

The impetus for the Bottle Rock and South Geysers plants came in the mid-1970s when America was reeling from the shock of the OPEC oil embargo and spiraling energy costs. For California government, the need for alternative energy was particularly pressing because long-term contracts providing inexpensive electrical power for the massive State Water Project were soon to expire and officials feared large price hikes.

The water project, a critical source of water for 20 million residents, requires billions of kilowatts of electricity each year to carry water from Oroville Dam in Northern California to the end of the state's 444-mile aqueduct at Lake Perris in Riverside County.

Geothermal power seemed an ideal solution. California is one of the few places in the world with large underground steam reservoirs, areas where underground water comes in contact with molten rock near the Earth's surface. To tap the energy, wells are drilled and the steam piped to a power plant where it turns turbines that generate electricity.

The richest of California's steam reservoirs was believed to be the geysers, a geothermal area 90 miles north of San Francisco that was discovered in 1847. Commercial power production began here in 1960 and many companies, including Pacific Gas & Electric Co., had successful plants.

"There was this tantalizing idea that if you develop the geysers, you could find a renewable, reliable resource where the cost would be steady and you could break away from the price escalations and uncertainty of the oil market," said Richard Maullin, who served as Brown's first chairman of the state Energy Commission.

Hoping to get at least one plant on line before power contracts expired in 1983, the state quickly floated bonds to finance construction of two plants. The bonds would be paid off by customers of the State Water Project, and the project's largest customer and biggest user of energy was the MWD.

The plans called for the state to construct and manage the plants, but the steam to run them would be purchased from private companies that would develop, operate and maintain adjacent steam fields.

To determine the availability of steam at the site of the plant, the state Department of Water Resources hastily entered into contracts with private geologists to analyze the steam field at the Bottle Rock site.

Department officials say their reports confirmed that steam would be available to run the plant at its proposed 55-megawatt capacity for 30 years.

Eugene Boudreau, a Santa Rosa geologist who has spent 10 years researching the projects in preparation for a book, maintains that is only part of the story. Although some reports were optimistic, he said others carried warnings that should have alerted officials to investigate the field further.

"But the state turned a blind eye to the negative information and particularly to the lack of information," Boudreau said.

Construction started in 1981 on the $122-million Bottle Rock plant-a facility that state officials boasted would be unlike any other at the geysers. Power plants constructed by private industry often are squat buildings of corrugated metal. The state's three-story structure of reinforced concrete had dark wood paneling in the reception area, a herringbone design etched in the concrete and reflecting glass windows on the top floor to give a panoramic view of the hills.

"We asked the department to consider a simple design," said Joseph Summers, an engineer who represents several water districts served by the state project. "But they wanted to build this symbolic stuff. They were hellbent on having something very elaborate that they could show off." Another official estimated that the state could have saved at least $20 million if the plant had been less ornate.

As construction of Bottle Rock got under way in Lake County, the state moved ahead with its plans to build another plant a few miles away in Sonoma County. The state relied on assurances from the private steam field operator, Geothermal Kinetics Inc., that there would be enough steam available to support the plant.

A later state audit found that the Department of Water Resources insisted that it did not have time for an independent analysis, even though the agency knew P G & E was having problems "locating enough steam for one of (its) plants on property adjacent to the South Geysers property."

As it turned out, the contractor's assurances were based on the drilling of three test wells, all in the same northwest quadrant of the steam field. The wells showed the presence of steam, but they told nothing about its availability on the remainder of the property.

During construction, the drilling yielded bad news. In 1985, the state decided to halt construction, determining that there was not enough steam to run the plant. By then, $55 million had been spent on construction. Today, South Geysers stands as a shell, completed on the outside but unfinished on the inside. Millions of dollars in unused equipment still sits in crates on the ground floor. Some has been sold to the Bechtel Corp. to recoup about $5 million.

Even as the state was throwing in the towel on South Geysers, it was formally opening the doors on what appeared to be its success story—the completed Bottle Rock plant. For the first year, the plant seemed to meet all expectations, pouring out electricity at the promised 55 megawatts-enough power to serve the needs of a city the size of Santa Rosa.

Then the steam field began to run into problems. First, a corrosive element in the steam caused problems with the piping. Then there was an ominous drop in pressure. Meanwhile, the price of oil had begun to drop dramatically. Suddenly power purchased from the private utilities was cheaper than that generated at the geothermal plant.

By the end of the decade, production at the plant had dropped to seven megawatts. Under pressure from water contractors, the state decided in September, 1990, that Bottle Rock should be closed and mothballed. The plant closed, having never generated enough electricity to offset the annual maintenance, operational and financing costs.

Defenders of the state's geothermal venture say the failure of the plants was hard to anticipate at a time when steam field testing procedures had not been perfected and much was still unknown about the behavior of steam reservoirs.

"In hindsight, you're looking at a program that is not successful," said John Pacheco, the department's senior engineer for water resources. "But economics played a big role and the crystal ball of the late 1970s … did not predict the drop in oil prices."

V. John White, executive director of the Center for Energy and Efficiency and Renewable Technology, an joint industry-environmental effort, said the state was an early casualty of a new industry that has learned from its mistakes. He said geothermal steam has proved to be a relatively clean form of energy and today generates 6.5% of California's electricity from plants located at the geysers, Mono-Long Valley, the Imperial Valley and Coso Hot Springs in the high desert near Death Valley.

The geysers in Sonoma and Lake counties were overdeveloped and the state chose to locate its plants at the edge of the receding reservoir; most of the plants that continue to operate are in the center of the reservoir, White said.

He said that despite the state's experience, geothermal energy remains a viable alternative for government. In fact, he said, the Los Angeles Department of Water and Power plans to develop its leases at the Coso geothermal area.

As for the state, it is no longer interested in geothermal power production and would like to sell the plants, said the state's Pacheco. He said a Santa Rosa company has shown interest in reopening Bottle Rock.

Gordon, the former Bottle Rock manager who still works for the state and occasionally inspects the plant, believes that if new wells are drilled and old ones are reworked, the Bottle Rock plant could operate again. "The problem was never with the plant," he said, "and I hope it operates again someday."

For that reason, Gordon said, everything at Bottle Rock was left intact-signs still on the walls, telephones in place and manuals on the desks. All in hopes that someday somebody else would run it again.

Source: Los Angeles Times, June 16, 1993.