MANAGUA, Nicaragua, Oct. 29 (UPI) -- Nicaragua is hoping to tap into its vast geothermal power resources and has awarded two concessions to Magma Energy Corp. and its partner Polaris Geothermal Inc., both of Canada, as part of a long-term energy self-sufficiency plan.
Industry experts say Nicaragua has the most geothermal energy potential of any country in Central America. Mostly trapped in volcanic mountains along the Pacific Coast, experts say geothermal energy alone can solve Nicaragua's energy crisis while efforts are under way to exploit wind power and other forms of renewable energy.
The Magma link followed the Canadian company's success in securing a stake in Iceland's geothermal energy resources, which inspired Nicaraguan planners to follow the example.
Magma said the concessions, Volcn Mombacho and Caldera de Apoyo, will be operated by Polaris Geothermal Inc., Ram Power Corp.'s wholly owned subsidiary, but Magma and PGI will contribute equally to meeting the project costs.
Magma and PGI won the concessions in an international bidding. The two sides still have to seal a joint venture agreement before drilling can start.
The Caldera de Apoyo concession is about 6 miles south of Masaya and 6 miles west of the colonial town of Granada, while the Volcn Mombacho concession is located 6 miles south of Granada. Exploration of each of the concessions may cover about 60 million square miles, Magma said.
Nicaragua granted the concession on the understanding that the two Canadian companies will invest $50 million on developing the sites for power generation. Exploration will start in early 2010.
Polaris is already involved in the construction of a geothermal power plant in San Jacinto, about 12 miles northeast of Leon, through its Nicaraguan subsidiary, San Jacinto Power S.A.
Magma has a growing number of geothermal interests in the Americas. The company currently holds an operating power generation plant, the Soda Lake Operation in Nevada, and an extensive portfolio of exploration properties throughout the western United States, Chile, Argentina and Peru.
Magma's exploration in Chile involved work on Carran and Maule, with encouraging geophysical results in Maule. Experts said Maule could be developed to produce 140 megawatt of electricity for at least 30 years. Magma wants to start up with a 50-megawatt power project at Maule.
Magma has also been looking into geothermal resources in Indonesia and New Zealand.
Analysts say Nicaragua will need to speed up development of its geothermal resources to meet a rising demand for energy. The country is already having difficulties paying for all the oil it needs at current prices.
Industry experts have also called for drastic reforms in the energy sector to move away from dependence on inefficient fossil fuel consumption and wasteful application of resources.