WAHPETON (AP) - The Circle of Nations School is the latest to convert to geo- thermal energy, seeking to tap mild temperatures underground to help reduce energy costs.

The boarding school for American Indian students is drilling 390 holes to a depth of 150 feet or more so it can use geothermal energy to heat and cool 11 buildings.

The price tag is approaching $2 million, but savings in fuel costs mean the system should be paid for in five years, said Robert Peck, the facility manager for the Circle of Nations School.

"The geothermal looked to be the best, the most efficient and environmentally friendly," Peck said.

Geothermal heating-and-cooling systems, which work in tandem with highly efficient heat pumps, have become increasingly popular because of spiking natural gas and fuel oil costs, said Lorraine Manz, a geologist with the North Dakota Geological Survey, which issues drilling permits for the projects.

So far, the largest geothermal project in North Dakota is Discovery Middle School in Fargo, which has 688 wells. Kennedy Elementary School in Fargo has 288 wells, and Woodhaven Plaza, also in Fargo, has 144 wells.

The new Bank of North Dakota will be equipped to tap geothermal power. Homeowners also can use it. Geothermal systems qualify for renewable-energy tax credits in the state.

Geothermal loop systems circulate fluid through a layer of earth with temperatures consistently within a band of 48 degrees to 54 degrees.

"We're not actually pulling steam out of the ground," said Vincent Falk, of Ground Source Technology in Hankinson, which is installing the geothermal loops. "We're pulling heat out of the ground."

Tapping those underground mild temperatures year-round means much less energy is expended to heat or cool a building. For every $1 in heating costs, for example, Falk estimates 70 cents goes to create the heat, while 30 cents is to circulate the heat through fans and ducts.

Geothermal systems essentially wipe away the cost of heating or cooling the air, allowing for a savings of 70 percent in operating costs, Falk said.

Although upfront costs are higher for geothermal systems, they often pay off within five years, Falk said. Geothermal systems typically cost 30 percent to 40 percent more than conventional systems, he said.