GLOCESTER - As oil prices skyrocket, a new geothermal heating and cooling system went online last week at Town Hall on Putnam Pike that officials claim could save taxpayers some serious dollars in the future.

"They say the cost savings will be a 40 percent reduction, but I think it will be more," said Town Planner Raymond Goff.

Last October, work crews drilled 14 wells behind the municipal building, going down 350 feet into bedrock where there is a steady temperature of 55 degrees.

The new system uses loops of piping filled with fluid buried underground that circulates continuously, absorbing heat from the earth during cold months. During warmer weather, the system will take the heat inside Town Hall and transfer it back into the earth.

The geothermal system replaces what Goff described as an "antiquated" steam system that operated exclusively on heating oil in the building built in 1939.

The old system was so inefficient with uneven heating and cooling that workers in parts of the 17,000-square-foot building swelter in winter while others in next door offices are freezing, Goff said. It's a similar problem in warmer weather.

The system and installation cost $342,000, but most of the money was funded by federal dollars, said Town Council President Walter Steere III.

He credits Goff as the "prime mover and shaker" in acquiring the grant money to make the project a reality.

Dispersed through the state Office of Energy Resource, the money came to the town as a total of $310,000 in stimulus allocations.

The town paid more than $40,000 a year in oil bills to heat the building. With the new system, Goff anticipates just a $10,000 annual expense for electricity.

Installing a new heating and cooling system is just one scheme officials are using to improve energy efficiency and lower operating costs.

The town's Community Resource Committee organized an electric audit in Town Hall with National Grid. As a result, light fixtures were replaced with more efficient lighting. In the past few years Town Hall got a new roof and replacement windows.

There is discussion under way of installing solar panels as another way of offsetting operating costs and Goff said as grants are available the town will apply.

Steere called the town a model for other communities to become more energy efficient and create renewable energy resources.

Geothermal heating and cooling systems have been embraced by neighboring towns and cities. Earlier this month, North Providence started drilling test wells in preparation of installing their new system.

Last fall, the newly constructed $3.4 million state-of-the-art Lincoln Senior Center included a geothermal system as part of its green initiative.