Thursday, May 08, 2008 7:05:03 AM
Geothermal markets heat up
http://www.energycurrent.com/index.php?id=3&storyid=10318
By Karen Broyles
Filed from Houston 5/5/2008 11:06:13 PM GMT
Geothermal power plant
Geothermal, long the "Sleeping Beauty" of sustainable energy, is now showing clear signs of waking up, particularly in the U.S., where geothermal potential remains largely untapped, according to Iceland-based Glitnir Bank.
Late last year, Glitnir opened a New York office with the aim of investing in geothermal projects. Glitnir then estimated that up to US$39.4 billion in funding would be needed to develop available geothermal energy resources in the U.S. through 2025, including US$16.9 billion over the next eight years and an additional US$22.5 billion in the following decade.
In the past, a lack of investment capital and technology to unlock lower heat geothermal resources, as well as a global emphasis on oil and gas exploration, kept geothermal on the backburner in the U.S. However, that tale is beginning to change as investment capital, a growing emphasis on cleaner-burning fuel alternatives to oil and gas and technological know-how are unlocking the wider potential use of geothermal.
"Geothermal energy is very complex and diverse in terms of its use. It's used for fish farming in China, alligator growing in Idaho, power production in China, spas and greenhouses in Mexico and Iceland, and used to heat buildings in Iceland," said Karl Gawell, executive director of the Washington, D.C.-based Geothermal Energy Association (GEA).
Now, companies such as Iceland-based financial group Glitnir are seeking a stake in U.S. geothermal potential through investment. In recent months, other financial investment companies such as Merrill Lynch also have backed U.S. geothermal development.
The expense of drilling geothermal wells has been a hindrance. However, investment capital has begun flowing into geothermal, and investment bankers are starting get their heads around that, while a geothermal well may take five to 10 years to pay off, it could run indefinitely as an energy resource, said Craig Nunn, member director of the Canadian Geothermal Energy Association.
With developments in turbine technology, "we can look at resources up to 100 degrees Celcius. If we're able to tap lower temperature geothermal systems, it opens a lot of doors to many, many locations."
"And we're not even looking at EGS [enhanced geothermal systems]. That opens a whole other set of doors," Nunn said.
Technology such as organic Rankine steam power plants has allowed regions such as southern Germany to access lower temperature geothermal resources. Gawell said that technology has allowed areas such as the U.S. state of Nevada to utilize geothermal power.
Other engineering techniques, for instance, using wastewater to generate geothermal power such as takes place at The Geysers geothermal field in California, also allow geothermal resources that couldn't be accessed previously to be utilized.
Condensers and cooling towers at The Geysers Power Plant in California
Geothermal heat source was used for years in the gold mining industry, when miners would process gold ore with hot water. New interests include mining minerals from geothermal fluids such as lithium, which is in high demand for batteries in hybrid cars.
Oil and gas companies such as Chevron, which already have a substantial arsenal of knowledge regarding drilling, also have or are showing interest in geothermal, pursuing opportunities for co-production of geothermal resources along with oil and gas, said Nunn.
However, tax credits and other incentives to encourage geothermal development are needed, as well as consistent funding by the public and private sectors over the long-term, to allow development of geothermal resources in the U.S. and worldwide to continue, industry experts say.
Just as in the oil and gas industry, finding enough skilled workers to fill available jobs in the geothermal sector also presents a challenge.
"They are having a hard time finding people. They're competing with (and often losing to) the mining and petroleum industries. I have head hunters call from time to time. We need to accelerate undergraduate and graduate education," said Lisa Shevenell, director of the Great Basin Center of Geothermal Energy and Research Hydrogeologist, Nevada Burea of Mines and Geology at the University of Nevada at Reno.
Expanding the use of geothermal development in the U.S. would also require something of a culture change. In Iceland, geothermal heating is used at a community level: hot water is pumped up and circulated around a town or neighborhood. Americans are more accustomed to individual power delivery, said Robert Zierenberg, a geology professor at the University of California (UC) at Davis.
U.S. geothermal development
While geothermal use in the U.S. typically is associated with electricity generation, geothermal is used for a variety of purposes worldwide.
The focus of geothermal in the U.S. also primarily remains on natural systems, while in Europe, geothermal energy is being engineered, such as using power and heat together. "Just like in oil and gas drilling, wells are fractured and water injected to utilize geothermal resources," said Gawell.
While research funding efforts in the past have not been consistent enough to stimulate the steady development of geothermal technologies, the U.S. government's attitude towards geothermal appears to be changing.
Earlier this year, the U.S. Department of Energy (DOE) formed a multidisciplinary team with Ormat Technologies subsidiary Ormat Nevada, GeothermEx Inc., the University of Utah, the U.S. Geological Survey, and the national laboratories to create an Enhanced Geothermal System (EGS) at the Desert Peak hydrothermal field in Nevada. DOE has invested over US$5 million in the effort.
Analyses will be directed toward developing and executing a hydraulic stimulation program for an in-field, non-productive well of high temperatures of over 400 degrees Fahrenheit. The team will try to create or enhance the permeability by injecting high pressure water.
For fiscal year (FY) 2009, DOE's Office of Energy Efficiency and Renewable Energy (EERE) reports that proposed funding for U.S. geothermal energy development efforts would increase by US$10.2 million to US$30 million versus US$19.8 million budgeted for FY 2008. The funding increase will provide for field demonstrations of EGS technology. The proposed federal budget for 2009 was unveiled earlier this year.
Despite the funding increase, geothermal industry experts say continued tax incentives are needed to keep geothermal development rolling. While tax incentives currently are in place, they will expire at the end of 2009 and will need renewal.
Legislation has been introduced to renew these incentives. In early April, Sen. John Ensign (R-Nev.) and Sen. Maria Cantwell (D-Wash.) introduced the Clean Energy Tax Stimulus Act of 2008, which extends the incentives to encourage renewable energy. Extending the placing-in-service deadline through 2009 for the Production Tax Credit encourages electricity production using renewable energy sources such as geothermal, wind, biomass, hydropower facilities and other sources. These renewable energy plants will have valuable tax stability for 10 years.
Last month, the Clean Energy Tax Stimulus Act amendment was added to U.S. 3221, the Housing Act, in an 88-8 vote.
Legislators and government agencies at the U.S. state level also are putting forth efforts to develop geothermal energy or provide incentives for geothermal use.
In Washington, Senate Bill 6897 has been proposed that would authorize a comprehensive review of the Pacific Northwest state's geothermal resources and make recommendations regarding policy measures to facilitate environmentally responsible development of the resources for electric generation and concentrated heating purposes.
Interest in developing geothermal resources in Oregon and Washington is taking off as the Cascade Mountain range is estimated to hold "potentially significant" geothermal resources. To date, little exploration has been conducted in the region and no deep test holds have been drilled.
Provo, Utah-based Raser Technologies recently announced it has started development of two additional geothermal projects, bringing its total number of projects under development to seven. The new projects include a 10 MW plant in Utah and the company's first 10 MW plant in Oregon.
Raser currently has 970 acres under geothermal lease agreements in Oregon in addition to the 73,000 acres of International Paper property on which Raser holds an exclusive geothermal option in the state. Raser is evaluating this option and expects to enter into additional geothermal leases in Oregon under the agreement.
Oregon and Washington will hold a competitive geothermal lease sale, which is tentatively scheduled for June 12 of this year. California and Nevada currently are planning to hold a geothermal lease sale on July 15.
The U.S. Bureau of Land Management will implement a new process for geothermal lease applications through opening nominations and scheduling sales based on those nominations in upcoming sales.
Several states have already received several nominations from production companies, particularly Nevada and Oregon, with 73 and 50 nominations, respectively.
A delegation of state representatives from Montana in April traveled to Iceland to study the nation's network of geothermal electricity heat. The recent visit followed up on a visit by officials from Iceland in late 2007 in regards to the possible investment in geothermal energy development in Montana.
Earlier this year, Colorado unveiled its 2008 Geothermal Action Plan, which includes investigating frameworks for reducing barriers to geothermal development with community leaders, geothermal development experts and owners of geothermal properties.
The action plan also calls for the hiring of a full-time geologist with the Colorado Geological Survey to continue to assess the state's geothermal resources; develop a strategic work plan with the Colorado Geological Survey to prepare for potential Department of Energy funding solicitations in the 2008-2009 DOE funding cycle for geothermal exploration and development; and explore options, including possible public/private partnerships with DOE for an EGS pilot project in Colorado with assistance of the Colorado School of Mines.
While the U.S. Rockies holds a significant portion of the country's geothermal resources, the Rockies are far behind in terms of installed geothermal energy. In the Rockies, geothermal electricity generation is most widely used in Nevada. However, the state only has 346 MW of geothermal power capacity, according to the 2008 Colorado College State of the Rockies Report Card.
Researchers with the University of Nevada at Reno's Great Basin Center for Geothermal Energy and the Desert Research Institute earlier this year discovered direct evidence of an active geothermal system in the Teels Marsh area of Mineral County in rural Nevada.
The discovery is part of an ongoing effort by Great Basin Center for Geothermal Energy scientists to catalogue and record all of the state's geothermal assets. Scientists at the center estimate that northern Nevada holds 2,500 MW of geothermal natural steam, which could generate power for 2.5 million people.
According to Shevenell, the minimum number of known, developable geothermal resources in the near term with current technology under suitable political, regulatory and economic conditions is 2390 MW, and likely closer to 3200 MW.
If all 2390 MW from geothermal is brought on-line by 2015, geothermal would account for 25 percent to 33 percent of Nevada's needed electrical capacity in 2015, based on an assumed two percent increase in electricity demand per year starting with the 8200 MW statewide capacity reported for 2007 by the Nevada State Energy Office.
"Geothermal energy clearly has the potential to displace significant amounts of fossil fuels and provide Nevada with clean, indigenous, renewable power, improving our economy, quality of life and national security," said Shevenell.
Other parts of the region provide more geothermal resources. Counties in Montana and Wyoming hold the greatest opportunity; however, portions of these counties lie within the boundaries of Yellowstone National Park and will likely never be developed.
Technology
GEA released a two-part report, The State of Geothermal Technology, in November 2007 and January 2008.
In Part I: Subsurface Technology, author Mark Taylor noted that subsurface technologies must be improved, new exploration technologies developed and drilling costs significantly reduced to utilize most of the geothermal resource base.
Most hydrothermal resources developed in the U.S. have been found through subsurface manifestations such as hot springs. However, these types of resources are estimated to represent only a very small fraction of an incredibly large, "hidden" U.S. resource base. A cumulative capacity of 100,000 MW can be achieved by tapping into EGS systems in the U.S. over the next 50 years, according to a study released by the Massachusetts Institute of Technology in January 2007.
"Although geothermal and oil and gas drilling operations may seem interchangeable, there are significant differences. The geologic formations encountered and fluid flow rates required for commercial production cause geothermal drilling contractors to use different methods and tools than those used in oil and gas drilling."
"Some of these include training specialized crews, drilling to maximize well diameters to increase flow potential, and using several pieces of equipment altered to be effective in geothermal drilling projects," Taylor noted.
Despite the differences, potentially thousands of megawatts of unused geothermal energy from thermal fluids commonly co-produced from oil and gas wells exist. Development of technology to access these megawatts is starting to be done on a limited basis.
While the industry has made several technological advances that help drilling contractors cope with difficult drilling environments, further advances will allow them to reach their target depths with fewer problems and less cost.
"A major reason that many geothermal prospects go undeveloped is that they are too deep to be drilled economically. If advances are made that significantly reduce drilling costs, resources at previously uneconomical depths would then become feasible development prospects," Taylor concluded.
The State of Geothermal Technology Part II: Surface Technology, released in January, highlights new and underused geothermal technology that could boost the use of the renewable energy source within the U.S.
Non-traditional technology applications that have been considered, or are emerging that could further expand geothermal potential, include hybrid systems, which integrate another resource into a hydrothermal geothermal power plant, creating more electricity without expanding the use of the geothermal source.
Geothermal can be used in combination with biomass, combined heat and power or CHP - geothermal electricity plus a geothermal direct use application - geothermal heat pumps, and geopressured resources, which operate on both natural gas and geothermal fuel.
Enhanced geothermal systems and oil and gas co-production also could expand geothermal potential in the U.S.
Several surface technology applications look particularly promising for the future, including hybrid cooling. Air cooling will likely become the preferred cooling option in an increasingly water-constrained world, Kagel said.
"However, the relative inefficiency of air-cooled systems during the summer has proven in some cases to be a liability. Hybrid cooling systems seek to integrate the best of both systems, increasing seasonal efficiency while also reducing water use and aesthetic impact."
Other promising technological applications include incremental technology improvements. Small-scale improvements can be commercially implemented more quickly than larger, more revolutionary advances, and can be incorporated into existing designs with comparatively low risk.
Increasingly standardized, modular geothermal conversion systems also hold promise for future geothermal development. Modular components and subcomponents reduce costs because they can be pulled from off-the-shelf designs that are mass-produced. They allow developers to move ahead more rapidly with plant development and, once a plant is established, capacity additions.
Further research and development could make the separation of minerals from geothermal water, known as mineral recovery, a viable technology. Mineral recovery offers benefits such as reduced scaling and increased revenue.
The U.S. Department of Energy's Energy Efficiency and Renewable Energy (EERE) this year has evaluated the DOE-sponsored study, The Future of Geothermal Energy, which was conducted by a panel of independent experts led by the Massachusetts Institute of Technology. The study, which examined the potential of geothermal energy to meet future U.S. energy needs, was released in January 2007.
The MIT-led panel concluded that geothermal energy could provide 100,000 Mwe or more in 50 years by using advanced EGS technology, which are fractured, hot-rock reservoirs that have been engineered to extract heat by the circulation of water between injection and production wells.
The EERE's report this year, which reviewed the assumptions and conclusions of the MIT study, found that the study's conclusions about the amounts of investment needed to achieve competitiveness and produce 100,000 Mwe were not supported by the MIT study's assumptions and conclusions. EERE concluded that, to achieve the MIT study's large scale use of geothermal energy, significant advances are needed in site characterization, reservoir creation, wellfield development and completion, and system operation, as well as improvements in drilling and power conversion technologies.
"The DOE strategy is to leverage and build from current geothermal technologies and resources to develop the advanced technologies required for EGS, while at the same time generating benefits in the near-, mid- and long-term.
"This will require a systematic, sustained research and development effort by the Federal government in strong partnership with industry and academia to ensure full development of EGS," the EERE study reported.
Geothermal's global appeal
To date, geothermal resources in Canada are widely undeveloped. The University of British Columbia estimates that between 4,000 MW to 7,000 MW of geothermal energy potential exist in British Columbia alone, of which none have been tapped at this point.
While Canadian geothermal resources were studied in the 1980s, the diversity of other resources such as coal and hydro and strong oil and gas prices led companies to focus on these sources rather than alternatives such as geothermal.
Government policy also has been an obstacle to geothermal development in Canada. British Columbia is the only jurisdiction in Canada that has a geothermal lease agreement available. "If I wanted to get a lease for geothermal opportunity in Alberta it wouldn't available," said Craig Nunn, a geologist with the Canadian Geothermal Energy Association.
The picture is starting to change. The number of Canadian companies that do work in the U.S. in geothermal has become an issue for Canadian policymakers. Knowing that companies with knowledge of geothermal are choosing not to spend capital in Canada is an awakening for many involved in electricity power supply.
British Columbia has made development of renewable energy sources such as geothermal a priority with the introduction of a carbon tax.
Technological development presented another barrier in the past to geothermal. While flash steam and dry steam geothermal technology was studied in the 1970s, geothermal resources accessible through these technologies were just the "lowest hanging fruit on the tree."
A team from the UC Davis expects to begin drilling this summer as part of the Iceland Deep Drilling project, an international effort to learn more about the potential of geothermal energy.
Professors Peter Schiffman and Robert Zierenberg are working with Wilfred Elders, professor emeritus at UC Riverside, Dennis Bird at Stanford University and Mark Reed at the University of Oregon to study the chemistry that occurs at high pressures and temperatures two miles below Iceland.
Funded by the National Science Foundation, the university team will drill up to 2.5 miles (4 km) into the rock. It will be one of the three boreholes sunk as part of the Iceland Deep Drilling Project, which is supported largely by Icelandic power companies.
In Africa, the Kenyan government is increasingly focused on developing geothermal power due to the country's rising demand for power and the challenges posed by hydroelectric plants' vulnerability to climate and weather changes, according to Frost & Sullivan's Strategic Analysis of the Kenyan Electricity Industry.
A host of independent power producers (IPPs) are expected to invest in this power sector to exploit the country's 7,000 MW geothermal power potential. The nation has already developed 115 MW of this potential, and plans are underway to construct more geothermal power stations.
"While Kenya's robust economic growth is fuelling the demand for power, existing supplies are unable to meet demand, leading to acute power shortages and blackouts," said Moses Duma, a Frost & Sullivan research analyst.
"Furthermore, approximately 62 percent of Kenya's power plants use water as their major feedstock, leaving them prone to fluctuating water levels as a result of climate and weather variations."
However, two major restraints stand in the way of the Kenyan power industry, which is still in its developmental stage but has considerable potential for growth in the short- to medium-term. One barrier is the dominance of the state utility in power transmission and distribution.
Lack of project finance is an additional barrier to companies, and "even the Kenyan government lacks adequate financial resources to actualise the planned power project," said Duma.
"Even though energy resources are plentiful in Kenya, the infrastructure to transport, distribute, transform and efficiently utilise them is lacking."
Duma noted that the Kenyan government's immediate focus should be on improving tariff levels to attract investment from both local and international companies.
While the U.S.'s support for domestic alternative energy development is questioned, the U.S. government has been encouraging other countries to pursue geothermal development. America.gov reported earlier this year that the U.S. State Department's Bureau of Oceans and Environmental and Scientific Affairs is working to become more active in the African Alley Geothermal Development Facility (ARGeo) project to develop geothermal resources in the East African Rift Valley and is collaborating with the Chilean government on potential geothermal development.
ARGeo is an international organization that is active in Kenya, Ethiopia, Djibouti, Uganda, Tanzania and Eritrea. The East African Rift Valley system runs from the Red Sea to Mozambique and is called an active divergent rift valley because the continent is being pulled apart by plate tectonic forces. The geothermal potential of this system is up to 7,000 MW.
So far, no geothermal development has been undertaken in South America, but the government of Chile is interested. Chile has the region's largest number of historically active volcanoes. The Andes Mountains run the length of South America where the Nazca plate slides under the South American plate, producing many active volcanoes and a rich geothermal resource.
Western GeoPower in April announced it had recently opened geothermal operations in Chile with the incorporation of a wholly owned subsidiary, Western GeoPower SpA, and the opening of an office in Santiago. Western GeoPower also has submitted bids to the Chilean Ministry of Mines for the acquisition of three geothermal exploration concession in northern Chile that were recently presented for bidding.
Western GeoPower and its independent consultants, GeothermEx, have been conducting a technical review of the geothermal potential for Chile and a field reconnaissance of selected geothermal sites. The review identified several locations of significant resource potential through Chile, including concessions currently under bid at Pampa Lirima and Polloquere.
UK-based utility Scottish and Southern Energy Plc will invest up to US$29.6 million in cash to purchase a 20 percent stake in UK-based Geothermal International Ltd. (GI) from existing shareholders.
GI is a supplier of ground source heating and cooling systems, with extensive operations in the UK and Ireland and to a lesser extent in Europe. Since its establishment in 2000, GI has installed more than 1,300 ground source heat pump systems, amounting to over 90 MW of installed capacity, sized from 6 kW and 10 MW.
Ground source heat pump systems can be used to transfer energy between buildings and the surface crust of the plant, or surrounding air, providing a renewable energy efficient means of heating and cooling buildings.
SSE Chief Executive Ian Merchant said,"SSE is rapidly building a strong portfolio of clean energy businesses that cover almost every part of the renewable and alternative energy market in the UK. Geothermal energy has been an obvious missing piece in this portfolio and this deal fills the gap very effectively."
According to Geothermal International, ground source heat pumps, often referred to as GeoExchange or geothermal systems, have grown in popularity and acceptance in the UK.
Planning requirements, such as the 10 percent renewable requirement in London, and increased energy efficiency measures, such as Part L, have made ground source systems a key part of modern building heating and cooling solutions. Geothermal International has installed commercial ground source systems in schools, office buildings and homes throughout the UK.
Between 1984 and 1987, the British Geological Survey identified four Mesozoic basins which contained significant low-temperature geothermal resources above 40 degrees Celcius in Permian and Triassic sandstones: eastern England, Cheshire, Worcester and Wessex.
In France, Orly Airport announced in early April that its facilities would utilize geothermal energy to cut down on its heating bills. According to media reports, Orly-Ouest terminal, part of Orly-South, the airport's Hilton Hotel, and two business districts will be hooked up to the system from 2011. The project is expected to cost US$17.27 million. The neighboring towns of Orly, south of Paris, and l'Hay-les-Roses, currently use geothermal.
In New Zealand, Might River Power plans to spend US$353 million on the geothermal development proposed at Rotokawa, north of Taupo. The development would be the second power station at Rotokawa and, with 132 MW of generating capacity, would be the second largest geothermal station in the country.
Mighty River Power and Tauhara North No. 2 Trust, through the Nga Awa Purua Joint Venture, in March signed an engineering procurement contract with Japan's Sumitomo Corp. for construction of the power station. Work is scheduled to begin around May 1 and take approximately two years to complete. Mighty River Power hold 75 percent in the Nga Awa Purua Joint Venture; Tauhara North No. 2 Trust holds the remaining 25 percent.
The proposed development is part of a significant geothermal expansion program being undertaken by Mighty River Power in conjunction with its Maori partners and includes three other geothermal sites at Mokai, Kawerau and Nga Tamariki.
Iceland-based investment bank Glitnir has formed a joint venture with India's LNJ Bhilwara Group to develop geothermal power plants in India and Nepal. Glitnir will hold 40 percent in the 60-40 partnership, and also will file an application with the Reserve Bank of India to open a representative office in India.
Glitnir CEO Larus Welding stated, "This will encourage prospects for growth in India in the geothermal arena. India is a vast country and we believe there are a number of unexplored geothermal energy resources. These resources and the technology employed contribute to clean, rural-based and cheap energy sources."
Welding noted that Glitnir had successfully implemented a project in China, where expertise and sourced funding for the project was used to heat a district in the Xian Yang province in China.
"We believe similar projects can be developed in India. In addition, Glitnir's strategy is to have a local presence in all the major emerging markets with potential in the Glitnir industry focus. Following the establishment of our presence in China, India is the next logical destination."
http://www.energycurrent.com/index.php?id=3&storyid=10318
By Karen Broyles
Filed from Houston 5/5/2008 11:06:13 PM GMT
Geothermal power plant
Geothermal, long the "Sleeping Beauty" of sustainable energy, is now showing clear signs of waking up, particularly in the U.S., where geothermal potential remains largely untapped, according to Iceland-based Glitnir Bank.
Late last year, Glitnir opened a New York office with the aim of investing in geothermal projects. Glitnir then estimated that up to US$39.4 billion in funding would be needed to develop available geothermal energy resources in the U.S. through 2025, including US$16.9 billion over the next eight years and an additional US$22.5 billion in the following decade.
In the past, a lack of investment capital and technology to unlock lower heat geothermal resources, as well as a global emphasis on oil and gas exploration, kept geothermal on the backburner in the U.S. However, that tale is beginning to change as investment capital, a growing emphasis on cleaner-burning fuel alternatives to oil and gas and technological know-how are unlocking the wider potential use of geothermal.
"Geothermal energy is very complex and diverse in terms of its use. It's used for fish farming in China, alligator growing in Idaho, power production in China, spas and greenhouses in Mexico and Iceland, and used to heat buildings in Iceland," said Karl Gawell, executive director of the Washington, D.C.-based Geothermal Energy Association (GEA).
Now, companies such as Iceland-based financial group Glitnir are seeking a stake in U.S. geothermal potential through investment. In recent months, other financial investment companies such as Merrill Lynch also have backed U.S. geothermal development.
The expense of drilling geothermal wells has been a hindrance. However, investment capital has begun flowing into geothermal, and investment bankers are starting get their heads around that, while a geothermal well may take five to 10 years to pay off, it could run indefinitely as an energy resource, said Craig Nunn, member director of the Canadian Geothermal Energy Association.
With developments in turbine technology, "we can look at resources up to 100 degrees Celcius. If we're able to tap lower temperature geothermal systems, it opens a lot of doors to many, many locations."
"And we're not even looking at EGS [enhanced geothermal systems]. That opens a whole other set of doors," Nunn said.
Technology such as organic Rankine steam power plants has allowed regions such as southern Germany to access lower temperature geothermal resources. Gawell said that technology has allowed areas such as the U.S. state of Nevada to utilize geothermal power.
Other engineering techniques, for instance, using wastewater to generate geothermal power such as takes place at The Geysers geothermal field in California, also allow geothermal resources that couldn't be accessed previously to be utilized.
Condensers and cooling towers at The Geysers Power Plant in California
Geothermal heat source was used for years in the gold mining industry, when miners would process gold ore with hot water. New interests include mining minerals from geothermal fluids such as lithium, which is in high demand for batteries in hybrid cars.
Oil and gas companies such as Chevron, which already have a substantial arsenal of knowledge regarding drilling, also have or are showing interest in geothermal, pursuing opportunities for co-production of geothermal resources along with oil and gas, said Nunn.
However, tax credits and other incentives to encourage geothermal development are needed, as well as consistent funding by the public and private sectors over the long-term, to allow development of geothermal resources in the U.S. and worldwide to continue, industry experts say.
Just as in the oil and gas industry, finding enough skilled workers to fill available jobs in the geothermal sector also presents a challenge.
"They are having a hard time finding people. They're competing with (and often losing to) the mining and petroleum industries. I have head hunters call from time to time. We need to accelerate undergraduate and graduate education," said Lisa Shevenell, director of the Great Basin Center of Geothermal Energy and Research Hydrogeologist, Nevada Burea of Mines and Geology at the University of Nevada at Reno.
Expanding the use of geothermal development in the U.S. would also require something of a culture change. In Iceland, geothermal heating is used at a community level: hot water is pumped up and circulated around a town or neighborhood. Americans are more accustomed to individual power delivery, said Robert Zierenberg, a geology professor at the University of California (UC) at Davis.
U.S. geothermal development
While geothermal use in the U.S. typically is associated with electricity generation, geothermal is used for a variety of purposes worldwide.
The focus of geothermal in the U.S. also primarily remains on natural systems, while in Europe, geothermal energy is being engineered, such as using power and heat together. "Just like in oil and gas drilling, wells are fractured and water injected to utilize geothermal resources," said Gawell.
While research funding efforts in the past have not been consistent enough to stimulate the steady development of geothermal technologies, the U.S. government's attitude towards geothermal appears to be changing.
Earlier this year, the U.S. Department of Energy (DOE) formed a multidisciplinary team with Ormat Technologies subsidiary Ormat Nevada, GeothermEx Inc., the University of Utah, the U.S. Geological Survey, and the national laboratories to create an Enhanced Geothermal System (EGS) at the Desert Peak hydrothermal field in Nevada. DOE has invested over US$5 million in the effort.
Analyses will be directed toward developing and executing a hydraulic stimulation program for an in-field, non-productive well of high temperatures of over 400 degrees Fahrenheit. The team will try to create or enhance the permeability by injecting high pressure water.
For fiscal year (FY) 2009, DOE's Office of Energy Efficiency and Renewable Energy (EERE) reports that proposed funding for U.S. geothermal energy development efforts would increase by US$10.2 million to US$30 million versus US$19.8 million budgeted for FY 2008. The funding increase will provide for field demonstrations of EGS technology. The proposed federal budget for 2009 was unveiled earlier this year.
Despite the funding increase, geothermal industry experts say continued tax incentives are needed to keep geothermal development rolling. While tax incentives currently are in place, they will expire at the end of 2009 and will need renewal.
Legislation has been introduced to renew these incentives. In early April, Sen. John Ensign (R-Nev.) and Sen. Maria Cantwell (D-Wash.) introduced the Clean Energy Tax Stimulus Act of 2008, which extends the incentives to encourage renewable energy. Extending the placing-in-service deadline through 2009 for the Production Tax Credit encourages electricity production using renewable energy sources such as geothermal, wind, biomass, hydropower facilities and other sources. These renewable energy plants will have valuable tax stability for 10 years.
Last month, the Clean Energy Tax Stimulus Act amendment was added to U.S. 3221, the Housing Act, in an 88-8 vote.
Legislators and government agencies at the U.S. state level also are putting forth efforts to develop geothermal energy or provide incentives for geothermal use.
In Washington, Senate Bill 6897 has been proposed that would authorize a comprehensive review of the Pacific Northwest state's geothermal resources and make recommendations regarding policy measures to facilitate environmentally responsible development of the resources for electric generation and concentrated heating purposes.
Interest in developing geothermal resources in Oregon and Washington is taking off as the Cascade Mountain range is estimated to hold "potentially significant" geothermal resources. To date, little exploration has been conducted in the region and no deep test holds have been drilled.
Provo, Utah-based Raser Technologies recently announced it has started development of two additional geothermal projects, bringing its total number of projects under development to seven. The new projects include a 10 MW plant in Utah and the company's first 10 MW plant in Oregon.
Raser currently has 970 acres under geothermal lease agreements in Oregon in addition to the 73,000 acres of International Paper property on which Raser holds an exclusive geothermal option in the state. Raser is evaluating this option and expects to enter into additional geothermal leases in Oregon under the agreement.
Oregon and Washington will hold a competitive geothermal lease sale, which is tentatively scheduled for June 12 of this year. California and Nevada currently are planning to hold a geothermal lease sale on July 15.
The U.S. Bureau of Land Management will implement a new process for geothermal lease applications through opening nominations and scheduling sales based on those nominations in upcoming sales.
Several states have already received several nominations from production companies, particularly Nevada and Oregon, with 73 and 50 nominations, respectively.
A delegation of state representatives from Montana in April traveled to Iceland to study the nation's network of geothermal electricity heat. The recent visit followed up on a visit by officials from Iceland in late 2007 in regards to the possible investment in geothermal energy development in Montana.
Earlier this year, Colorado unveiled its 2008 Geothermal Action Plan, which includes investigating frameworks for reducing barriers to geothermal development with community leaders, geothermal development experts and owners of geothermal properties.
The action plan also calls for the hiring of a full-time geologist with the Colorado Geological Survey to continue to assess the state's geothermal resources; develop a strategic work plan with the Colorado Geological Survey to prepare for potential Department of Energy funding solicitations in the 2008-2009 DOE funding cycle for geothermal exploration and development; and explore options, including possible public/private partnerships with DOE for an EGS pilot project in Colorado with assistance of the Colorado School of Mines.
While the U.S. Rockies holds a significant portion of the country's geothermal resources, the Rockies are far behind in terms of installed geothermal energy. In the Rockies, geothermal electricity generation is most widely used in Nevada. However, the state only has 346 MW of geothermal power capacity, according to the 2008 Colorado College State of the Rockies Report Card.
Researchers with the University of Nevada at Reno's Great Basin Center for Geothermal Energy and the Desert Research Institute earlier this year discovered direct evidence of an active geothermal system in the Teels Marsh area of Mineral County in rural Nevada.
The discovery is part of an ongoing effort by Great Basin Center for Geothermal Energy scientists to catalogue and record all of the state's geothermal assets. Scientists at the center estimate that northern Nevada holds 2,500 MW of geothermal natural steam, which could generate power for 2.5 million people.
According to Shevenell, the minimum number of known, developable geothermal resources in the near term with current technology under suitable political, regulatory and economic conditions is 2390 MW, and likely closer to 3200 MW.
If all 2390 MW from geothermal is brought on-line by 2015, geothermal would account for 25 percent to 33 percent of Nevada's needed electrical capacity in 2015, based on an assumed two percent increase in electricity demand per year starting with the 8200 MW statewide capacity reported for 2007 by the Nevada State Energy Office.
"Geothermal energy clearly has the potential to displace significant amounts of fossil fuels and provide Nevada with clean, indigenous, renewable power, improving our economy, quality of life and national security," said Shevenell.
Other parts of the region provide more geothermal resources. Counties in Montana and Wyoming hold the greatest opportunity; however, portions of these counties lie within the boundaries of Yellowstone National Park and will likely never be developed.
Technology
GEA released a two-part report, The State of Geothermal Technology, in November 2007 and January 2008.
In Part I: Subsurface Technology, author Mark Taylor noted that subsurface technologies must be improved, new exploration technologies developed and drilling costs significantly reduced to utilize most of the geothermal resource base.
Most hydrothermal resources developed in the U.S. have been found through subsurface manifestations such as hot springs. However, these types of resources are estimated to represent only a very small fraction of an incredibly large, "hidden" U.S. resource base. A cumulative capacity of 100,000 MW can be achieved by tapping into EGS systems in the U.S. over the next 50 years, according to a study released by the Massachusetts Institute of Technology in January 2007.
"Although geothermal and oil and gas drilling operations may seem interchangeable, there are significant differences. The geologic formations encountered and fluid flow rates required for commercial production cause geothermal drilling contractors to use different methods and tools than those used in oil and gas drilling."
"Some of these include training specialized crews, drilling to maximize well diameters to increase flow potential, and using several pieces of equipment altered to be effective in geothermal drilling projects," Taylor noted.
Despite the differences, potentially thousands of megawatts of unused geothermal energy from thermal fluids commonly co-produced from oil and gas wells exist. Development of technology to access these megawatts is starting to be done on a limited basis.
While the industry has made several technological advances that help drilling contractors cope with difficult drilling environments, further advances will allow them to reach their target depths with fewer problems and less cost.
"A major reason that many geothermal prospects go undeveloped is that they are too deep to be drilled economically. If advances are made that significantly reduce drilling costs, resources at previously uneconomical depths would then become feasible development prospects," Taylor concluded.
The State of Geothermal Technology Part II: Surface Technology, released in January, highlights new and underused geothermal technology that could boost the use of the renewable energy source within the U.S.
Non-traditional technology applications that have been considered, or are emerging that could further expand geothermal potential, include hybrid systems, which integrate another resource into a hydrothermal geothermal power plant, creating more electricity without expanding the use of the geothermal source.
Geothermal can be used in combination with biomass, combined heat and power or CHP - geothermal electricity plus a geothermal direct use application - geothermal heat pumps, and geopressured resources, which operate on both natural gas and geothermal fuel.
Enhanced geothermal systems and oil and gas co-production also could expand geothermal potential in the U.S.
Several surface technology applications look particularly promising for the future, including hybrid cooling. Air cooling will likely become the preferred cooling option in an increasingly water-constrained world, Kagel said.
"However, the relative inefficiency of air-cooled systems during the summer has proven in some cases to be a liability. Hybrid cooling systems seek to integrate the best of both systems, increasing seasonal efficiency while also reducing water use and aesthetic impact."
Other promising technological applications include incremental technology improvements. Small-scale improvements can be commercially implemented more quickly than larger, more revolutionary advances, and can be incorporated into existing designs with comparatively low risk.
Increasingly standardized, modular geothermal conversion systems also hold promise for future geothermal development. Modular components and subcomponents reduce costs because they can be pulled from off-the-shelf designs that are mass-produced. They allow developers to move ahead more rapidly with plant development and, once a plant is established, capacity additions.
Further research and development could make the separation of minerals from geothermal water, known as mineral recovery, a viable technology. Mineral recovery offers benefits such as reduced scaling and increased revenue.
The U.S. Department of Energy's Energy Efficiency and Renewable Energy (EERE) this year has evaluated the DOE-sponsored study, The Future of Geothermal Energy, which was conducted by a panel of independent experts led by the Massachusetts Institute of Technology. The study, which examined the potential of geothermal energy to meet future U.S. energy needs, was released in January 2007.
The MIT-led panel concluded that geothermal energy could provide 100,000 Mwe or more in 50 years by using advanced EGS technology, which are fractured, hot-rock reservoirs that have been engineered to extract heat by the circulation of water between injection and production wells.
The EERE's report this year, which reviewed the assumptions and conclusions of the MIT study, found that the study's conclusions about the amounts of investment needed to achieve competitiveness and produce 100,000 Mwe were not supported by the MIT study's assumptions and conclusions. EERE concluded that, to achieve the MIT study's large scale use of geothermal energy, significant advances are needed in site characterization, reservoir creation, wellfield development and completion, and system operation, as well as improvements in drilling and power conversion technologies.
"The DOE strategy is to leverage and build from current geothermal technologies and resources to develop the advanced technologies required for EGS, while at the same time generating benefits in the near-, mid- and long-term.
"This will require a systematic, sustained research and development effort by the Federal government in strong partnership with industry and academia to ensure full development of EGS," the EERE study reported.
Geothermal's global appeal
To date, geothermal resources in Canada are widely undeveloped. The University of British Columbia estimates that between 4,000 MW to 7,000 MW of geothermal energy potential exist in British Columbia alone, of which none have been tapped at this point.
While Canadian geothermal resources were studied in the 1980s, the diversity of other resources such as coal and hydro and strong oil and gas prices led companies to focus on these sources rather than alternatives such as geothermal.
Government policy also has been an obstacle to geothermal development in Canada. British Columbia is the only jurisdiction in Canada that has a geothermal lease agreement available. "If I wanted to get a lease for geothermal opportunity in Alberta it wouldn't available," said Craig Nunn, a geologist with the Canadian Geothermal Energy Association.
The picture is starting to change. The number of Canadian companies that do work in the U.S. in geothermal has become an issue for Canadian policymakers. Knowing that companies with knowledge of geothermal are choosing not to spend capital in Canada is an awakening for many involved in electricity power supply.
British Columbia has made development of renewable energy sources such as geothermal a priority with the introduction of a carbon tax.
Technological development presented another barrier in the past to geothermal. While flash steam and dry steam geothermal technology was studied in the 1970s, geothermal resources accessible through these technologies were just the "lowest hanging fruit on the tree."
A team from the UC Davis expects to begin drilling this summer as part of the Iceland Deep Drilling project, an international effort to learn more about the potential of geothermal energy.
Professors Peter Schiffman and Robert Zierenberg are working with Wilfred Elders, professor emeritus at UC Riverside, Dennis Bird at Stanford University and Mark Reed at the University of Oregon to study the chemistry that occurs at high pressures and temperatures two miles below Iceland.
Funded by the National Science Foundation, the university team will drill up to 2.5 miles (4 km) into the rock. It will be one of the three boreholes sunk as part of the Iceland Deep Drilling Project, which is supported largely by Icelandic power companies.
In Africa, the Kenyan government is increasingly focused on developing geothermal power due to the country's rising demand for power and the challenges posed by hydroelectric plants' vulnerability to climate and weather changes, according to Frost & Sullivan's Strategic Analysis of the Kenyan Electricity Industry.
A host of independent power producers (IPPs) are expected to invest in this power sector to exploit the country's 7,000 MW geothermal power potential. The nation has already developed 115 MW of this potential, and plans are underway to construct more geothermal power stations.
"While Kenya's robust economic growth is fuelling the demand for power, existing supplies are unable to meet demand, leading to acute power shortages and blackouts," said Moses Duma, a Frost & Sullivan research analyst.
"Furthermore, approximately 62 percent of Kenya's power plants use water as their major feedstock, leaving them prone to fluctuating water levels as a result of climate and weather variations."
However, two major restraints stand in the way of the Kenyan power industry, which is still in its developmental stage but has considerable potential for growth in the short- to medium-term. One barrier is the dominance of the state utility in power transmission and distribution.
Lack of project finance is an additional barrier to companies, and "even the Kenyan government lacks adequate financial resources to actualise the planned power project," said Duma.
"Even though energy resources are plentiful in Kenya, the infrastructure to transport, distribute, transform and efficiently utilise them is lacking."
Duma noted that the Kenyan government's immediate focus should be on improving tariff levels to attract investment from both local and international companies.
While the U.S.'s support for domestic alternative energy development is questioned, the U.S. government has been encouraging other countries to pursue geothermal development. America.gov reported earlier this year that the U.S. State Department's Bureau of Oceans and Environmental and Scientific Affairs is working to become more active in the African Alley Geothermal Development Facility (ARGeo) project to develop geothermal resources in the East African Rift Valley and is collaborating with the Chilean government on potential geothermal development.
ARGeo is an international organization that is active in Kenya, Ethiopia, Djibouti, Uganda, Tanzania and Eritrea. The East African Rift Valley system runs from the Red Sea to Mozambique and is called an active divergent rift valley because the continent is being pulled apart by plate tectonic forces. The geothermal potential of this system is up to 7,000 MW.
So far, no geothermal development has been undertaken in South America, but the government of Chile is interested. Chile has the region's largest number of historically active volcanoes. The Andes Mountains run the length of South America where the Nazca plate slides under the South American plate, producing many active volcanoes and a rich geothermal resource.
Western GeoPower in April announced it had recently opened geothermal operations in Chile with the incorporation of a wholly owned subsidiary, Western GeoPower SpA, and the opening of an office in Santiago. Western GeoPower also has submitted bids to the Chilean Ministry of Mines for the acquisition of three geothermal exploration concession in northern Chile that were recently presented for bidding.
Western GeoPower and its independent consultants, GeothermEx, have been conducting a technical review of the geothermal potential for Chile and a field reconnaissance of selected geothermal sites. The review identified several locations of significant resource potential through Chile, including concessions currently under bid at Pampa Lirima and Polloquere.
UK-based utility Scottish and Southern Energy Plc will invest up to US$29.6 million in cash to purchase a 20 percent stake in UK-based Geothermal International Ltd. (GI) from existing shareholders.
GI is a supplier of ground source heating and cooling systems, with extensive operations in the UK and Ireland and to a lesser extent in Europe. Since its establishment in 2000, GI has installed more than 1,300 ground source heat pump systems, amounting to over 90 MW of installed capacity, sized from 6 kW and 10 MW.
Ground source heat pump systems can be used to transfer energy between buildings and the surface crust of the plant, or surrounding air, providing a renewable energy efficient means of heating and cooling buildings.
SSE Chief Executive Ian Merchant said,"SSE is rapidly building a strong portfolio of clean energy businesses that cover almost every part of the renewable and alternative energy market in the UK. Geothermal energy has been an obvious missing piece in this portfolio and this deal fills the gap very effectively."
According to Geothermal International, ground source heat pumps, often referred to as GeoExchange or geothermal systems, have grown in popularity and acceptance in the UK.
Planning requirements, such as the 10 percent renewable requirement in London, and increased energy efficiency measures, such as Part L, have made ground source systems a key part of modern building heating and cooling solutions. Geothermal International has installed commercial ground source systems in schools, office buildings and homes throughout the UK.
Between 1984 and 1987, the British Geological Survey identified four Mesozoic basins which contained significant low-temperature geothermal resources above 40 degrees Celcius in Permian and Triassic sandstones: eastern England, Cheshire, Worcester and Wessex.
In France, Orly Airport announced in early April that its facilities would utilize geothermal energy to cut down on its heating bills. According to media reports, Orly-Ouest terminal, part of Orly-South, the airport's Hilton Hotel, and two business districts will be hooked up to the system from 2011. The project is expected to cost US$17.27 million. The neighboring towns of Orly, south of Paris, and l'Hay-les-Roses, currently use geothermal.
In New Zealand, Might River Power plans to spend US$353 million on the geothermal development proposed at Rotokawa, north of Taupo. The development would be the second power station at Rotokawa and, with 132 MW of generating capacity, would be the second largest geothermal station in the country.
Mighty River Power and Tauhara North No. 2 Trust, through the Nga Awa Purua Joint Venture, in March signed an engineering procurement contract with Japan's Sumitomo Corp. for construction of the power station. Work is scheduled to begin around May 1 and take approximately two years to complete. Mighty River Power hold 75 percent in the Nga Awa Purua Joint Venture; Tauhara North No. 2 Trust holds the remaining 25 percent.
The proposed development is part of a significant geothermal expansion program being undertaken by Mighty River Power in conjunction with its Maori partners and includes three other geothermal sites at Mokai, Kawerau and Nga Tamariki.
Iceland-based investment bank Glitnir has formed a joint venture with India's LNJ Bhilwara Group to develop geothermal power plants in India and Nepal. Glitnir will hold 40 percent in the 60-40 partnership, and also will file an application with the Reserve Bank of India to open a representative office in India.
Glitnir CEO Larus Welding stated, "This will encourage prospects for growth in India in the geothermal arena. India is a vast country and we believe there are a number of unexplored geothermal energy resources. These resources and the technology employed contribute to clean, rural-based and cheap energy sources."
Welding noted that Glitnir had successfully implemented a project in China, where expertise and sourced funding for the project was used to heat a district in the Xian Yang province in China.
"We believe similar projects can be developed in India. In addition, Glitnir's strategy is to have a local presence in all the major emerging markets with potential in the Glitnir industry focus. Following the establishment of our presence in China, India is the next logical destination."
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