www.forbes.com Peter Kelly-Detwiler 11/06/2014
Right now, a project in the forests of central Oregon may hold the promise to unlocking an enormous newenergy resource in the United States. On the NewberyVolcano VOLC +4.45%, AltaRock Energy is engaged in a project to mine the earth’s heat two miles down and turn it into a reliable and cost-effective supply of electricity. The potential of this energy resource is huge, and it is not confined to a particular geography. The main thing one needs is hot rock at a reasonable depth. And there is a lot of that in this country – over 3,000 years worth at our current rate of energy use.
In 2005 an 18-person panel was assembled under the auspices of the Massachusetts Institute of Technology (MIT) to look at the potential of geothermal energy to become a major source of energy in the United States. When most people think of geothermal, they envision the hydrothermal resources that are located in volcanic zones along tectonic plates, but the potential for geothermal is much larger and geographically dispersed. In fact, there is enormous potential for heat mining enhanced geothermal systems (EGS) throughout the U.S. and the world.
EGS works by drilling a hole into the ground, and pumping water – with a biodegradable diverter, which enhances the fracture process – into a closed loop system to create fractures in the rock. Additional water is added (once the reservoir is saturated, very little water is lost in the closed loop) to absorb heat from the rock, which turns to steam at the surface and drives a turbine.
The MIT group was specifically looking at what would be necessary to produce 100,000 MW of EGS in North America (which would represent about 10 % of overall U.S. generating capacity). They noted that the quality of the geothermal resource is affected by three basic factors:
1) The temperature-depth relationship (also referred to as the geothermal gradient), in other words, how deep do you have to drill to obtain the requisite heat?
2) The reservoir rock’s permeability and porosity. How easily do fluids or gases move through the rock and how big are the spaces between the grains in the rock? This matters because it affects the surface area that the water (which absorbs the necessary heat) is exposed to.
3) The amount of fluid saturation. How much fluid is there in the rock that can absorb the heat?
The typical hydrothermal reservoirs utilized in today’s geothermal plants contain all three attributes: they are relatively shallow, have high permeability and porosity, and have fluids in place that are easily recharged. EGS reservoirs, by definition, lack at least one of these characteristics. They may not have enough permeability and porosity or they may lack sufficient fluids. But with manipulation, that can change.
As the MIT report noted, EGS is attractive for several reasons, including the fact that it provides virtually carbon free baseload (round the clock) electricity and the source rock resource exists widely throughout the United States. The plants are also highly scalable because they are modular, based on the number of geothermal wells that are developed. The study group indicated that the potential of this resource was enormous and cost-effective: “the panel thinks that with a combined public/private investment of about $800 million to $1 billion over a 15-year period, EGS technology could be deployed commercially on a timescale that would produce more than 100,000 MWe of new capacity by 2050.” The group noted that this is “less than the cost of a single new-generation, clean-coal power plant.”
The MIT report did not start a revolution, but it did influence a few motivated entrepreneurs to look into this issue. One of them, Aaron Mandell, co-founded AltaRock (now 100% backed by investor Vinod Khosla) in 2007 to see if he could turn theoretical potential into reality. The question he was trying to answer was simple:
If you can prove EGS works and prove the economics are competitive, can geothermal begin to displace coal? Can we take a virtually unlimited supply of heat from the earth and use it to permanently retire fossil fuels?
Mandell observes that EGS is a very different technology than hydro-fracking for natural gas. One doesn’t have to drill sideways, nor use chemicals or sand to open up fractures in the rock. Also, no wastewater is produced that needs to be disposed of. Rather, it’s the temperature differential between cold water and hot rock that creates the fractures. These fractures in turn result in enhanced surface area for subsequent heat transfer from the rock to the water. Another public concern has been the potential for creating earthquakes, referred to as “induced seismicity.” But as Altarockhighlights using measured data from the Newberry project, EGS stimulations result in seismicity that is lower than a packed football stadium during a big NFL game.
Another difference from fracking – which typically uses three or four million gallons per well – is that AltaRock is using a closed loop. Once the reservoir is initially charged, no more additional water is needed, and the plants can then produce power for decades. Mandell is enthusiastic about the prospects for the EGS resource and for his company.
The cost structure and development risk is totally different than for traditional geothermal energy. We can achieve a high degree of certainty that a well will produce, because if you don’t hit permeability, you can create it.
With the development of the greenfield Newberry Volcano site, AltaRock is working to morph theory into reality, and the implications are significant. Retired Duke Energy DUK +0.58% Chairman Jim Rogers has said that “by mid-century virtually every power plant in this country will be retired and replaced.” As this happens a new source of generation will need to fill the void and EGS is one resource that has that capability.
In Oregon, we are building what we believe to be one of the most important power plants in the U.S. We’ve drilled 10,000 feet into hot dry rock, at 300 degrees Centigrade, with almost no permeability at the bottom and used our technology tocreate a geothermal reservoir. We no longer need to rely on naturally occurring reservoirs to get the heat and this opens the door to a whole new generation of development.
The undertaking is not cheap: it is underwritten by a $40 million commitment from private investors, complemented by a $21.5 million matching grant from the Department of Energy. The project is also supported by the University of Oregon, Lawrence Berkeley National Laboratory, the University of Utah, Texas A&M, Temple University, and scientists from the U.S. Geological Survey and the Pacific Northwest Seismic Network.
It involves several stages. The first element involves drilling the initial exploratory and injection well. This well provides information concerning downhole temperatures and is the well into which the water is introduced to fracture the rock and create the geothermal reservoir. Once the reservoir is created, additional vertical production wells are drilled, and they will have connectivity to the first well so that water moves from one to the other. The superheated water (at about 300 degrees C) will rise up the production wells to the surface and the resulting steam will course through a generator to create electricity. At this point, the Newberry Volcano project has already seen completion of the injection well, stimulation of the resource, and the creation of permeability. The next step is to drill the producer wells that will have ‘communication’ with the water injected into the first well, creating the closed loop network.