QUITE A TIME FOR GEOTHERMAL

U.S. Geothermal Power Production and Development Update
Dan Jennejohn, January 2010 (Geothermal Energy Association)

SUMMARY
Geothermal energy had a remarkable year in 2009 but that’s not the real story the statistics in U.S. Geothermal Power Production and Development Update, from the Geothermal Energy Association (GEA), tells.

Despite the recession and thanks to financing opportunities provided in the American Recovery and Reinvestment Act (ARRA), geothermal energy ended the year with a total U.S. installed capacity of 3,152.72 megawatts. The industry saw a 46% growth over its 2008 installed capacity and had a 33% increase in the jobs it supplies.

But the real story is what the report suggests about geothermal energy’s potential. ARRA, the U.S. Department of Energy (DOE) and other federal sources have made $626 million in research, development, demonstration and deployment funding available to an industry that already has 6,442.9 megawatts of new geothermal power plant capacity under development. This adds up to the conclusion that GEA’s goal of 10 gigawatts (10,000 megawatts) of installed U.S. capacity in the foreseeable future is a reasonable and achievable possibility.

10 gigawatts of installed capacity would meet the electricity demand of 10+ million people. But if estimates of the future potential of emerging technologies prove correct, that is just the beginning of what geothermal can do for the domestic energy supply.

And remember: That’s 10 gigawatts of baseload, 24/7 electricity generation and 10 gigawatts of fossil fuel power plants eliminated.

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The infusion of public and private funding will advance the emerging technologies. Producers remain excited about Enhanced Geothermal Systems (EGS) and the estimates of hundreds of thousands of potential megawatts EGS could produce despite controversies about potential seismic disturbances from the very deep drilling. Newly announced DOE regulations may delay the emergence of EGS but will certainly make what is eventually approved a more certain investment with a steeper growth potential.

Geothermal Hydrocarbon Co-production (GHCP) offers the opportunity to cut costs by sharing expenses with other, ongoing drilling to develop thousands, or perhaps tens of thousands, of megawatts of power-producing hot water in oil and gas fields and mining operations.

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COMMENTARY
The U.S., with a total generating capability of 3,152.72 megawatts, is the world leader in geothermal energy installed capacity and it is a world leader in new capacity.

In September 2009, 8 states were generating electricity from geothermal energy: Alaska, California, Hawaii, Idaho, Nevada, New Mexico, Utah, and Wyoming. Oregon, Colorado, Florida, Louisiana, Mississippi and several other states will soon join the list.

There are an identified 6442.9 megawatts of new U.S. geothermal power plant capacity in development. There are another ~665 megawatts of unconfirmed projects which, if developed, would increase the total of developing projects to 144 and the U.S. potential capacity to 7109.9 megawatts.

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There are 4 phases of geothermal development:
(Phase I) Identifying site, secured rights to resource, initial exploration drilling
(Phase II) Exploratory drilling and confirmation underway; PPA not secured
(Phase III) Securing PPA and final permits
(Phase IV): Production drilling underway; facility under construction
(Unconfirmed) Proposed projects that may or may not have secured the rights to the resource, but some exploration has been done on the site

Only the Phase IV projects are counted as installed capacity.

State-by-state:
Alaska installed its first geothermal power plant in 2006 at Chena Hot Springs and now has 2 more units for at total installed capacity of 730 kilowatts.

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California, with 2605.3 megawatts of installed capacity, leads the nation. It gets more than 4.5% of its electricity from geothermal energy, amounting to 13,439 gigawatt-hours.

Hawaii has 1 geothermal power plant, Puna Geothermal Venture, on the island of Hawaii. It has a nameplate capacity of 35 megawatts and produces 25-to-30 megawatts, which is ~20% of the electricity consumption of the Big Island.

Idaho brought Raft River, its first geothermal power plant, online in 2008. It has a nameplate capacity of 15.8 megawatts and generates 10.5-to-11.5 megawatts. An expansion and several new projects are in development.

Nevada has 21 operating geothermal power plants with a total operating capacity of 448.4 megawatts and it is exploding with development. It has brought 3 new plants online in the last 6 months and also has more developing projects than any other state.

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New Mexico brought its first plant, Lightning Dock, a 0.24 megawatt project, online in July 2008. Lightning Dock will eventually produce 20 megawatts.

Utah’s Blundell power plant Unit 1 has a gross capacity of 26 megawatts. Blundell’s Unit 2 has a capacity of 11 megawatts. In April 2009, Utah added the low temperature 10 megawatt Hatch Geothermal Power Plant which sends its electricity to Anaheim, California.

Wyoming’s first geothermal project, a 250 kilowatt unit, came online in September 2008.

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14 states have projects in development or under consideration: Alaska, Arizona, California, Colorado, Florida, Hawaii, Idaho, Louisiana, Mississippi, Nevada, New Mexico, Oregon, Utah, and Washington.

Emerging technologies:
Geothermal producers sees promise in 4 emerging technologies: (1) Enhanced Geothermal Systems (EGS), (2) Geothermal Hydrocarbon Co-production (GHCP), (3) Geopressured Geothermal Resources (GGR), and (4) Geothermal Heat Pumps (GHPs).

EGS is a way of artificially creating geothermal energy by drilling into the earth’s hot depths and pumping water down to it. EGS is new, unproven and problematic. There are several EGS research, development and demonstration projects underway. None is producing power at commercial scale and at least 1 has been stopped because of seismic activity associated with it.

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If EGS technology were proved, it could change the industry because it would turn any site into a geothermal field if, through deep drilling, the earth’s heat could be accessed.

The first successful EGS facility may be at Desert Peak, Nevada, where the U.S. Department of Energy, in conjuntion with Ormat Technologies Inc., GeothermEx Inc. and others, is drilling a $5+ million pilot project at the site of the existing Desert Peak geothermal power plant. If it works, the EGS project will add 5 megawatts of capacity and be ready for commercial production by 2015.

Geothermal Hydrocarbon Co-production (GHCP) is a method of capturing the heat from fluids brought up in oil and gas production and mining operations. A study of the Texas Gulf Plains by the Southern Methodist University Geothermal Energy Program indicated GHCP could generate 1000-to-5000 megawatts of electricity there.

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The GEA has data on 5 GHCP operations: (1) The Jay Oil Field project in Florida will use 120,000 barrels of co-produced water to generate 200 kW and aim for its larger 1 megawatt potential; (2) The Rocky Mountain Oil Test Center in Wyoming had, from 2008 to February 2009, produced 586+ megawatt-hours of power from 3.0 million barrels of hot water but was then shut down so the field network of wells could be modified to produce a more consistent volume of water; (3) The GCGE Oil Co-production in Mississippi will generate co-produced geothermal electricity from a producing oil well in a test 50 kilowatt-hour project; (4) The GCGE Natural Gas Co-production in Louisiana will generate 50 kilowatt-hours of co-produced geothermal electricity from natural gas production operations; (5) The Florida Canyon Mine in Nevada will deploy 2 “green machine” units that use groundwater from mining operations to generate electricity while cooling the mining operation water.

The geothermal heat pump concept. (click to enlarge)

Geopressured Geothermal Resources (GGR) is a technology most prominent in the northern Gulf of Mexico states of Texas and Louisiana (offshore and onshore). The USGS estimates GGR could generate thousands of megawatts of geothermal energy as well as 1,000 TCF of potentially recoverable natural gas. Congress authorized new technology demonstrations in 2007 but nothing has at present been done.

The U.S. Geothermal Heat Pump (GHP) industry has grown steadily for 4 years. A February 2009 Energy Information Administration (EIA) report showed shipments of geothermal heat pumps (GHPs) increased 36% to 86,396 units in 2007. GHPs cost more than traditional heating and cooling systems but the high efficiency and ongoing savings makes them highly appealing to consumers with the resources and vision to plan for the long-term.

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Money: The DOE Geothermal Technologies Program (GTP) works with industry, academia, research facilities, and national laboratories to move geothermal technologies to commercial scale. The American Recovery and Reinvestment Act (ARRA) of 2009 provided up to $400 million in new funding for the GTP. The total amount allocated to geothermal in 2010 may be as much as $626 million.

Unlike most of the rest of us, the geothermal energy industry is coming off a big 2009 with a ton of money in its pocket. A January conference in New York City attracted big attendance and the increased interest of venture capital. Last year was quite a year but 2010 may leave it looking dull. NewEnergyNews intends to keep a keen eye on how DOE handles new EGS regulations and how investors react.

The deeper you drill, the hotter it gets. (click to enlarge)

QUOTES
Karl Gawell, Executive Director, GEA: “The Geothermal Energy Industry is experiencing unprecedented growth with future years's promising double-digit, year-over-year expansion…While stimulus money has been driving much of our recent growth, we are also seeing that as geothermal technology pushes forward the economics of these projects really make sense.”