LATEST ESTIMATES OF U.S. GEOTHERMAL POTENTIAL

Updated U.S. Geothermal Supply Curve
Chad Augustine and Katherine R. Young and Arlene Anderson, February 1, 2010 (National Renewable Energy Laboratory and U.S. Department of Energy)

THE POINT
Remember when Mom used to say that the reward comes from the effort? That’s where the geothermal energy industry is right now.

But it’s a little scary because the most potent form of geothermal capacity, called Enhanced Geothermal Systems (EGS), seems to be teetering on the brink of falling into that category of New Energy solutions most exemplified by hydrogen fuel: It is a potential solution to all of the nation’s ills just a few years away from reality - and seems to remain so indefinitely.

Updated U.S. Geothermal Supply Curve, from researchers at the National Renewable Energy Laboratory (NREL) and the U.S. Department of Energy (DOE), examined 2 hypothetical cases, one (the “basic case”) in which there are only limited improvements in EGS development (reservoir performance) above what is possible presently, and another (the “target case”) in which “significant advances in reservoir performance” are obtained from funding of EGS research, development, and demonstration projects through DOE’s Geothermal Technologies Program (GTP).

Their estimates of U.S. geothermal resources in 4 categories of geothermal production show the cumulative potential is enormous:
(1) Identified hydrothermal, current capacity excluded (6.39 gigawatts),
(2) Undiscovered hydrothermal (30.03 gigawatts),
(3) Near hydrothermal field enhanced geothermal systems (EGS) (7.03 gigawatts), and
(4) Deep EGS (15,908 gigawatts).

Context: The U.S. presently requires a total electricity capacity of about 1,000 gigawatts. Deep EGS has a potential capacity of 15 times that.

Each type of production has a different of accessibility, a different estimated capacity and cost and a different resulting levelized cost of electricity (LCOE). The amount of the potential supply that becomes real (gets developed), and especially the amount of the enormous EGS potential that gets developed, depends (just like Mom said) very much on the effort the nation invests in getting at it and bringing the LCOE down. For now, however, the thousands and thousands of gigawatts of electricity EGS could theoretically supply remain locked behind barriers of cost and real-world viability.

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The researchers used sophisticated modeling programs to create supply curves and capital costs for all 4 types of geothermal production in both scenarios. Capital costs were divided further into production phases because geothermal production is much like oil drilling and entails a series of methodical steps culminating in the actual generation of electricity.

In both the basic and target cases, hydrothermal resources are the low cost (and low total potential return) options. But with the kind of investment in advancing EGS technology hypothesized in the target case, costs can be expected to drop significantly. This would result in a lot more deployment of EGS - if the other real-world barrier is overcome.

EGS is a way of using the earth’s heat in the absence of natural pools of hot water (hydrothermal resources) by deeply drilling to layers of scaldingly hot rocks. By pumping water down to them, their heat can be used to boil the water. The water can then be pumped back up, the steam can be captured and used drive turbines.

The capital cost is fairly manageable. EGS requires deep drilling, which is expensive. But if technology can be developed to control the capital cost of deep drilling, the supply curve can take over and change the economics of geothermal energy. No longer would a developer have to locate a hard-to-find hydrothermal resource. Hot rocks are common deep within the earth.

The real-world viability part of EGS is the other barrier and it could be more challenging. The deep drilling associated with EGS development seems to possibly create seismic disturbances. There may be a technological fix. The association of the deep drilling and the seismic events might not even be causal but coincidental. But until this matter is settled, geothermal remains restricted to its less costly but also less productive forms.

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THE DETAILS
The fundamental elements of the report are the supply curves determined for the various kinds of geothermal resources under varying assumptions. Supply curves suggest degrees of cost competitiveness and levels of market penetration.

Both the Government Performance and Results Act of 1993 (GPRA) and DOE portfolio development support processes required the Department to develop supply curves. The NREL/DOE paper is intended to evaluate the methods of the supply curves' determination. Its results tell a story about geothermal energy.

Geothermal production comes from 2 types of sources: hydrothermal sources and enhanced geothermal systems (EGS).

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Hydrothermal sources are naturally occurring deep pools of boiling water that are brought to the surface at the remote sites where they are discovered. (Geysers are the nautral world's version of geothermal energy.) The heat of the water is captured and transformed into steam that is used to drive electricity-generating turbines.

EGSs are man-made production sites created by drilling into formations of hot rock. By pumping surface-temperature fluids into such a formation, a fracture is opened and extended. The injected fluid is heated by the hot rock as it is circulated through the reservoir, then brought to the surface where the heat is captured (in a similar way as with hydrothermal sources) and used to create steam to drive an electricity-generating turbine. (The fluids are finally recaptured and re-injected, forming a closed-loop system.)

Each of the 2 types of geothermal is further divided according to the accuracy of information available about them and the cost to develop them. There are both identified hydrothermal and undiscovered hydrothermal resources and there is near-hydrothermal field EGS potential and deep EGS potential.

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Levelized Cost of Electricity (LCOE)
(1) Hydrothermal and near hydrothermal EGS resources were simulated on a site-by-site basis, using each reservoir temperature and depth to determine a capacity and net sales potential for each plant. For EGS sites, well exploration and stimulation costs were included.

Near hydrothermal EGS resources are included into site-by-site assessment because they can be visualized due to their proximity to identifiable resources. Only the deep EGS resources must at present be considered completely hypothetical.

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(2) Deep EGS resources were simulated based on the heat energy per volume of rock at 3-to-10 kilometer depths. The fraction of that energy that could be captured was translated to electricity-generating potential. The efficiency of the plant at the surface determines the amount of the energy captured. Plants were assumed to have a 30 year working life.

The U.S. EGS electricity-generating resource potential was estimated at 15,908 gigawatts. The economically-recoverable potential is expected to be significantly less but nevertheless much larger than the 500 gigawatts estimate made in the 2008 USGS assessment isolated to the 11 western states and 3-to-6 kilometer depths. The new estimate gets much of its total from depths greater than 6 kilometers, which means more drilling capital costs.

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The capacity estimates for the 4 U.S. geothermal resource categories:
(1) Identified hydrothermal potential (current capacity excluded): 6.39 gigawatts
(2) Undiscovered hydrothermal potential: 30.03 gigawatts
(3) Near hydrothermal field EGS potential: 7.03gigawatts
(4) Deep EGS potential: 15,908 gigawatts

The supply curves are based on the middle 80% of estimate calculations and they exclude the lowest 10% of estimates and the highest 10% of estimates. Aggregated supply curves are based on the most cost-effective 50 gigawatts of the geothermal resource in each category.

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Technology being developed through the GTP can be vital to identifying EGS sites and developing their potential. The researchers recommend that further study should concentrate on EGS reservoir engineering improvements. Drilling costs are not only the primary cost factor in deep EGS resource development, they are also rising. They are estimated to be as much as 64% higher than they were in 2004.

The researchers call for better methods to quantify geothermal resources and describe their quality.

Two key sources of information on geothermal resources used by the researchers were the geothermal resource assessment performed by the U.S. Geological Survey (USGS) in 2008 (Williams, Reed et al., 2008b) and the Massachusetts Institute of Technology (MIT) Future of Geothermal Energy report (Tester et al., 2006).

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QUOTES
- From the NREL/DOE study of U.S. geothermal potential: “For this study, the geothermal resource was broadly split between two technologies: conventional hydrothermal and enhanced geothermal systems (EGS). The hydrothermal resource consists of the naturally occurring geothermal sites conventionally used to produce electricity. Enhanced geothermal systems are artificial geothermal systems created by drilling into formations of hot rock, hydraulically stimulating the formation to open and extend fractures, intersecting the fractures with one or more drilled holes, and then circulating fluid through the fractures. Injected fluid is heated by the hot rock as it is circulated through the reservoir, brought to the surface, and then used to produce electricity in a power plant before being re-injected into the reservoir, forming a closed- loop system.”

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- From the NREL/DOE study of U.S. geothermal potential:.”There is ample room for improvement in quantifying the geothermal resource as the quantity and quality of geothermal resource data continue to increase. Both the undiscovered hydrothermal and near hydrothermal field EGS resource assessments rely heavily on assumptions. The deep EGS resource is based on data that are sparse in many parts of the country. Additional efforts are needed to better characterize these resources.”