DOE Takes Baby Steps on Geothermal and Earthquakes

What’s the real scoop on Geothermal and earthquakes? Despite a NY Times report that has been picked up by other outlets, (for instance, here and here), the Department of Energy (DOE) is not initiating any major new regulations for Geothermal projects.

What they have done: building on the experience at The Geysers geothermal field in California, they are issuing a new policy that will apply to “all new Enhanced Geothermal [Systems (EGS)] projects, including those recently funded through the Recovery Act.” The Obama Administration is providing $338 million in funding to a total of 123 projects, although there are no figures on how many of those involve EGS, which generally fractures rock deep in the Earth to allow water to more easily flow through, collecting heat that can then be used to generate power. Mico-quakes cansometimes be produced by slippage along those fractures.

(Image: AltaRock Energy)

According to a DOE letter to the office of Congressman Henry Waxman (D-CA) obtained by TENTHMIL, the policy will feature:

• The Department will require grantees to collect stress data, background seismicity, and geology data prior to actual field stimulation. Once the data are collected, the grantee will use predictive stimulation models to estimate and forecast potential induced seismicity magnitude and potential radius of seismicity. Information submitted by grantees will be used to develop site specific risk mitigation strategies.
• The Department will task a team of experts to review these results as a part of a go/no-go decision point.
• If judged satisfactory, grantees will be given the go-ahead to conduct field work with adequate permits from local authorities. Otherwise, they will be asked to gather more data and conduct more analysis.

This comes on the heels of two projects – The Geysers, in California, run by Seattle-based AltaRock Energy, and a project in Basel, Switzerland. Both of them were in populated areas near seismic zones – and both were recently shut down after jolting local residents. In both cases, the companies were experimenting with EGS technique.

(Image Source DOE, AltaRock Energy)

Scary Words

The NY Times story opened with, “The United States Energy Department, concerned about earthquake risk, will impose new safeguards on geothermal energy projects that drill deep into the Earth’s crust.” Some picked up the drumbeat and inserted the words “new regulations.” But the DOE isn’t taking things quite that far.

Ernest Majer, a geothermal expert and deputy director of the Earth Science Division at Lawrence Berkeley National Laboratory in California, told TENTHMIL, “We’re in the process of reevaluating what sort of mitigation controls will be put on. They’re not regulations, and we don’t want to put regulations where they’re not necessary.”

On the other hand, he said, the experience that AltaRock had drilling at The Geysers has taught everyone some important lessons, and they wanted to bring that to the table. And they mostly appear to involve the application of common sense when you’re doing seismically sensitive drilling and fracturing in an area with a lot of buildings.

That’s what caused trouble for the Basel project – it was in the middle of town, where even the smallest jolts will shake people up and potentially leave cracks in buildings. There were fewer people living around The Geysers, but they weren’t any happier about the temblors – or about the way their concerns were dismissed.

“It’s ironic,” notes Majer, “because AltaRock’s drilling never even made it below the caprock. They went into an existing well and got jammed up, which was probably their problem – in old wells things can shift.” They never even got as far as fracturing the rock down in the geothermally-interesting heat zone.

But what happened was a public-relations problem. Because they’re experimenting with a new, proprietary process, Majer says the company couldn’t be forthcoming in describing what they were doing, and people got suspicious.

“They’ve got another project at Newberry, Oregon” that they’re moving forward with, he adds. Not only is that site far from people, the ring-fracture system of the Newberry Volcano will limit the dispersal of any potential stresses.

“That seems like a more attractive prospect for experimenting right now,” so they wrapped things up at The Geysers, even as the DOE was finding that the quakes there, while disconcerting, wouldn’t have had an impact on the local population.

(Originally appeared at TenthMil.com)

Geothermal Pitches Wall Street

Representatives of the Geothermal Energy Association had their largest schmooze-fest ever in New York Thursday (Jan. 14). They met with Wall Street financiers, had lunch with politicians, including Senate Majority Leader Harry Reid (D-NV), Mayor Bloomberg declared “New York City Geothermal Energy Day”, and at the end of the day they even got to ring the closing bell on the stock exchange - well, on the smaller and less prestigious NASDAQ, but it’s still an honor.

Will Geothermal always remain the poor cousin of the better-established solar and wind industries?

The New York Times reports:

Overall, advocates say, geothermal technology is proven and has distinct advantages over wind and solar. Geothermal power is a steady and reliable baseload, which electric utilities appreciate. And geothermal plants use less land than wind farms or solar arrays.

But [the GEA Executive Director Karl] Gawell admits major Wall Street investment banks shy away from geothermal because it takes years to see a return on investments. A Nevada project that came online last year took five years to complete, compared with a lead time of little more than a year for a standard wind farm.

“They’re realizing that geothermal can be a good investment,” Gawell said. “You’ve just got to stay in there a little bit longer.”

Gawall also stopped in at the Wall Street Journal to pitch them on earth power, noting that 200 megawatts have come online in the past year.

“It’s being rediscovered in the U.S.,” Mr. Gawell says. While the U.S. is currently the world leader, the geothermal industry today is where the wind-power industry was 20 or 30 years ago, he says.

And given the role that big corporates—such as General Electric and Siemens—played in the explosion of the wind industry, the logical question is, when will big companies pile into geothermal? GE has been showing up at geothermal meetings lately, Mr. Gawell says, and GE Energy Financial Services finances some geothermal investments.

Analyst Byron King says it’s time the big companies jumped in and took over from the “mom and pop” operations. In his Energy & Scarcity Investor (via BeforeItsNews.com), he says:

The pre-crash business model of the geothermal industry is no longer appropriate to the tight-credit world in which we live… Post-crash, it’s clear that most publicly traded geothermal companies are too small. Back when credit was cheap, money flowed more easily and you could “afford” to be patient over a five-to-eight-year time frame. The same small team of developers was prospecting, leasing, drilling, finding, assessing, fundraising, developing, building, stringing electric line and selling power. Holy smokes, Batman! Where’s the point where we can MONETIZE this?

But in our new economic world, the small, mom and pop business approach just won’t cut it. Geothermal power takes too much upfront capital to make things work. It requires too many different management skill sets. Like many things in life, bigger is better with geothermal. In fact, the world’s largest geothermal producer is Chevron Corp. Is that big enough?

At least some of the investors are excited:

By 2012, “we think the strategic landscape starts to change quickly,” said Paul Leggett, a vice president of investment banking at Morgan Stanley. “We do think the geothermal industry is ready for a takeoff.”

(Originally appeared at Tenthmil.com)