The Geothermal Drilling Process That Could Power the World for 30,000 Years
Last Thursday, I dodged a bullet. I was supposed to fly from D.C. to Brussels, and then on to Uganda to provide oil legislation advice to the government there on behalf of the U.S. State Department.
However, a temperamental Icelandic volcano blew the top off a glacier, sent clouds of ash aloft, shut down Europe, and canceled my flights. Flying out a day earlier, as had been the original plan, would have put me among a million travelers stranded in airports, train stations, and boat piers across northern Europe.
Actually, it is quite a display of natural prowess. After all, this single tiff from Mother Nature closed a continent in 24 hours.
Not the first time, either. Beginning in 1821, the same volcano spewed this stuff for years and, even earlier still, may have been largely responsible for the last great ice age. Which prompted some thinking as I spent hours unsuccessfully seeking another route to central Africa.
Must be some way to make money off such energy…
And of course there is.
The Earth’s Heat: An Increasing Energy Source
Now, nobody can harness a volcano, but the usage of geothermal energy is a tamer version of the same principle.
Quite apart from the current geological theatrics wrecking havoc on Europe, the earth’s heat has been a steadily increasing source of energy for years. More than 20 countries use it to generate electricity and heat. While Iceland is the best known, with almost 20% of electricity there being geothermal, the Philippines obtains over 16% of its power from the earth’s heat. Germany and Italy also generate significant power from the same source.
However, it is in the U.S. – the home of geysers like Old Faithful in Yellowstone Park – that most geothermal energy exists. Chevron Corp. (NYSE:CVX), headquartered in San Ramon, California, is actually the largest producer of such power worldwide.
And production is increasing. The Geothermal Energy Association (GEA) trade group reported on April 14 that construction has begun on new U.S. projects with 7,875.2 megawatts (MW) of new potential capacity, up 26% year-on-year. As of April 1st, there are 3,086.6 MW of installed geothermal capacity in the country.
By the end of 2009, there were 188 new projects in 15 states – with Nevada, California, Utah, and Oregon leading the list. Federal stimulus programs, tax incentives, and strong state renewable energy standards are fueling the growth. Washington has already committed some $600 million for 135 geothermal research projects in 25 states through 2012.
The stakes are considerable.
A 2006 report from MIT found that there is enough energy in hard rock at an average of seven miles beneath the surface to meet the world’s power needs for 30,000 years. This is not merely using the readily available sources from hot springs and geysers. The real source is the vast amounts of energy contained in dry rock – all over the world.
The cloud of debris moving through the sky across Europe is certain to provide the latest enticements to what is becoming one of the great technological races in renewable energy. Winning the quest for this “holy grail” could well revolutionize the global energy system.
The energy is there. Needed is something called the Enhanced Geothermal System (EGS) of drilling to unlock the energy in hot dry rock (HDR).
EGS and HDR have been known for some time, but the ability to release the stored energy has been daunting and expensive. Yet several conclusions, including those made by the MIT report, contend that with investment amounting to little more than the cost of one or two new coal-fired power plants (one or two billion dollars), we could have significant power from the earth’s crust on line and on tap in a couple of decades.
There are pioneers already moving in this direction. Let me introduce you to some of the companies currently on my list at the forefront in rolling out the technical applications.
First up is Nevada Geothermal Power Inc. (TSX.V:NGP; OTC.BB:NGLPF). This Vancouver-based company has been operating the Blue Mountain site in Nevada, currently producing 36 to 38 MW of power, and is planning to phase in similar activities at its Pumpernickel and Black Warrior locations in Nevada and Crump Geyser in Oregon. The company has recently announced it expects an aggregate power generation of between 150 and 300 MW once all these locations are operational.
Another geothermal producer I am watching is a private company based in Bend, Oregon, and appropriately named Vulcan Power.
This outfit can actually lay claim to having the largest geothermal property portfolio in the country, currently controlling over 170,000 acres of natural steam land with a 500 MW generating capacity for utilities throughout the western U.S. In March, Vulcan filed for permission to build a 60 MW binary-cycle geothermal power plant near Fernley, Nevada. That facility is within 30 miles of five existing geothermal plants. Vulcan expects the plant to be in operation by 2012.
Both of these companies are phasing in geothermal power. Both are making use of existing electricity-generating infrastructures and positioning the new facilities in locations adjacent to the generating plants and to a developing network of geothermal energy sites. That reduces the development expense and transport costs.
Elsewhere, the developments are equally significant and coming in at an even higher scale.
On April 16th, Japanese heavyweight Mitsubishi Heavy Industries Ltd. (TYO:7011) announced it has teamed up with Icelandic utility provider Reykjavik Energy to build geothermal projects jointly in developing countries throughout the world. The goal is staggering: to control no less than 50 percent of the global market in four years.
Mitsubishi says the new partnership will offer an integrated turnkey approach to provide poorer nations with construction, engineering, exploration, financing, and operational capability, along with components supply. In short, they are proposing nothing less than to change how vast areas of the world view energy production.
For the immediate future, the geothermal sourcing of power will be a slowly rising component in the energy mix.
To be a major player, EGS approaches are required. And that introduces a concern: EGS requires considerable hydraulic stimulation – which, upon occasion, causes seismic activity. To date, EGS projects have produced no fewer than five earthquakes in various parts of the world, measuring up to 3.9 on the Richter scale. Some care is needed in overseeing how the technology is applied.
As for my own travels, the State Department has now rescheduled my assignment to mid-June 2010. Of course, nobody can guarantee the clouds of ash will be gone by then.
Maybe the Mayans were on to something?