Power(Ful) Business Opportunities From

Power(ful) Business Opportunities from

‘The Heat Beneath Our Feet’

By Thomas S. Drolet

CEO, WalAm Energy Inc.

Pardon in advance for the play on words above, but you and I are hereto review a real business opportunity in the persona of clean, renewable and profitable geothermal energy. Indeed we are standing on variousparts of our solar systems most available and prolific natural heat energy source – the earth.

This review is being presented in two parts: Part 1 herein, will focus on defining the origins and place of Geothermal Power as a current and growing source of renewable electricity. Itwill also put into context the relative place of Geothermal beside ourother siblings in the family -- hydroelectric, solar and wind power. Part2 will cover the actual makeup of a geothermal plant and its profitablebusiness proposition including its short construction to operationcycle after drilling is complete.

The bottom line of both articles is to underscore the rebirth of geothermal energy as a ‘Phoenix from the Ashes’ (so to speak). It is nowtaking its place as an equal partner to hydroelectric power as a growingprofitable base load electrical supply system.

Part 1 – Defining Geothermal and Its Successes

The earth’s surface has, on average; a solid rock “crust” which extends about 50 km (30 miles) beneath the continents but only 5–10 km (3-6miles) beneath the ocean floors. Our journey onwards to the center ofthe earth (Figure 1) would take us through the mantel and then on intothe ultimately liquid core of molten very hot magma containing virtuallylimitless heat energy for the purposes of this discussion.

Now, if we could only siphon off and use some of that massive amountof heat at the core of the earth for our needs in sustaining and growingour economies in an age when some of our current energy systems areunder a cloud of concern for their potential effects on pollution andglobal warming. Fortunately, we can and are doing so in a small butsignificant and growing way. Several countries are currently using someof the heat in the form of hot springs, district heating systems and assteam to produce electricity—aka, geothermal power.

The Earth’s Heat Source - Basic Facts

Geothermal energy is defined as the available and useful thermal energy that is stored in the Earth’s crust in the first five kilometers or so ofdepth. The energy is actually distributed between the constituent hostrock and in the natural fluid that is contained in fractures and pores ofthat rock. These fluids are mostly in liquid water form rather than asteam given the high pressures as we approach drilling levels of interest.

The Earth’s temperature increases with depth, with the temperatureat the center reaching more than 4200 °C. A portion of this heat is arelic of the

planet’s formation about 4.5 billion years ago, and a portionis generated by the continuing decay of radioactive isotopes. Thetemperature of the e

Earth increases by about 3°C for every 100 m indepth. Figure 1—Temperatures in the Earth

This means that at a depth of 2 km, the temperature of the earthis about 70 °Celsius, increasing to 100 °Celsius at a depth of 3km.However, in some places, tectonic activity allows hot or molten rock toapproach the earth’s surface, thus creating pockets of higher temperatureresources at reasonably easily accessible depths to our drill bits oftoday . Through processes known as plate tectonics, the Earth’s crusthas been broken into 12 huge plates that move apart or push togetherat a rate of millimeters to centimeters per year. Where two plates collide,one plate can thrust below the other (Figure 2). At great depth,just above the downward thrusting plate, temperatures become highenough to melt rock, forming magma. Because magma is less densethan surrounding rocks, it moves up toward the earth’s crust and carriesheat from below. Sometimes magma rises to the surface through thin orfractured crust as lava (Iceland, Hawaii etc).

Similarly, when two plates are diverging (as the mid Atlantic Ridge —with its most famous manifestation -- Iceland), magma rises to nearand even onto the surface through fractures.

Electrical Power from the Earth’s Heat

The extraction and practical utilization of earth’s heat requires a carrier which will transfer the heat towards the heat-extraction system (geothermal plants generating electricity). This carrier is provided by geothermal fluids forming hot aquifers inside permeable formations. Theseaquifers or reservoirs are the hydrothermal fields which are distributedwidely but unevenly across the earth. High heat geothermal fields occurwithin well-defined belts of geologic activity, often manifested asearthquakes, volcanoes, hot springs, geysers and Figure 2 - Plate Tectonic Processes

fumaroles. The geothermal belts are associated with the margins

of the earth’s major tectonic plates (See Figure 3 below).

In all cases, certain conditions must be met before we have a viable geothermal resource. The first requirement is accessibility. This is usuallyachieved by drilling to depths of interest (1-5 km), frequently usingconventional methods similar to those used to extract oil and gas from underground reservoirs. The second requirement is sufficient reservoirproductivity. Productive Geothermal systems normally need to havelarge amounts of hot, natural fluids contained in an aquifer with highnatural rock permeability and porosity to ensure long-term productionat economically acceptable levels. Currently these areas include regionsin mid to northern Italy, Iceland, Japan, New Zealand, the Philippines,Mexico, the Geysers field north of San Francisco, various other sites inCalifornia, Nevada, Utah, Idaho, Hawaii, Alaska and British Columbia.

Figure 3 - Hottest Known Geothermal Regions

China, Chile, Peru, Ecuador, Argentina, large parts of Eastern Africa (the Rift Valley), parts of central Europeand western Eurasia are in the early stages of development or are beingactively looked at for development in the near future.

Base Load vs. Peaked (part time) Electricity Generating Systems

Renewable energies traditionally include hydroelectric, solar, windand geothermal power. Solar and wind electricity generating systemsare generally known as peaked systems (i.e. when the sun shines and thewind blows). Technology breakthroughs, increasing economies of scale/ application and heightened market investor attention have allowedsolar and wind to attain paybacks that are quicklyapproachingcommercially acceptable time frames.

Similarly to hydroelectric power, Geothermal generation systems arepredominantly base loaded systems, i.e. always ‘on’ systems that arecommercially competitive today (they have commercially attractiveIRR’s). Production tax credits and accelerated timetables are still employedin some jurisdictions to help speed up development of geothermal energy.

Geothermal energy does not burn fossil fuels to produce carbon dioxide. The natural high temperature heatfrom the earth is used to make steam that turns a turbo generator set and thence produce electricity.

Proven Performance

The Lardello steam field in central/northern Italy was the world’s firstmajor geothermal power project and has produced useable heat andelectricity continuously since the early 1900s. Iceland has an astounding60 per cent of its electricity being generated by geothermal plants (alsoproviding direct district heating load). The U.S. is currently the world’sleader in the generation of electricity from geothermal energy, withCalifornia, Nevada, Utah, Idaho, Hawaii and Alaska having an installedcapacity of 2,850 megawatts, of which 2,492 MWe is in California.

California also hosts the largest producing single geothermal field in the world at the Geysers Geothermal Field near San Franciscogenerating over 900 Megawatts of electricity for the California market.That compares with an installed world capacity of nearly 10,000 megawattsin locations such as Italy New Zealand, Mexico, the Philippines,Indonesia, Kenya and Iceland.

Geothermal is a profitable electricity and heat production system thatis expanding quickly. Furthermore, there is real potential in the nextdecade or two that will allow society to start to develop methods thatutilize deeper heat ---at 10 km plus. A 2007 study by the MassachusettsInstitute of Technology (MIT) reported on developments in Enhanced Geothermal Systems (EGS) whereby geothermal power is ‘engineered’ by drilling deep wells, fracturing the rock at depth which then allowsthe earth’s heat to permeate the wells. Water can then be injected, heatedand extracted as a power source. The MIT study, referred to above,has suggested that with a reasonable investment in research and development,

EGS could provide the world with 100,000 MWe or more ofcost-competitive generating capacity in the next 50 years.

Part 2 - Our Warm Globe ‘Can’ Reduce Global Warming

Geothermal energy is a renewable resource by any rational measure. Large, magma-heated geothermal systems in the earth are drivenby partially molten or crystallized but still hot igneous intrusions thatyield their heat gradually towards the surface at fracture points overhundreds of thousands, nay millions of years.

Not a single geothermal field has been exhausted to date, although some reservoir pressures and temperatures have slowly declined in responseto continuous production in some localities.

Figure 5 – Overall Geothermal Plant Schematic

Air

One of the most obvious visual elements of a geothermal plant is theplume of steam rising from cooling towers. The key word, ofcourse, is “steam” – not “smoke”. Geothermal plants use the naturalsteam or hot water produced by the earth’s subsurface magma ‘furnace’– they do not need to burn fossil fuels such as oil, natural gas or wood.As a result, they produce virtually no air emissions.The key word is “virtually.” In fact, elements including nitrous oxide,hydrogen sulfide, sulfur dioxide, carbon dioxide and particulates maybe present in the source “fuel” – but in extremely low amounts. A binarygeothermal plant produces nearly zero air emissions. At many site locations across North America, air quality has actually improvedbecause hydrogen sulphide, normally emitted by natural hot springsand fumaroles, now passes through an abatement system that reducesemissions by 99.9 per cent.

Land

Land impacts also are minimal. Geothermal power plants typically areconstructed at or near the geothermal reservoir – there is no need totransport ‘fuel’ to the plant - and require only a few acres for the plantbuildings. Geothermal plants generally have a low profile, particularlywhen compared with wind turbines, solar power towers or coal plantswith chimneys up to 200 meters (~ 650 feet) tall.The system of geothermal wells and pipelines serving the plant maycover a considerable area but does not prohibit other uses such as farming,livestock or wildlife grazing and recreational activities. The wellpads themselves can be measured in square yards and multiple wellscan be drilled from a single pad using standard directional-drillingtechniques. Subsidence, the slow sinking of land, sometimes can beascribed to the depletion of a geothermal reservoir. This effect can bemitigated through the reinjection of condensed process water into thereservoir – a desirable procedure in any case in order to extend thereservoirs and therefore the plant’s lifespan.

Water

The reinjection to the reservoir also explains the lack of impacts inthe “water” environment, i.e. potential impacts on groundwater andsurface water sources such as creeks, rivers and lakes. Both productionand injection wells are constructed with casing materials that preventcross-contamination with groundwater systems. It should be noted, too, that larger energy projects such as those in northern California and British Columbia have undergone rigorous environmentalassessments by federal, state and provincial government agencies; andsubsequently must obtain and maintain a number of operational permitsfrom regulatory agencies that protect both the natural environmentand human health. In this respect, geothermal energy projectshave a decided environmental advantage over most other energy producers.

A Geothermal Plant

More common are systems dominated by hot water at temperaturesin the range 150 - 300 C (300-700 F). For these systems, flash-steampower plants are required. In flash steam plants the geothermal fluidsare brought to the surface through production wells as much as 4 kmdeep. At these depths, the hot waters are highly pressurized, but as pressureis reduced in transit to the power plant, 30% to 40% of the waterflashes (boils) to steam. The steam is separated from the remaining hot water and fed to a turbine/generator unit to produce electricity. Theresidual water is returned to the reservoir through injection wells tohelp maintain pressure and Figure 6 - Geothermal Power Plant Schematic

prolong productivity.

For lower-temperature geothermal reservoirs (those between approximately100 C (212F) and 150 C, binary-cycle power plants are thepreferred installations. In a binary plant, geothermal waters are passedthrough a heat exchanger to heat a secondary working fluid (for example,iso-pentane) that vaporizes at a lower temperature than water. Ina closed-loop cycle, the working fluid vapor spins the power producingturbine/generator unit, and then is condensed back to liquid beforebeing re-vapourized at the heat exchanger. As in a flash-steam cycle, thespent (heat-depleted) geothermal water exiting a binary plant is injectedback into the reservoir.

Modern Geothermal electric-power plants are typically available 95% of the time. They are modular, and can be installed incrementally on an as-needed basis. Moreover, construction of these plants is a relatively rapid procedure – as little as half a year for 0.5 to 10 megawatt units, and 1- 2.5 years plants with capacities of 25-100Mwe.

About the Author:

Mr. Thomas Drolet resides in Englewood, Florida and is currently working as a consultant to various energy industries worldwide. He spent 26 years with Ontario Hydro, the largest, fully integrated electrical utility in North America serving customers with hydroelectric, coal and nuclear power plants acting in various engineering, research and operating functions.

In 1982 he formed Canada’s research and development program into Fusion engineering and technology (CFFTP) and then moved into International commercial work with Ontario Hydro International, a spin-off unit of the world's fourth largest electrical utility, where he was named President and CEO in 1993. His duties included all aspects of marketing, project management, and operations with electrical utilities in over 40 countries worldwide. He was previously Managing Director of American Electric Power Canada, and president of Canadian Energy Opportunities, Inc., DTE Energy Technologies as vice president, International Business, and President and CEO of Western GeoPower Inc (USA) and CEO of WGP SpA (Chile) wherein he worked to develop large Geothermal Projects in the USA, Peru, Nicaragua and Chile.

He was appointed as CEO of WalAm Energy Inc. on January 1, 2011.

Tom is currently on the Board of Directors of Ember Resources Inc, a Natural Gas production Company active in Alberta Canada. Mr. Drolet holds a bachelor's degree in Chemical Engineering from Royal Military College in Canada, a Masters of Science degree in Chemical Engineering and DIC from Imperial College, University of London, England. Tom also obtained a certificate from the University of Western Ontario (late 80's) in International Business.

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