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Chena geothermal conference takes stock Electric utilities, independent power producers, UA, state and federal agencies hear challenges, opportunities in geothermal power Stefan Milkowski For Petroleum News
To get a sense of how things look for geothermal energy in Alaska, consider the title of the conference held April 28-30 at the Chena Hot Springs Resort near Fairbanks — “Risks, Barriers, and Opportunities.”
“I guess I wanted to be as realistic as I could about where things are with geothermal energy,” explained David Lockard, geothermal program manager for the Alaska Energy Authority. “There’s tremendous excitement and opportunities, but it’s not necessarily easy.”
About 90 people from around the state and as far away as Iceland attended the conference, representing electric utilities, independent power producers, the University of Alaska, and state and federal agencies. Presentations focused on current projects, technological advances, and potential uses of geothermal energy.
Opportunities to grow For now, geothermal energy makes up a tiny fraction of overall power production in Alaska and the U.S. as a whole, with about 3,000 megawatts of installed U.S. geothermal capacity of a total of 1.1 million megawatts, according to the U.S. Department of Energy.
But the federal government has committed significant funding to research and project development, including $400 million in federal stimulus funds, and the Geothermal Energy Association projects that geothermal power production will double over the next five years.
For now, most geothermal production relies on high-temperature geothermal resources with naturally occurring hot water and steam. But plants using lower-temperature water and secondary fluids with low boiling points (called “binary systems”) and systems that involve artificially fracturing hot, dry rock and cycling liquid through it (called “enhanced geothermal systems,” or EGS) are expected to dramatically expand the potential of geothermal energy.
“If we could solve the technological challenges of EGS, it would solve our energy crisis,” said Lorie Dilley, an engineer with the firm Hattenburg Dilley & Linnell.
According to Dilley, several countries are currently exploring the technology with varying levels of success. “We’re probably 10 to 20 years out from making these commercially viable types of resources,” she said.
The Department of Energy’s Geothermal Technologies Program has a goal of demonstrating EGS technology by 2015.
Geothermal energy also fits into a larger goal promoted by Gov. Sarah Palin and others of dramatically boosting the state’s production of renewable energy.
Steve Haagenson, executive director of AEA and the state’s energy coordinator, encouraged conference goers to think broadly about the use of geothermal energy for power production and for direct uses like space heating.
Haagenson promoted geothermal and other renewable forms of energy as promising ways to keep money in the state, but also mentioned its limitations.
“Geothermal energy is a lot like gold,” he said. “It is where you find it.”
Technical, economic challenges Volcanoes and hot springs are good indicators of geothermal resources, but don’t ensure viable projects. Developers are often forced to take risky and expensive bets more typical of oil and gas explorers than electric utilities.
Prime resources are often located in remote areas, where development costs are high, and the viability of geothermal power projects, like that of other forms of renewable power, is subject to fluctuations in the cost of energy from fossil fuels.
Even proven geothermal resources like that near the Makushin volcano on Unalaska Island have remained undeveloped because of economic hurdles. Other projects require government support, which has not always been available.
On top of that, regulatory and fiscal terms for geothermal leasing and development may need some tweaking, according to Bruce Buzby, a natural resource specialist at the Division of Oil and Gas. Lease terms, for instance, offer land at $3 an acre.
“We recognize that these terms may be a little dated,” Buzby said, adding that the division is currently reviewing all laws and regulations dealing with geothermal development. “We’re really looking for input.”
Bernie Karl, proprietor of the Chena Hot Springs Resort, which uses geothermal energy for heating, electricity, and even to produce hydrogen for a resort truck, focused on the opportunities.
“The only really, really good thing the governor’s said, that I know of, is ‘Drill, baby, drill,’” he said. “And that’s drilling for geothermal as far as I’m concerned. I say drill anywhere and everywhere. If you look at the energy cost in America today, if you look at the highest energy cost in the world in Alaska, you would have to be insane not to drill.”
The conference included updates on several projects, some of which are described below.
Naknek to drill this summer Despite being turned down for funding through the state’s renewable energy fund, Naknek Electric Association plans to spend $12 million this summer drilling a full-diameter exploratory well near the neighboring village of King Salmon in Southwest Alaska. A DOE grant secured by former Alaska Sen. Ted Stevens and other members of Alaska’s congressional delegation will provide $2.9 million; the rest will come from NEA directly, according to NEA general manager Donna Vukich.
Vukich said the utility has done extensive geophysical work and drilled test wells to 400 feet. The well drilled this summer will reach 9,000 to 12,000 feet and will be used as a production well should the resource prove viable.
Phase 1 of NEA’s plan involves producing 25 megawatts of power for Naknek, Dillingham and a half-dozen other villages, which would be connected by 157 miles of new transmission lines. The project would also provide district heating for Naknek and King Salmon.
Vukich said she hopes to begin production within 18 to 24 months and produce power in Naknek for 14 cents per kilowatt-hour and slightly more in surrounding locations — several times less than current prices.
Phase 2 involves producing up to 50 megawatts of power and connecting Naknek to additional villages.
Gary Friedmann, a geologist with Alaska Earth Sciences and project manager, said securing a drilling rig will cost significantly less than it would have last year because of the current low demand for rigs.
Akutan looking at volcano With a state loan of nearly $800,000 and a pending grant of almost $3 million from the renewable energy fund, the City of Akutan is pushing ahead with plans to generate up to tens of megawatts of power from an active volcano on Akutan Island in the eastern Aleutians.
A Trident fish processing plant on the island provides megawatt-scale demand, and state-funded surface work in the 1980s suggests a promising geothermal resource, said Amanda Kolker, a geologist working with the city. “There’s a demand and there’s a resource, and that’s why we have a project.”
The city plans to continue surface work this summer and begin exploratory drilling in the fall and winter, according to Kolker.
Mount Spurr has high costs Reno-based Ormat Technologies is moving ahead cautiously with ambitious plans to develop a 50-megawatt plant on the shoulder of Mount Spurr west of Anchorage.
Policy and business development director Paul Thomsen said his company hopes to initiate surface work this summer with the long-term goal of supplying baseload power to the Railbelt grid by 2014 or 2015.
“We think the Spurr project can be a real shining star for projects of its kind, not only in Alaska but (around) the Ring of Fire,” he said.
In September 2008, Ormat Nevada Inc., an Ormat subsidiary, paid $3.5 million for leases on Mount Spurr in the first state lease sale for geothermal energy at the site in more than 20 years.
But Thomsen warned that development costs at the remote site are expected to be three times as high as at other sites Ormat has developed, and he said how the site is developed will depend on whether Ormat receives state support for the project.
Ormat Nevada applied for a $4.5 million grant from the renewable energy fund to conduct a resource assessment, but the project was not recommended for funding.
Well planned at Chena Building on the success of two low-temperature geothermal units installed at Chena Hot Springs in 2006, United Technologies Corp. and Chena Hot Springs Resort-Chena Power have developed a 280-kilowatt mobile geothermal power generator designed to produce power from combined hot water and oil produced from oil wells.
The prototype, installed on two flatbed trailers, will be shipped in May to Quantum Resources in Jay, Fla., and should be in operation by June, according to Ian-Michael Hebert, vice president of project management at the resort. The unit will be tested with the output from a well producing 5 percent oil and 95 percent hot water. After cycling through the plant, the hot water and oil will be returned to the oil processing facilities.
The resort also plans to drill a 3,000- to 4,000-foot well this summer with the goal of expanding its generating capacity, according to Hebert.
A proposed $198,000 reservoir-modeling project for the Chena geothermal resource was recommended for funding under the renewable energy fund, but was not funded.
Cable would connect Iceland Former Alaska governor Steve Cowper is also getting into geothermal. Cowper, who now lives in Texas, is working with Emerald Network Computing and international partners to lay an underwater fiber-optic cable from Iceland to the northeast coast of the U.S.
Cowper said the cable would allow major data managers like Google and Microsoft to create data centers in Iceland, where they could take advantage of low-cost, clean, geothermal power.
The project would create a major new market for geothermal energy in Iceland, Cowper said, adding that Emerald Network Computing would likely be involved in energy generation as well as operation of the cable.
Cowper said the company is still seeking financing and commitments from customers, but expects to know in a few months whether the project will proceed.
“I pay attention to green when it’s profitable,” he said.
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