[Senate Hearing 110-246]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-246
 
                      GEOTHERMAL ENERGY INITIATIVE

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                                   TO

RECEIVE TESTIMONY ON S. 1543, A BILL TO ESTABLISH A NATIONAL GEOTHERMAL 
INITIATIVE TO ENCOURAGE INCREASED PRODUCTION OF ENERGY FROM GEOTHERMAL 
 RESOURCES BY CREATING A PROGRAM OF GEOTHERMAL RESEARCH, DEVELOPMENT, 
DEMONSTRATION AND COMMERCIAL APPLICATION TO SUPPORT THE ACHIEVEMENT OF 
                   A NATIONAL GEOTHERMAL ENERGY GOAL

                               __________

                           SEPTEMBER 26, 2007


                       Printed for the use of the
               Committee on Energy and Natural Resources


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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

DANIEL K. AKAKA, Hawaii              PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota        LARRY E. CRAIG, Idaho
RON WYDEN, Oregon                    LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota            RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana          JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           BOB CORKER, Tennessee
KEN SALAZAR, Colorado                JOHN BARRASSO, Wyoming
ROBERT MENENDEZ, New Jersey          JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas         GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
JON TESTER, Montana                  MEL MARTINEZ, Florida

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
              Frank Macchiarola, Republican Staff Director
             Judith K. Pensabene, Republican Chief Counsel


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Akaka, Hon. Daniel K., U.S. Senator From Hawaii..................     5
Barrasso, Hon. John, U.S. Senator From Wyoming...................     6
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................     1
Craig, Hon. Larry E., U.S. Senator From Idaho....................     7
Domenici, Hon. Pete V., U.S. Senator From New Mexico.............    34
Grimsson, Hon. Olafur Ragnar, President of Iceland, Reykjavik, 
  Iceland........................................................     9
Karsner, Alexander, Assistant Secretary, Energy Efficiency and 
  Renewable Energy, Department of Energy.........................    40
Murkowski, Hon. Lisa, U.S. Senator From Alaska...................     3
Myers, Mark D., Director, Geological Survey, Department of the 
  Interior.......................................................    44
Petty, Susan, President, Altarock Energy, Inc., Seattle, WA......    53
Salazar, Hon. Ken, U.S. Senator From Colorado....................     2
Sanders, Hon. Bernard, U.S. Senator From Vermont.................     2
Shevenell, Lisa, Ph.D., Director, Great Basin Center for 
  Geothermal Energy, University of Nevada, Reno, NV..............    59
Smith, Hon. Gordon H., U.S. Senator From Oregon..................     3
Tester, Hon. John, U.S. Senator From Montana.....................     8
Williamson, Kenneth H., Ph.D., Geothermal Consultant, Santa Rosa, 
  CA.............................................................    69
Wunsch, David R., Ph.D., Geologist and Director, New Hampshire 
  Geological Survey, and Vice-President, Association of American 
  State Geologists, Concord, NH..................................    63

                               APPENDIXES
                               Appendix I

Responses to additional questions................................

                              Appendix II

Additional material submitted for the record.....................
                              ----------                              


                     WEDNESDAY, SEPTEMBER 26, 2007

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10 a.m. in room 
SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman, 
chairman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. Thanks to everybody for being here. I'd 
particularly like to thank our witnesses for their willingness 
to testify before the committee.
    This is a legislative hearing on S. 1543. The bill focuses 
on how to develop a more secure domestic energy program based 
on clean, renewable energy from geothermal resources.
    In the next several decades, our Nation will continue to 
face concerns over our energy supply and security. This will 
result in even greater energy demands at a time when many 
existing power plants will be retired, or be replaced. There's 
growing concern about greenhouse gas emissions and global 
warming. All of this makes it critical that the United States 
come up with a less carbon-intensive, and balanced energy 
portfolio, including renewable energy, energy efficiency, and 
clean hydrocarbon production.
    The Massachusetts Institute of Technology estimates that 50 
gigawatts, or more, of coal-fired electrical capacity will need 
to be retired in the next 15 to 25 years, due to environmental 
concerns--mainly atmospheric carbon dioxide emissions. 
Additionally, as much as 40 gigawatts of other existing power 
resources may have to be decommissioned in that same timeframe. 
As a result, there's an even greater need for reliable, low 
cost, electric power and heat supply for our Nation.
    Today we are very fortunate to have as a witness President 
Grimsson, of the Republic of Iceland. President Grimsson comes 
to testify before the committee today to highlight the efforts 
that Iceland has undertaken in producing clean, affordable, 
renewable energy from geothermal resources. The island Nation 
is the world leader in geothermal energy development, with 
nearly 72 percent of its entire energy consumption originating 
from local renewable energy sources, such as geothermal hydro-
power.
    The United States can also be a world leader in developing 
a clean, renewable geothermal resource base. Greater 
development of geothermal resources--whether through 
conventional or unconventional technologies--will go far in 
helping us achieve a more continuous baseload energy capacity, 
while also decreasing the harmful greenhouse gas emissions that 
we're putting in the atmosphere.
    President Grimsson, welcome. Senator Domenici is delayed a 
few minutes, and will be here shortly, I'm informed, but let me 
see if either of the other two committee members who are here 
would like to make any statement at this time.
    [The prepared statements of Senators Salazar, Sanders, and 
Smith follow:]
   Prepared Statement of Hon. Ken Salazar, U.S. Senator From Colorado
    Thank you Mr. Chairman and Ranking Member Domenici for holding 
today's hearing on S. 1543, the National Geothermal Initiative Act. I 
would like to thank Chairman Bingaman and his staff for the work they 
did to introduce this important legislation. I would also like to thank 
our witnesses for sharing their time with us, particularly President 
Grimsson who has come to us all the way from Iceland, a country that is 
utilizing its renewable energy better than any other country.
    Geothermal energy is a clean, reliable resource that reduces the 
use of fossil fuels, cuts operating costs, and does not release any 
greenhouse gas emissions. It is also a sustainable energy resource as 
the hot water used in the process can be re-injected into the ground to 
preserve the resource. Geothermal resources are quite versatile, and 
can be used for direct heating applications, and also, if the 
temperatures are sufficiently high, to produce electricity.
    Despite the fact that our nation is the world's largest producer of 
geothermal energy, this resource accounts for less than 1% of the 
electricity generated across the entire country. Furthermore, 
geothermal energy is often ignored in national projections of the 
evolving U.S. energy supply. As our country moves forward to create a 
new, clean energy economy, we must take advantage of this resource and 
find ways in which it can be better utilized.
    In Colorado, the town of Pagosa Springs has utilized geothermal 
energy for over twenty-five years to provide heat for many of its 
government buildings and commercial establishments. In addition, 
geothermal heat or water is used in at least 30 resorts and small 
businesses across the state to heat pools and buildings, raise fish, 
and grow vegetables. The current use of geothermal energy in Colorado 
is estimated to prevent the release of over 161,000 tons of carbon 
dioxide each year. In addition, the use of the geothermal resources is 
estimated to create 3,000 jobs, and the geothermal businesses pay 
local, state and federal taxes.
    But in Colorado we could still do more. It is estimated there is 
enough concentrated geothermal energy to provide hot water and heat for 
100,000 homes. Geothermal heat pumps are particularly beneficial in 
Colorado. Some school districts have, or are considering, using these 
systems, and utilities are looking into heat pumps as a way to meet 
their load reduction goals. The Delta-Montrose Electric Association 
(DMEA) in Colorado, a non-profit cooperative, has done great work 
promoting direct use of geothermal energy including ground source heat 
pumps (GSHPs). According to DMEA, the one million GSHPs currently in 
use in the U.S. today reduce our country's dependence on imported fuels 
by 21.2 million barrels of crude oil per year.
    Colorado may also have the potential to generate electricity from 
high temperature geothermal resources in the Arkansas River and San 
Luis Valleys in western Colorado, and this resource is virtually 
untapped today.
    This is why the National Geothermal Initiative Act is so important. 
If we increase our research and development of this clean and safe 
energy resource, we will be taking another step towards our country's 
energy security.
    This hearing will help to highlight the importance of this 
resources and what it means to our nation's future. I look forward to 
hearing from the experts we have here today, and would like to thank 
Chairman Bingaman and Ranking Member Domenici once again for addressing 
this issue.
                                 ______
                                 
 Prepared Statement of Hon. Bernard Sanders, U.S. Senator From Vermont

    Chairman Bingaman, Ranking Member Domenici, I am proud to join you 
as a sponsor of this bill, S.1543 which would promote the development 
of clean renewable geothermal energy.
    We should do more to encourage research and demonstrations of 
geothermal energy in this country. It is a clean renewable source of 
energy that is dispatchable, that is, it is available for use at all 
times and not intermittent like some other forms of renewable energy. 
Geothermal energy can thus be a terrific backup energy source for wind 
and solar when the sun is not shining or the wind is not blowing.
    This bill will be a good first step in helping our country achieve 
the goal of greater use of this emerging technology, one that will 
doubtless create lots of new jobs across our nation and reduce 
greenhouse emissions.
                                 ______
                                 
  Prepared Statement of Hon. Gordon H. Smith, U.S. Senator From Oregon

    Mr. Chairman, I appreciate your convening this hearing on S. 1543, 
the National Geothermal Initiative Act of 2007. I would like to welcome 
President Grimsson of Iceland and the other witnesses who will appear 
before us today.
    I strongly support the goals of this legislation, which is why, Mr. 
Chairman, I have just agreed to cosponsor this bill. I commend you for 
setting a strong national goal for geothermal electricity generation, 
and for reestablishing a program within the Department of Energy to 
help achieve this goal. Geothermal is a base-load resource that will 
help Oregon and the nation reach the goals of energy security, 
sustainable economic development, and reduced greenhouse gas emissions.
    Oregon is a state that could benefit substantially from geothermal 
development. While there are no power plants in operation today, there 
are four projects currently under development. Oregon does have 
existing direct-use sites where geothermal is used for building energy 
needs, as well as an established Geo-Heat Center at Oregon Institute of 
Technology. The Western Governor's Association Geothermal Task Force 
estimates that by 2025, geothermal power plants in Oregon could produce 
1,250 megawatts of electricity.
    The United States is already the world's leader in geothermal 
electricity production, with 2,800 megawatts of capacity. We need to 
maintain that leadership, and this bill will provide the research and 
development, as well as other important assistance, to achieve that 
goal.
    I remain concerned, however, that the federal agencies that 
administer public lands in the Western United States will not have the 
resources to administer their respective leasing programs effectively. 
For national goals to be realized, these agencies must be able to keep 
up with the growing demand for access to geothermal resources on public 
lands. We must ensure that agencies have the necessary personnel to 
facilitate the timely development of geothermal resources in accordance 
with federal environmental statutes.
    Mr. Chairman, in closing I'd like to point out that while S. 1543 
has an aggressive goal of using geothermal resources to generate 20 
percent of our nation's electricity by 2030, this is not an entirely 
new goal. In 2000, then-Secretary Bill Richardson announced an 
initiative called ``GeoPowering the West.'' It set a goal of meeting 10 
percent of the electricity needs of the West with geothermal by 2020. 
We need to ensure that the Department of Energy oversees an effective 
program that will enable developers to turn these goals into reality.
    I look forward to hearing from the witnesses today, and to working 
with you, Mr. Chairman, and the other cosponsors to move this 
legislation forward.

    Senator Murkowski.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you, Mr. Chairman. I do have a 
longer statement that I wish to submit for the record. But just 
very briefly, I too, want to welcome you, President Grimsson. 
It is, indeed, an honor to have you before this committee. Your 
passion about how we can do better, and specifically in the 
area of geothermal energy has always been inspiring in our 
private conversations, and I'm delighted that you will be able 
to address the full committee today.
    Mr. Chairman, I want to thank you for holding this hearing. 
We have set a goal in our legislation here of getting 20 
percent of our power from geothermal energy, and while this may 
be overly optimistic, as a co-sponsor of this measure, I think 
that the National Geothermal Initiative Act of 2007 is a very 
important step for this Nation to get on with developing 
alternative energy.
    Coming from the State of Alaska, where we have at least 50 
percent of our State's communities that could theoretically tap 
into hot water from inside the earth to produce electricity, 
this is an area where we are very optimistic. Alaska has nearly 
a dozen proposed geothermal projects right now that could 
proceed, if there was additional Federal assistance to help in 
the identification of specific geothermal well sites, or aid in 
improving drilling, or assistance to develop geothermal 
turbines that operate more efficiently at the low water 
temperatures.
    Some have suggested that geothermal is a mature technology. 
I would argue that contention. Even though we've been trying to 
promote geothermal technology for decades, there's still 
considerable work that needs to be done to lower the cost of 
high-temperature geothermal, to improve the technology, so that 
we can produce electricity from the lower-temperature water.
    Mr. Chairman, again, I have so much that I want to add on 
this, in terms of what Alaska is doing, what we are looking to 
do. I'll try to include that in my questions for the witnesses, 
so that we can get to this very distinguished panel.
    With that, I thank you.
    [The prepared statement of Senator Murkowski follows:]

  Prepared Statement of Hon. Lisa Murkowski, U.S. Senator From Alaska

    Mr. Chairman, thank you for holding this hearing. While the goal of 
this nation getting 20% of its power from geothermal may be overly 
optimistic, as a co-sponsor of the measure, I think the National 
Geothermal Initiative Act of 2007 is an important step for this nation 
to get on with developing alternative energy.
    I come from Alaska, a state where at least 50% of the state's 
communities may theoretically tap hot water from inside the earth to 
produce electricity. Alaska has nearly a dozen proposed geothermal 
projects right now that could proceed, if there was additional federal 
assistance to help in the identification of specific geothermal well 
sites, or aid in improving drilling, or assistance to develop 
geothermal turbines that operate more efficiently at lower water 
temperatures.
    With fuel prices at near record highs, hot water heated naturally 
by the earth sports a zero fuel cost. But geothermal power only 
provides the nation with three-tenths of a percent of its electricity 
at present--because of the currently high capital costs of siting and 
building geothermal plants.
    Geothermal is not yet a mature technology. Even though we have been 
trying to promote geothermal technology for decades, there is 
considerable work still to be done to lower the cost of high-
temperature geothermal and to improve the technology so that 
electricity can be produced from lower temperature water--expanding the 
applicability of the process nationwide.
    For example, we still haven't updated a national geothermal mapping 
assessment started in 1978--and never totally conducted in detail in 
much of Alaska.
    MIT in a recent report suggested that geothermal power holds the 
promise of providing low-cost electricity for most of the nation, if 
the federal government would increase its research and financial 
assistance to help prove new technology--the technology to ``mine hot 
dry rocks'' or inject water deeper into the earth to heat up, rather 
than simply tapping natural hot water springs or only using heated 
subsurface water pools closer to the surface where they are known.
    This act will create a geothermal initiative that will lead to the 
completion of a geothermal resource base assessment by 2010. It will 
encourage demonstration plants to show the full range of geothermal 
production and push new technology in the engineering of geothermal 
plants.
    Besides restating a federal commitment to geothermal, it will fund 
a national exploration and research effort and the development of 
geothermal information centers.
    Just last year there was a major success in Alaska, where a local 
geothermal developer Bernie Karl, who owns a small geothermal spring 
resort at Chena Hot Springs outside of Fairbanks, utilized new 
technology designed by United Technologies to produce electricity from 
relatively cool water, water only 160 degrees in temperature, For just 
a $1.5 million federal grant, work at Chena Hot Springs has confirmed 
that economic electricity can be generated from relatively low-
temperature geothermal resources.
    That opens the door to many more communities in Alaska potentially 
benefiting from geothermal power and shows the importance that federal 
legislation provide aid for both low-temperature and high-temperature 
geothermal research in the future. If I have any concerns about the 
proposed bill it is that it doesn't specifically address low-
temperature geothermal sufficiently.
    Right now besides Chena, there are geothermal projects at Akutan, 
at Unalaska, at Mt. Spurr near Anchorage, near Naknek, at Tenakee 
Springs in Southeast, at Pilgrim's Hot Springs in western Alaska, all 
ready to potentially produce power, if there is more federal assistance 
to help lower the cost of their development.
    Some may argue that federal aid is not needed since geothermal is a 
mature technology. But new technology development, according to the MIT 
report, could result in geothermal power providing America with 100 
gigawatts of electricity within 50 years, a significant portion of its 
future power needs without the risk of supply disruptions or fuel price 
fluctuations.
    And of course geothermal power produces no greenhouse gas emissions 
and releases no carbon to the environment--a significant advantage 
given current concerns over global warming.
    Right now there are researchers in the Alaska Aleutians hoping for 
federal grant research to test whether new types of unmanned aerial 
vehicles can be used to pinpoint geothermal hot spots, the exact spots 
where wells should be sunk to tap hot water resources. For a nominal 
grant, this technology could be proven up that would save all 
geothermal projects many millions of dollars in drilling costs. This 
one project is an example of why more federal aid is needed and useful.
    Currently seismic engineers are in the field between Naknek and 
King Salmon in Alaska testing the likelihood of finding enough hot 
water to power most of the Bristol Bay region in Alaska--an area where 
electricity currently costs more than 30 cents per kilowatt hour. A 
find could produce a major power source to bring economic electricity 
to 17 villages in the region.
    This bill would authorize a couple hundred million dollars in 
federal funding for all forms of geothermal work over the next five 
years. That is less than we have authorized for other forms of 
renewable energy in the Energy Policy Act of 2005 or have proposed for 
biomass, wind, solar or hydrogen fuel development in EPACT.
    Geothermal really is a stepchild among renewables. Along with ocean 
energy it received relatively little federal assistance in EPACT two 
years ago. But geothermal is like the stepchild that is on the verge of 
inheriting the family estate. If we encourage geothermal development it 
will pay big dividends to the nation. If we spend money now to advance 
geothermal technology, it will help the entire nation, not just in the 
West, but across the country.
    I look forward to the testimony on this important type of 
alternative energy for the nation.

    The Chairman. Thank you very much.
    Senator Akaka, did you want to make an opening statement? 
Go ahead.

        STATEMENT OF HON. DANIEL K. AKAKA, U.S. SENATOR 
                          FROM HAWAII

    Senator Akaka. Yes, Mr. Chairman.
    Good morning, everyone, and Aloha. First, I would like to 
thank the Chairman, Chairman Bingaman, for all of his 
leadership and hard work in ensuring that the energy challenges 
and solutions facing our country have remained at the forefront 
of our work and discussions here at the U.S. Senate.
    I commend you, Mr. Chairman, and your staff, for putting 
together this very important discussion regarding the 
production of geothermal energy, so we can discuss the 
possibilities in forwarding this technology as a substantial 
source of clean, renewable energy. I thank you very much for 
adding me as a co-sponsor to this bill.
    I would like to extend a warm welcome to President Olafur 
Ragnar Grimsson of Iceland. It is an honor to have you here 
today, and I look forward to hearing about how you have been so 
successful in the transformation of your country from one that 
was dependent on fossil fuels, to one that is now relying on 
clean, renewable energy.
    I am truly impressed by the substantial progress you have 
made in this regard, and look forward to the possibilities of 
our partnership with you. As we learn from your experiences and 
success in this regard.
    I want you to know, Mr. President, that in my home State, 
the first geothermal energy power plant went online in the 
Island of Hawaii in July 1981, producing just 3 megawatts of 
power. Today, we have a plant providing a constant 30 megawatts 
of firm, renewable energy which makes up 20 percent of the 
Island's power use, and 31 percent of Hawaii's renewable energy 
resources.
    This is obviously at a much smaller scale, but it is 
substantial when you consider Hawaii's unique energy 
challenges, as a small island State. As you can see, we have 
benefited from this technology for quite some time, and I look 
forward to seeing an even greater potential for this in the 
area of renewable energy across this country.
    Thank you very much, Mr. Chairman.
    The Chairman. Thank you very much.
    Senator Barrasso, go right ahead.

         STATEMENT OF HON. JOHN BARRASSO, U.S. SENATOR 
                          FROM WYOMING

    Senator Barrasso. Thank you very much, Mr. Chairman, thank 
you, Mr. President for being here with us today. I am looking 
forward to being further educated today on the issue of 
geothermal energy production, looking forward to these 
hearings.
    My philosophy, being from an energy State, where we have 
extraordinary natural resources and energy resources--including 
hydrocarbons, wind, uranium, hydropower, solar, coal--is No. 1 
to support efficiency, and efficient energy use; to support 
research and development, and investment in new technologies, 
to support renewable energies, to support alternative energies; 
and yes, to support fossil fuels, which have served as the 
foundation for the energy that we all consume, and which have 
provided us with the standard of living that we all enjoy 
today.
    Mr. Chairman, I'm compelled by the submitted testimony that 
geothermal energy must be part of the overall domestic energy 
supply of our Nation. Many benefits seems clear. Geothermal 
energy appears to be a reliable and a flexible source of 
domestically produced energy.
    Nonetheless, looking at the proposal before us today, Mr. 
Chairman, I must say, I'm concerned that the goal established 
may go beyond simply a challenge to government, industry and 
consumers. I am concerned that this may be an unrealistic bar.
    While the goal is simply a statement of desired attainment, 
the mandates to the Secretary of Energy, and the Secretary of 
Interior go further than that. Back in the Wyoming legislature, 
Mr. Chairman, I adhered closely to the idea of a balanced 
budget. Even in Washington, there is likely a politically 
imposed, finite level of resources that we are willing to 
expend.
    In light of that, I am concerned, Mr. Chairman, that the 
proposed legislation could inadvertently or even intentionally 
reduce our Nation's research and development in other 
potentially equally important areas of domestic energy 
production.
    In conclusion, Mr. Chairman, I support geothermal energy. I 
look forward to the testimony of the panelists before us today. 
I remain cautious--I'm cautious of the proposed goal, I'm 
cautious of what this means to our Nation's total energy 
portfolio. I'm cautious of what this means to limited research 
and development dollars, and cautious about potential 
unintended consequences if the expectations are overly 
exuberant.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Senator Craig, did you wish to make a statement before 
President Grimsson testifies?

        STATEMENT OF HON. LARRY E. CRAIG, U.S. SENATOR 
                           FROM IDAHO

    Senator Craig. Mr. Chairman, thank you, I will be most 
brief, and ask that my statement be a part of the record.
    For someone from Idaho to be here, interested in 
geothermal, is pretty obvious. In 1890, the first geothermal 
wells were drilled in Idaho, we now have over 350 buildings in 
my State that are heated by geothermal, and we have more 
geothermal power coming online in Idaho soon, in a 13-megawatt 
structure. Idaho grows increasingly optimistic of its 
opportunities because of its geothermal capability.
    We also recognize the obstacles, the costs involved, 
timelines for bringing these very expensive plants online, and 
all of that.
    So, the bill that we're here to have testimony on today, 
the 20 percent goal that you've put in that bill, Senator 
Bingaman is a--I call it an aspirational goal. A lot of us are 
aspirational today about where we want to take our country, 
when it comes to energy, or climate change involvement--our 
President speaks of that, we speak of that. Twenty percent is 
not achievable if we don't come down into the system and allow 
it, not unlike what we've done for nuclear, to be able to 
afford it. To offset, you know, wind goes up in 6 months. A 
geothermal plant, 3 to 5 years from the drilling. Lots of costs 
out there before cash-flow starts. Nuclear, of course, has a 
much longer lead time than that.
    So, I appreciate what you're doing here, and I'm very 
excited about hearing from the President and what is going on 
in his great country. Thank you.
    I'll ask unanimous consent my full statement be a part of 
the record.
    [The prepared statement of Senator Craig follows:]

   Prepared Statement of Hon. Larry E. Craig, U.S. Senator From Idaho

                    IDAHO'S HISTORY WITH GEOTHERMAL

   In 1890 the Boise Water Works Company completed two wells in 
        Boise to create the nation's first district heating system.
   Today 4 district heating systems in Boise provide geothermal 
        heat to about 350 buildings, including the State Capitol.
   Boise continues to explore expanding the use of geothermal 
        heat:

    --Boise State University is discussing heating 4 new buildings with 
            geothermal.

               IDAHO'S GEOTHERMAL ELECTRICITY PRODUCTION

   Raft River in Southern Idaho was selected by DOE as a 
        demonstration ``binary cycle'' plant in the 1970's.
   In 1980 the Raft River plant was the world's first 
        geothermal binary operation--commercial scale 7 megawatt (MW) 
        plant.

    --Closed due to poor economics (low oil prices).

   In 2002 U.S. Geothermal Inc. purchased the facility with 
        full commercial operation in mind:

    --Re-opened wells with support from DOE on a cost sharing basis.
    --Commercial 13 MW plant is scheduled to be on-line by the end of 
            2007.
    --Levelized cost of 6.2 Kw/h--(PURPA)
    --Currently, exploring further expansion--potential of 110 MW at 
            this site in the future.

                           GEOTHERMAL OUTLOOK

   The expansion of geothermal resources is a high risk 
        financial initiative--drilling geothermal wells can be compared 
        to prospecting for oil or natural gas.

    --Cost from $5--$10 million to drill and identify a good source--
            takes 1 year or more.
    --Its takes 2 years to build a plant at a cost of approx. $40 
            million.

   Compared to the wind or solar industry, geothermal requires 
        much more up front financing to verify its resources.
   We need to explore ways of reducing the upfront financial 
        risks of these geothermal projects, lets focus on those areas 
        of S. 1543:

    --Funding discovery and characterization of resources.
    --Funding for cost shared drilling.
    --Funding for enhanced exploration and development technologies.
    --Funding our National Labs and programs like the ``Intermountain 
            West Geothermal Consortium''--lead by BSU.
    --Develop the supporting infrastructure--transmission lines etc.

   Setting artificially high goals is meaningless and could 
        lead to a boom and bust cycle that could set this valuable 
        resource back.

    --Clean Portfolio Standard (CPS) would be more meaningful.

   This is a domestic continuous base load renewable power 
        source that has little environmental impact--a source too 
        important to not develop.

    The Chairman. It will be included, as will all of the 
others.
    Senator Tester, did you have a statement to give before 
President Grimsson speaks?

          STATEMENT OF HON. JON TESTER, U.S. SENATOR 
                          FROM MONTANA

    Senator Tester. I did, thank you, Mr. Chairman. I want to 
thank you for having this hearing, and I also want to thank the 
witnesses for coming today.
    President Grimsson, very, very good to see you. I really, 
really appreciate you making the trek to testify and give us 
your perspective here today.
    You know, you truly have a vision for your country, and I 
think that this country can learn from your vision. Hopefully, 
we can move forward with some good, progressive, geothermal 
energy policies that will help this country move towards energy 
independence.
    Geothermal energy is one of the most promising forms of 
energy in this country, particularly in the West and the South. 
We produce about 3,000 megawatts in this country, but we can 
produce much, much more. But we lack so much. We lack an 
assessment of our national geothermal resource, we need 
assistance in developing known geothermal opportunities--which 
you can help us on both of those--and quickly advancing 
technology, such as enhanced geothermal technologies, and you 
can help us on all of those, as a matter of fact.
    We have good resources in Montana, but not the best. We 
currently use ground-source heat pumps to heat thousands of 
homes, and we have dozens of commercially operating hot springs 
resorts. But, with a little bit of help from you, and others, 
we can develop more geothermal energy, in the forms of 
electricity and district heating systems.
    I truly do look forward to your testimony here today, and 
I'm still going to try to twist your arm to get you to Montana. 
I know you are sending a delegation out there, and we look 
forward to their visit.
    Thank you very much.
    The Chairman. President Grimsson, as you see, you're being 
welcomed by one and all here on the committee, and we very much 
appreciate your testimony. Why don't you go right ahead?

STATEMENT OF HON. OLAFUR RAGNAR GRIMSSON, PRESIDENT OF ICELAND, 
                       REYKJAVIK, ICELAND

    Mr. Grimsson. Thank you very much, Mr. Chairman, for this 
warm welcome, and it is indeed both an honor and a privilege 
for me to be invited to give this testimony here today to your 
distinguished committee, both on my country's story in this 
regard, but also perhaps on how the United States can take 
important steps in increasing the use of geothermal energy.
    I have also, in recent months, enjoyed the opportunity to 
meet many Senators in their offices to discuss this 
opportunity, and I also want to thank all of you for that 
courtesy that you gave me earlier this year, respectively.
    Iceland is, indeed, an interesting case, because we have 
transformed or energy system from being--in the early years of 
my life--over 80 percent dependent on coal and oil, into one in 
which now 100 percent of our electricity production and the 
house heating in the country is from clean energy resources. 
Over 70 percent of our entire energy consumption--including 
shipping and transport and any other area--is from indigenous 
renewable resources. All of this has happened in the lifetime 
of a single generation.
    It is my firm belief that other countries can, and many 
are, in fact, following our example, and the lead in this 
respect. The United States has the potential to utilize 
geothermal energy in a major way, contributing not only to your 
energy system, but also to the security--the national security 
of the country, limiting the dependence of imported fossil 
fuel, reducing the risks causes by fluctuating oil prices, and 
also providing opportunities for new infrastructures, 
supporting both cities and regions and individual States within 
the United States, where the resources are located.
    I hope the committee will--through your deliberations--come 
to realize how technical, scientific, business, and 
policymaking cooperation between Iceland and the United States 
can, indeed, in many ways, help the United States to achieve 
this transformation, and thus become one of the leading clean 
energy countries in the world, but at the same time strengthen 
the U.S. economy and enhance the security of the Nation.
    But let me also emphasize here in the beginning--geothermal 
energy is not only reliable, it's also secure, it is very cost-
effective, it is, in fact, a very good business, and it is a 
clean energy resource which can provide significant amounts of 
power to industries, households and businesses in many 
different parts of the United States.
    But, it has also this very valuable characteristics of 
being very flexible. So, we can in many places, provide large-
scale solutions, where in others it can serve a small town, a 
big city, a few industries, or even a single household--there's 
no other energy resource that has this flexibility as the 
geothermal has.
    A single geothermal can also be used as a base for many 
different profit-making business ventures--not only for 
producing electricity and the heating system for houses--but 
also to develop tourist centers, spas, hotels, health clinics, 
produce cosmetics and skin products, as well as greenhouses, 
cultivation, and snow melting. It's very important when one is 
examining the geothermal power that these multiple business 
opportunities that are involved in a single resource make it, 
perhaps, in my opinion, the most profit-making energy potential 
of those countries and regions that are blessed with this 
resource.
    We know that in international energy tables, it's often 
classified as ``new renewable.'' But this is not really the 
case, because people have--in many parts of the world, from the 
dawn of civilization--used hot water and hot springs for many 
different purposes. Electricity has been commercially available 
from geothermal sources since the beginning of the last 
century.
    But, especially in the last three decades, we have seen 
enormous progress in this area. The Reykjavik Energy Company, 
which is the leading company in this field in my country, now 
currently operates the world's largest and most sophisticated 
geothermal district heating system in the world, only rivaled 
in size by a project which Icelanders are now building in the 
city of Xian Yang, in China. It is, indeed, fascinating for us 
in Iceland to observe the strong interest in which the Chinese 
leadership now takes in this area.
    As you probably know, the Iceland's energy use per capita 
is among the highest in the world. The proportion of this 
provided by renewable energy sources exceeds the figures for 
all other countries.
    But, it's also worth recollecting that it was the oil 
crisis in the 1970s, fueled by the Arab-Israeli War and the 
Iranian Revolution, that caused Iceland to change its energy 
policy in a fundamental way.
    The economic benefits from this process--from utilizing 
geothermal energy--can be seen when the total payments for hot 
water used for space heating are compared to the consumer cost 
of oil. The present value of Iceland's total savings made 
between 1970 and 2000 is estimated to be more than 3 times the 
country's Gross National Income for the year 2000. A strong 
indication of how it makes both good business, and strong 
economic sense to enter into this area.
    Other countries can, indeed, do the same. Geothermal 
resources have been identified in over 90 countries in the 
world, and According to the excellent MIT report, ``A View 
Toward Geothermal Energy,'' the potential in the United States 
from enhanced geothermal system is, in fact, a prominent part 
of the future energy outlook of this country.
    But the key that is important to realize, the keys to a 
successful geothermal development are efficient and 
comprehensive interdisciplinary geothermal research, and proper 
resource management during utilization.
    Let me, therefore, conclude my opening statement by 
identifying some areas where cooperation with Iceland could 
benefit the United States in the creation of a major U.S. 
geothermal program.
    First, extensive research on geophysical exploration, 
assessment of low temperature--but also high temperature--and 
deep and conventional geothermal resources, including the so-
called hot, dry rock, and supercritical geothermal resources.
    Second, developing and extending existing drilling 
technology, for example, by drawing on the vast experience 
gained in the oil and the gas industry.
    Third, cooperation between research institutions and 
universities and financial sectors as now, for example, exists 
in the Iceland Deep Drilling Project, which has comprehensive 
involvement from U.S. partners.
    Fourth, studying more comprehensive and efficient 
management of geothermal resources without over-exploiting 
them.
    Fifth, modeling the nature of geothermal systems based, for 
example, on the methods and the tools already being developed 
at the Lawrence Berkeley Laboratory in California with a 
significant contribution from Icelandic scientists.
    Sixth, facilitating investments by Icelandic energy 
companies, banks, and investors, in cooperation with American 
energy and utility companies, State government, city council 
and regional authorities. The strong interest from the 
Icelandic business sectors to enter into such cooperation with 
American partners is, I think, a strong manifestation of their 
belief that this is an extraordinarily good profit-making 
business.
    Seventh, supporting the ongoing research project between 
Iceland and American scientists on how geothermal portholes can 
be used for CO2 capture and sequestration, by 
pumping the CO2 down the portholes, into the basalt 
layers which exist both in Iceland and the United States, and 
where the CO2 would turn into solid rock, and not 
escape to the surface later on. It's the only carbon 
sequestration project in the world which is based on turning 
the CO2 into solid rock, without any risk of it 
escaping later on.
    There are--as you can see--a number of areas where 
cooperation between Iceland and the United States can play an 
important role to the benefit of both our countries. Here, I 
believe, the U.S. Senate could take a very important lead.
    I hope that my testimony--but also our willingness in 
Iceland to provide further information--will help the Congress 
in these important deliberations. In order to support that, I 
have here with me today the head of the Icelandic Energy 
Authority, who represents the scientific community in my 
country, and in this respect, we believe very strongly that new 
energy cooperation along these lines, between Iceland and the 
United States, could indeed be a fascinating and a great homage 
to our longstanding alliance and friendship, but also help to 
strengthen the U.S. economy, and also the security of your 
country.
    With these words, let me conclude my opening statement. I 
have also submitted a larger written version with more detailed 
information, but I am ready to answer any questions that the 
distinguished Senators are willing to put forward.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Mr. Grimsson follows:]

    Prepared Statement of Hon. Olafur Ragnar Grimsson, President of 
                      Iceland, Reykjavik, Iceland

                            1. INTRODUCTION

    It is an honour and a privilege for me to be invited to give 
testimony to your distinguished committee on my country's story and to 
discuss how the United States can take important steps in increasing 
the use of geothermal energy.
    I will be describing how Iceland transformed its energy system from 
being based on peat, imported coal and oil to one in which 100 percent 
of its energy production is based on clean energy resources, with 
roughly 72% of its entire energy consumption coming from indigenous 
renewable sources (54% geothermal, 18% hydropower). The rest of 
Iceland's energy requirements, for the fishing fleet and 
transportation, are met by imported fossil fuel.
    This change has happened in the lifetime of only one generation, 
and thus my country has developed from being one of the poorest 
countries in Europe into one of the most affluent in the world.
    It is my hope that many other countries can follow our lead and 
understand that what is one day considered a tough challenge can become 
a reality if the right forces and the right policies are put to work.
    For the United States of America, geothermal energy can become a 
major energy resource, contributing to the security of the country, 
limiting dependence on the import of fossil fuels, reducing the risks 
caused by fluctuating oil prices and providing opportunities for new 
infrastructures supporting the cities and regions where the resources 
are located.
    I hope to outline how technical, scientific, business and policy-
making cooperation between Iceland and the United States can help the 
US to achieve this transformation and thus become one of the leading 
clean energy countries in the world and at the same time strengthening 
the US economy and enhancing the security of the nation.
    I will also show that geothermal energy is a reliable, flexible and 
green energy resource which can supply significant amounts of power to 
households and industry. Furthermore, it uses land economically, gives 
social returns and it is cost-effective.
    It is reliable because it provides base-load power 24 hours a day 
and is available throughout peak hours.
    It is flexible and can be tailored to needs accordingly. This is a 
clear shift from the public debate, which has been preoccupied by ``big 
solutions'' in the field of energy, centred on coal, oil and nuclear 
programmes. In many places, geothermal energy can provide a ``big'' 
solution, but in many others it can serve a single city, large 
industries, a small town or as little as a single household. This 
flexibility can bring significant advantages.
    It is green: When coal is used to produce an equivalent amount of 
energy, the CO2 emissions are 35 times greater, according to 
information from the NREL. Emissions from geothermal power plants 
contain mostly water vapour and they do not emit particulates, hydrogen 
sulphide or nitrogen oxides.
    It uses land economically: Geothermal plants require by far the 
least land for electricity production per energy unit compared with all 
other available renewable sources.
    It gives social returns: Many more jobs are created through the 
harnessing of geothermal energy than by developing other types of 
renewable energy resources.
    And it is cost effective: The cost of electricity produced with 
geothermal energy in the US is expected to be between five and eight 
cents per kWh. This is more expensive than the cost of our geothermal 
power in Iceland which is closer to two or three cents, but according 
to a new market report from Glitnir Bank it is still far lower than the 
cost of energy from solar or other renewable sources. This would 
represent a significant saving for individuals and communities.

             2. CLIMATE CHANGE-ENERGY SECURITY-CLEAN ENERGY

    For many years now, I have been warning that in the coming decades 
we will see catastrophic effects of global climate change if humanity 
does not take immediate precautionary action. Unfortunately, when I 
first spoke about this threat in my New Year address to the Icelandic 
nation in 1998, not many people had yet begun to take the issue with 
sufficient seriousness. Now, however, the world's leading scientists no 
longer question the reality of climate change but only how much time 
remains until we reach the point of no return.
    For a country such as Iceland, climate change can have disastrous 
consequences. As an island high in the Northern seas, we are dependent 
on the Gulf Stream bringing warm water from the Gulf of Mexico. As with 
other island states and coastline territories, rising water levels can 
have a devastating effect on our future livelihood. Like most other 
countries, Iceland has experienced irregularities in weather patterns. 
We are fighting the biggest desert in Europe and we have the largest 
glaciers in Europe, which have been rapidly retreating in recent years, 
allowing us to witness the effects of climate change at first hand and 
encouraging us to be in the forefront of global action, creating 
solutions with the best possible partners.
    In discussions on climate change that have taken place 
internationally, frequent reference has been made to the significance 
of the polar regions, where evidence of the impact of global warming 
has been most pronounced.
    At the Reykjavik Ministerial Meeting of the Arctic Council, an 
inter-governmental organization embracing the countries in the North, 
including Iceland, the United States and Russia, in November 2004, the 
eight member states received the main findings of the Arctic Climate 
Impact Assessment (ACIA). This report, completed during Iceland's 
Chairmanship of the Arctic Council, is the world's most comprehensive 
and detailed regional climatic and ultraviolet radiation assessment to 
date and documents impacts that are already being felt throughout the 
Arctic region. It clearly demonstrates that the Arctic climate is now 
warming rapidly, presenting a range of challenges for human health, 
culture and well-being among the people of the region.
    The importance of the ACIA, which drew on the work of more than 300 
leading researchers, indigenous representatives and other experts from 
fifteen nations, goes well beyond its regional relevance. According to 
the authors, Arctic warming and its consequences will have worldwide 
implications, affecting in a profound manner vegetation patterns, 
biological diversity, marine transportation, access to resources and 
the survival of coastal communities, to name only a few examples.
    Barely three years after the ACIA was presented, it would seem that 
future projections, based on its findings, may have been somewhat 
conservative. In our own Icelandic neighbourhood, the Greenland ice cap 
is melting at an accelerating rate, with potentially catastophic 
consequences in terms of global sea-level rise. As the leading ACIA 
scientist, Robert Corell, recently observed, one Greenland glacier 
alone, at Ilulissat, is now putting enough fresh water into the sea to 
provide drinking water for a city the size of London.
    Therefore, the message from the North is clear; all countries need 
to start taking the issue of global climate change seriously and work 
together in a deliberate way towards the adaptation to, and the 
mitigation of, its accelerating impacts.
    This explains the vital interest that Iceland has in working with 
other nations to campaign hard against climate change and play a role 
in persuading others, policy-makers, scientists, experts, corporate 
leaders and other individuals to take action.
    There are many steps that need to be taken. In this hearing, the 
focus will be on the aspect where I believe my country can make a 
significant input. I see the increased utilization of clean energy 
resources as one of the most vital parts in the fight against climate 
change.
    The International Energy Agency (IEA) forecasts that US$ 20 
trillion in new investment will be required to meet world energy needs 
by 2030. Much of this investment will be needed in the world's fastest-
growing economies and expectations for China alone amount to 18% of the 
total. Innovative policies and technologies present significant 
opportunities to ensure economic growth and social development while 
minimizing the unwanted consequences of investments, such as urban air 
pollution, resource depletion, health damage, water stress and climate 
change. Geothermal energy can play an important role in this aspect in 
many parts of the world.
    We have approached the issue of energy in Iceland from the point of 
view of the importance of achieving energy security. As geothermal 
energy and hydroelectric power have been developed within Iceland's 
borders, this means that we have become independent of fuel imports for 
electricity production. Thus we have less reason than many other 
nations to worry about fluctuating prices of oil except as they affect 
the transport sector and the fisheries fleet, and in these areas too, 
we are working on decreasing our dependence on oil.

                       3. GEOTHERMAL UTILIZATION

    Although geothermal energy is categorised in international energy 
tables among the ``new renewables'', it is not a new energy source at 
all.
    People have used hot springs for bathing and washing of clothes 
since the dawn of civilisation in many parts of the world. Late in the 
nineteenth century, people began experiments utilizing geothermal 
energy for outdoor gardening and early in the twentieth century, 
geothermal sources were first used to heat greenhouses. Around the same 
time, people started using geothermal energy to heat swimming pools and 
buildings.
    Electricity has been generated by geothermal steam commercially 
since 1913, and geothermal energy has been used on the scale of 
hundreds of MW for five decades now, both for electricity generation 
and direct use. The scale of utilization has increased rapidly during 
the last three decades.
    Conventional electric power generation is mostly limited to 
geothermal fields with a fluid temperature above 150C, but 
considerably lower temperatures can be used with the application of 
binary fluids which utilize the geothermal fluids down to about 80C. 
The unit sizes of steam turbines are commonly 20-50 MWe. The efficiency 
of geothermal utilization is enhanced considerably by co-generation 
plants which produce both electricity and hot water for district 
heating and other direct uses.
    In many countries, the most significant direct application is for 
district heating, using the geothermal fluid directly or extracting the 
heat with the aid of heat exchangers or heat pumps. In Iceland, most of 
the direct use of geothermal heat is in the form of central heating; 
85% of all houses in Iceland are heated this way.
    Geothermal water also has many other applications, including 
swimming pools, soil warming, fish farming, animal husbandry, 
aquaculture pond heating and industrial heating and processing such as 
drying of timber, wool and seaweed.
    Reykjavik Energy currently operates the world's largest and most 
sophisticated geothermal district-heating system in Reykjavik, 
Iceland's capital city. In terms of size, it will be rivalled only a 
project that Icelanders are building in Xian Yang in China.
    A single geothermal resource can be used as the basis of many 
different profit-making ventures, from delivering hot water to 
municipalities to developing tourist centres with spas, hotels and 
health clinics. This has been done at the ``Blue Lagoon'', a geothermal 
site in Iceland, where cosmetics and skin balms made from the silica 
precipitates in the run-off water have been developed into a 
significant source of income.
3.1 Sustainable Utilization of Geothermal Resources
    Geothermal energy is a renewable energy source, meaning that the 
source itself has the potential to recover following utilisation. It 
may be utilised in either a sustainable manner or an ``excessive'' 
manner.
    Excessive production from a geothermal field--in excess of the 
capacity of the resource to recover--can only be maintained for a 
relatively short time. After a period of prolonged excessive use, 
production must be brought down to, or below, the level of maximum 
sustainable use. Stepwise development is employed to avoid excessive 
production.
    Stepwise development takes into consideration the individual 
conditions of each geothermal system, and minimises the long-term 
production cost. The cost of drilling is a substantial component, both 
in the exploration and the development of geothermal fields. With the 
stepwise development method, production from the field is initiated 
shortly after the first, successful wells have been drilled.
    The production and response history of the reservoir during the 
first development step is used to estimate the size of the next 
development step. In this way, favourable conditions are achieved for 
the timing of the investment in relation to the timing of revenue, 
resulting in lower long-term production costs than could be achieved by 
developing the whole field in a single step.
    A combination of the stepwise development method with the concept 
of sustainable development results in an attractive and economical way 
to utilize geothermal energy resources.

                  4. GEOTHERMAL DEVELOPMENT IN ICELAND

    Iceland is a country of 300,000 people, located on the mid-Atlantic 
ridge, between Europe and America. It is mountainous and volcanic, with 
much precipitation. The country's geographical peculiarities have 
endowed Iceland with an abundant supply of geothermal resources and 
hydropower.
    Iceland's energy use per capita is among the highest in the world, 
and the proportion of this provided by renewable energy sources exceeds 
that in most other countries. Nowhere else does geothermal energy play 
a greater role in providing a nation's energy supply. Almost three-
quarters of the population live in the south western part of the 
country, where geothermal resources are abundant.
    The current utilization of geothermal energy for heating and other 
direct uses is considered to be only a small fraction of what this 
resource can provide. The potential to generate electricity is more 
uncertain. Hydropower has been the main source of electricity, but in 
recent decades geothermal power plants have also contributed an 
important share of production. In 2006, geothermal plants generated one 
fourth of the total 9,920 GWh produced. In 2009, the total production 
is forecast to be about 15,000 GWh, with 20% generated in geothermal 
plants. At the same time, 80% of the electricity will be used in the 
energy intensive industry.
    Iceland possesses relatively extensive untapped energy reserves. 
However, these reserves are not unlimited. Only rough estimates are 
available as to the size of these energy reserves in relation to the 
generation of electricity. Therefore, there is considerable uncertainty 
when it comes to assessing to what extent they can be harnessed with 
regard to what is technically possible, cost-efficient, and 
environmentally desirable.
    For the potential generation of electricity, these energy reserves 
are estimated at roughly 50,000 GWh per year, some 60% coming from 
hydropower and 40% from geothermal resources. By 2008, the generation 
will amount to about 30% of that total potential.
    A master plan comparing the economic feasibility and the 
environmental impact of the proposed power development projects is 
being prepared. It is hoped that this comparison will aid in the 
selection of the most feasible projects to develop, considering both 
the economic and environmental impact of such decisions, including 
which rivers or geothermal fields should not be harnessed due to their 
value in terms of natural heritage and recreation. Final results are 
expected by 2009.
4.1 Space Heating
    In a cold country like Iceland, home heating needs are greater than 
in most countries. Coal imports for space heating were begun after 
1870. The use of coal for heating increased in the beginning of the 
twentieth century, and coal was the dominant heat source until the end 
of World War II. Iceland's dependence on oil began with the twentieth 
century.
    Oil for heating purposes first became significant after World War 
II. By 1950 about 20% of families used oil for heating, while 40% used 
coal. At that time about 25% enjoyed geothermal heating services. In 
the 1950s, the equipment to utilize oil for heating improved, obviously 
leading to increased consumption.
    As a result, coal was practically eliminated from space heating in 
Iceland around 1960. At the same time, control systems for central 
heating developed rapidly, and the first automatic temperature 
regulators for radiators became common.
    The first uses of geothermal energy to heat houses can be traced 
back to 1907. In Reykjavik, large-scale distribution of hot water for 
heating homes began in 1930. In addition to the development in the 
capital area, many communities around the country built their heating 
distribution systems in places where hot springs, or successful 
drilling, yielded suitable geothermal water. Community schools in the 
countryside were also preferably located close to supplies of 
geothermal water, which was available for heating and swimming.
    When the oil crisis struck in the early 1970s, fuelled by the Arab-
Israeli War, the world market price for crude oil rose by 70%. About 
the same time, roughly 90,000 people enjoyed geothermal heating in 
Iceland, around 43% of the nation. Heat from oil still served over 50% 
of the population.
    The oil crises of 1973 and 1979 (following the Iranian Revolution) 
caused Iceland to change its energy policy, dropping the emphasis on 
oil and turning to domestic energy resources: hydropower and geothermal 
heat. This policy meant searching for new geothermal resources, and 
building new heating services across the country. It also meant 
constructing transmission pipelines (commonly 10-20 km long) from 
geothermal fields to towns, villages and individual farms.
4.2 Electric Power Generation in Iceland
    Generating electricity with geothermal energy in Iceland has 
increased significantly in recent years. Three of the plants are co-
generation plants producing both electricity and hot water for district 
heating. One of them uses a water-ammonia mixture as its working fluid 
(Kalina-process), extracting heat from 120C geothermal water for 
electricity generation followed by a series of other direct uses for 
industrial processes of boiling and drying, district heating, swimming 
pools, fish farming and snow melting, reducing the temperature of the 
water to 25C before it is finally discarded.
    As a result of a rapid expansion in Iceland's energy-intensive 
industries, the demand for electricity has increased considerably. Fig. 
5.4* shows the development from 1970-2005, and planned production up 
until 2008. Total electricity production in 2005 from geothermal 
sources came to 1,658 GWh, which was 19.1% of the country's total 
electricity production. Enlargements of the existing power plants and 
two new plants increased the installed capacity by 210 MWe in 2007, 
bringing the total capacity up to 410 MWe.
---------------------------------------------------------------------------
    * All figures and tables have been retained in committee files.
---------------------------------------------------------------------------
4.3 Benefits of using geothermal heat instead of oil
    The economic benefits of the policy of increasing the utilization 
of geothermal energy can be seen when the total payments for hot water 
used for space heating are compared to the consumer costs of oil.
    Direct annual savings stood at a peak level from 1980 to 1983, 
about $200 million per year. They rose above $200 million in 2000, and 
savings continue to climb as oil prices increase. In 2000, the present 
value of the total savings between 1970 and 2000 was estimated at 
$8,200 million or more than three times Iceland's national budget in 
2000. The economic savings garnished by using geothermal energy are 
substantial, and have contributed significantly to Iceland's 
prosperity.
    Assuming that geothermal energy used for heating homes in 2003 was 
equivalent to the heat obtained from the burning of 646,000 tons of 
oil, the use of geothermal energy reduced the total release of 
CO2 in the country by roughly 37%.
    Besides the economic and environmental benefits, the development of 
geothermal resources has had a desirable impact on social life in 
Iceland. People have preferred to live in areas where geothermal heat 
is available, in the capital area and in rural villages where thermal 
springs can be exploited for heating dwellings and greenhouses, 
schools, swimming pools and other sports facilities, tourism and 
smaller industries. Statistics show improved health of the inhabitants 
of these regions.
    The significant fluctuations of oil prices caused by political 
unrest in key oil-producing regions should encourage governments to 
focus on indigenous energy sources to meet their basic energy 
requirements.
4.4 Heat Pumps
    Until recently, geothermal energy has been economically feasible 
only in areas where thermal water or steam is concentrated at depths of 
less than 3 km in restricted volumes, analogous to oil in commercial 
oil reservoirs. The use of ground-source heat pumps has changed the 
economic norms. In this case, the earth is the heat source for the 
heating and/or the heat sink for cooling, depending on the season.
    This has made it possible for people in all countries to use the 
earth's heat for heating and/or cooling. It should be stressed that 
heat pumps can be used basically anywhere.
    It is considered likely that heat pumps will become competitive 
where water above 50C is not found. In such places, heat pumps can be 
used instead of direct electrical heating to raise the temperature of 
warm spring water.
4.5 The Public Sector's role in developing geothermal energy in Iceland
    Governments in Iceland have encouraged exploration for geothermal 
resources and research into the various ways geothermal energy can be 
utilized. This work began in the 1940s at the State Electricity 
Authority, and was later, for decades, in the hands of its successor, 
the National Energy Authority (Orkustofnun), which was established in 
1967. The aim has been to acquire general knowledge of geothermal 
resources and make the utilization of this resource profitable for the 
national economy.
    This work has led to great achievements, especially in finding 
alternative resources for heating homes. This progress has been 
possible thanks to the skilled scientists and researchers at the 
National Energy Authority. This research is now in the hands of a new 
state institute, Iceland GeoSurvey, which was born out of the National 
Energy Authority in 2003. New and effective exploration techniques have 
been developed to find geothermal resources.
    This has led to the development of geothermal heating services in 
regions that were thought not to contain suitable geothermal resources. 
Iceland's geothermal industry is now so developed that the government 
can play a smaller role. Successful power companies now take the lead 
in exploitation, either developing geothermal fields that are already 
being utilized, or finding new fields.
    The Icelandic government set up an Energy Fund by merging two funds 
in 1967 to further increase the use of geothermal resources. Over the 
past few decades, this has granted numerous loans to companies for 
geothermal exploration and drilling. Where drilling failed to yield the 
expected results, the loans were converted to grants.
    The country's larger district heating services are owned by their 
respective municipalities. Some 200 smaller heating utilities have been 
established in rural areas. Recent changes in the ownership structure 
of many district-heating systems in Iceland have had their effect. The 
larger companies have either bought or merged with some of the smaller 
systems. Also it is becoming increasingly common to run both district 
heating and electricity distribution in a single municipally-owned 
company. This development reflects increased competition in the energy 
market of the country.

                    5. GEOTHERMAL ENERGY WORLD-WIDE

    The people of Iceland live in a harsh natural environment in terms 
of the weather and the danger of earthquakes and volcanic eruptions; 
however, nature also provides them with access to the heat inside the 
earth for energy production. But Iceland is not unique in this respect: 
the same opportunities exist in many countries and can benefit their 
people if they are fortunate enough to make use of them.
    Geothermal resources have been located in some 90 countries and 
there are quantified records of geothermal utilization in 72 countries. 
Electricity is produced from geothermal sources in 23 countries. Five 
of these obtain 15-22% of their national electricity totals from 
geothermal sources. In 2004, the worldwide use of geothermal energy 
amounted to about 57 TWh/a of electricity (Bertani, 2005), and 76 TWh/a 
for direct use (Lund et al., 2005).
    Electricity production increased by 16% between 1999 and 2004 (an 
annual growth rate of 3%). Direct use rose by 43% during the same 
period (an annual growth rate of 7.5%). Only a small fraction of the 
geothermal potential has been developed so far, and there is ample 
space for accelerated use of geothermal energy both for direct 
applications and for electricity generation.
    Over two billion people, a third of the world's population, have no 
access to modern energy services. A key issue for improving the 
standard of living of the poor is to make clean energy available to 
them at prices they can afford. The world population is expected to 
double by the end of the 21st century. To provide sufficient commercial 
energy (not to mention clean energy) to the people of all continents is 
an enormous task.
    More and more countries are seriously considering how they can use 
their indigenous renewable energy resources. The recent decision of the 
Commission of the European Union to reduce greenhouse gas emissions by 
20% by 2020 compared with the 1990 level throughout its member 
countries implies a significant acceleration in the use of renewable 
energy resources. Most of the EU countries already have considerable 
geothermal installations.
5.1 Geothermal energy for development
    The top fifteen countries in electricity production from geothermal 
sources include ten developing countries. The top fifteen countries in 
direct use of geothermal energy include five developing and 
transitional countries.
    In the electricity sector, the geographical distribution of 
suitable geothermal fields is restricted and mainly confined to 
countries or regions on active plate boundaries or with active 
volcanoes. Central America is one of the world's richest regions in 
geothermal resources. The geothermal potential for electricity 
generation in Central America has been estimated at about 4,000 MWe 
(Lippmann 2002), and less than 500 MWe have been harnessed so far. 
Geothermal power stations provide about 12% of the total electricity 
generation of four countries in the region: Costa Rica, El Salvador, 
Guatemala and Nicaragua.
    With an interconnected grid, it would be easy to provide all the 
electricity for these four countries from renewable energy sources. 
With its large untapped geothermal resources and its significant 
experience in both geothermal and hydro development in the region, 
Central America may become an international example of how to reduce 
overall emissions of greenhouse gases over a large area. Similar 
developments can be foreseen in the East African Rift Valley and in 
several other countries and regions rich in high-temperature geothermal 
resources.
    Geothermal energy can play a significant role in the electricity 
production of countries and regions rich in high-temperature fields 
which are associated with volcanic activity. Examples can be found in 
many developing countries of rural electrification and the provision of 
safe drinking water and the development of schools and medical centres 
in connection with the exploitation of geothermal resources. Thus, the 
projects are in line with the United Nations' Millennium Development 
Goals.
    Kenya was the first country in Africa to utilize its rich 
geothermal resources and in the foreseeable future will be able to 
produce most of its electricity from hydro and geothermal sources. 
Several other countries in the East African Rift Valley can follow 
suit. Icelandic experts from Reykjavik Energy are now developing the 
geothermal fields in Djibouti. Indonesia is probably the world's 
richest country in geothermal resources and will be able to replace a 
considerable part of its fossil-fuelled electricity plants with 
geothermal stations in the future.
    The main commercial application of geothermal energy for direct use 
in Kenya is in flower farms near the Olkaria geothermal power station 
where greenhouses are heated during the night and kept dry using 
geothermal heat. Around 60,000 people work on the flower farms in the 
region and it is estimated that some 300,000 people derive their 
livelihood from them. The flower companies, which export cut flowers 
(mainly roses) by air to Europe, provide the staff and their families 
with good housing, water, electricity, schools and medical centres.
    Another interesting example of the benefits of geothermal 
development in Africa is in Tunisia where greenhouses replace cooling 
towers to cool irrigation water from 2-3 km deep wells in the Sahara 
desert. Due to the Earth's thermal gradient, the temperature of the 
water from the wells is up to 75C and needs to be cooled to 30C to be 
used for irrigation. Some 110 hectares of greenhouses have been built 
in the oasis. The main products are tomatoes and melons which are 
exported to Europe. This has created many jobs for men and women. Here 
the geothermal energy development is a by-product of the irrigation 
project.
5.2 Direct use of heat world-wide
    In the direct use sector, the potential is very large, as space 
heating and water heating constitute a significant part of the energy 
budget in large parts of the world. In industrialised countries, 35 to 
40% of total primary energy consumption is used in buildings. In 
Europe, 30% of energy use is for space and water heating alone, 
representing 75% of total building energy use.
    As I have mentioned, the European Union's commitment to reduce 
greenhouse gas emissions by 20% by the year 2020 opens up a huge 
potential for further applications, and most EU countries already have 
considerable geothermal installations. The same applies to the USA, 
where the use of ground source heat pumps is widespread both for space 
heating and cooling.
    The largest potential is, however, in China. Owing to geological 
conditions, there are widespread low-temperature geothermal resources 
in most provinces of China which are already widely used for space 
heating, balneology, fish farming and greenhouses during the cold 
winter months and also for tap water in the summer. It is very 
important for proponents of the various types of renewable energy to 
work together in order to find the optimal use of energy resources in 
the different regions of the world.
5.3 Iceland as an active international partner
    Capacity building and transfer of technology are key issues in the 
sustainable development of geothermal resources. Many industrialised 
and developing countries have significant experience in the development 
and operations of geothermal installations for direct use and/or 
electricity production. It is important that they open their doors to 
newcomers in the field. We need strong international cooperation for 
the transfer of technology and the financing of geothermal development 
in order to meet the Millennium Development Goals and tackle the 
threats of climate change.
    Iceland has made a significant contribution to transfer technology 
from its geothermal industry to other countries, to enable them to 
build up capacity in geothermal science and engineering. The Government 
of Iceland and the United Nations University (UNU) decided in 1978 to 
establish the UNU Geothermal Training Programme in Iceland (UNU-GTP). 
Specialized training is offered in geological exploration, borehole 
geology, geophysical exploration, borehole geophysics, reservoir 
engineering, chemistry of thermal fluids, environmental studies, 
geothermal utilization, and drilling technology (www.os.is/unugtp/). 
The aim is to assist developing countries and Central and Eastern 
European countries with significant geothermal potential to build up 
groups of specialists covering most aspects of geothermal exploration 
and sustainable development. The UNU-GTP is financed mostly by the 
Government of Iceland.
    The Government of Iceland has secured core funding for the UNU-GTP 
to expand its capacity-building activities by holding annual workshops/
short courses in geothermal development in selected countries in Africa 
(these started in 2005), Central America (these started in 2006), and 
later in Asia (where they will probably start in 2008).
    In many countries in Africa, Asia, Central America and Central and 
Eastern Europe, UNU-GTP graduates are among the leading specialists in 
geothermal research and development. They have been very successful, 
and have contributed significantly to energy development in their parts 
of the world.
    Icelandic geothermal experts have been on missions of various 
lengths (ranging from a few weeks to several years) to over 70 
countries around the world. The countries are: Albania, Algeria, 
Argentina, Azerbaijan, Bulgaria, Burundi, Cape Verde, Canada, Chile, 
China, Costa Rica, Croatia, Djibouti, Egypt, El Salvador, Eritrea, 
Ethiopia, the Faeroes (Denmark), France, Georgia, Germany, Greece, 
Greenland, Guadeloupe (France), Guatemala, Honduras, Hungary, India, 
Indonesia, Iran, Jordan, Kenya, North Korea, Le Reunion (France), 
Lithuania, Madagascar, Macedonia, Malaysia, Martinique (France), 
Mongolia, Nepal, New Zealand, Nicaragua, Norway, Panama, Papua New 
Guinea, the Philippines, Poland, Portugal (Azores), Romania, Russia, 
Saba (Dutch Antilles), Salomon Islands, Serbia, Slovakia, Slovenia, St. 
Lucia, St. Vincent, Syria, Sweden, Taiwan, Tanzania, Thailand, Tunisia, 
Turkey, Uganda, USA, Vanuatu, Vietnam, Yemen, and Zambia.
    In the beginning most of the missions were for United Nations 
agencies, but the number of projects with direct contracts between 
Icelandic companies and agencies/companies in the respective countries 
has grown steadily during the last fifteen years and has been 
accelerating over the past few months.
    The projects have involved project management, geothermal 
exploration, drilling and well testing, field development, reservoir 
evaluation and resource management, design and construction of 
geothermal power stations and district heating systems and also 
specialist courses on various aspects of geothermal research and 
development.

            6. THE GEOTHERMAL POTENTIAL OF THE UNITED STATES

    It is not generally known that the United States is the global 
leader in geothermal electric power production. Production in the US 
came to about 18,000 GWhe in 2005, out of a world total of 
about 57,000 GWhe. For comparison, the Philippines ranked 
number two with about 9,200 GWhe and Iceland number 8 with 
about 1,500 GWhe. Direct use of geothermal energy is also 
considerable in the US. It is ranked number three after China and 
Sweden and contributes about 8,700 GWhth to the World total 
of 75,900 GWhth. Table 1 shows the top 10 countries in 
geothermal energy utilization.
    Geothermal electric power plants are located in California (2,492 
MW), Nevada (297 MW), Utah (26 MW), Hawaii (35 MW) and Alaska (0.4 MW) 
with current installed gross geothermal capacity at about 2,851 MW.
6.1 US Geothermal Capacity in Perspective
    The total installed capacity in North America is about 3,517 MW, of 
which 2,851 MW is installed in the US and 666 MW in Mexico. Globally, 
the installed capacity is about 8,933 MW (8,9 GW). The total potential 
for North America is considered to be 30,000 MW (30 GW), which means 
that only 12% of the estimated potential is now being utilized (Glitnir 
Energy Research, 2007 and Geothermal Energy Association, 2007).
    Active volcanoes and high-temperature geothermal systems are 
manifestations of terrestrial energy flow from the mantle to the 
surface of the Earth. The volcanic and geothermal activity is more 
intense at plate boundaries than within the tectonic plates and the 
distribution in the world in fairly well known.
    The world potential for geothermal electric power generation is 
estimated at about 148,800 MW, or 149 GW. The figures presented here 
are considered to be conservative, since geothermal assessments have 
only been carried out for a limited number of countries and regions. 
Theoretical considerations based on the situation in Iceland and the US 
reveal that hidden resources suitable for electric generation are 
expected to be 5-10 times larger than the estimate of identified 
resources (Stefansson, 2005). The production potential presented here 
only takes account of the current state of technology, and not Enhanced 
Geothermal Systems or Hot Dry Rock techniques.
    According to the MIT report ``The Future of Geothermal Energy'', 
geothermal energy from Enhanced Geothermal Systems (EGS) in the United 
States could have a major impact on the national energy outlook. 
According to the report, this energy could provide over 100 GW of cost-
competitive base-load electricity in the next 50 years.
    Unfortunately, the utilization of EGS is not yet considered cost-
effective but significant advances towards commercial viability have 
been demonstrated in international projects (e.g. in Germany and 
Australia). This has led US experts to become optimistic about 
achieving commercial viability in the US, given reasonable governmental 
investments to support research, development and demonstration projects 
over the next 10 to 15 years.
    The main areas in which R&D needs to be focused in the United 
States are drilling technology (drilling through high-temperature 
rocks), power-conversion technology (broadening the temperature range 
that can be utilized) and reservoir technology (stimulating flow 
through reservoirs and improving downhole pumps). Successful 
demonstration projects are needed for future growth of the industry.
6.2 Current Projects and Potential
    The current installed geothermal capacity in US is about 2,851 MW 
in five states: California, Nevada, Utah, Hawaii and Alaska, with Idaho 
and Wyoming soon to be added to the list. Most geothermal activity is 
in California and Nevada, which have the greatest geothermal potential. 
At least 69 geothermal projects are in the initial drilling 
exploration, production drilling or construction phase. Of these 
projects, 31 are in Nevada. The estimated generation capacity of these 
projects is about 2,500 MW.
6.3 The kinds of expertise and cooperation needed using current 
        technology
    The keys to successful geothermal development are efficient and 
comprehensive interdisciplinary geothermal research (both during the 
exploration and production phases), together with proper resource 
management during utilization. Today, Iceland is producing electricity 
from geothermal resources at a cost of about 2-3 US cents per kWh--as 
compared to some 7-9 US cents/kWh for most geothermal plants in the 
USA. There may not be one single reason for this discrepancy, rather it 
may be due to a combination of several factors.
    One important difference between the USA and Iceland is that in 
Iceland, wherever applicable, a ``holistic approach'' is used to 
harness geothermal resources. This means using a sequence of 
applications so that as much energy as possible is extracted out of the 
ground before disposing of the spent geothermal fluid. Starting with 
electricity production from the flashed geothermal steam, or from 
turbines using binary heat-exchangers, the heat content of the fluids 
is exploited in industrial processing, domestic space heating, 
greenhouse heating, fish farming, snow melting, etc., before the fluid 
is finally disposed of.
    This concept can be taken a step further, e.g. by cultivating algae 
on a large scale using both geothermal warm water and CO2 to 
induce growth. The algae can then be used as food for aquatic life-
forms, or to produce bio-fuel by utilizing the geothermal steam, and so 
on.
    The holistic approach does not stop there; in Iceland, tourism is 
linked to the geothermal production plants, with balneology, health 
centres, cultural and educational centres, and cosmetic products based 
the geothermal chemicals, and so on. There is no limit to the spin-
offs.
    Probably the best Icelandic example of this holistic approach is 
demonstrated by the Svartsengi power plant, which produces both 
electricity and hot water for domestic space heating. The geothermal 
effluent from the plant has been used to create the world famous ``Blue 
Lagoon'', with multiple spin-off revenues in health care, cosmetics, 
tourism and education.
    While a holistic approach of this kind, with a large component of 
space heating, may be more suitable in a relatively cold country like 
Iceland similar approach could also be applied in parts of the USA that 
have a warmer climate, e.g. by using the effluent energy for large-
scale cooling and refrigeration and other spin-offs tailored to the 
specific environment.
    Another important characteristic of the Icelandic geothermal 
industry is a willingness to share information, rather than keeping it 
proprietary. There is hardly any closed file; almost everything is 
published one way or another, and experience and expertise are carried 
from one geothermal field to the next, to the mutual benefits of all 
the energy companies involved. More or less the same geoscience 
companies serve the whole industry, and geoscientists in different 
disciplines work hand-in-hand from exploration to production. This 
culture may be partly related to the smallness of the nation--but 
essentially, open-file reporting has little to do with population size.
    Yet another factor needs to be mentioned. In geothermal prospecting 
worldwide, some targets are easy to reach and others are less so. Many 
of the most accessible and attractive geothermal prospects, in 
locations such as national parks and reserves, etc., must be left 
intact due to ever-growing environmental restrictions, while others 
which are less promising can only be approached after protracted and 
costly permitting procedures. This affects the overall economics of the 
industry.
    In one sense, it seems somewhat paradoxical that, at the same time 
we are seeking sources of green and renewable energy in order to reduce 
the emission of greenhouse gases, we are also limiting their 
development by environmental regulation which, in some cases, may be 
unduly restrictive. Different, and probably more costly, measures will 
be necessary to resolve this environmental dilemma. International 
collaborative efforts on environmental issues of the geothermal 
industry would be desirable.

             7. AREAS OF POSSIBLE US-ICELANDIC COOPERATION

7.1 Geothermal Exploration and Assessment
    The 1970s resource estimates by the United States Geological Survey 
indicated that low-to medium-temperature geothermal resources are 
located widely throughout the USA, but many of them were not economic. 
Given the escalating cost of competing fossil fuels since then, a re-
evaluation of the nature, extent, and economic potential of these 
resources would be prudent.
    There are considerable known conventional high-temperature 
geothermal resources in the western states, and also in Hawaii and 
Alaska. Most are associated with young volcanic rocks, which should be 
attractive targets for the generation of electric power. In some of 
these locations geothermal production is already taking place, 
including California where 5% of the installed electrical generating 
capacity is geothermal. More effort is evidently needed to remove 
technical, regulatory, environmental, and fiscal barriers to the 
further economic development of these resources.
    However, to make a really significant impact on the overall 
renewable energy picture, new approaches to geothermal development will 
be necessary. In the USA a recent comprehensive assessment of the 
potential for ``enhanced'' or engineered geothermal systems (EGS) 
within the USA, indicates that a cumulative capacity of more than 
100,000 MWe from EGS can be achieved in the United States within 50 
years with modest government investment.
    In Iceland, a different approach to the future of geothermal energy 
is under way; this involves investigation of the economic potential of 
producing supercritical geothermal resources by the Iceland Deep 
Drilling Project (IDDP). Supercritical geothermal production, in which 
water and vapour are in the same phase under heat or pressure, is an 
especially attractive component of enhanced geothermal systems. The 
environmental and economic incentive is to produce an order of 
magnitude more energy from geothermal wells occupying the same area as 
conventional resources, but at less than half an order of magnitude of 
increased cost.
    Such deep, unconventional, geothermal resources (DUGRs) are not 
restricted to Iceland. For example, in the USA, the resource base of 
conventional hydrothermal resources is estimated to be 2,400-9,600 
Exajoules (1 EJ = 1018 J), whereas the supercritical 
volcanic EGS resource base is estimated to be as much as 74,100 EJ, 
excluding geothermal systems in national parks (DOE, 2007). A 
systematic survey of the potential of DUGRs in the USA is therefore 
desirable, and plans should be developed to investigate these 
potentially large resources further.
    Despite the fundamental differences between the geology of Iceland 
and the United States, there are topics where collaboration would be of 
mutual benefit, in data sharing, e.g. on methods of geophysical 
exploration and assessment of both low-temperature, high-temperature, 
and Deep Unconventional Geothermal resources. As an example, one such 
cooperative venture between universities in North Carolina and Iceland 
GeoSurvey geoscientists on geophysical methods in geothermal 
exploration has been in progress for some years now.
7.2 Drilling technology
    Drilling technology is another area where cooperation between the 
USA and Iceland is needed. The development and application of the 
drilling techniques involved in the multilateral completion of wells is 
an example. These have been developed by the oil industry, but seldom 
in the geothermal industry.
    Multilateral completions are used to improve output when the well 
yield is inadequate. In this way, the heavy investment in steel casings 
and cement in the upper parts of such well are not lost. This is not a 
common practice in the geothermal industry. However, one can envisage 
scenarios where the drilling of such multilateral wells would lead to 
considerable economic improvement, at the same time having lower 
environmental impact by reducing the need for surface installations.
    Other possible areas for cooperation in drilling involve advances 
in coring techniques in exploration and research wells, for example in 
relation to the IDDP. Continuous core drilling is slow and extremely 
costly compared to conventional rotary drilling which is used almost 
exclusively in the geothermal industry.
    Similarly, cooperation on improving techniques of well stimulation 
would be desirable. Other technical developments of mutual interest 
that are greatly needed are in the areas of high-temperature logging, 
measurement while drilling, and downhole fluid sampling. Sandia 
National Laboratory (SNL) in the USA has had a long-term programme of 
technological development in these areas. Further collaboration between 
SNL and Icelandic geothermal scientists would be highly desirable.
7.3 Science and research
    In Iceland there is a healthy collaboration between government and 
industry that could provide numerous opportunities for participation by 
US government agencies. One excellent example where the USA is already 
cooperating with Iceland in geothermal research is the Iceland Deep 
Drilling Project (IDDP).
    In 2005, the United States National Science Foundation committed 
USD 3.2 million to support the acquisition and scientific study of 
drill core samples to be recovered by the IDDP. This has enabled a team 
of US investigators to participate in the project.
    Further cooperation between the DOE, the USGS, and the NSF and the 
Icelandic GeoSurvey (ISOR) and the National Energy Authority of Iceland 
(Orkustofnun) on scientific investigation as part of such advanced 
geothermal research and development projects would be mutually 
beneficial.
    Iceland is a favourable locale for scientific studies related to 
geothermal systems. For example, more than 100 international scientists 
and engineers are already involved in the IDDP project, in 
collaboration with the Icelandic energy industry. Many of these 
scientists and engineers are from US universities and institutes, which 
will draw funds from domestic US sources. The US NSF is already 
supporting some of these scientists, and also a considerable part of 
the cost of core drilling for scientific studies.
7.4 Technological advancement
    The success of the geothermal industry is partly linked to the use 
of long-proven technology. Nevertheless, there is always a need for 
improvements. On the cost-effectiveness side, advancement in casing 
technology and cementing technique in drill holes would be most 
beneficial.
    The IEA International Implementing Agreement on Geothermics is an 
example of an international effort that could lead to technological 
advancements in drilling and geothermal harnessing. Within the US, one 
of the roles of the Geothermal Department of the DOE has been to 
participate in this implementing agreement. Drilling costs is one of 
the chief factors affecting the geothermal economy.
7.5 Management of geothermal resources
    Some cooperative studies involving US scientists and engineers and 
their Icelandic counterparts are already under way in the areas of 
reservoir management, reservoir modelling and tracer techniques. In 
most cases water or steam extraction from a geothermal reservoir causes 
some decline in reservoir pressure.
    The only exception is when production from a reservoir is less than 
its natural recharge. Consequently, the pressure decline manifests 
itself in further changes, such as temperature conditions (cooling), 
phase conditions (increased boiling), chemical composition, surface 
manifestations and land elevation (subsidence).
    The energy production potential of a geothermal system is not only 
dependent on the available energy in the ground, but is predominantly 
determined by this pressure decline. The pressure decline is determined 
by the rate of production, on the one hand, and the nature and 
properties of the system, on the other.
    Comprehensive and efficient management is an essential part of 
successful geothermal resource utilization. Such management implies 
controlling the energy extraction from the geothermal system so as to 
maximise the resulting benefits, without over-exploiting the resource.
    Geothermal resource management involves deciding between different 
courses of action, and the operators must have some idea of the 
possible outcome of the different alternatives. Geothermal resource 
management is a field where co-operation between the US and Iceland has 
the potential to be very fruitful because geothermal fields have common 
characteristics and the experience of utilizing one field may be of 
benefit to operators of other fields.
    Modelling the nature of a geothermal system is one of the most 
powerful tools available for resource management in order to understand 
and predict its behaviour. Reservoir models are also helpful in 
estimating the outcome of different management actions. The field of 
numerical geothermal modelling has evolved greatly during the last two 
decades. A lot of the relevant development of methods and tools has 
taken place at the Lawrence Berkeley Laboratory in California. A 
significant contribution to this effort has come from co-operation with 
Icelandic scientists and the modelling of Icelandic geothermal systems.
    Reinjection is an integral part of any sustainable and 
environmentally-friendly geothermal utilization, both as a method of 
waste-water disposal and to counteract pressure draw-down by providing 
artificial water recharge (Stefansson, 1998, 2005). Reinjection is 
essential for sustainable utilization of geothermal systems that have 
limited natural recharge. However, one of the dangers associated with 
reinjection is the cooling of production wells, but this can be 
minimised through careful testing and research. Tracer testing, 
combined with comprehensive interpretation, is probably the most 
important tool for this purpose. Some significant advances in tracer 
testing techniques have come about through US-Icelandic co-operation, 
and these need to be developed further.
    Sustainable geothermal utilization involves energy production at a 
rate which may be maintained for a very long time, such as 100-300 
years (Axelsson et al., 2004). This requires efficient management in 
order to avoid overexploitation, which mostly occurs because of lack of 
knowledge and poor understanding, and also in situations when many 
users draw on the same resource without common management. An example 
of the latter is at the Geysers Geothermal Field in California.
    Geothermal resources of highly variable nature may be managed in a 
sustainable manner. Good examples are the vast geothermal resources in 
sedimentary basins in different parts of the world (Axelsson et al., 
2004). Further cooperation between US and Icelandic geothermal 
engineers in the area of resource management would be mutually 
beneficial.
7.6 Business aspects and financing of projects
    One field where Icelandic companies have scored greater success 
than their counterparts elsewhere is that instead of the renewable 
energy companies being heavily subsidised by taxpayers' money, they 
generate substantial revenue for their owners. This means that the 
resources are well managed from the financial point of view.
    Recently, Icelandic financial institutions have decided to put 
emphasis on financing and investing in geothermal projects world-wide. 
One of Iceland's largest banks, Glitnir Bank, has stated that 
sustainable energy will be one of the three main fields of expertise on 
which it focuses globally. The bank took part in establishing an 
investment company, called Geysir Green Energy, which has been actively 
looking for opportunities in the United States. Iceland-America Energy 
is a geothermal company with projects under way in California and 
elsewhere. Its mother company, Enex, has also been active in many 
countries.
    Reykjavik Energy is probably the best known Icelandic geothermal 
company. It has grown into becoming Iceland's largest power company, 
overtaking the National Power Company last year, which mainly is 
involved in hydropower. Reykjavik Energy has founded an investment 
company, Reykjavik Energy Invest, which has ambitious plans in the 
sphere of developing geothermal resources in the world and is 
participating in projects in the Philippines, Indonesia, Djibouti and 
elsewhere.
    Icelandic geothermal energy companies are open to partnerships with 
leading financial institutions and developing companies for their 
overseas operations, and this could become an interesting area in the 
cooperation between Iceland and the United States.
7.7 CO2 capture and sequestration--zero-emission power 
        plants
    According to data from Kagel et al. (2005) the average emission of 
CO2 from fossil-fuelled electric power plants in the USA is 
about 620 kg/MWh, whereas the average emission of CO2 from a 
flashed steam geothermal plant is only 27 kg/MWh. Nonetheless, one 
environmental impact of geothermal production is the emission of some 
undesirable gases to the atmosphere, and the major geothermal gas is 
CO2. Therefore, reduction in its emission is a desirable 
goal in geothermal utilization.
    Wells already drilled for reinjection of liquid have been made 
available by Reykjavik Energy for mineral sequestration studies in an 
attempt to devise a new way of disposing of the CO2. At the 
same time, studies are under way as regards the disposal of 
H2S, the other troublesome gas emitted by geothermal plants, 
and there is a good chance that both these studies may lead to the 
establishment of a ``zero-emission power plant.'' The studies are being 
done in collaboration with US scientists from Columbia University, 
among others.
    A possible means of storing CO2 underground is to use 
chemical bonding of injected CO2 in a mineral phase. Igneous 
rocks such as basalt provide the necessary base cations to effect the 
precipitation of carbonate minerals from injected CO2-
saturated fluids (See, e.g., Matter et al., 2007). Upon injection into 
basalt aquifers, CO2 will acidify the groundwater and the 
acid will be neutralized by water-rock reactions, where, for example, 
the Mg+2 and Ca+2 released supply cations that 
react with the dissolved CO2 to form carbonates.
    Even though the physical and hydrological conditions in the 
geothermal reservoirs are not the most favourable conditions for 
CO2 mineral sequestration, results of determination of 
calcite in high temperature geothermal boreholes can nevertheless 
provide critical background information for the planning of field-scale 
CO2 mineral sequestration experiments. Such determinations 
have been carried out in some geothermal areas in Iceland and suggest 
that a significant portion of CO2 is captured, and that 
experiments under more favourable conditions should be worthwhile 
(Armannsson et al. 2007).
    Planned studies of sequestration at Hellisheioi in Iceland will be 
done under more favourable conditions than in previous studies already 
carried out, i.e. at lower temperatures, and will be designed so as to 
obtain as much information as possible. The results of this experiment 
will not only be of use in geothermal studies but also to any emitter 
of CO2 that can use the results to devise a possible means 
of disposal of CO2 by sequestration in basalts. This is 
another area where US-Icelandic cooperation would be desirable.
 8. new technology developments--the next phase of scientific expertise
8.1 Deep Drilling
    Studies indicate that it would be possible to increase the output 
of high-temperature geothermal fields ten times, without increasing 
their area, by producing supercritical geothermal fluids, at higher 
temperatures and pressures and from much deeper wells than are 
currently used. Thus, the Iceland Deep Drilling Project (IDDP) is 
investigating the technical and economic feasibility of producing 
energy from such supercritical geothermal systems on land in Iceland, 
similar to those responsible for black smokers associated with mid-
ocean ridge hydrothermal systems.
    In Iceland this will require drilling to depths of 4 to 5 km in 
order to reach temperatures of 400-600C. It is estimated that wells 
producing supercritical fluid would have an energy output ten times 
greater than conventional shallower geothermal wells.
    This project is being funded by a consortium of three Icelandic 
energy companies, the US aluminium company Alcoa, and the Government of 
Iceland. If this project proves successful, it could lead to a major 
step forward in the economics of developing high-temperature geothermal 
resources by developing DUGRs worldwide.
    The IDDP has engendered considerable international interest. The 
International Continental Scientific Drilling Program (ICDP) and the US 
National Science Foundation (NSF) are contributing funds to this 
program. There could be a role for an interagency group of US 
organizations (NSF/DOE/USGS) to play in the IDDP. Similarly, Icelandic 
scientists and engineers could collaborate with these agencies in the 
investigation of DUGRs in high-temperature geothermal fields in the 
USA, for example at the Geysers Geothermal Field in California and in 
many other high-temperature systems in the USA.
    Drilling to produce a supercritical fluid of an unknown chemical 
composition presents a dilemma. The fluid need to be sampled and 
chemically analyzed before proper material with respect to scaling or 
corrosion can be selected for heat-exchangers or power generators. The 
choice of technology to be applied for power generation cannot be 
decided until the physical and chemical properties of the fluid have 
been determined. Nonetheless, it appears likely that the fluid will be 
used indirectly, in a heat-exchange circuit of some kind. In such a 
process the fluid from the well would be cooled and condensed in a 
heat-exchanger and then injected back into the field. This heat-
exchanger would act as an evaporator in a conventional closed power-
generating cycle. There are numerous opportunities for US agencies to 
participate in this advanced engineering project.
8.2 Hot Dry Rocks--Enhanced or Engineered Geothermal Systems
    During the last two decades or so, several projects have been aimed 
at heat mining by injecting cold fluid into hot rocks. Considerable 
work has been done on inducing steam production in declining 
operational geothermal fields by injecting cold water into deep 
boreholes, e.g. in the Geysers Geothermal Field in California. These 
heat-mining projects have operated under different names, such as ``Hot 
Dry Rocks (HDR)'', ``Hot Wet Rocks (HWR)'', ``Hot Fractured Rock 
(HFR)'', ``Enhanced Geothermal Systems (EGS)'' or ``Engineered 
Geothermal Systems (EGS)'', and have been tested to various extents in 
the USA, Europe and Japan. Heat mining by injecting cold fluid into hot 
rocks is common to all these projects. In Europe the hot rock 
temperatures tested at 4-5 km depths ranged from 200-300C; in the USA 
they were from 300-400C and above 500C in Japan.
    Recently, the IDDP added the acronym DUGR [for Deep Unconventional 
Geothermal Resources] to the list of acronyms above, in an attempt to 
distinguish geothermal reservoirs at supercritical conditions from HDR, 
HWR, HFR or EGS. DUGRs have temperatures in the 400-600C range, and 
can produce supercritical fluids, if permeable zones are intersected by 
drilling.
    The greatest unknowns in the DUGR systems are uncertainty about 
fluid composition and the permeability properties. We do not know how 
permeable fracture systems respond to production at semi-brittle 
temperatures, i.e. at 500-700C in basaltic rocks and at 400-600C in 
volcanic rocks of rhyolitic to intermediate chemical composition. If 
drilling a DUGR intersects a supercritical system of marginal 
permeability, then the possibility of using the EGS approach should be 
considered.
    Injection of cold water to induce fracture permeability (hydro-
fracturing) might be a more productive way of utilizing a DUGR system 
than simply attempting to flow the supercritical reservoir fluid 
directly. Given the much higher enthalpy of the DUGR systems, the power 
output available would be much higher than that produced by any EGS 
existing to date. The experience gained in investigating DUGRs in 
Iceland will be directly transferable to the USA.
8.3 Ocean floor drilling--Advanced technology
    Considerable advances have been made in drilling technology within 
the oil and gas industry by developing the technology in drilling what 
has been called multilateral completion of wells (branched or fingered 
wells). This technology has been developed in order to harness 
relatively thin oil-yielding zones, e.g. in permeable sandstone beds of 
only a few metres' thickness, at great depths beneath the sea floor.
    A similar approach, using the technology of multilateral wells, 
could open new dimensions in harnessing geothermal resources, e.g. in 
environmental sensitive fields, and should be considered closer by 
geothermal prospectors.
    The opportunity exists for a very comprehensive scientific 
programme, investigating the anatomy of a mid-ocean rift system by 
combining land-based and ocean-based deep borehole studies with 
complementary geological and geophysical and seismic imaging studies 
and putting the drilling activities into a broader regional geological 
context.
8.4 Technology projects--What is in the pipeline?
    There are numerous areas of research and development by the 
geothermal industry in the USA and Iceland where collaboration would be 
highly desirable. For example, deep drilling to produce high-
temperature and high-pressure hydrous fluid requires advanced drilling 
technology--special casing materials and advanced cementing techniques. 
Conventional and proven technology needs be improved.
    The most sensitive parts in a drillhole, with respect to its 
performance and lifetime for production, are the steel casings and 
cementing integrity. Improper casing selection and handlings, poor 
cementing jobs, or too frequent thermal cycling, may all lead to well 
failure. The casing in DUGR wells need be stressed to the limits of 
material tolerance due to the extremely high pressures and temperatures 
involved.
    Steam turbines for high-temperature and high-pressure supercritical 
steam require heat-exchangers for electricity production. Depending on 
the fluid geochemistry, advanced corrosion and scaling studies may be 
required before power can be produced economically from the DUGR 
systems. Cooperative research projects and pilot studies would not only 
be beneficial to US-Icelandic collaborators, but to the geothermal 
industry at large.
    Development and deployment of advanced downhole logging and fluid 
sampling tools for use at high fluid pressures and temperatures is 
needed to deal with the DUGR systems. Discussions about collaboration 
between Sandia National Laboratory (through the DOE) and the IDDP on 
this topic have been in progress since 2002. Unfortunately, this 
collaboration has not been realized yet due to lack of funding from the 
US side.
    However, a less ambitious collaboration for downhole tool 
development and testing has been established between Iceland and 
several European countries, funded by the European Commission. Some of 
the tool components to be used have been developed and tested by 
Sandia.
    At the moment, only a few of the available downhole tools so far 
developed can withstand the range of temperatures that will be 
encountered in the DUGR systems. Advances in high-temperature tool 
development and monitoring technique are badly needed.
    In addition to investigations and sampling of fluids at 
supercritical conditions, the IDDP will permit scientific studies of a 
broad range of important geological issues, such as investigation of 
the development of a large igneous province, and the nature of magma-
hydrothermal fluid circulation on the landward extension of the Mid-
Atlantic Ridge in Iceland.
    Furthermore, the IDDP will require use of techniques for high-
temperature drilling, well completion, logging, and sampling, 
techniques that will have a potential for widespread applications in 
drilling into oceanic and continental high-temperature hydrothermal 
systems.
    The addition of a scientific program to the industry-driven IDDP 
drilling venture has obvious mutual advantages. The IDDP provides 
opportunities for scientists to become involved in an ambitious project 
that has a budget larger than can be funded by the usual agencies that 
fund scientific drilling on land. In turn, the industrial partners will 
benefit from strong scientific contributions that will expand 
opportunities for innovation and provide a perspective that can be of 
critical importance in the context of poorly understood natural systems 
such as supercritical geothermal reservoirs. Clearly, improved 
collaboration between the USA and Iceland in these diverse scientific 
and technical areas will be mutually beneficial.

                               CONCLUSION

    I hope that in this testimony I have managed to demonstrate how 
geothermal resources can significantly contribute to the emerging clean 
energy economy of the United States and thus strengthen the security of 
the country.
    In order to achieve this goal in the coming years, cooperation 
between Iceland and the United States can play an important role. I 
have outlined a number of areas where such cooperation on technical, 
scientific and business projects is either already taking place or 
could be speeded up and enhanced with the creation of a supporting 
network. The result would be to enhance tremendously the utilization of 
geothermal power in the United States.
    In this process the US Senate and the House of Representatives 
could, and must, play an important role.
    I hope that my testimony and our willingness in Iceland to provide 
further information and to engage in the necessary cooperation will 
help the Congress in its important deliberations.
    This new energy cooperation between Iceland and the United States 
would be a great homage to our long-standing alliance and friendship.

 ATTACHMENT 1.--PERMANENT CO2 SEQUESTRATION INTO BASALT AT 
              THE HELLISHEIDI GEOTHERMAL PLANT IN ICELAND

    The reduction of anthropogenic CO2 emissions is 
considered one of the main challenges of this century. By capturing 
CO2 from variable sources and injecting it into suitable 
deep rock formations, the carbon released is returned back where it was 
extracted instead of freeing it to the atmosphere. This technology 
might help to mitigate climate change.
    Injecting CO2 at carefully selected geological sites 
with large potential storage capacity can be a long lasting and 
environmentally benign storage solution. To date CO2 is 
stored as gas in association with major gas production facilities such 
as Sleipner in the North Sea operated by Statoil and In Salah in 
Algeria operated by Sonatrack, BP and Statoil.
    The CO2 fixation project at Hellisheidi Iceland will on 
the other hand take place in a different geological media; the 
CO2 will be stored as solid calcium carbonate mineral in 
basaltic rock.
Why basalt and why Iceland?
    Basaltic rocks are one of the most reactive rock types of the Earth 
s crust. Basaltic rocks contain reactive minerals and glasses with high 
potential for CO2 sequestration. Basaltic rocks are common 
on the Earth s surface, for example the continental flood basalts of 
Siberia, Deccan plateau of western India, Columbia River basalt in 
north-western United States, volcanic islands like Hawaii and Iceland 
and the oceanic ridges. More than 90% of Iceland is made of basalt.
Natural processes
    The process, where CO2 is released from solidifying 
magma, reacts with calcium from the basalt and forms calcite, occurs 
naturally and the mineral is stable for thousands of years in 
geothermal systems (Figure 1*). Chemical weathering of basalts at the 
surface of the Earth is another example of carbon fixation in nature. 
The proposed experiment will aim at accelerating these natural 
processes.
---------------------------------------------------------------------------
    * Figures 1-2 have been retained in committee files.
---------------------------------------------------------------------------
The project at Hellisheidi
    A mixture of water and steam is harnessed from 2000 m deep wells at 
Hellisheidi geothermal power plant. The steam contains geothermal 
gases, i.e. CO2. It is planned to dissolve the 
CO2 from the plant in water at elevated pressure and then 
inject it through wells down to 400-800 m, just outside the boundary of 
the geothermal system (Figure 2).
Zero emission
    It shall be kept in mind that the amount of pores in the basaltic 
rock is limited. Therefore, the results from the Hellisheidi experiment 
will not safe the world s climate. However, the experiment might 
demonstrate that a zero emission geothermal power plant is a 
possibility and even the option to store the main part of Iceland s 
CO2 emission in a safe way. This technology, if proved 
successful, can then be exported to other basaltic terrains of the 
Earth.
Project consortium
    The University of Iceland, Reykjavik Energy, University Paul 
Sabatier in Toulouse, Columbia University in N.Y., the Icelandic 
GeoSurvey and Lawrence Berkeley Laboratories in California have 
established a research group. Reykjavik Energy, one of the world s 
leading companies in harnessing geothermal energy, will provide the 
infrastructure of its geothermal fields at Hellisheidi, and create a 
natural laboratory for the research. The area has been extensively 
studied.
    The research will be a combined program consisting of field scale 
injection of CO2 at Hellisheidi, laboratory based 
experiments, large scale plug-flow experiments, study of natural 
CO2 waters as natural analogue and state of the art 
geochemical modelling.
Knowledge for the future
    The bulk of the research will be performed by PhD students at the 
University of Iceland, thereby generating the human capital and 
expertise to apply the advances made in the project in the future.
attachment 2.--tentative budget for us--iceland cooperation in the iddp
   Desired action: launch a US-Iceland collaboration 
        immediately.
   Funds needed--for the next 5 years--25 million USD 
        (approximately 5 million a year).
   US--Iceland cooperation by the DOE and ISOR, with 
        involvement of SANDIA and other laboratories, institutes and 
        universities cooperating to support the technology of the IDDP.
   Specific areas of collaboration:

    --Develop and deploy advanced in high-temperature down hole logging 
            tools and techniques and downhole fluid samplers.
    --Develop high-temperature measurement while drilling tools (MWD) 
            to monitor well conditions during drilling.
    --Improve drilling at high-temperatures, select and test Drill 
            Bits--e.g. PCD bits, and other drilling methods under 
            development, e.g. thermal spallation. Improve continuous 
            coring methods, e.g. with respect to penetration rate and 
            cooling efficiency.
    --Fluid Handling and Evaluation--harnessing natural supercritical 
            fluids for power production and extraction of valuable 
            minerals and/or metals.
    --Reinjection-sustainable harnessing of geothermal resources--
            develop reinjection schemes in deep seated reservoirs. 
            Develop evaluation methods.
    --Material sciences--casings and wellheads, cements, heat 
            exchangers, turbines.

    As relevant, items 1 to 5 can be described in more detail, the 
scope of the research defined, potential partners specified, and the 
details of budget required for each task estimated. Part of the 
research and tool testing can be deployed in the first IDDP well in 
FY2009. The well will be drilled in 2008 (August-December), flow tested 
in 2009 (after heating up), and a pilot plant engineered and tested 
from 2009 to 2015. IDDP wells 2 and 3 will be drilled in 2009 and 2010, 
flow tested and studied for energy and chemical production as relevant. 
The IDDP mission could be completed in 2015. The range of fluid 
compositions that will be produced will range from dilute modified 
meteoric waters to modified seawater.
    If the first well yields promising results the US-Iceland 
collaboration could begin planning attempting the same approach in the 
USA in FY 2011.

    The Chairman. Thank you very much, President Grimsson. 
Thank you for your oral testimony, and also the excellent 
written testimony you've provided. It is very extensive and in-
depth.
    Let me also thank you publicly for your leadership in 
focusing our attention on this subject. As you know, Congress 
is pulled in many directions, and I think that the tendency in 
Washington is not to maintain a focus on any one subject very 
long. I think what you've been able to do in Iceland is keep a 
focus on this issue of developing renewable energy resources, 
and particularly geothermal resources over a substantial 
period, and obviously it's paid off very handsomely for your 
country.
    Let me ask if you could give us any more information about 
the potential areas of cooperation that you mentioned, between 
our two countries, which are very good. To what extent is there 
an international consortium in existence, either formally, de 
facto, or in connection with geothermal research and 
development? Are there substantial efforts going on in other 
parts--in parts of Europe, in Australia, you mentioned China--
perhaps you could give us a little insight into that?
    Mr. Grimsson. Thank you very much, Mr. Chairman. Let me say 
that, perhaps the benefit that we in Iceland have derived from 
other countries not having taken sufficient interest in this 
power and energy resource over the past half a century or so, 
was that it enabled us to develop a technological lead in this 
area, which we have now, in recent years, used as a base to 
create partnerships with many different countries in the world.
    I mentioned this fascinating project in China--it has been 
enormously successful. It creates a potential for transforming 
the heating system in most of the major Chinese cities from 
coal and oil, over to clean energy, geothermal power, and 
thereby more or less cleaning up a large cause of the pollution 
in the Chinese cities.
    The third-largest energy company in China, Sinopec, has had 
a number of dedications to my country. Next Tuesday, I will 
meet with President Hu of China, to discuss how this 
corporation should be taken further.
    It's absolutely clear that China has now woken up to the 
great potential that the country has in the field of geothermal 
power, and the Chinese leadership is determined to utilize that 
potential.
    In addition, we have started such a corporation in Germany. 
Many people wouldn't have thought that Germany could be a 
potential country from geothermal energy contribution, but that 
is definitely the case. Similarly, man Central and Eastern 
European countries, as well as countries in Central America, 
Russia, as well as India.
    In fact, there is now almost endless traffic of Energy 
Ministers, and experts and business leaders to my country to 
try to get access to our limited manpower, because we are a 
small country and there's a limited manpower that we have in 
this area.
    But the most recent addition is the entry of major banks 
and investors and corporate players into this area, because 
they have finally realized that geothermal, although expensive 
in the beginning can, in the long run over more than a century 
or so from the same portholes or so, if they are managed 
correctly, provide an extremely profitable long-term energy 
operation which is safe and secure and cost-effective. The 
reason why they want to do it, is that the banks and the 
investment companies have come to the conclusion that 
geothermal power is over 30 percent more profitable than any 
other form of clean energy today.
    I think the strong interest from the business and the 
financial community is, perhaps, the best evidence of the 
extraordinary profit-making capability of this resource, if it 
is done in the right way. Part of the reason why electricity 
here in the United States from geothermal power plants is so 
much more expensive than the electricity from geothermal power 
plants in Iceland--in Iceland it's about 2 or 3 cents per 
kilowatt, whereas I believe it's about 7 or 8 here, in the 
United States, on the average--is that the Icelandic power 
companies use the geothermal source for many other business 
ventures. So, the electricity profits they get from that single 
resource, is just a part of their entire profit portfolio. That 
is why they can offer the electricity at a lower price.
    So, I have now seen, in the last few years, an emergence of 
a strong international interest in this. I would even say that 
there is already a race on to get access to the scientific 
manpower, the technological capabilities, that are available in 
this area.
    Because you need scientific manpower in order to be able to 
harness this resource, there is a limit provided by the 
availability of the scientific cooperation in this area.
    Therefore, support for universities, research institutions, 
and long-term technical programs are an essential part of this 
success. We established in Iceland, in cooperation with the 
United Nations, almost--more than 25 years ago, the United 
Nations Geothermal Program. It wasn't intended for developing 
countries--not European countries or the United States, but we 
have trained almost 400 technical experts from many different 
parts of the world.
    That network is now a key contributor to the success of the 
Icelandic cooperation with these countries. We want to do the 
same, from a little bit different perspective, with the United 
States in the coming years.
    That's why I have issued, in addition to people in the 
Senate, a number of key American universities and technological 
institutions. That's why the Department of Energy sent a 
delegation to Iceland a few months ago, and we welcomed them 
with a warm heart and a strong interest. I believe there is a 
great scope for cooperation between the Department of Energy 
and the United States, between different State governments and 
city governments all over the United States, and also between 
business corporations, as well as universities and research 
institutions.
    The Chairman. Thank you, thank you very much.
    Senator Murkowski.
    Senator Murkowski. Thank you, President Grimsson. Just 
listening to your testimony, again, makes me energized--excuse 
the pun--about what the potential is for geothermal. It makes 
me frustrated that we have not done more in this country to 
advance it. To have your leadership on this issue, I think is 
absolutely imperative.
    You've given us some figures here this morning that ought 
to wake everybody up. If we're concerned about the initial high 
cost, the up-front cost, to invest in geothermal, your 
statement that geothermal ends up being 30 percent more 
profitable than any other energy source out there, ought to get 
the attention of those in the investment community.
    As you know, in Alaska, that's been one of our struggles, 
our issues--we've got a lot of potential, we haven't been able 
to match up those with the investment and the capital side of 
it with the potential out there.
    You mentioned the aspect of cooperation, and how Iceland is 
in a position to provide levels of assistance, and I appreciate 
how you have detailed all of those. I am very encouraged that 
you will be up in my State in just a couple of weeks here, 
along with Secretary Karsner, looking at some of the issues of 
energy in the Arctic, and how we can further advance, and I'd 
like to continue our conversation at that time.
    I do want to point out, I guess, to the group that's here 
and those that are paying attention to this issue--in many 
ways, Iceland and Alaska are very similar, being Arctic areas, 
small populations, reliant on fossil fuels to power us from the 
beginning. But also recognizing that many things have been put 
off limits, because our population is small in number, and our 
expenses are so incredibly high.
    But your point, to me, that other nations are looking to 
Iceland as a place to do their business, not because you have a 
great deal of manpower, or a labor source, but because you have 
a reliable, affordable source of energy. So that, whether 
you're a high-tech company that can basically do business all 
over the globe, instead of choosing a country that has a great 
deal of human resource, these businesses are now choosing to 
locate in place where the energy resource is there.
    In several of my communities, I've got a grouping of about 
17 communities out in Western Alaska, we're looking at a 
project there. They're currently paying, on average, about 30 
cents a kilowatt hour for their energy costs. If we can put 
together a project that works for these 17 communities and 
network them, and bring them to a point where energy is now 
affordable, there's a level of sustainability out in villages 
that has never existed before.
    So, I get energized, and I forget to ask my question. Let 
me ask you, you mentioned the concept of dry, hot rock 
development, and how one of the things that we might seek to do 
in terms of cooperation is further research in this area. Do 
you see this as economical in the future, as a power source, 
this dry rock? Dry, hot rock development? Or, is that still one 
of those that we need to spend a little more focus on, in 
developing that technology?
    Mr. Grimsson. Let me first, Senator, pay tribute to our 
cooperation and your friendship, toward me and to Iceland in 
this area ever since we first met in Alaska some years ago. As 
you know, I have, for a long time, been a strong believer that 
geothermal could be extraordinarily important for Alaska.
    Perhaps, also, because it can feed the smaller communities 
in many different ways, and it can solve the energy problems, 
and help those communities to move away from oil, over to a 
cleaner, much cheaper energy base, and thereby strengthen--not 
only the community, but the economic potential of those.
    We will be very happy--and I know the energy companies and 
the investors from Iceland are quite interested in exploring 
such cooperation with Alaska. You have been so kind--as well as 
my friends in Alaska--to invite me to come to the Arctic Energy 
Conference that you were hosting in Alaska next month. That 
might give us opportunities to explore this potential for 
Alaska, in a systematic way.
    Let me also add that, here in Washington, one tends to 
forget that the United States is a Northern, and Arctic 
country. I can understand that, given the heat and the climate, 
and the humidity.
    But one of the effects of President Putin putting that 
metal flag on the bottom of the Arctic sea bed was to wake 
everybody up to the enormous energy resource and the energy 
potential of the Arctic on the Northern regions. It's 
estimated--and I have been saying that, said it up in Alaska 
about 5 years ago, but nobody wanted to listen until now--but 
about a quarter of the unused energy resources in the world are 
in the Arctic, on the Northern territories.
    That is also an area where, I believe, my country or the 
United States--both being Arctic and Northern countries--could 
have extensive cooperation.
    In addition, and I think that's also an encouragement for 
Alaska--what has happened in the last year or two is that 
companies of many different types, industrial companies, 
software companies, internet companies, now want to gain access 
to clean energy resources on a long-term basis. We tried for 25 
years, in Iceland, to get the second aluminum company to come 
to our country, and there were no takers.
    But now, we are faced with what I call a queue of foreign 
companies and corporations, not only in the aluminum sector, 
but also in the internet, and the information technology 
sectors. Companies like Microsoft, Intel, Cisco, Google and 
others. They are looking forward to looking to exploring the 
potential of a long-term access to clean energy resources.
    That has made me conclude that those regions, or States 
within the United States or countries in the world that can 
offer long-term access to clean energy resources of this kind, 
will be almost magnets for corporate investments in the years 
and the decades to come. That is a very important addition to 
the energy consideration. That it will strengthen the 
competitive position of the respective cities, regions and 
states that are fortunate to be blessed with this resource.
    So, there is a completely new business environment out 
there. It's important for my country, and for the Senate, and 
for the U.S. Government to take that into consideration. 
Everyone wants to combine clean energy usage with the business 
opportunities of this new century.
    Let me make it clear, Senator, that what I said before that 
was a geothermal power is--according to some banks and 
investors--more than 30 percent more profitable than any other 
form of clean energy--not, perhaps, of the entire energy field, 
but of clean energy.
    With respect to your question of dry, hot rock, it is 
indeed one of the fascinating key areas of scientific and 
research estimation. In many different parts of the world, 
people are looking at that possibility, and then what I've 
sometimes said, simply harnessing the fire inside. We tend to 
forget that we sit on top of a huge fireball. That is probably 
the greatest energy resource that the planet is blessed with. 
Our task is to find the technology to harness that fire, which 
is inside the planet. We have made enormous progress in the 
last 30 or 40 years, but we are still in that process of 
technological innovation. The dry, hot rock area is one such 
exploratory phase which I believe offers a lot of 
possibilities.
    I also mention another one which I have not mentioned this 
morning, and that is geothermal drilling on the seabed. There 
are, of course, geothermal resources on the bottom of the ocean 
floor. With the technology derived from the oil and the gas 
industry in recent decades, getting oil and gas up from the 
seabed, we have now, a much stronger technological possibility 
to harness the geothermal resources under the seabed.
    That could be another area where cooperation between the 
United States and Iceland and other countries could, indeed, be 
very profitable, in addition to the deep drilling project, 
which I mentioned before. Consists of going as far down as 5 
kilometers to an area where there are between 400 to 600 
degrees heat. To examine the combination of pressure and heat--
how that can be utilized.
    So, there are fascinating opportunities out there, and I 
believe strongly that if we play it right, the support from the 
Senate and the Department of Energy and Russian, and Iceland 
and some other countries as well, we could see an extraordinary 
technological progress in the next 5 to 10 years in this area.
    The Chairman. Before we continue with the questions, 
Senator Domenici, did you wish to make an opening statement? If 
so, please go right ahead.
    Senator Domenici. Senator, I'll wait for my turn, and to 
vote.
    The Chairman. OK, fine.
    Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman.
    President Olafur, again, it's great to have you here, and I 
want you to know that I'm very interested to hear more about 
the partnership, partnership of the public and private sectors 
in Iceland--during the early days of research and development 
and also during the days of exploring the potential of 
geothermal in Iceland, that's one of two questions. I 
understand the high potential of geothermal is risk-heavy and 
it requires much money, involves initial investments. Iceland 
overcame those risks, I understand, and challenges, and have 
shown the world that this has paid off. This is why I'm 
interested in hearing about your partnership of public and 
private sectors.
    The other question is--which is important to us--at what 
point did funding shift predominantly to the private sector in 
these partnerships? So that, first there's the partnership, and 
the other is a funding shift predominantly to the private 
sector.
    Mr. Grimsson. Thank you very much, Senator. Let me first 
address what you said about the great risk involved in this 
area.
    Maybe 20, 30, 40 years ago there was considerable risk 
involved. But now with the advance in the scientific knowledge 
of geologists and other scientific expertise in this area, if 
there is a sufficient scientific preparation for the drilling 
projects, the risk has been reduced considerably.
    So, the combination of sound, preparatory science, before 
you start the costly drilling can reduce the risk to such an 
extent of now our energy companies very seldom come out with a 
zero result from their drilling. This was not the case 30 or 40 
years ago. So, it's important to realize that the risk has been 
reduced considerably. Although the initial cost in the drilling 
is considerable, that is offset by--once you built the station, 
there is very little you have to do to it, for decades.
    So, that is why the municipalities in Iceland that built 
the geothermal power plants are very reluctant to sell them. 
Because it enabled the municipalities to lower the taxes on the 
citizens, because they get so much profit from the geothermal.
    In my country, the development of the geothermal was 
locally based. These were initiatives taken by local counselors 
in small towns, in fishing communities who simply wanted hot 
water for their houses. The famous Blue Lagoon, close to the 
fishing town of Keflavik to Vik, is a by-product of seven local 
counselors--fisherman and workers deciding in the local council 
30 years ago, so they wanted hot water for their houses.
    So, there is a series of locally owned municipal geothermal 
companies, that have grown up in different parts of the 
country, whereas the hydro-sector has been more driven by the 
State. But, it's more local initiatives that have driven the 
geothermal sector.
    Of course, the State has played a role that is primarily 
through the drilling. But that company has now been privatized. 
So, the Iceland Drilling Company is now one of the largest 
local drilling companies in the world for the purpose of 
geothermal and it's a completely private enterprise, doing this 
solely on a profit-making basis, without subsidies to the 
company itself.
    There has been some difficulties for the municipally owned 
geothermal energy companies to find ways, how do they allow 
themselves to partner up with banks and investors in order to 
create private entity enterprises, both in Iceland and 
elsewhere. But that's just now been primarily sold.
    This year, we have established two major investment 
instruments in this area that intend to operate globally, on a 
business basis. One is Geysir Green Energy, and last month--no, 
sorry, this month--Goldman Sachs became one of the shareholders 
in the Geysir Green Energy Company which is jointly owned by 
the local geothermal company in Southwestern Iceland, the 
Icelandic investors and one of the Icelandic banks.
    The other is Reykjavik Energy Invest, which was recently 
founded by the Reykjavik Energy Company in cooperation with 
some Icelandic investors and financial authorities with the 
purpose of inviting both American and other investors to join 
in.
    So, out of what begun as a municipal-driven activity 40 or 
50 years ago, have now developed major financial instruments 
that intend to become major players on a business basis, solely 
in the United States, in China, in Russia, in Indonesia, in 
Western Europe, as well as Central and Eastern Europe. I have 
come as far as to say that if we get it right, we will get more 
profit and greater revenues for my country through foreign 
activity outside of Iceland in this area, than we will probably 
get from any other sector in our economy. I know it's a strong 
statement, but I believe in the light of the energy 
requirements of the world, this is probably the most exciting 
and the strongest profit-oriented business endeavor that we can 
enter in to.
    So, when I hear people here in the United States say, 
``Geothermal is costly, it's difficult, it's risky,'' and so on 
and so forth, I advise you to take a look at how we here in 
Iceland have turned this into an extraordinarily profitable 
business and intend to stay in it for a long while. You might 
doubt my words, but talk to the investors and the banks who are 
risking their money in this field. They wouldn't be doing it, 
unless they thought they would get great profit out of it.
    The Chairman. Thank you.
    Senator Domenici.

   STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR FROM NEW 
                             MEXICO

    Senator Domenici. Mr. Chairman, I have a very brief opening 
statement, and I would ask that it be made part of the record 
as if read.
    The Chairman. We will include it in the record.
    Senator Domenici. Thank you very much.
    Mr. President, let me thank you, again, for coming to 
testify. Your information will be very useful to the committee 
as it works to address our geothermal opportunities.
    I think you know that both the Chairman and I come from New 
Mexico. There has been a great deal of money that has been 
spent at Los Alamos National Laboratory, where they went to 
very deep places under the surface to seek geothermal and to 
try to bring it up. They went through hot rocks, and put 
substance in to see if they could generate sufficient heat to 
the surface, so that it would become viable. My understanding, 
and I guess we will hear that from a witness that follows, Mr. 
Chairman, is that program didn't work for Los Alamos--at least 
from what I understand. We'll be glad to see what they did, or 
didn't do, that would change the situation.
    In your testimony, you spoke about making loans to 
companies for exploration and drilling. Should the drilling 
fail to yield the expected results, the loans convert to 
grants--is that right, so far?
    Mr. Grimsson. Mm-hm.
    Senator Domenici. On the surface it would appear that you 
are providing a grant program for those who fail. Perhaps you 
could give us a little bit more information to clarify exactly 
how this program works. Is that how it works, or did I get it 
wrong?
    Mr. Grimsson. In my country now, the new geothermal 
activity is entirely driven by the energy companies themselves. 
This is done within the auspices of the energy companies alone, 
they don't need any grants or support for it.
    What we have, however, done is to establish the so- called 
Iceland Deep Drilling Project, which is a public/private 
partnership with some money from the Icelandic State, some 
money from the Reykjavik Municipal Energy Company, but also 
some private funding from, like, Alcoa, the aluminum company 
and other private resources, with the purpose of exploring the 
potential--as I said before--of harnessing an area of, between 
400 to 600 hot, degrees hot geothermal resources.
    That would be an entirely new phase, if that is successful, 
of the whole geothermal potential--not only in Iceland, but in 
the United States and all over the world.
    So, I think, Senator, we have to distinguish between energy 
projects that are based on the ongoing technology, and what we 
already know now.
    Although incentives might be given, for example, in this 
country here to different parts of the United States that are, 
perhaps, hesitant to start exploring this possibility, or even 
take the small communities in Alaska, the villages and so on--
on the basis that if it is successful, then they will repay the 
whole thing back.
    So, I believe, in the long run, you don't have to look at 
this as a State-subsidized kind of business. There might be 
areas of scientific and technological exploration, or even some 
drilling explorations tat are part of a research storage 
program, in the same way as you can say that Los Alamos 
Laboratory were in the beginning, used for producing the bomb, 
and so on, but have moved from that area over to geothermal and 
other contribution from a scientific point of view.
    But, in this respect, I have to emphasize, however, that 
the greatest problem we have found in cooperation with other 
countries and partners is to let them realize that the more 
that you make a successful geothermal business, it is as 
important to manage the resource for decades after the drilling 
and the establishment of the turbines, and so on.
    The reason why some of these energy projects, geothermal, 
have failed in the United States--have been closed down--was 
that there was not enough attention paid to the management of 
the resource, it was over-utilized over a short period, because 
the owners didn't realize that you have to have a level of 
sustainability in order to maximize your profit.
    The biggest problem we had with the Chinese in explaining 
to them the nature of the geothermal business, was to let them 
realize this managerial aspect of the resource. Because they 
only looked at this as engineering corporation, in terms of the 
drilling and the turbines.
    So, it is the comprehensive view, the entire business 
perspective of the long-term operation of it, which is 
important. Even if there are some subsidies and grants in the 
early stages, they should not be a hindrance for the overall 
long-term development of the resource.
    Senator Domenici. Mr. President, let me say to you, once 
again, we appreciate your bringing this information to us, and 
the exchange of expertise between your experts and ours--the 
few that we have--will certainly be something we will look 
forward to as a result of this bill.
    Mr. Grimsson. If I can just say, Senator, some years ago, 
risk insurance either through tax incentive or other supporting 
mechanism was, perhaps, an important element in the development 
of this resource, but I don't think it is any more. I think now 
the companies, the investors are sufficiently advanced that 
they don't need any risk insurance in order to enter this in a 
big way.
    Senator Domenici. That's good. Thank you very much.
    [The prepared statement of Senator Domenici follows:]

    Prepared Statement of Hon. Pete V. Domenici, U.S. Senator From 
                               New Mexico

    Good morning. I want to add my welcome to President Grimsson of 
Iceland. You've traveled far, and you come with decades of experience 
in the development and use of geothermal resources.
    I also want to welcome our other witnesses who've come to help us 
assess S. 1543, the National Geothermal Initiative Act of 2007.
    Rather than take a lot of time for a lengthy opening statement, I 
will just note two things:

          1. Geothermal energy is an important component of our quest 
        to develop every conceivable domestic source of energy; and
          2. That said, some, including myself, have a number of 
        concerns about the specifics of this particular bill. The 
        Administration is going to testify ``the goal may be 
        technically unattainable given the timeframes specified'' and I 
        hope we can work together to address this and other issues.

    However, I look forward to working with you, Chairman Bingaman, to 
address those concerns as we work towards a mark-up of this 
legislation.
    I know that time is short and we have a large number of witnesses 
with several lengthy statements to be made. I will likely submit most 
of my questions for the record to help keep this hearing on time.
    Thank you Chairman Bingaman.

    The Chairman. Thank you very much.
    Senator Tester.
    Senator Tester. Thank you, Mr. Chairman.
    I want to echo Senator Murkowski's remarks that your 
testimony is exciting, it gives us hope, and you're well on the 
way to having 70 percent of your energy from renewable 
resources, you're well on the way to zero emissions, and you've 
done it. I mean, that kind of shoots holes in any arguments 
that we can't do it, if you've done it, we can. So, I want to 
thank you on that.
    Many of my questions have been answered, but I do have a 
couple. That is, you come from a different perspective, you've 
developed some partnerships with the United States. Have you 
noticed any regulatory or business barriers in this country to 
developing geothermal energy?
    Mr. Grimsson. There might be some. Although I know a lot 
about this business, there are some areas where my knowledge is 
limited. Maybe you could, perhaps, talk to representatives 
within the United States about this regulatory framework.
    But, in order to proceed in a successful way, what I think 
we require is legislative support from the Congress. We need 
support from the Department of Energy. But, above all, we need 
strong interest from respective States, or cities or regions 
within the United States, because it has to be regionally and 
locally driven. That is the nature of this resource. If the 
interest is there, from the State governments and the city 
governments, I don't think there is a regulatory problem.
    We are, for example, now engaged in three geothermal 
projects in California. They are not big, but they are the 
first geothermal that the Icelanders entered into in 
California, including providing a geothermal re-heating system 
for the ski resort of Mammoth. So, maybe Senator, you can come 
skiing to California and relax in the hot water provided by 
those resorts in the future.
    Senator Tester. The latter rather than the former would be 
better, yes.
    Mr. Grimsson. But the second is geothermal energy project 
within a National Park in California. I think that bears 
witness to the environmental element of this geothermal 
resource that California has allowed, such a power plant to be 
built within a National Park.
    So, there might be some fine-tuning of the regulatory 
framework or the legislative framework and so on, but by and 
large, I think we need a strong support from the institutions, 
and then let the business sector run with the ball.
    Senator Tester. You had also spoke of, in your testimony--I 
think there were seven points--one of them was cooperation for 
higher ed and research institutions with Iceland and the United 
States, as well as banking. It makes sense. I was just 
curious--is there that kind of partnership now, and how 
extensive is it?
    Mr. Grimsson. Let me also pay tribute to what we have 
learned from the United States in this area. Many of our most 
foremost experts have been trained, and educated here, within 
the United States. I think it's important for you to realize 
that the reason that the United States--you have enormous 
resources of knowledge and experience in this area, it's just a 
question of putting it together in a different way, and giving 
it a different priority. Icelandic scientists have, for a long 
time, cooperated with research institutes and universities and 
other bodies within the United States Some of our most foremost 
people have also stayed within the United States for a long 
time.
    We have cooperation with U.S. scientists and official 
bodies in the Icelandic Deep Drilling Project, we have 
cooperation with the Lawrence Livermore Laboratory. There was a 
tester who led the very distinguished MIT report in this area 
has, in the recent months, established cooperative links with 
one of our major universities in this area.
    So, there is already a network in place. But, it has not 
been given the sense of priority, either from Congress or, with 
all due respect, perhaps until now, recently, from the 
Department of Energy. Also, different State governments, or 
city councils within the United States could do more.
    But, if you succeed in harnessing the great rush of all the 
knowledge you already have in the United States, in cooperation 
with us in Iceland and others, I think you can have enormous 
progress in this area, in the coming years.
    We have discussed with Under Secretary Karsner the 
possibility of, perhaps, doing a formal agreements between 
Iceland and the United States, modeled on the framework which 
has already been made between Sweden and the United States in 
this area.
    As I said in my opening statement, there's a very strong 
interest in my country, of the scientific community, from the 
authorities, from the business community to strengthen our 
cooperation with the United States and we see that as a 
fascinating continuation of our alliance and strong friendship 
for more than half a century.
    Senator Tester. Thank you President Grimsson for your 
leadership and your vision. I very much appreciate it.
    The Chairman. Senator Barrasso.
    Senator Barrasso. Thank you very much, Mr. Chairman.
    Mr. President, I was curious, you talked about 
CO2 capture, and a new way of disposing of the 
carbon dioxide, I think you said into rock, mineral 
sequestration, underground storage, and I noticed you had a 
couple of pages in the report, one toward the end and one at 
the very end. Could you give us a progress report, if you 
could? You talked--there's mention of planning of a full-scale 
CO2 mineral sequestration experiment, and how that's 
developing and how you see this going down along the line?
    Mr. Grimsson. Thank you very much for mentioning that, 
because I have taken a strong personal interest in this 
project. It was, the beginning of it was a scientific 
partnership that I helped to create between prominent 
scientists from Columbia University, and the leaders of the 
Icelandic scientific community in this area.
    The American leaders on this project have been Professor 
Klaus Lackner, and Professor Wally Broker of Columbia 
University who partners up with professors and scientists of 
the University of Iceland.
    Then the Reykjavik Energy Company agreed to make the 
portholes available for this experiment. According to these 
prominent scientists--and I have to take their word for it, 
because it's not my expertise. The experiment is based on 
taking CO2 from the geothermal emission in the 
beginning, pump it down into the portholes where it will mix 
with the basalt layers, and through chemical processes, turn 
into solid rock. I have a brief description here on this one 
piece of paper on this project which I might leave with you 
afterwards.
    Another element of this project is the technology being 
developed in Arizona to pump CO2 from the atmosphere 
and turn it into such a substance that it can also be pumped 
down into the ground.
    There is, furthermore, the third dimension in this project 
is to take the exhaustion from aluminum smelters and other such 
industrial plants, and let them also mix up with the basalt 
layers, and turn into solid rock.
    I think I'm correct in saying that all other carbon 
sequestration projects in the world run the risk of the 
CO2 escaping sooner or later into the atmosphere. 
This is, perhaps, the only extensive scientific project based 
on the experiment of turning it into a solid substance, where 
it will exist down there, perhaps, for thousands of millions of 
years. Will it work? I don't know. But we'll know in 4 to 5 
year's time.
    My answer has been that, I doubt if these world- class 
scientists would be spending their effort or risking their 
reputation on this project, because it's--as you can hear, a 
high-profile, exciting project. If they can believe there is a 
reasonable chance of succeeding, this--the technological 
machine to take the CO2 from the atmosphere has 
already been developed in Arizona. Now we have been discussing 
to bring it to Iceland to test it in different weather 
conditions than in Arizona. Since the basalt layers exist in 
Russia and the United States, India, as well as in Iceland, you 
have to be sure that the machinery will work in many different 
weather conditions.
    But I have said so, and I will repeat it today, that if it 
succeeds, it's probably the most revolutionary contribution to 
the CO2 problem from a single technological 
innovation that we could have. But, it is also an excellent 
example of what a cooperation between the United States and my 
small country could contribute of global relevance, by putting 
our best scientists and the best American scientists with 
strong corporate and financial support from the business 
community, and make them work together.
    I will be happy to share with you that information, and 
provide you and others on the committee with more extensive 
information about this.
    Senator Barrasso. Thank you very much, Mr. President.
    Thank you, Mr. Chairman.
    The Chairman. Again, Mr. President, thank you very much for 
being so generous with your time, and expertise on this 
important issue and you've done a good job on focusing our 
attention on the subject, and we hope we can make serious 
progress and follow through with some of your recommendations.
    Unless any other member has another question, why don't we 
thank you and then go to our second, and then our third panel 
after that.
    Mr. Grimsson. Just let me thank you, Senator, and the 
committee for the honor you have given me and my country for 
asking me to come here. I think it is testimony to what has 
been achieved in my country by scientists and the researchers 
in municipalities and local councilors, as well as governmental 
leaders over the last 50 years. So, by coming here today, I am 
bearing a witness to a long history of many people who have 
combined to make this a successful effort.
    If I may conclude by inviting the committee to visit my 
country and take a closer look, and find out that what I have 
really told you makes sense on location, in Iceland. We are 
proud to host the astronauts who went to the moon for the 
training session before the space program was successful, we 
will be happy to host the committee in the same spirit for this 
new, fascinating journey for clean energy in the United States.
    The Chairman. Thank you for that very generous invitation. 
We will try to take you up on it. Thank you.
    Mr. Grimsson. Thank you very much.
    The Chairman. Our second panel is the Honorable Alexander 
Karsner, who is the Assistant Secretary for Energy, and Dr. 
Mark Myers, who is Director of the Department of Interior 
Geological Survey.
    All right, Thank you both for being here. We will start 
with you, Secretary Karsner, and we appreciate your willingness 
to testify on this important subject, you're a frequent visitor 
to our committee, and we're always glad to see you, so go right 
ahead.

  STATEMENT OF ALEXANDER KARSNER, ASSISTANT SECRETARY, ENERGY 
     EFFICIENCY AND RENEWABLE ENERGY, DEPARTMENT OF ENERGY

    Mr. Karsner. Thank you, sir.
    Mr. Chairman, members of the committee, thank you for the 
opportunity to appear before the committee today to provide the 
Department of Energy's views on S. 1543, the National 
Geothermal Initiative Act of 2007. It's always an honor to 
appear before this committee, but let me say, it's particularly 
a pleasure today to be testifying after President Grimsson who 
has been instrumental in shaping much of my thinking on the 
subject of geothermal.
    You all know that I was an Air Force brat for most of my 
youth, so I grew up in Kirtland, and Lowry and Carswell and 
places like this, but was very familiar with Kiler in Iceland, 
and the security legacy relationship we've had there. A new era 
of energy security can be born out of this alliance with 
Iceland and so I'm very enthusiastic and honored to be 
testifying after the President.
    Turning now to the bill before the committee today, S. 
1543. It establishes a national goal of achieving 20 percent of 
total electric energy production in the United States from 
geothermal resources, not later than 2030.
    Additionally, the legislation directs the Secretary to 
establish a geothermal research, development, demonstration, 
commercialization, outreach, and education program in support 
of this 20 percent national goal.
    While the Department shares the committee's interest in 
rapidly accelerating market penetration of all renewable energy 
technologies, including geothermal--this particular goal may, 
in fact, be technically unattainable within the timeframe 
specified.
    Generating 20 percent of our Nation's electricity from 
geothermal resources would require in excess of 165 gigawatts 
of geothermal power plant capacity by 2030, based on the Energy 
Information Administration's (EIA) reference case, Electricity 
Demand Forecast.
    In 1978, USGS National Geothermal Resource Assessment 
estimated 23 gigawatts of estimated conventional geothermal, 
also called hydrothermal technology, that can be developed for 
electricity. The difference of more than 142 gigawatts would 
have to come from new discoveries, conventional resources that 
were not viable at the time of the 1978 assessment, and 
unconventional means, such as enhanced geothermal systems 
(EGS), co-produced fluid from oil and gas wells, and 
geopressured, geothermal resources, as well as the avoided 
electricity use from heat, and heat pump applications. With the 
exception of one small co-production generator, none of these 
unconventional resources are currently being used to generate 
commercial power in the United States.
    A recent report by the Massachusetts Institute of 
Technology, ``The Future of Geothermal Energy,'' estimates that 
100 gigawatts of electricity could be, in fact, installed by 
2050 using EGS technology.
    Again, while the Department supports the intent of the 
legislation, there are significant concerns with the 
feasibility of the national goal set out in S. 1543. The 
Department looks forward to working with this committee to 
resolve these and other technical concerns with S. 1543.
    Since the founding of the Department of Energy, the agency 
has supported geothermal research and development. Over that 
period, a number of key accomplishments have contributed to 
increase commercial development of hydrothermal resources, to a 
point where today it has, in fact, reached market maturity. 
Favorable provisions of the Energy Policy Act of 2005, and 
other Federal and local incentives encourage energy to develop 
hydrothermal resources. These include an updated resource 
assessment, a Programmatic Environmental Impact Statement for 
major geothermal areas in the Western United States, a 
streamlined permitting and royalty structure, loan guarantees, 
and an extension of the production tax credit.
    Looking at the future, the Department is currently 
considering the findings of the MIT study it funded, using 
funding in Fiscal Year 2007's operating plan.
    DOE is holding discussions with industry and academic 
experts, further defining technical barriers and gaps, and 
determining technical and commercial actions that can help 
industry overcome the barriers, and to bridge those gaps. We 
expect to release this evaluation no later than the end of 
2007.
    Mr. Chairman, the Department anticipates that geothermal 
resources will continue to play an important and growing role 
in our Nation's energy portfolio, as we look to rapidly expand 
the availability of this clean, secure, reliable domestic 
source of energy.
    The Department looks forward to working with this committee 
to resolve concerns related to S. 1543 and to continue our 
national commitment to clean, renewable energy production.
    Mr. Chairman, this concludes my prepared remarks, and I'd 
be happy to answer any questions the committee members may 
have.
    [The prepared statement of Mr. Karsner follows:]

 Prepared Statement of Alexander Karsner, Assistant Secretary, Energy 
         Efficiency and Renewable Energy, Department of Energy

    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to appear before the Committee today to provide the 
Department of Energy's views on S. 1543, the National Geothermal 
Initiative Act of 2007, and to update the Committee on the Department 
of Energy's (DOE) Geothermal Program.
    S. 1543 establishes a national goal of achieving ``20 percent of 
total electrical energy production in the United States from geothermal 
resources by not later than 2030.'' To accomplish that goal, the 
legislation requires the Department of Energy and the Department of the 
Interior to characterize the complete U.S. geothermal resource base by 
2010; develop policies and programs to sustain an annual growth rate in 
geothermal power, heat, and heat pump applications of at least 10 
percent, and to achieve new power or commercial heat production from 
geothermal resources in at least 25 States; demonstrate state-of-the-
art geothermal energy production; and develop tools and techniques to 
construct an engineered geothermal system power plant. Additionally, 
the legislation directs the Secretary to establish a geothermal 
research, development, demonstration, commercialization, outreach and 
education program in support of the 20 percent national goal.
    The Department has significant concerns with the feasibility of the 
national goal established in this legislation. Generating 20 percent of 
our nation's electricity from geothermal resources would require more 
than 165,000 megawatts of geothermal power plant capacity by 2030, in 
Energy Information Administration's (EIA) reference case electricity 
demand forecast.\1\ The 1978 USGS National Geothermal Resource 
Assessment estimated 23,000 megawatts of identified conventional 
geothermal resources, also called hydrothermal technology, that can be 
developed for electricity. The difference, more than 142,000 megawatts, 
would have to come from new discoveries, conventional resources that 
were not viable at the time of the 1978 assessment, and unconventional 
means such as Enhanced Geothermal Systems (EGS), co-produced fluid from 
oil and gas wells, and geopressured-geothermal resources, as well as 
and avoided electricity use from heat, and heat pump applications. With 
the exception of one small co-production generator, none of these 
unconventional resources are being used currently to generate 
commercial power. A recent report by the Massachusetts Institute of 
Technology (MIT), The Future of Geothermal Energy, estimates that 
100,000 megawatts of electricity could be installed by 2050 using EGS 
technology. The MIT projection assumes a 15-year technology development 
program is conducted by the public and private sector prior to wide-
scale installations.
---------------------------------------------------------------------------
    \1\ The Energy Information Administration projects Total Electric 
Power Sector Capacity in 2030 to be 1159 GW. This projection is based 
on an assumption that geothermal power plant has a capacity factor of 
80-85 percent. While the Department shares the Committee's interest in 
rapidly accelerating market penetration of all renewable energy 
technologies, including geothermal, this particular goal may be 
technically unattainable within the timeframe specified. The Department 
looks forward to working with the Committee to resolve these and other 
technical concerns with S. 1543.
---------------------------------------------------------------------------
    Since the founding of the Department of Energy, the agency has 
supported geothermal research and development. Over that period, a 
number of key accomplishments have contributed to increased commercial 
development of hydrothermal resources--to a point where it has reached 
market maturity. The Department's investment contributed to the 
identification of those resources, accurate characterization and 
modeling of hydrothermal reservoirs, improved drilling techniques, and 
advanced means of converting the energy for productive uses. The 
Federal government has realized many successes in hydrothermal 
technology development, as evidenced by winning eight R&D 100 Awards in 
the past ten years. I would like to share with the Committee the 
Department's current assessment of the geothermal industry, and discuss 
briefly the future potential for geothermal development as a part of a 
diversified, domestic clean energy portfolio.

                          GEOTHERMAL INDUSTRY

    Geothermal energy is the heat from deep inside the earth, coming in 
large part from the decay of radioactive elements. Geothermal heat is 
considered a base load renewable energy source, and can be used for 
electricity generation and direct use (space heating, district heating, 
snow melting, aquaculture, etc.). While geothermal energy is available 
at some depth everywhere, in the U.S., it is most accessible in western 
states such as California, Nevada, Utah, and Hawaii, where it is found 
at shallow depths as hydrothermal resources. This is where the bulk of 
conventional, commercial geothermal development is taking place, but a 
number of other states, notably Idaho, Oregon, Arizona and New Mexico, 
could see new power projects coming online in the very near future.
    Geothermal resources can be subdivided into four categories: 1. 
hydrothermal; 2. deep geothermal (Enhanced Geothermal Systems or EGS); 
3. geopressured; and 4. fluid co-produced with oil and gas. Of these, 
hydrothermal resources, which are characterized by ample heat, fluid, 
and permeability, have been developed commercially around the world. 
The other resource categories have not reached commercial maturity and 
are less accessible through conventional geothermal processes. The 
United States has been and continues to be the world leader in online 
capacity of hydrothermal resources for electric power generation.
    Currently, the U.S. has approximately 2850MWe of 
installed capacity and about 2,900 MWe of new geothermal 
power plants under development in 74 projects in the Western U.S., 
according to industry estimates. In 2006, EIA estimates that geothermal 
energy generated approximately 14,842 gigawatt-hours (GWh) of 
electricity. The geothermal industry presently accounts for 
approximately 5% of renewable energy-based electricity consumption in 
the U.S. Most of the balance is split between hydropower and biomass, 
with wind and solar contributing a small portion.
    In general, conventional hydrothermal technology is sufficiently 
mature, based on the following:

   The Western Governors Association geothermal task force 
        recently identified over 140 sites with an estimated 13,000 MWe 
        of power with near-term development potential.
   Hydrothermal reservoirs discovered at shallow depths using 
        existing drilling technology, based upon similar available oil 
        and gas practices used in the industry, are cost-effective.
   Power plant technology is based on standard cycles and can 
        be bought off-the-shelf. Major development of binary-cycle 
        power plant technology has enabled the development of 
        increasingly lower temperature hydrothermal resources.
   Hydrothermal-generated electricity is cost competitive in 
        certain regions of the country, where the resource can be 
        maximized.

    Favorable provisions of the Energy Policy Act of 2005 (EPACT 2005) 
and other federal and local incentives encourage industry to develop 
hydrothermal resources. EPACT 2005 contains significant provisions to 
promote the installation of geothermal power plants and geothermal heat 
pumps. These include:

   Resource Assessment.--USGS has been directed to update its 
        1978 assessment of geothermal resources (Circular 790). EPACT 
        2005 mandates that USGS complete the Resource Assessment report 
        by September 2008. To date, the Department of Energy has 
        contributed over $1 million in financial support as well as 
        technical support through its national laboratories and the 
        Department's Geothermal Resources Exploration and Definitions 
        activity.
   Programmatic Environmental Impact Statement (PEIS).--A PEIS 
        is being developed for the major geothermal areas in the 
        Western U.S. by the Bureau of Land Management (BLM), in 
        partnership with the U.S. Forest Service. DOE is a cooperating 
        agency for the PEIS and the Department anticipates that 
        completion of the PEIS will encourage geothermal production.
   Streamlined Permitting and Royalty Structure.--EPACT changed 
        the royalty structure for leasing on Federal land from a 50/50 
        State/Federal split to a 50/25/25 split for State/Federal/
        local, providing an incentive for local governments to attract 
        geothermal resource developers. EPAct also streamlined leasing 
        requirements, which lowers costs for potential developers.
   Federal Purchases of Renewable Energy.--EPAct 2005 requires 
        that the Secretary of Energy seek to ensure that federal 
        consumption of electric energy during any fiscal year should 
        include the following amounts of renewable energy; 1) not less 
        than 3 percent in fiscal years 2007 through 2009, 2) not less 
        than 5% in fiscal years 2010 through 2012 and 3) not less than 
        7.5% in fiscal year 2013 and each fiscal year thereafter.
   Loan Guarantees.--EPACT 2005 authorizes the Department to 
        issue loan guarantees to eligible projects that ``avoid, 
        reduce, or sequester air pollutants or anthropogenic emissions 
        of greenhouse gases'' and ``employ new or significantly 
        improved technologies as compared to technologies in service in 
        the United States at the time the guarantee is issued''. On May 
        16, 2007, the Department issued a Notice of Proposed Rulemaking 
        to establish the loan guarantee program. The comment period for 
        that rulemaking has closed, and the Department anticipates 
        finalizing the rule shortly. In addition, on August 3, 2007, 
        the Department named David G. Frantz as the Director of the 
        Loan Guarantee Office, reporting directly to the Department's 
        Chief Financial Officer. By providing the full faith and credit 
        of the Unites States government, loan guarantees will enable 
        the Department to share some of the financial risks of projects 
        that employ new or significantly improved technologies. DOE is 
        currently authorized to provide $4 billion in loan guarantees, 
        and the 2008 President's Budget requested $9 billion in loan 
        volume limitation.

    In addition, the Tax Relief and Health Care Act of 2006 extended 
the production tax credit for geothermal and other renewables that are 
put into service through December 31, 2008. This provision has had a 
significant impact on encouraging new installations of conventional 
geothermal power facilities; as I mentioned previously, over 2,900 
MWe are now under development in the U.S. An investment tax 
credit of 10 percent is also available to the industry, but cannot be 
combined with the production tax credit. Because conventional 
geothermal is a mature technology and favorable policy changes have 
clearly resulted in the growth of the industry, the FY 2008 Budget 
Request terminates the current Geothermal Technology program.

                   ENHANCED GEOTHERMAL SYSTEMS (EGS)

    Enhanced Geothermal Systems (EGS) involves technology that enables 
geothermal resources that lack sufficient water or permeability 
(compared to conventional hydrothermal resources) to be developed. The 
ultimate intent is to tap energy from hot impermeable rocks that are at 
a depth of between 3 and 10 kilometers in the earth's crust. Such rock 
formations require engineered enhancements to enable productive 
reservoirs.
    DOE funded MIT to conduct a study of EGS potential in the U.S. MIT 
made the following key findings:

   EGS has the potential to produce up to approximately 100,000 
        MW of new electric power by 2050 based in part on an abundance 
        of available geothermal resources.
   Elements of the technology to capture EGS are in place.
   Multiple reservoir experiments are required.
   Successful R&D could provide performance verification at a 
        commercial scale within a 15-year period nationwide.

    The Department is currently considering the findings of the MIT 
study. DOE is holding discussions with industry and academic experts, 
further defining technical barriers and gaps, and determining the 
technical and commercial actions that can help industry overcome the 
barriers and to bridge the gaps. Input has come from oil and gas 
companies, service companies, academia, the geothermal industry, 
international experts, government agencies, and the national 
laboratories. We expect to release this evaluation by the end of 2007.

                               CONCLUSION

    In conclusion, Mr. Chairman, the Department anticipates that 
geothermal resources will continue to play an important and potentially 
growing role in our nation's energy portfolio, as we look to rapidly 
expand the availability of clean, secure, reliable domestic energy. The 
industry currently benefits from tax incentives and regulatory 
streamlining in EPACT 2005, and future industry investments in enhanced 
geothermal have the potential to significantly expand domestic 
geothermal energy production. The Department looks forward to working 
with this Committee to resolve concerns related to S. 1543, and to 
continue our national commitment to clean, renewable energy production. 
Mr. Chairman, this concludes my prepared remarks, and I would be happy 
to answer any questions the Committee Members may have.

    The Chairman. Thank you very much.
    Dr. Myers, go right ahead.

   STATEMENT OF MARK D. MYERS, DIRECTOR, GEOLOGICAL SURVEY, 
                   DEPARTMENT OF THE INTERIOR

    Mr. Myers. Great, thank you, Mr. Chairman and committee 
members for the opportunity to testify today, and to provide 
the Department of Interior's views on S. 1543.
    The Department of Interior supports the goal of increasing 
the percentage of electrical production that comes from 
renewable resources, which could have many positive effects to 
the environment and the economy. Expanded national geothermal 
resource assessment effort will contribute to the goal of 
providing the information needed to assess the potential 
contribution of geothermal energy to the Nation's domestic 
energy mix.
    Geothermal resources have the potential to provide 
significant amounts of clean, renewable, reliable energy to the 
United States. Based on current projections, the United States 
will need to increase its electrical generating capacity by 40 
percent over the next 20 years. The critical question is, to 
what extent can geothermal resources contribute to the 
increasing demand for electricity?
    Geothermal energy is one of the Nation's largest resources 
of renewable power. In the 1978 U.S.G.S. National Geothermal 
Resource Assessment estimated 23,000 megawatts of identified 
conventional geothermal resources, however currently installed 
capacities estimated to be approximately 2,850 megawatts, or 
about 12 percent of that potential.
    Under the Energy Policy Act of 2005, the U.S.G.S. is 
conducting a new assessment of conventional moderate to high-
temperature geothermal resources, and will report on the 
results of that assessment in the Fall of 2008.
    The new assessment will provide the detailed estimate of 
the geothermal electrical power generation potential from 
identified and undiscovered resources that could be used to 
evaluate major technical challenges, or increase geothermal 
development.
    Approximately 250 identified geothermal systems will be 
included in the current assessment effort, which will result in 
an improved understanding of thermal, chemical and mechanical 
mechanisms that lead to the formation of productive geothermal 
systems.
    I'd like to say, in order to have a successful geothermal 
project, you need certain technical properties to the rock--you 
need a hot source of rock, you need a way to transfer that heat 
energy through, which is through a fluid. You need the rock to 
have enough properties of conductivity or permeability, in 
order to actually be able to move the fluid through the rock in 
a sufficiency to extract the heat, and you need a cap rock 
source over the type. These issues are not unlike what you need 
for an oil and gas deposit, but those elements need to be 
present.
    So, when you look at characterizing and assessing 
conventional geothermal resources, the assessment will include 
a provision to look at Enhanced Geothermal Systems, or EGS. EGS 
are geothermal resources that required some sorts of 
engineering to develop that permeability, that 
interconnectability in the rock, necessary for the circulation 
of the hot water or steam, and the recovery of the heat for the 
electrical power generation.
    These types of reservoirs can range from sub-commercial 
geothermal resources that need modest permeability enhancement, 
or fracturing of the rock, to entirely impermeable hot, dry 
rock that either lacks the connect conductivity between the 
rock zones, or the fluid you need to transfer the heat.
    EGS, this enhances the focus of rapidly evolving scientific 
and technical study in both the United States and abroad. With 
an additional study, the characterization that would be 
authorized under S. 1543, the U.S.G.S. can provide a more 
comprehensive understanding of how these potential resources 
can contribute to the domestic energy mix.
    Several other unconventional geothermal resources have the 
potential for electrical generation. These include, geopressure 
geothermal resources, and co-produced geothermal and oil and 
gas. Geopressure geothermal resources are found in deep, high-
temperature permeable formations and sedimentary basins that 
have water at significantly elevated pressures. The hot, high-
pressure water, saturated with methane and the resources 
consist of a combination of thermal, mechanical, and chemical 
energy. Most of the geopressure geothermal resources are 
located in the Northern Gulf of Mexico Basin.
    Coal-produced geothermal and oil and gas is a relatively 
new concept, where geothermal resources rely on dedicated wells 
for producing--from primarily water-bearing formations under 
high pressure--a coal-produced system is one in which the 
geothermal heat extraction process coordinated with new or 
existing oil and gas wells. This requires geothermal electrical 
power technology to lower fluid production rates, typical of 
most oil and gas wells.
    The U.S.G.S. has geothermal and related expertise, as well 
as an ongoing effort in geothermal research and 
characterization. S. 1543 will require the U.S.G.S to expand 
its current assessment effort. We believe the best approach to 
a comprehensive national geothermal assessment is to develop 
the geologically based methodologies for evaluating 
unconventional geothermal resources capable of providing 
electricity. Additionally, our understanding conventional 
reservoirs would be improved by enhanced characterization that 
would be done in conjunction with the evaluation of 
unconventional resources.
    At present, most identified geothermal systems in the 
United States are incompletely developed, or inadequately 
characterized. The Department shares the committee's desire to 
increase the use of renewable energy, including geothermal 
resources, to ensure that we are able to promote renewables in 
the most cost-effective ways available, and to maintain 
appropriate flexibility in the budget management, the 
Administration recommends the bill be amended to authorize, 
rather than require, the assessments within the statutorily 
provided timeframe. This would ensure that the activities 
authorized under the bill would compete in the normal 
prioritization, budget and funding process.
    Thank you, Mr. Chairman, and I'd be happy to answer any 
questions that you might have.
    [The prepared statement of Mr. Myers follows:]

   Prepared Statement of Mark D. Myers, Director, Geological Survey, 
                       Department of the Interior

    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to provide the Department of the Interior views on S. 1543, 
``National Geothermal Initiative Act of 2007.''
    The Department of the Interior supports the goal of increasing the 
percentage of electricity production that comes from renewable sources, 
which could have many positive effects on the environment and economy. 
An expanded national geothermal resource assessment effort could 
contribute to this goal by providing State and Federal government 
policy makers, other Federal agencies, the energy industry, and the 
environmental community with the information needed to estimate the 
potential contribution of geothermal energy to the Nation's energy mix. 
However, the Department has several concerns with S. 1543, including 
the availability of funding for the work proposed in the context of 
overall funding for the Administration's priorities. We share the 
Committee's desire to increase the use of renewable energy, including 
geothermal resources. That said, to ensure that we are able to promote 
renewables through the most cost effective ways available, and to 
maintain appropriate flexibility in budgetary management, the 
Administration recommends that this bill be amended to authorize rather 
than require the assessment within a statutorily prescribed timeframe. 
This would ensure that the activities authorized under this bill would 
compete under the normal prioritization, budgetary, and funding 
process. We would like to work with the committee to revise the bill to 
address these issues.

      GEOTHERMAL ENERGY--EXISTING STUDIES AND REMAINING QUESTIONS

    Domestic geothermal resources have the potential to provide 
significant amounts of clean, renewable, and reliable energy to the 
United States. Based on current projections, the United States will 
need to increase its electrical power generating capacity by 40 percent 
over the next 20 years. A critical question is to what extent can 
geothermal resources contribute to this increasing demand for 
electricity? Geothermal energy already constitutes one of the Nation's 
largest sources of renewable electrical power, yet the installed 
capacity of approximately 2850 megawatts falls short of current 
geothermal resource estimates.
    Under Sec.  226 of the Energy Policy Act of 2005 (EPAct), the U.S. 
Geological Survey (USGS) is currently conducting a new assessment of 
conventional moderate-temperature and high-temperature geothermal 
resources and will report on the results of that assessment in the fall 
of 2008. The new assessment will provide a detailed estimate of the 
geothermal electric power generation potential from identified and 
undiscovered resources and include an evaluation of major technical 
challenges for increased geothermal development. Approximately 250 
identified geothermal systems will be included in the current 
assessment effort, which is resulting in improved understandings of the 
thermal, chemical, and mechanical processes that lead to the formation 
of productive geothermal systems.
    In addition to characterizing and assessing conventional geothermal 
reservoirs, under the EPAct authorization, the USGS is examining one 
type of unconventional geothermal resource--Enhanced Geothermal Systems 
(EGS). EGS are geothermal resources that require some form of 
engineering to develop the permeability necessary for the circulation 
of hot water or steam and the recovery of heat for electrical power 
generation. These types of reservoirs can range from subcommercial 
geothermal reservoirs that need some modest permeability enhancement to 
entirely impermeable ``hot dry rock'' that not only requires 
permeability but also sufficient quantities of water. A provisional 
examination of the onshore U.S. EGS resources will be included with the 
new USGS national assessment efforts. However, EGS is the focus of 
rapidly evolving scientific and technical study both in the United 
States and abroad. With additional study and characterization that 
would be authorized in S. 1543, the USGS could provide a more 
comprehensive understanding of how this potential resource can 
contribute to the domestic energy mix.
    Besides EGS, there are several unconventional geothermal resources 
that have potential for electrical generation. These include 
Geopressured Geothermal resources and Co-Produced Geothermal and Oil & 
Gas. Geopressured Geothermal resources are found in deep, high 
temperature, permeable formations in sedimentary basins that have water 
at significantly elevated pressures. This hot, high-pressure water is 
saturated with methane, and the resource consists of a combination of 
thermal, mechanical and chemical energy. Most of the geopressured 
geothermal resources are located in the northern Gulf of Mexico Basin. 
Co-produced geothermal and oil and gas is a relatively new concept. 
Where geopressured geothermal resources rely on dedicated wells 
producing from primarily water-bearing formations under high pressure, 
a co-produced system is one in which the geothermal heat extraction 
process is coordinated with new or existing oil wells. This requires 
adapting geothermal electric power generation technology to the lower 
fluid production rates typical of most oil wells.
    Under S. 1543, USGS contemplates carrying out a national geothermal 
resource assessment that would build on current USGS efforts by 
including unconventional geothermal resources, as well as an enhanced 
characterization and understanding of the domestic, conventional 
geothermal resources.
    In carrying out such a comprehensive assessment, USGS would 
coordinate and cooperate with the Department of Energy's Office of 
Energy Efficiency and Renewable Energy (EERE), other Department of the 
Interior bureaus, State geological surveys, and other relevant entities 
that have geothermal expertise and responsibilities. USGS and DOE are 
already cooperating on the current national resource assessment 
mandated by EPAct through shared technical expertise and DOE's 
provision of supplemental funding to USGS.

                        REQUIREMENTS OF S. 1543

    S. 1543 requires the Secretary of the Interior, acting through the 
Director of the U.S. Geological Survey (USGS), to conduct and complete 
a comprehensive nationwide geothermal resource assessment that examines 
the full range of geothermal resources in the United States; submit to 
the appropriate committees of Congress a report describing the results 
of the assessment; and in planning and leasing, consider the national 
goal established under this Act.
    The USGS has geothermal and related expertise as well as an ongoing 
effort in geothermal research and characterization. This bill would 
require USGS to expand on the current assessment effort, and we believe 
the best approach to a comprehensive national geothermal assessment is 
to develop geologically based methodologies for evaluating 
unconventional geothermal resources capable of producing electricity. 
Additionally, our understanding of conventional reservoirs would be 
improved by the enhanced characterization that could be done in 
conjunction with evaluation of unconventional resources. At present, 
most of the identified geothermal systems are incompletely developed 
and inadequately characterized. The current USGS effort will help 
alleviate some of this challenge, but more work can be done.

                         CONCERNS WITH S. 1543

    S. 1543 requires that a national assessment be completed by 2010. 
The Department does not believe that this timeframe adequately 
recognizes other important budgetary priorities and believes that the 
activities authorized under this bill should compete under the normal 
prioritization, budgetary, and funding processes. In order to 
substantively undertake an evaluation of the unconventional geothermal 
resources, a methodology for assessing these resources must first be 
developed, peer reviewed, and published. Even with full funding at the 
levels contemplated in this bill, methodology development would take 
approximately one year. Once that methodology is developed and peer 
reviewed, more time would be needed to conduct the national assessment 
of the unconventional resources and a more robust evaluation of the 
conventional geothermal resources. We are concerned about the statutory 
timeframes for accomplishing the assessment laid down in this bill. We 
would like to work with the committee to ensure that the timeframe used 
by the Federal government for its assessment of unconventional 
resources is prudent and consistent with the national goal identified 
in S. 1543.
    With recent interest in offshore areas for geothermal development, 
we would appreciate clarification as to whether unconventional 
resources should include areas offshore such as the outer continental 
shelf (OCS). If the national assessment includes the OCS, USGS would 
work in cooperation with the Minerals Management Service which would 
have the lead for the OCS portion of the effort. However, inclusion of 
the OCS would increase the cost and time needed to complete this 
assessment.
    Many geothermal resources are located on onshore Federal lands. The 
availability of leases of geothermal resources to electricity producers 
is important to the national goal identified in this act of increasing 
the percentage of electrical energy production from geothermal 
resources. It should therefore be noted that onshore geothermal 
resources on the Federal lands are leased by the Bureau of Land 
Management (BLM) under regulations developed pursuant to EPAct. The BLM 
and Forest Service (FS) are already considering geothermal development 
in their land use planning. BLM and FS are jointly preparing a 
Geothermal Programmatic Environmental Impact Statement (PEIS) to plan 
for and support future geothermal leasing. This PEIS will evaluate 
pending geothermal lease applications and areas with high potential for 
geothermal development, and in this sense support the goal identified 
in S. 1543.

                               CONCLUSION

    In conclusion, the Department of the Interior believes that it is 
important to consider all available options that may contribute to the 
goal of a comprehensive national assessment of geothermal energy. Such 
an assessment would provide a variety of organizations the information 
needed to determine the viability of geothermal energy to contribute to 
the Nation's domestic energy mix. However, we have concerns relating to 
the bill's timeframe, clarity and scope. Significant changes are needed 
to address the full range of the Administration's concerns before we 
could support this legislation.
    Thank you, Mr. Chairman, for the opportunity to present this 
testimony. I will be pleased to answer questions you and other Members 
of the Committee might have.

    The Chairman. Thank you both very much.
    Secretary Karsner, let me ask you, first of all, obviously 
a major purpose that we have in putting forth this proposed 
legislation is to get a focus area of energy development over a 
significant period of time. So, I think we've got an 
unfortunate history in this country of funding something for a 
year, and not funding it for a year, and then back again, and 
then cutting the funding in half. This is one of those areas, 
as I understand it, there is no funding in the current year 
budget for geothermal--am I right about that?
    Mr. Karsner. You are correct about that.
    The Chairman. That is a change from some previous years. I 
mean, maybe you could give us a little bit of the history in 
the last several years as to what we've done in this area, as 
you understand it?
    Mr. Karsner. Yes, sir, I will.
    Of course, the Department's reaching its 30th anniversary 
in coming weeks, and over those 30 years, it has traditionally 
funded geothermal for 28 of them. So, this wasn't the first 
year it was zeroed out, in fact, the year prior was.
    Cumulatively, the Department has invested about $1.3 
billion over that period, predominantly--and almost 
exclusively--aimed at hydrothermal shallow reservoirs. So, a 
lot of good progress was made through the taxpayers' investment 
over that amount of time, over more than a quarter of a 
century. Even as recently as the last several years, the 
geothermal program has earned up to 8 R&D 100 awards for 
excellence and breakthroughs in its technology.
    Interestingly, though, with the passage of the Energy 
Policy Act--some of the policy that had, in fact, been lacking, 
some of the efforts by the Federal Government to fund 
commercialization aspects that were not in effect prior to the 
EPAct 2005--came in effect and had a very substantial impact on 
the rise of the sector.
    So, there's not a direct correlation, one-to-one, with the 
amount of R&D investment to the prosperity and the 
proliferation of the technology into our economy. So, in fact, 
the correlations are the opposite--as the technology R&D 
funding has gone down, and tax credits and other incentives, 
streamlined permitting royalties go up--more deployment occurs, 
and more private sector capital is stimulated.
    We'd like to understand, better, what the findings were of 
the MIT report that has been so consequential in terms of 
establishing some equilibrium with an eye toward the future of 
going beyond just conventional hydro-thermal investments, and 
getting into accessing what is possibly an immeasurable 
resource underneath the whole of the country, but accessing it 
in new ways that, previously, we had not.
    The Chairman. Let me just say, I hope you will work with 
the committee and those of us who are supporting this 
legislation--to get it in a form so that it would lay out 
something of a blueprint that the Administration could be 
supportive of going forward, so that we don't have a constant 
push and pull between the Administration and the Congress, the 
Congress wanting one thing, the Administration committed to 
something different.
    I hope that we can work that out this fall, and then I hope 
that we can see that reflected in budget requests coming from 
the Administration in future years.
    Mr. Karsner. We'd be pleased to continuously work with the 
committee on that basis.
    The Chairman. That would be great.
    Let me turn to Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    I just want to follow up on that, you know, it appears to 
me that our energy policy is somewhat dictated by who's liking 
what type of energy. Is wind the end all and be all? With some 
people it is, and you've got them taking point on it, and you 
see great things happening. You've got an advocate--certainly, 
Senator Domenici, Senator Bingaman have been huge, strong 
advocates in the nuclear, and you see advances there; President 
Bush decided it was ethanol.
    There is this very sporadic focus, and with that focus 
comes the dollars, and there's that flurry of activity, but 
when we're talking about sustainable energy into the future, 
there's got to be leadership and initiative and the funding 
that comes with it.
    So, I appreciate your statements here that you support the 
intent of where we're going with this legislation, I'm 
concerned that you point out that right now you don't think 
it's feasible. I guess I get inspired by President Grimsson, 
I'll say so, and I think we need to figure out how to get to 
yes on some of this stuff, instead of saying, ``Well, we can't 
meet the 20 percent goal, so we're just not going to start 
there.''
    Let me ask you about the low-temperature geothermal 
research. We have been delighted to partner with the Department 
of Energy in the State of Alaska to work on a project up there 
that you're very familiar with. We've demonstrated the 
viability of low-temperature technology, but we know we've got 
to enhance its performance to improve the efficiency if we're 
to develop the systems.
    What plans does DOE have for pursuing advanced low-
temperature geothermal research going forward?
    Mr. Karsner. Thank you, Senator, that's a great question, 
and I think you're referring to the Chena Hot Springs Project, 
which is one of those R&D 100 awards----
    Senator Murkowski. Right.
    Mr. Karsner [continuing]. That I just alluded to, based on 
using record low temperatures, in fact, to convert geothermal 
to an energy resource at site.
    That project is an example of how we have matured 
something, and the question, then, becomes how should we 
proliferate it? So, that's a new model.
    Fundamentally, most geothermal discussions are about 
distributed energy. So, it compels an array of other 
discussions that we haven't looked at in our very narrow focus, 
almost exclusively on the conversion technologies, or resource 
assessments.
    In this case, we have to figure out how we might facilitate 
a reliability in the manufacturing at scale at 200 KW 
conversion devices produced here domestically for the purpose 
of exploiting those widely available resources. We can't really 
do these things on an on again/off again basis. That is to say, 
suppliers have to know there is a real and continuous market.
    So, I'd say, with respect to low temperature, we need to do 
a lot more market cultivation, as we have done in other 
programs.
    I take your point, and in fact, take it very seriously, 
when you talk about the propensity that government has had 
through a legacy of managing this portfolio in prioritizing one 
technology over the other. I hope that we are being successful, 
and that we will have a future of moving beyond technology 
preference and selection, and moving toward preference for 
attributes--that is to say, the priorities of our mission are 
that energy ought to be clean, it ought to be affordable, it 
ought to be reliable, it ought to be secure, and really, it 
ought to be domestic, to the extent that we maximize it with 
the Department of Energy. That, that definition ought to be 
cross-cutting and holistic to a balanced portfolio approach to 
technologies.
    So, I know that is what Secretary Bodman has emphasized and 
that we have emphasized. But it is a necessary thing that you 
have put to us, that we move beyond that, and not fluctuate in 
the way that we invest in these technologies.
    Having said that, proportionality and perspective of what 
each can contribute, and the positive and negative 
characteristics of each technology--and almost every technology 
possesses both positive and negative characteristics--have to 
be taken into account. So, I take the view that we will need 
all of these technologies, and we will need them to meet those 
criteria. Of course, geothermal is one that, one could say, 
meets it in spades, in terms of its reliability, its security, 
its cleanliness, et cetera.
    Senator Murkowski. I appreciate that.
    Mr. Karsner. So, proliferation of the 200 KW is going to 
require more commercialization focus.
    Senator Murkowski. Appreciate that, and I couldn't agree 
with you more.
    Dr. Myers, just very quickly, as you talk about the new 
assessment, I would certainly like to see the U.S.G.S. do this 
new assessment as soon as possible, do you have plans for an 
examination of the low-temperature resources, in addition to 
the traditional resources, then, as part of the national 
assessment?
    Mr. Myers. Senator Murkowski, a national assessment will 
focus on high and moderate temperature, again, we plan on 
completing that by 2008----
    Senator Murkowski. What is moderate? How do you define 
moderate temperatures?
    Mr. Myers. Ninety degree C.
    Senator Murkowski. OK.
    Mr. Myers. Ultimately, the enhanced assessment to look at 
EGS would look more dominantly and provide a methodology for 
assessing many of the SGA or low-temperature.
    Senator Murkowski. But that enhanced assessment isn't this 
assessment that will be going forward first?
    Mr. Myers. That's correct.
    Senator Murkowski. So, you don't see that happening for 
awhile?
    Mr. Myers. I see, under the current funding scenarios, us 
being able to successfully complete the assessment that we're 
doing on the 250 sites by 2008. But, the enhanced--looking at, 
particularly looking as ESG--won't happen unless we devote more 
resources to the assessment, in the outgoing years beyond that.
    Senator Murkowski. But, in any case, it wouldn't be until a 
couple of years from now, provided that funding is there?
    Mr. Myers. That is correct.
    Senator Murkowski. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Tester.
    Senator Tester. Yes, Mr. Chairman.
    I'd like to thank the panelists for being here today.
    I may have asked this question before, so you'll have to 
refresh my memory--is the DOE concerned with carbon release and 
global warming, in general?
    Mr. Karsner. I think you have asked the question before, 
and the answer remains, yes. We're very concerned, and we're 
very assertive on the subject matter, as would be indicated by 
our participation this week and the President's convening the 
major economies on this subject.
    Senator Tester. As I look at some of the work that the 
DOE's done--and I don't want to be critical, but I will--a lot 
of it has been around coal, which is big in the State of 
Montana, so I can't be negative against that, and petroleum, 
which is big around the State of Montana, and nuclear power. 
With the exception of potentially nukes, global warming is a 
huge issue with those energy sources, but yet when I go through 
your testimony, very little is being done with things like 
geothermal, which seems to be a slam dunk.
    I'm a little bit embarrassed by the fact that Iceland has 
moved forward on this very rapidly--we've got tremendous 
resources in this country, and literally, nothing has been 
done. As I look back, you're quoting studies from 1978--that's 
nearly 30 years ago.
    When I was in high school and debated, if I had taken a 30-
year source for my substantiation for evidence, I'd have lost 
every damn debate--and I lost most of them anyway--but I'd have 
lost every damn debate I was in. I mean how can you go back 30 
years for substantiation of saying that 20 percent by 2030 is 
not achievable?
    Mr. Karsner. Two separate things there--in terms of the 
ultimate capacity that may be achievable, there are a great 
deal more factors than the U.S. Geological Survey study--I'll 
let my colleague from the U.S.G.S. speak to the study itself--
but as a power plant developer, what I can tell you is, the 
studies are fine, they're interesting at a given scale to have 
a government background study. By way of example, if I were 
using wind study and statistics from the NOAA, as wind 
developers frequently do--that is useful as a baseline, but it 
is not at all useful in terms of commercially financing and 
deploying the technology.
    Senator Tester. Yes, but----
    Mr. Karsner. So, the study being 30 years old, has no 
correlation to the fact that the sector is booming now, as 
never before. So, we want an updated study, I think that's a 
good piece of the legislation, I think, very thoughtful, but it 
is not what is the indispensable factor in the growth.
    Senator Tester. But, one of the first statements you made 
in your testimony--and correct me if I'm wrong--is that a 1978 
study said that 23 KW would be available. So, the 20 percent 
was unrealistic by those standards. Of course it would be 
unrealistic by those standards. When was the last time an 
assessment was done on geothermal availability in this country?
    Mr. Karsner. I don't have the answer as to the last time 
it's been done--I believe in 1978--you're correctly quoting. 
But, whatever the margin of error may be in the modernization 
of the study, I can assure you, Senator, by magnitudes and 
orders of multiples of three or four times, it will be an 
extreme delta between 20 percent and 165 KW by 2030, whether 23 
moves to 30, or 35 or 40. We have nothing in the body of 
science, from MIT or elsewhere, that would allow us to say 
that's feasible.
    Senator Tester. I can just tell you, from my perspective, 
as a dirt farmer from North Central-Montana, if I don't think 
it can be done, it won't be done. Period. It won't happen. If I 
go into it and say, ``Yes, we're going to use the resources 
that we have, and we're going to demand more resources for an 
assessment that take into all counts of geothermal,'' then it 
will happen. I think, I honestly think that 165 KW is entirely 
achievable. Even with a miniscule 23 in a 1978 study.
    But, the truth is, I don't think there's enough focus on 
geothermal and I think that's the problem. I don't mean to be 
critical with the study here, because I think that you have to 
come forth with what the Administration wants you to come forth 
with, so you've got no choice, you're between a rock and a hard 
place, but to overlook the geothermal opportunities and to go 
in saying that we can't achieve 20 percent by 23 years from 
now, I think is selling this country short, and quite frankly 
selling the Department of Energy short on their ability to look 
into the future with a vision. That's all I have to say.
    We need to have an assessment done, and would I hope that 
that assessment is a realistic assessment, and not an 
assessment that we go in and say, you know, ``We don't have the 
resources, so we might as well forget it.'' I hope it's 
complete, it doesn't sound like it's going to take into account 
a lot of things it should be looking into, it'll take into 
moderate and high resources--correct, Dr. Myers?--when I think 
there's even more availability out there, in some of the stuff 
below 90 degrees.
    But, I want to thank you for your testimony and thank you 
for coming, I appreciate it.
    The Chairman. All right, thank you very much, Thank you 
both for your testifying.
    I think I'll go ahead with the third panel, here, so please 
come forward at this point.
    On the third panel is Susan Petty with AltaRock Energy in 
Seattle, Washington, David Wunsch, who is a Ph.D., from the New 
Hampshire Geological Survey, Lisa Shevenell, who is a Ph.D. 
with the Mackay School of Earth Sciences and Engineering at the 
University of Nevada in Reno, and Kenneth Williamson who is a 
geothermal consultant and Ph.D. from Santa Rosa, California.
    Thank you all very much for being here.
    Let me just ask if each of you could take about 5 minutes 
and summarize your testimony. We will include your full 
testimony in the record, but we would appreciate you telling us 
the main points that you think we need to focus on.
    Ms. Petty, Thank you for being here, I understand you were 
one of the co-authors of the MIT study that's been referred to 
here several times, and we congratulate you on that, and go 
right ahead.

  STATEMENT OF SUSAN PETTY, PRESIDENT, ALTAROCK ENERGY, INC., 
                          SEATTLE, WA

    Ms. Petty. Thank you, Mr. Chairman and members of the 
committee. I'm honored to have the opportunity to speak to you 
today regarding S. 1543.
    One of the goals of the MIT study was to look at what the 
future of geothermal energy might be. Our 18-panel member study 
looked first at assessing what the magnitude of the resource 
was, and we found that this geothermal resource is truly vast. 
It extends across the entire continent and it's available to us 
using technologies to recover it, that we are not now using.
    We found that, while you can use the heat through 
circulation of fluids through natural fractures and 
permeability, we can access much more of this resource by 
creating or enhancing fractures in hot rock. These are the 
enhanced, or engineered geothermal systems, or EGS.
    EGS power is technically feasible today. The first project, 
a commercial and public venture in Germany--will go online in 
the next few months at the--in the town of Guntherhocking. 
Potentially--the study found that--potentially 100,000 
megawatts could be online by 2050 with modest Federal 
investment over an 8 to 10-year period of only $368 million.
    The best resources of this kind are economic, now. These 
best sites where high temperatures are found at shallow depths, 
are actually, have been studied in the past, and could be used 
to develop this type of resource, with this technology with 
today's--with today's economic power crisis.
    However, the study also found with incremental technology 
improvement, the cost of power from these types of resources, 
from EGS resources could be cut in half, or more. These 
technology improvements are built upon the technology we use 
today to generate power from conventional or hydro-thermal 
resources, and rely on drilling technology, conversion 
technology, and fracturing technology that we use now. So, 
while this is technically feasible in many areas, it's not 
economic across the whole United States.
    However, with combing learning by doing, and innovative 
technology improvement, we could make a really large amount of 
energy both technically and economically feasible.
    The fracturing technology that we use comes out of the oil 
and gas industry, but has been demonstrated and improved at 
sites in Europe, and is now being tested in sites in Australia. 
There are 8 companies in Europe developing more than 50 
projects using this type of technology, this has happened due 
to price incentives and technology and research investment from 
European Union.
    Twenty companies in Australia are now working to 
commercialize EGS power development, and here in the United 
States we have one company focused on developing power from EGS 
technology. As a result of the findings of the MIT study, I 
founded AltaRock Energy in this past year, and we plan to use 
the technology that has been developed in the past, both by the 
Department of Energy's research program in geothermal and also 
through research that has been conducted in Europe and is being 
conducted in Australia.
    S. 1543 provides for funding for geothermal energy 
research, as well as increasing geothermal energy use by 10 
percent per year, to ultimately reach a 20 percent goal of our 
Nation's energy use. However, we're not asking to make this 
investment with no return. If only half of the energy that 
would meet this goal of 20 percent were generated from Federal 
lands, over $1 billion of royalties would be generated from 
this energy production.
    This royalty would go 50 percent to the Federal Government, 
and the other 50 percent would go to the States and counties in 
which these energy developments took place. This seems to me to 
be a very excellent return on a very modest investment.
    So, in both--while getting this investment, while making 
this investment not only ensures this return, it also provides 
our country with a source of clean, renewable, and an 
indigenous energy. Thank you.
    [The prepared statement of Ms. Petty follows:]

 Prepared Statement of Susan Petty, President, AltaRock Energy, Inc., 
                              Seattle, WA

    Mr. Chairman and Members of the Committee, I am honored to have the 
opportunity to speak to you regarding Senate Bill 1543, the ``National 
Geothermal Initiative Act of 2007,'' which was introduced to the Senate 
on June 5, 2007, by Senator Bingaman to encourage increased production 
of energy from geothermal resources.
    One of the goals of S. 1543 is to achieve 20% of electric power 
generation from geothermal energy by 2050. You may be asking yourself 
if this a realistic goal? In the fall of 2004, I was included in a 12 
member panel led by Dr. Jefferson Tester of the Massachusetts Institute 
of Technology that looked at the Future of Geothermal Energy. Our group 
consisted of members from both industry and academia. While some of us 
started the study convinced that it was possible to engineer or enhance 
geothermal systems (EGS) with today's technology, many of us, including 
myself, were skeptical. As we reviewed data, and listened to experts 
who were actively researching new methods, testing them in the field, 
and starting commercial enterprises to develop power projects from 
geothermal energy using this emerging technology, I believe all of us 
became convinced that a way had been found to tap into the vast 
geothermal resource under our feet.
    Everywhere on Earth, the deeper you go, the hotter it gets. In some 
places, high temperatures are closer to the surface than others. We 
have all heard of the ``Ring of Fire, '' characterized by volcanoes, 
hot springs and fumaroles around the rim of the Pacific Ocean, 
including the Cascades, the Aleutian Islands, Japan, the Philippines 
and Indonesia. We know that along the tectonic rifts such as the Mid-
Atlantic Ridge including Iceland and the Azores, the East African Rift 
Valley, the East Pacific Rise, the Rio Grande Rift running up through 
New Mexico and Colorado and the Juan de Fuca Ridge the earth's heat is 
right at the surface. But other geologic settings allow high 
temperatures to occur at shallow depths, such as the faulted mountains 
and valleys of the Basin and Range, the deep faults in the Rocky 
Mountains and the Colorado Plateau. In addition, the sedimentary basins 
that insulate granites heated by radioactive decay along the Gulf 
Coast, in the Midwest, along the Chesapeake Bay and just west of the 
Appalachians can not only provide oil and gas, but hot water as well. 
(See Figure 1).*
---------------------------------------------------------------------------
    * Figures 1-5 have been retained in committee files.
---------------------------------------------------------------------------
    The heat contained in this vast resource is so large that it is 
really difficult to contemplate. Even with very conservative 
calculations, the MIT study panel found that the amount of heat that 
could be realistically recovered in the US from rocks at depths of 3 km 
to 10 km (about 2 miles to 6 miles) is almost 3,000 times the current 
energy consumption of the country. (See Figure 2). Listening to the 
experience of those developing the Soultz project in France, the 
Rosemanowes project in the UK and the Cooper Basin project in 
Australia, the panel members began to understand that the technology to 
recover this heat was here today. We can drill wells into high 
temperature rocks at depths greater than 3 km. We can fracture large 
volumes of hot rock. We can target wells into these man-made fractures 
and intersect them. We can circulate water through these created 
fractures, picking up heat and produce it at the other side heated to 
the temperature of reservoir rocks. We can produce what we inject 
without having to add more water. Long term tests have been conducted 
at fairly modest flow rates on these created reservoirs without change 
in temperature over time. No power plants have yet been built, but 
several are in progress in Europe.
    Does this mean that we can build economic geothermal power plants 
based on EGS technology right now? At the best sites, where high 
temperatures occur at shallow depths in large rock masses with similar 
properties, geothermal power production from EGS technology is economic 
today. But to bring on line the huge resource stretching across the 
country from coast to coast, we need to do some work.
    I'd like to talk about the economics of geothermal power production 
so you can better understand what needs to happen to enable widespread 
development of power projects using EGS.
    At some places in the Earth's crust, faults and fractures allow 
water to circulate in contact with hot rock naturally. These are 
hydrothermal systems where natural fractures and high permeability 
allow high production rates. Even low temperature systems can be 
economic if the flow rates produced are high enough. The capital cost 
for the wells and wellfield-related equipment generally is between 
25%--50% of the total capital cost of the power project. The capital 
cost for hydrothermal projects can range from around $2,500/installed 
kW to over $5,000/kW, largely depending on the flow rate per well and 
the depth of the wells. The levelized break-even cost of energy for 
commercially viable hydrothermal projects currently ranges from $35/MWh 
to over $80/MWh. Of this, about $15-25/MWh is operating cost. The rest 
is the cost to amortize the power generation equipment and the 
wellfield.
    Hydrothermal power is a good deal: Clean, small foot print, cost-
effective. So why isn't more power from hydrothermal sources on line? 
The issue for hydrothermal power is risk. Because the risk related to 
finding the resource and successfully drilling and completing wells 
into the resource is high, development by utilities is unlikely. In 
order to accept this risk, independent power producers need a long-term 
contract at a guaranteed price and a high return on their investment. 
Utilities are loath to give a long-term contract because the payments 
to the generator will be treated as debt in determining their debt-to-
equity ratio for credit and bond ratings.
    Hydrothermal projects also tend to be small in size. While some of 
the potential future hydrothermal projects might be large, many of 
these are associated with scenic volcanic features protected as 
national parks or revered by Native Americans. A large scale project 
might mitigate the risk by spreading it over a much larger number of 
MW. In addition, there is a true economy of scale for geothermal power 
projects. For instance, the same number of people are needed to operate 
a 10 MW geothermal project as operate a 120 MW, or even a 250 MW, 
project.
    Most of the really good (i.e. economic) hydrothermal systems are in 
the arid West. Not only is cooling water--which improves project 
economics by improving plant efficiency--an issue in this part of the 
country, but also the wide open spaces mean high-potential sites are 
often far from transmission, operators, supplies and large population 
centers with a high demand for power. Little potential for producing 
power from conventional geothermal, i.e. hydrothermal, sources exists 
in the Midwest, Southeast or East Coast.
    Still, hydrothermal power has the potential to supply the country 
with more than 20,000 MW, or about 2% of our current installed 
capacity. However, the very high reliability of geothermal power means 
that this would be about 4% of our current annual generation. And this 
power is baseload or power that is available night and day.
    Over the years, the cost of generating electricity from 
hydrothermal sources has dropped from around $130/MWh to less than $50/
MWh. This was facilitated by incentives provided both by the market 
during the mid-1980s oil crisis, and by the government in the form of 
tax subsidies encourage the construction of over 2,000 MW of geothermal 
power that went on line from 1986-1995. Some of this drop in cost is 
due to research conducted by the US Department of Energy (DOE). For 
instance, in 1980 the DOE completed the first demonstration binary 
power plant at Raft River. This plant enabled the use of fluids at 
temperatures much lower than had been developed in the past. Industry 
commercialized this technology, and now most of the new geothermal 
power plants being built today are binary plants. DOE research, 
together with industry, developed high-temperature tools that are now 
essential to the evaluation of geothermal wells. A combination of DOE-
supported research and industry effort as improved binary power plant 
efficiency by almost 50% from the earliest commercial plants in the 
1980s, and flash power-plant efficiency by almost 35% over the same 
time period. This translates directly into reduction in overall project 
cost and power prices because fewer wells and less equipment is needed 
to generate the same amount of energy.
    The MIT study started with the current state of the geothermal 
industry. The first task we realized we needed to undertake was a 
realistic look at the size and potential cost of developing geothermal 
power across the continent. It has long been realized by scientists 
that a vast geothermal resource exists everywhere as long as technology 
allows us to drill deep enough, develop a reservoir by creating 
fractures or enhancing natural fractures, and connect wells to 
circulate fluid through that reservoir. The US Geological Survey has 
been tasked with a detailed evaluation of the US geothermal resource, 
but this could not be finished in time for our study. The MIT panel, 
therefore, undertook a preliminary assessment of the geothermal 
resource in the US.
    Using data collected over the years with DOE support, maps of the 
temperature at depth were developed by Dr. David Blackwell's group at 
SMU. Temperature at the midpoint of 1 km thick slices was projected at 
1 km intervals starting at a depth of 3 km and extending down to 10 km, 
a reasonable limit for drilling using today's technology. The heat 
resource contained in each cubic kilometer of rock at these 
temperatures at each depth was then calculated. The amount of energy 
stored in this volume of rock is so enormous that it is really 
impossible to comprehend. (See Figure 1) We then looked at the studies 
that had estimated what fraction of this heat might be recovered, and 
at what efficiency this recovered heat might be turned into electric 
power. Studies showed that for economic systems, 40% or more of the 
total heat stored in the rock is recoverable. We also considered the 
more conservative recoverable estimates of 2% and 20%. Even at 2%, the 
amount of energy that could be realistically recovered, leaving 
economics and cost considerations aside, is more than 3,000 times the 
current total energy consumption of the US, including transportation 
uses.
    In order to understand the technology needed to recover this 
energy, we turned to the published literature on the experiments done 
in the past at Fenton Hill, Rosemanowes, Hijiori, Ogachi and Soultz. We 
also brought in experts who are currently working on the Soultz project 
and on commercial engineered and enhanced geothermal projects in Europe 
and in Australia to tell us about the status of their work and their 
future efforts and needs. By the end of the study, we had concluded 
that EGS technology is technically feasible today. We can:

   Drill wells deep enough and successfully using standard 
        geothermal and oil-and-gas drilling technology with existing 
        infrastructure to tap the geothermal resource across the US, 
        including areas in the Midwest, East and Southeast.
   Consistently fracture large rock volumes of rock.
   Monitor and map these created or enhanced fractures.
   Drill production wells into the fractured rock.
   Circulate cold water into the injection well and produce 
        heated water from the production wells.
   Operate the system without having to add significant amounts 
        of water over time.
   Operate the circulation system over extended test periods 
        without measurable drop in temperature.
   Generate power from the circulating water at Fenton Hill and 
        Ogachi.

    In addition, EGS power projects are scalable. Once the first 
demonstration unit has been tested at a site, the potential exists to 
develop a really large scale project of 250 to 1000 MW. Combined with 
the fact that good EGS sites where large bodies of hot rock with fairly 
uniform properties can be found across the US, that the sites are so 
many that they can be selected to avoid places with no transmission 
capacity or those located near areas of scenic beauty or environmental 
sensitivity, generating power from EGS technology looks like a winning 
proposition.
    The real question then becomes, not is it realistic to anticipate 
generating 20% of our nation's electric power from geothermal energy, 
but can we make it cost effective?
    The MIT panel included members from industry and research who are 
experts in the economics of power generation. The panel developed a 
list of key technologies that could help reduce the cost of generating 
power from EGS. They considered the changes in the cost of power 
generation from hydrothermal systems over the last 20 years, and the 
current state of EGS technology. They also considered research 
currently underway, not only that sponsored by DOE through universities 
and the national laboratories, but that being done by industry. Using 
models developed by both DOE and MIT, the cost of power and the impact 
on that cost of these possible technology improvements was examined. In 
addition, the panel looked at the impact of ``learning by doing'' on 
the cost of power.
    We concluded that at the best sites, those with very high 
temperatures at depths of around 3-4 km in areas with low permeability 
natural fractures, EGS is economic today. Figure 3 shows the relative 
cost of power from a 300C site at a depth of 3 km. With current 
technology power from this site could be generated for a levelized cost 
of power of about $74/MWh. This isn't the price that power could be 
sold for, since it doesn't include profit. It does, however, include 
financing charges at higher than utility rates, operating costs and the 
cost of amortizing the capital investment in the welfield and power 
plant. At deeper depths and lower temperatures, the cost of generating 
power using EGS technology is much higher, about $192/MWh. (Figure 4).
    With incremental technology improvement, the cost of power could be 
cut in half or more, particularly for the deeper high temperature 
systems. These incremental technology improvements include things like 
improving conversion cycle efficiency, being able to isolate the part 
of the wellbore that has been treated so that untreated parts can be 
fractured, redesigning wells to reduce the number of casing strings and 
improved understanding of rock/fluid interaction to prevent or repair 
short circuiting through the reservoir. None of these technology 
improvements require game changing strategies, just the kind of 
advancement that comes from persisting in extending our knowledge to 
the next level. Looking at the high temperature example in Figure 3, 
the levelized cost of power could be cut to $54/MWh or about 27% with 
these technology improvements implemented. The moderate temperature 
site could see a much larger reduction of over 60% to $74/MWh.
    Figure 5 shows a supply curve for EGS based geothermal power for 
the entire US. This curve shows the amount of power available at a 
certain cost. However, this is cost of power not price. In other words, 
this is not the price that an independent power producer would charge a 
utility for this power if they were selling it to them. However, it 
does give an idea of what could be economic in the future. The two sets 
of dots are calculated using current technology and the projected cost 
using future incrementally improved technology. Once the cost of power 
increases to around $100/MWh, it is clear that more than 400,000 MW 
would be available or development. This means that the amount of power 
we could develop is not limited by the resource available, but by the 
cost. And the cost is limited by the technology and the fact that we 
aren't doing this here in the US.
    We concluded that at the best sites, those with very high 
temperatures at depths of around 3-4 km in areas with low-permeability 
natural fractures, EGS is economic today. With incremental technology 
improvement, the cost of power could be cut in half or more, 
particularly for the deeper high temperature systems. These incremental 
technology improvements include things such as improving conversion 
cycle efficiency, being able to isolate the part of the wellbore that 
has been treated so that untreated parts can be fractured, redesigning 
wells to reduce the number of casing strings and improved understanding 
of rock/fluid interaction to prevent or repair short circuiting through 
the reservoir. None of these technology improvements require game-
changing or revolutionary strategies, just the kind of advancement that 
comes from persisting in extending our knowledge to the next level.
    The cost of this type of technology improvement is not high. The 
panel felt that an investment of $368,000,000 over a period of about 
8-10 years combined with industry involvement could result in 100,000 
MW on line by 2030. This would be 10% of the current installed capacity 
and over 20% of the current electric generation of the country. 
Combined with the hydrothermal resource, it is a very realistic goal to 
have geothermal energy provide 20% of the nation's electricity by 2030. 
However, the effort would require federal support, university, 
laboratory and industry research, and development and a real commitment 
to renewable energy use.
    Currently more than eight companies are developing EGS power 
projects in Europe and more than 20 companies are working to get power 
on line using this technology in Australia. AltaRock Energy Inc. is the 
only company focused on commercializing power generation from EGS 
technology in the US. In Europe, price subsidies and European Union-
sponsored research are helping to start more than 50 EGS projects. In 
Australia, government grants, help with transmission access, research, 
and legislation requiring generation from renewable energy sources are 
driving EGS technology to commercialization. Other countries with fewer 
economic geothermal resources are planning to include geothermal energy 
in their generation portfolio. The US needs to commit to this clean, 
baseload, renewable power source for our own energy future.

                                SUMMARY

    The Future of Geothermal Energy: Impact of Enhanced 
        Geothermal Systems (EGS) on the United States in the 21st 
        Century
    --http://geothermal.inel.gov/publications/future--of--geothermal--
            energy.pdf
    --12 member panel lead by Dr. Jefferson Tester through MIT
    Conclusions
    --EGS power is technically feasible today
    --Potentially 100,000 MW can be on line by 2030 with federal 
            investment of $350,000,000
    --Resource extends across US
    --Best resources economic today at high temperature, shallow sites
    --With incremental technology improvement, cost can be cut in half
    --With learning by doing and innovative technology improvement cost 
            can be reduced for deep resources to \1/4\ cost with 
            current technology
    Hydrothermal Systems
    --Natural permeability
    --High flow rates
    --Few big systems
    --Located in Western US
    --Exploration drilling is needed and remains risky
    --Economic now even for low temperatures
    -->2800 MW on line growing by about 300 MW/yr
    --Potential for as much as 20,000 MW at economic costs over next 40 
            yrs
    -->95% average availability
    --Technology improvement reduced cost (not price)--13 cents per kWh 
            in 1986 to about 5 cents per kWh in 2006
    Enhanced Geothermal Systems (EGS)
    --Resource is vast
    --Distributed across the US, but best sites in West
    --Low or no natural permeability
    --Reservoir must be engineered to
      --Obtain high flow rates
      --Develop good heat exchange area
    --Exploration risk reduced
      --Temperature only needed
      --Drill deeper to get greater temperature
    --Large systems can be developed
    --Uses proven state-of-the-art drilling technology
    --Fracturing technology developing
    --MIT study identified key areas of technology improvement needed 
            to reduce cost
    --Potential for CO2 sequestration
    --8 companies in Europe; 20 companies in Australia working to 
            commercialize
    --AltaRock Energy--first US company focused on EGS technology 
            development

   STATEMENT OF LISA SHEVENELL, PH.D., DIRECTOR, GREAT BASIN 
  CENTER FOR GEOTHERMAL ENERGY, UNIVERSITY OF NEVADA, RENO, NV

    Ms. Shevenell. OK, thank you Mr. Chairman for the 
opportunity to participate in this discussion about funding a 
more aggressive geothermal initiative. I am the Director of the 
Great Basin Center for geothermal energy, and have 24 years 
experience in geothermal research. The Center that I lead was 
created in 2000, and receives funding from a variety of public 
and private sources.
    It is estimated that approximately 9,000 megawatts could be 
brought online by 2015, based on the results of a 2005 Western 
Governor's Association workshop. A 2006 Western Governor's 
Association report also states that a strong, over-arching 
theme is the need for stable long-term policies at both the 
Federal and State levels, to address U.S. energy needs.
    The Nation needs sustained longer-term energy policies, yet 
this has not yet occurred. Funding cycles remain irregular and 
uncertain, S. 1543 would help remedy the ongoing situation of 
these uncertain funding cycles.
    Volatility in funding persists in threatening the success 
of the national geothermal program, as stated previously by 
members. The proposed elimination of the DOE geothermal program 
would be very damaging to research efforts, and has been 
damaging numerous research institutions that are losing key 
personnel to other interests.
    A sustained, expanded, and dependable funding source is 
needed to supply the necessary research programs that will help 
to increase utilization of geothermal resources. Without 
continued funding, the Nation's geothermal research program can 
not continue to contribute to this important and growing 
industry. Key researchers at several leading geothermal 
research institutes have been lost due to volatility in 
funding.
    These institutions include: Idaho National Lab, Oregon 
Institute of Technology, Southern Methodist University, 
Stanford University, University of Nevada, Reno, and the 
University of Utah.
    A reduction in research staff corresponds to a reduction in 
the ability to train students with real-life, applied research 
experience in collaboration with industry.
    We are in a time of growing needs for expertise in 
geothermal at the exact time that we have been losing expertise 
due to unstable funding cycles.
    As the industry is poised for rapid expansion, many in the 
industry are aging, and too few students are graduating to fill 
the increasing work force needs. Our Center's collaboration 
with industry and research, outreach and training and resource 
development is important to the future health of the industry. 
Educational activities must be accelerated at a number of 
institutions to meet the growing demand for a trained work 
force in geothermal energy.
    In summary, recent downturns in funding are disturbing. 
Without continued, consistent, stable funding, our universities 
and other research institutions will face continued loss of 
faculty with expertise in geothermal resources research, and a 
contribution of educational programs nationwide to this growing 
industry will be reduced accordingly.
    Federal investment in geothermal research and education 
needed by industry and government alike, are appropriate and 
necessary components of a national energy policy, and the 
increased funding suggested by S. 1543 will go far in assisting 
the industry in their research and education needs. Now is the 
time to aggressively pursue secure, clean, reliable geothermal 
energy.
    We, therefore, request that the U.S. Senate pass S. 1543, 
so that the use of geothermal energy in the United States can 
be accelerated. Thank you.
    [The prepared statement of Ms. Shevenell follows:]
  Prepared Statement of Lisa Shevenell, Ph.D., Director, Great Basin 
      Center for Geothermal Energy, University of Nevada, Reno, NV
    Mr. Chairman and distinguished members of the committee, thank you 
for the opportunity to appear before you and participate in this 
discussion about funding a more aggressive geothermal initiative in the 
U.S. through Senate Bill 1543.

                              INTRODUCTION

    I am the director of the Great Basin Center for Geothermal Energy 
at the University of Nevada in Reno and I have experience leading and 
conducting applied research in geothermal energy in collaboration with 
industry for the past 24 years. The Center was created by the 
University in 2000, receives funding from the University and various 
federal, state and tribal agencies and the private sector, and through 
the leadership of Senator Reid, has received congressionally directed 
appropriations since 2002. The mission of the Center is to work in 
partnership with U.S. industry via research, outreach and education to 
establish geothermal energy as a sustainable, environmentally sound, 
economically competitive contributor to energy supply in the United 
States. We are conducting several timely research projects to assist 
industry in identifying and characterizing geothermal resources. We 
have conducted numerous workshops for geothermal stakeholders of all 
kinds, and have published extensive data sets, maps, presentations, and 
publications on our web site (www.unr.edu/geothermal). We are working 
with and graduating students to enter the workforce to participate in 
the geothermal industry, an activity that must be accelerated to meet 
the growing demand for a trained workforce in geothermal energy. The 
industry is expanding rapidly, and employees are not available at the 
rate needed.

                               BACKGROUND

    In the President's 2006 State of the Union Address, he noted again 
that we needed to secure America's energy future, and provide access to 
reliable domestic energy supplies. Geothermal is a reliable baseload 
power source available 24/7. It is estimated that approximately 9000 
megawatts (MW) could be brought on-line within the next decade based on 
the results of a Western Governor's Association workshop held in Reno 
in 2005. However, this was not a scientifically based estimate, and our 
knowledge at this point is not sufficient to give a full estimate of 
the total accessible resource base. Federal programs to conduct this 
assessment are needed as industry does not have the staffing or 
infrastructure available to conduct a proper assessment.
    A National Research Council report (Renewable Power Pathways, 2002) 
indicated that geothermal has an enormous potential resource base, and 
that geothermal research by the U. S. DOE should be increased, 
particularly into technologies that can reduce risk, reduce costs, or 
expand the accessible resource base. In the Western Governors' 
Association's Clean and Diversified Energy Advisory Committee report of 
2006 (http://www.westgov.org/wga/initiatives/cdeac/) they state that 
``A strong, overarching theme . . . is the need for stable, long-term 
policies at both the federal and state levels. . . .'' to address U.S. 
energy needs. The nation needs sustained longer-term energy policies, 
and this has not yet occurred. Funding cycles remain irregular and 
uncertain, as evidenced by the elimination of the DOE geothermal 
program in spite of authorization of increased funding for research by 
the DOE in the Energy Policy Act of 2005. Senate Bill 1543 would help 
remedy the ongoing situation of these uncertain funding cycles. 
Exploration and early testing are very expensive and highly risky.
    Exploration technologies available today require confirmation of 
the resource by drilling, which is expensive, with costs ranging from a 
few million to 10 million dollars per production well. Because the cost 
and risk of exploration are higher than for oil and gas and other 
competing energy sources, the ability to obtain financing is more 
difficult.
    Nevertheless, increases in geothermal power production are clearly 
forecast for the future. Less growth is anticipated in direct use 
applications, although greater focus should be placed on those uses 
also given that increased direct use of geothermal resources would 
displace fossil fuels. In its May 2007 survey, the Geothermal Energy 
Association found that there were 69 power projects in the U.S under 
various stages of development, totaling approximately 2500 MW. In 
Nevada alone, 195 drilling permits have been issued in the past 3.5 
years. In contrast, no projects were completed in Nevada from 1993 
until the end of 2005. In August 2007, the U.S. Bureau of Land 
Management held their first geothermal lease sale in two years in Reno. 
Almost 123,000 acres were leased in Nevada alone at a sale price of 
$11.7 million. It is anticipated that 1500 new MW will be on-line in 
Nevada by 2015, with 240 MW currently permitted. Clearly there has been 
a large increase in interest in developing geothermal resources in 
Nevada, requiring greater staffing and investment across all sectors.
    The last geothermal resource assessment in the U.S. was conducted 
by the USGS in the 1970s from which they estimated a hydrothermal 
resource base of between 95,000 and 150,000 MW. Our understanding of 
geology is far different today than it was in the 1970s, which is 
shortly after the time that plate tectonics began gaining acceptance as 
a standard model for the Earth. In the last 30 years there have been 
huge advances in structural geology and characterization technology. 
Significantly, the oil industry has developed major new 3-dimensional 
seismic imaging technology and directional drilling. These are 
primarily responsible for a revolution in petroleum reservoir 
prospecting and management, but have not been applied as yet in the 
geothermal industry. It was not until the 1980s that binary system 
power conversion became economical in geothermal plants. With a binary 
system, the heat from geothermal fluids is transferred to another fluid 
with a lower boiling (flash) temperature. This lower flash point fluid 
is then used in the generator to produce electricity. The binary cycle 
allows electricity to be generated from a lower temperature reservoir. 
Thus, what was not a significant reservoir in the 1970s may well be 
significant today. The survey published in the 1970s is out of date. 
Clearly, a modern resource assessment must be conducted if geothermal 
energy is to reach its potential.

               THE IMPORTANCE OF GEOTHERMAL TO THE NATION

    Increasing our use of geothermal and other renewable energy 
resources helps diversify our power supply. Increasing the use of 
geothermal energy also helps us move away from our dependence on carbon 
dioxide-producing fossil fuels as the main components of our energy 
supply. Geothermal power production is also a more reliable and 
consistent power supply than other renewable resources because the 
plants operate 24 hours per day and are not subject to daily variations 
in weather as are solar and wind power generation. It is not subject to 
price volatility as are oil and natural gas, and it boosts energy 
security because it is a domestic energy supply. Distributed, smaller 
electrical power plants such as geothermal plants increase our national 
security because many more spatially distributed targets would need to 
be destroyed to cause large-scale power disruptions than would be the 
case with existing large coal-fired and nuclear power plants. Decisions 
made by this committee impact U.S. energy security. As part of a 
comprehensive energy plan, geothermal energy must be utilized to help 
decrease our dependence on fossil fuels. Additionally, geothermal 
energy can be used to produce alternative, clean transportation fuels 
such as hydrogen.

                 SUCCESSES FROM PREVIOUS DOE INVESTMENT

    Previous dollars going to research from the DOE geothermal program 
have led to many successes in the past years, and I will outline a few 
examples based on the recent work at our Center. Our research results 
are directly contributing to the DOI goals of characterization of the 
complete geothermal resource base by 2010 and much of our data for the 
Great Basin has been transferred to the US Geological Survey for their 
assessment efforts. Some of the new areas identified in Nevada by DOE 
funded research efforts were recently bid upon and leased at the August 
14 BLM lease sale (e.g., McGinness Hills, Desert Queen). We have 
identified previously unknown geologically favorable areas for 
productive geothermal resources, which should help in future 
exploration efforts. We have developed new exploration techniques (such 
as shallow temperature surveys and remote sensing techniques) and are 
actively sharing data and techniques with the geothermal industry. 
Research conducted has benefited industry by locating new resources, 
ranking known resources and helping to characterize them to increase 
drilling success. Through efforts such as a meeting held with industry 
and DOE in late 2006 in Reno, we also work closely with industry to 
identify research needs.
    However, volatile funding cycles persist in threatening the success 
of the national geothermal program. The proposed elimination of the DOE 
Geothermal program would be very damaging to our research efforts, and 
has been damaging to the efforts of other research institutions that 
are losing key researchers to other industries. Without renewed 
geothermal funding soon, we would be forced to close the Great Basin 
Center for Geothermal Energy. As Senate Bill 1543 states: ``federal 
policies and programs are critical to achieving the potential'' of 
geothermal resources. A sustained, expanded and dependable funding 
source is needed to support the necessary research programs that will 
help to increase production of geothermal energy and reduce up-front 
risk of geothermal exploration and development. Bill 1543 also states 
that funding should be prioritized for discovery and characterization 
of geothermal resources, currently the major function of the Great 
Basin Center for Geothermal Energy. Further, the Bill states that a 
national center should support the development and application of new 
exploration and development technologies and disseminate geological and 
geophysical data to support geothermal exploration activities; these 
are functions that our current work supports for the Great Basin, which 
includes Nevada and parts of California, Idaho, Oregon and Utah.

                          RESEARCH INVESTMENT

    DOE research should focus its funding in four key areas: (1) 
improving the accuracy of exploration technology to reduce risk; (2) 
improving drilling technology to reduce risk and cost; (3) improving 
identification and characterizations of geothermal resource to enhance 
development; and (4) increasing industry cost-sharing of exploration 
drilling in previously undeveloped areas.
    Without continued funding, our research projects and the Great 
Basin Center for Geothermal Energy will cease to contribute to this 
important and growing industry. Key researchers at several leading 
geothermal research institutes have already been lost due to uncertain 
and irregular funding cycles through DOE. These institutions include 
Idaho National Laboratory, Oregon Institute of Technology, Southern 
Methodist University, Stanford University, University of Nevada, Reno, 
and University of Utah. A reduction in research staff corresponds to a 
reduction in the ability to train students with real-life applied 
research experience in collaboration with industry. Funding for 
geothermal must increase and stabilize, otherwise these research 
institutions will be forced to seek other resources, abandoning their 
geothermal work, resulting in a huge loss to the geothermal community. 
We are in a time of growing needs for expertise in geothermal at the 
exact time that we have been losing expertise due to unstable funding 
cycles. Consistent federal policies and funding over longer periods of 
time are needed to develop our untapped geothermal resources, both for 
power generation and direct use applications. Increased, consistent 
funding for the GeoHeat Center (Oregon) would also go far in advancing 
direct use applications, in addition to electrical generation. This 
Center is the only U.S. institute focusing on direct use applications, 
and they similarly have just lost an expert in this field due to 
unstable and uncertain funding cycles.

                         EDUCATIONAL INVESTMENT

    We must increase our investment in geothermal research and 
education at this critical juncture. As the industry is poised for a 
rapid expansion, many in the industry are aging, and insufficient 
students are graduating to fill the need for the increasing workforce 
needed. The Federal government also faces a shortage of engineers and 
geoscientists needed in land-management and regulatory roles. Our 
Center's collaboration with industry in research, outreach, training 
and workforce development is important to the future health of the 
industry. Currently, individuals are in very high demand due to the 
booming mining and petroleum industries that seek many of the same 
talents as are needed in the geothermal industry. This educational 
activity must be accelerated to meet the growing demand for a trained 
workforce in geothermal energy. The industry is expanding rapidly, and 
employees are not available at the rate needed. I have been approached 
frequently this year by industry seeking employees of nearly any type, 
be it part time, full time, temporary, interns, or graduate students--
whoever is trained and available. Skilled workers are at a premium and 
resources need to be allocated to rapidly develop a trained workforce 
at both the graduate and undergraduate level, as well as at the 
community college level for technicians, and programs and curricula are 
currently under development.

                               SUMMATION

    In summary, recent downturns in funding are disturbing. Without 
continued, consistent, stable funding, our research projects and 
projects at other research institutions will cease to contribute to 
this important and growing industry and our institutions will face the 
continued loss of faculty with expertise in geothermal.
    Historically, the DOE geothermal program has contributed much to 
the industry with modest agency investments to applied research and 
cost shared programs, and the increased funding suggested by Bill 1543 
will go far to assist the industry in their research and education 
needs.
    We therefore request that the US Senate pass Bill 1543 such that 
the use of geothermal energy in the US will be accelerated. I believe 
that stabilization and expansion of the investment in geothermal energy 
research and cost-shared programs is critical to future power 
generation of the U.S. Federal investments in geothermal research and 
in education of the workforce needed by industry and government are 
appropriate and necessary components of a National energy policy. Now 
is the time to aggressively pursue secure, clean, reliable geothermal 
power. Thank you.

    The Chairman. Thank you very much.
    Dr. Wunsch--is that the correct pronunciation?
    Mr. Wunsch. Yes, it is, Mr. Chairman.
    The Chairman. Thank you for being here, and please, go 
right ahead.

 STATEMENT OF DAVID R. WUNSCH, PH.D., GEOLOGIST AND DIRECTOR, 
     NEW HAMPSHIRE GEOLOGICAL SURVEY, AND VICE-PRESIDENT, 
     ASSOCIATION OF AMERICAN STATE GEOLOGISTS, CONCORD, NH

    Mr. Wunsch. Mr. Chairman, thank you very much, and members 
of the committee for allowing me the chance to participate in 
this panel and testify in favor of S. 1543. I am currently the 
Vice President of the Association of American State Geologists, 
and represent the Chief Executives of the Geologic Bureaus of 
the 50 States, as well as the Commonwealth of Puerto Rico.
    AASG support S. 1543, and believes that geothermal energy 
is vastly under-utilized as a resource that could contribute to 
the Nation's energy independence, economic growth, and the 
quest for low-emissions, sustainable energy resources.
    S. 1543 is also a big step in integrating the resources of 
the Federal Government, agencies, national labs, academia and 
State agencies, such as the State surveyors.
    In the eyes of the public, geothermal energy is generally 
equated to the areas of high hydrothermal resource development 
out West, Yellowstone National Park is probably one example 
they may have seen.
    Now, on the opposite end of the spectrum of low-temperature 
geothermal, something that's become ubiquitous is the use of 
geothermal heat pumps that are--can be used pretty much around 
the country.
    What I'd to speak to a little bit is about the things that 
occur in that temperature range in between, which includes the 
use of hot dry rock technologies and binary systems where other 
chemicals can be used that boil at temperatures less than the 
boiling temperature of water, and can convert that heat energy 
into mechanical for electrical production.
    As was mentioned by previous panel members, the oil and gas 
production and geo-pressurized fluids that come out of there 
also has a unique potential for producing energy as a by-
product of oil and gas production. Another one that is vastly 
underused, is direct heat, just simply the hot water that can 
be utilized for heating large buildings, factories, and for 
such uses as greenhouses, food processing, curing cement 
products, and many others.
    Mr. Chairman, from your home State of New Mexico I've 
borrowed a bulletin from the New Mexico Bureau of Geology and 
Mineral Resources. It is an excellent summary of some of the 
different uses of geothermal energy. On the second page of that 
they have a great graphic that shows a range of temperatures 
and things that the water can be used for, including lumber 
drying, building greenhouses, et cetera.
    In my State of New Hampshire, the Northern part of the 
State, which is very forested, has taken a real economic 
downturn because of the loss of the lumber and wood products 
industries. Now, if there was direct heating, perhaps, to heat 
some of these large factories, imagine the economic boom that 
could be encountered by providing some of the cheaper energy 
costs which might make these more competitive in the economic 
world markets. That would not only help New Hampshire, but many 
of the Northern States that are heavily forested.
    In reference to specific programs mentioned in S. 1543, the 
State Geologists believe that it is time to do this new 
enhanced assessment that we've been talking about. There are 
some maps that have been made by various sources, but some of 
the data is not consistent, or they are presented at broad 
national scales, and there is a need for a comprehensive data 
set presented at a detailed scale.
    Since the last one that was done by the U.S.G.S. in 1979, 
there's been huge advances in geophysical exploration, 
including 3-D imaging. In addition, the State Geological 
Surveys have been involved in carbon sequestration studies, so 
that there's been enhancements in the amount of data that's 
been collected in the sub-surface, which can be used 
concomitantly for characterizing geothermal resources.
    In addition, State Geological Surveys often have 
information about local geothermal resources that could be 
captured in this national assessment. For example, the Alaska 
State Geological Survey performed an assessment in the early-
1980s as a primary source of analysis for current prospecting 
of that State.
    In my State of New Hampshire, we have legislation that's 
been introduce, H.B.415 that would charge the State Geological 
Surveys with conducting a geothermal assessment. Having 
technical support, and perhaps, cooperative funding from this 
Federal program would enhance our efforts, tremendously.
    Therefore, AASG believes it's imperative that any national 
assessment should be performed in cooperation with the State 
Geological Surveys, regional volcano observatories and other 
agencies, and academic institutions.
    With respect to the U.S.G.S. timeline for the enhanced 
study of 2010, this may be a little bit short, considering all 
of the resources that would have to be combined, especially if 
State assessments were brought in, but perhaps 2012 might be a 
more appropriate date.
    Currently, less than 1 percent of the energy the Nation 
consumes is from geothermal resources, so the goal of 20 
percent of our electrical production by 2030 could be a bit 
ambitious. For example, Australia which has a smaller 
population and total demand, but is farther along in hot dry 
rock technology, has limited their power expectations to 6.8 
percent of its baseload by 2030. However, if we include the 
energy efficiencies that could be gained by broad-scale low-
temperature geothermal as well as geo-exchange heat pumps, 
maybe the 2030 goal of 20 percent is, indeed, workable, and 
it's something I believe we should strive for.
    In summary, AASG fully support S. 1543, we believe for 
Congress, it's the time now to act to support research, 
development and to sponsor demonstration geothermal energy 
projects to meet our needs, and to make us less dependent on 
foreign energy sources and ensure our national security. AASG 
members and the State Geological Surveys they direct are 
willing and able partners to partner with the U.S.G.S., 
Department of Energy and other Federal entities that would be 
charged with developing and assessing the Nation's geothermal 
resources.
    Thank you, and I'll be glad to answer questions after the 
panel concludes.
    [The prepared statement of Mr. Wunsch follows:]

 Prepared Statement of David R. Wunsch, Ph.D., Geologist and Director, 
  New Hampshire Geological Survey, and Vice-President, Association of 
                 American State Geologists, Concord, NH

                              INTRODUCTION

    Mr. Chairman and members of the Committee, thank you for the 
opportunity to present testimony in full support of S.1543. I am the 
vice-president of the Association of American State Geologists (AASG), 
which represents the chief executives of the geologic agencies of the 
fifty states and the commonwealth of Puerto Rico. The state geologists, 
and the geological surveys they direct, collect geologic information, 
conduct research, and disseminate this information by way of scientific 
reports, maps, and other means. Collectively the state surveys 
represent one of the largest centers of geological information in the 
United States, and whose participation will be critical in assessing 
and exploring geothermal resources for the nation.
    S.1543 fills an important gap in the research and development of 
geothermal resources in the United States, and would serve to remedy 
the lack of programmatic support for the DOE geothermal program as 
defined in the Energy Policy Act of 2005. Geothermal Energy is an 
untapped and underutilized resource that could contribute immensely to 
our nation's energy independence, economic growth, and quest for low-
emission, sustainable energy resources. Recently an interdisciplinary 
panel affiliated with the Massachusetts Institute of Technology (MIT) 
concluded that both conventional and engineered geothermal systems 
could produce 100 gigawatts of electric energy for the United States in 
the next 50 years. Their report (The Future or Geothermal Energy, MIT) 
recommends that the time to enlist a comprehensive plan to develop the 
nation's geothermal resources is now. S.1543 is a big step toward 
integrating the resources of federal government agencies, national 
labs, academia, and state agencies in performing a national assessment 
to evaluate our nation's geothermal resources.

              THE RANGE OF GEOTHERMAL ENERGY OPPORTUNITIES

    In the eyes of the public, geothermal energy is generally equated 
with areas of concentrated hydrothermal activity in the western United 
States, such as Yellowstone National Park. Large-scale geothermal 
systems exploit high-temperature water sources, capitalizing on the 
supercritical water and stream generated at relatively shallow depths, 
and use its heat energy to turn turbines and generators that produce 
electricity. In the past decade a more ubiquitous, low-temperature form 
of geothermal energy has been commercially successful that utilizes the 
constant temperature of the earth at very shallow depths. These low-
temperature geothermal heat pump systems, sometimes referred to as 
geoexchange systems, are very efficient at heating and cooling, and are 
regularly being used in large commercial buildings, military 
installations, public buildings such as schools, and private homes. 
Geoexchange systems can be installed literally anywhere, and offer 
widespread access to geothermal resources.
    Direct hydrothermal power generation, and geoexchange systems 
described above represent the high and low-temperature end members of 
the geothermal energy spectrum, respectively. However, there are 
several applications of geothermal energy that exist between these 
temperature regimes, and offer a tremendous opportunity for the 
development of cost effective, low-impact energy sources that are 
viable in geologic settings that are more geographically diverse. For 
example, in tectonically stable regions of the nation, most geothermal 
resources are non-hydrothermal and are more difficult to exploit using 
existing technologies. Yet the potential for this type of ``dry'' 
geothermal energy is enormous because its use is not restricted to 
hydrothermal activity normally associated with tectonically active 
regions. Technology is being developed to exploit non-hydrothermal 
geothermal energy reserves, known as hot dry rock (HDR) reservoirs. 
These energy extraction technologies work by tapping heat with deep 
boreholes drilled into a HRD reservoir. Once boreholes are installed, 
water is injected into the HDR reservoir to induce fracturing and 
increase the heat exchange capacity of the reservoir. This artificial 
generation of fractures creates more pore space and surface area for 
water cycled into the HDR reservoir to absorb geothermal heat. Water 
heated by contact with the rock is then extracted from the fracture 
system through a neighboring extraction well and used to generate power 
in steam turbines. In typical HDR designs the water is circulated on a 
closed loop and injected back into the fracture reservoir once it has 
passed through the power plant. Hence, HDR geothermal systems are 
nearly 100% emission free, introducing no wastes into the environment. 
Some designs, such as binary systems, incorporate a secondary organic 
fluid that is circulated in a closed loop system to create the 
mechanical energy necessary to generate electric power at temperatures 
below the boiling point of water (212F).
    Several countries, including Japan, Switzerland, Sweden, Germany, 
are actively advancing HDR technology by research and development, or 
operating demonstration power-generating systems using HDR technology. 
The European Union currently has sponsored a demonstration site near 
Soultz, France that has shown promising results. In Australia, private 
enterprise is leading the way in actively developing the technologies 
for constructing engineered HDR systems. And the U.S., through a HDR 
project at Los Alamos National Lab, has also worked with this 
technology. There are many areas of the country that may be viable for 
exploiting these enhanced or engineered geothermal systems at depths 
that are within the drilling range of current technology, including 
much of the western United States.
    Geopressurized geothermal resources consist of gas-saturated brines 
contained in oil and gas reservoirs under anomalously higher 
temperatures and pressures than would ordinarily be expected. There are 
many producing regions in the U.S. that have geological formations that 
exhibit these conditions. The U.S. Department of Energy conducted a 
geopressurized-geothermal research program from 1975 to 1992. The 
resulting work showed that wells with high brine flow rates could 
produce natural gas as well geothermal heat energy as a byproduct that 
could be used to produce electricity using a Hybrid Power System (HPS), 
similar to the binary system described above. The brine could safely be 
reinjected into the formation to enhance recovery efforts. To date, 
geothermal resources related to oil and gas production remain largely 
underutilized. The further development of the resource would benefit 
from enhanced reservoir characterization, improved high-temperature and 
high-pressure drilling, construction, and completion technologies, and 
the development of high efficiency binary-cycle power systems. S.1543, 
in Section 5, addresses these and other constraints that preclude the 
active development of these geopressurized-geothermal resources, and 
would promote research, development, demonstration, outreach and 
education, and commercial application.
    The use of direct heat applications of geothermal waters is a 
vastly underutilized resource. Water need not be heated to boiling or 
supercritical temperatures to produce economic benefit. Water 
temperatures in the 100F range can be used for aquaculture and 
enhancing biogas production. Geothermal fluids in the 150F range can 
be used for direct heating green houses, buildings and homes, food 
processing, curing fabricated cement, and other purposes. Direct 
heating applications can also be co-generated from power plants that 
utilize hydrothermal fluids. The New Mexico Bureau of Geology and 
Mineral Resources has compiled an excellent description and examples of 
the wide uses and range of applications based on ambient temperature of 
the fluids. The publication (Geothermal Energy in New Mexico, 2006) is 
attached to this testimony.* Data compiled by the Southern Methodist 
University estimates that much of the West, and select areas of the 
eastern half of the country may have temperatures in the range to 
accommodate the direct uses described above within 10 kilometers of the 
surface, which is a depth currently attainable utilizing present 
drilling and engineering technologies adapted form large-scale oil and 
gas production.
---------------------------------------------------------------------------
    * Publication has been retained in committee files.
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                    COMMENTS SPECIFIC TO SENATE BILL

    The Association of American State Geologists strongly supports the 
initiatives that would be authorized in S.1543 if it became law. The 
Bill would charge the USGS, in cooperation with DOE, to conduct a 
nationwide assessment of geothermal resources within the United States. 
This assessment is overdue. The last comprehensive characterization of 
geothermal resources was conducted by the USGS in 1978 (USGS Circular 
790). Since then there have been clear advances in geophysical 
exploration, including three-dimensional (3-D) imaging, and other 
methods for enhanced subsurface characterization. Moreover, maps 
created by different sources that show favorable areas for geothermal 
resources are often not consistent, or they are presented at broad, 
national scales. Thus, there is a need for a uniform, comprehensive 
national dataset presented at a detailed scale.
    Many state geologic surveys maintain the well record libraries for 
the states, and conduct the majority of basic geologic mapping 
activities that are being performed in their states with funding 
through the USGS Cooperative Mapping Program. In addition, several 
state surveys are either independently or through consortia 
investigating a variety of geologic repositories for carbon 
sequestration. The geologic data being compiled from these efforts 
could concomitantly provide valuable information for characterizing 
geothermal resources. These basic data are critical to identifying and 
characterizing the nature and extent of low permeability formations in 
basins or basement, or low-grade hydrothermal resources that could be 
candidates for engineered geothermal systems.
    For example, state geologic surveys often have a significant amount 
of information on local geothermal resources that should be captured in 
the national assessment. The Alaska State Geological Survey performed 
an assessment in the early 1980's that is the primary source for 
analysis and current prospecting. Therefore, the AASG believes it is 
imperative that any nationwide assessment of geothermal resources 
should be performed in cooperation with the state geological surveys, 
regional volcano observatories, and other local agencies that have 
knowledge and data within and among the states. The development of 
cooperative efforts and programs should be clearly reflected in Bill 
1543. In my own state of New Hampshire, there is currently a bill being 
evaluated by our state legislature (HB 415-FN) which would charge the 
New Hampshire Geological Survey with conducting a geothermal assessment 
of the state. This would include compiling available geophysical data 
that have become available since a cooperative Department of Energy 
pilot well project was completed in the 1970's. For our new assessment, 
we would also collect new data and expand the database of bottomhole 
temperature measurements. This statewide assessment could benefit from 
cooperative efforts, technical support, and additional funding from 
federal agencies, and would ultimately provide new and more 
comprehensive data, including geochemical and radiometric analysis of 
granite, which is one assumed source of higher heat-flow areas within 
the state. The statewide assessment for potentially expanding 
geothermal energy use is consistent with New Hampshire's goal of having 
25% or its energy needs supplied from renewable sources by 2025. Many 
states have their own agendas for developing renewable or green energy 
supplies, so the time is appropriate for establishing a cooperative 
federal program would assist state efforts to compile scientific data 
that collectively will be a critical component of any national 
assessment.
    S.1543 assigns the USGS a deadline of 2010 for completing the 
geothermal assessment, which may not afford enough time to coordinate 
the resources available between federal and state agencies, or 
synthesize the assessments that states may be conducting independently. 
This is especially true if engineered geothermal systems are 
considered. Perhaps 2012 would be a more appropriate date, which would 
allow adequate time to complete the assessment. It is important that 
the national assessment be comprehensive and robust, because the nation 
would depend upon the findings of this report to develop the full 
extent of its geothermal resources. Just as important, a realistic and 
accurate assessment will be critical in meeting the stated goal of 
having 20 percent of the total US electrical energy production from 
geothermal resources by 2030.
    Currently less than 1 percent of the energy the nation consumes is 
created from geothermal sources, so the proposed goal of achieving 20 
percent of total electrical production by 2030 from geothermal 
resources is ambitious, especially if this number refers strictly to 
electrical energy production, and does not consider improvements to 
efficiency. The EIA reports that total energy demand is increasing in 
the United States, and is expected to grow by 41 percent by 2030 (EIA 
website, http://www.eia.doe.gov/oiaf/aeo/pdf/trend--3.pdf ). By 
comparison, Australia has a smaller population than the US, and is 
farther along in the development of HDR power. Private companies have 
applied for permits for 116 areas, and can be expected to invest $A 524 
M ($US 435 M) in their projects in the next six years. But Australia 
has limited their geothermal power expectations to 6.8% of its base 
load power needs by 2030.
    In the case of the US power portfolio, the 20 percent goal may be a 
more achievable if energy efficiency is included. For example, 
geothermal heat pumps are the most energy efficient and environmentally 
friendly method of heating and cooling homes. They are 48% more 
efficient than gas furnaces and 75% more efficient than oil furnaces, 
and the increased efficiency means reduction in greenhouse gas 
emissions. Installing a heat pump system in a typical home is equal to 
planting an acre of trees in terms of greenhouse gas reduction. For 
every 100,000 homes with geothermal heat pump systems, foreign oil 
consumption is reduced by 2.15 million barrels annually, and 
electricity consumption is reduced by 799 million kilowatt hours 
annually. The more than 900,000 geothermal heat pumps installed in the 
U.S. currently yield an energy savings equivalent to taking 1,165,000 
cars off the road, planting more than 346 million trees, or reducing 
crude oil imports by 19.3 million barrels. If geothermal heat pumps 
were installed in commercial, industrial, and private residences 
nationwide, we could save several billion dollars in annual energy 
costs, and significantly reduce demand for electricity.

                               SUMMATION

    The Association of American State Geologists fully supports the 
initiatives and programmatic efforts being proposed in S.1543. 
Geothermal Energy is an untapped and underutilized resource that could 
contribute immensely to our nation's energy independence. The nation's 
energy needs are expected to grow in the coming decades, and the 
Congress should act now to support research, development, and 
demonstration of geothermal energy resources and projects to meet the 
nations energy needs, reduce our dependence on foreign energy sources, 
and to ensure national security. New technologies, and advances in the 
scientific understanding of the earth's subsurface make a variety of 
geothermal applications viable for meeting part of the nation's energy 
needs. The members of the Association direct the activities of the 
state geologic surveys, who are willing and able partners that can 
assist the US Geological Survey and the Department of Energy with 
assessing and developing the nation's geothermal resources as defined 
in S. 1543. Thank you.

    The Chairman. Thank you very much.
    Dr. Williamson, go right ahead.

     STATEMENT OF KENNETH H. WILLIAMSON, PH.D., GEOTHERMAL 
                   CONSULTANT, SANTA ROSA, CA

    Mr. Williamson. Chairman Bingaman, members of the 
committee, thank you for inviting me here today. I'm not 
representing any company or industry group, these are my 
personal views today.
    My experience is 5 years of government geothermal research 
in the U.K., and the rest of my experience has been in private 
industry, where I worked for a U.S. company that developed a 
quarter of the world's geothermal resources.
    I'd also like to say that the leading geothermal company 
worldwide, at this time, is an American company--Chevron is the 
largest producer of geothermal energy worldwide. The geothermal 
assets, I also should say, are not in the United States.
    The Chairman. You're saying Chevron's geothermal assets are 
not in the United States? Is that your point?
    Mr. Williamson. Chevron's geothermal assets are in 
Southeast Asia, but it is currently the largest producer of 
geothermal energy worldwide.
    The Chairman. All right.
    Mr. Williamson. I believe the national goal proposed in S. 
1543 is of great importance to our country, that's why I'm here 
today. It will enable us to reduce greenhouse gas emissions, 
and improve energy security. But, it will be very challenging 
for both industry and for government--it implies an 18 percent 
per year growth rate.
    Hundreds of billions of dollars of private investment are 
required, about half a trillion dollars, by my estimate. Tens 
of thousands of geothermal wells have to be drilled, millions 
of acres of land have to be leased, and permits approved, so I 
think the focus of S. 1543 has to be to motivate industry to 
take up these challenges.
    I see four roles that government can adopt to help motivate 
industry. The first is to provide incentives. I see engineered 
geothermal systems, or Enhanced Geothermal Systems as the key 
to large-scale development. It will be--it's the only way that 
I can see that we could reach that 20 percent goal. The fastest 
way to get that moving is to provide incentives to private 
industry.
    Governments in Germany and Australia have already done so, 
and private industry responded quickly in both countries. For 
example, a subsidized power price for the first few hundred 
megawatts of EGS installed might be the most effective, and it 
should be spread over a range of geological environments, if 
that's how we chose to do it.
    The second role I see if for research. There are two key 
areas of research to making EGS work, in my opinion. The first 
is, we need to improve EGS productivity. We need to do 
experiments on how to improve the flow of water through these 
cracks that we make in the rocks, and be able to predict what 
will happen with computer models.
    Second, sometimes cold water leaks through from one well to 
the other, and that can be very damaging. We need to be able to 
devise a system to repair these short circuits. So, these are 
the two areas of focus I would like to see on EGS research.
    Another area of research that would be productive, I 
believe, is what I call ``heaven systems.'' The currently 
developed geothermal systems in the United States, almost all 
have associated hot springs, but I believe there are many 
geothermal systems that have no surface expression, and we lack 
rapid reconnaissance tools to find these systems. We need 
better geophysical tools to target wells and both areas would 
benefit from basic research that the government could sponsor.
    The third government role I see as being critical is in 
education. Many U.S. geothermal experts started their careers 
in the 1970s, as I did. We urgently need a new crop of 
engineers and geologists in this industry. We need geothermal 
courses to be taught in universities across the United States.
    The fourth role is in leasing and permitting. Millions of 
acres of government land will need to be leased to develop this 
20 percent goal. The BLM will need the resources to do this, 
and the permitting process will need to be streamlined.
    I have to say, the first project I worked on in the United 
States when I arrived in 1981 was successfully discovered in 
Northern California, and it is still awaiting permits to be 
developed.
    The Chairman. It's awaiting permits from one of the Federal 
Departments, the Department of Interior? Or who?
    Mr. Williamson. I believe it's currently held up in the 
District Court, there's been a challenge to the permit that was 
issued.
    The Chairman. OK.
    Mr. Williamson. In conclusion, then, I believe that 
geothermal can play a major role in cutting greenhouse gas 
emissions, and establishing energy security for this country. I 
believe that past technology will not get us to the 20 percent 
goal. I believe that EGS is the key, and I believe that 
continued research is required.
    Private industry must be motivated to move quickly on EGS, 
and the government must find a way to do this, with financial 
incentives and streamlined approvals.
    Thank you for your attention.
    [The prepared statement of Mr. Williamson follows:]

    Prepared Statement of Kenneth H. Williamson, Ph.D., Geothermal 
                       Consultant, Santa Rosa, CA

    Chairman Bingaman, members of the committee, thank you for inviting 
me to testify today. I had 24 years experience exploring and developing 
geothermal resources with Unocal Corporation, an American company that 
developed a quarter of the world's geothermal capacity. I worked in 
geothermal research and exploration for 5 years with the British 
Geological Survey. My doctorate thesis involved a study of heat flow 
from the earth in East Africa. I am now a geothermal consultant, and 
for the past several months I have been working with Chevron 
Corporation, the largest producer of geothermal energy in the world. I 
am not representing any company or industry group today. This testimony 
reflects my personal views.
    S.1543 seeks to establish a national goal: 20 percent of total 
electrical production in the United States from geothermal resources by 
2030. Achieving this would be a major step towards reducing greenhouse 
gas emissions, and creating energy security for our country. It would 
demonstrate to the rest of the world that clean, base load electricity 
can be generated on a large scale with minimal carbon dioxide 
emissions, and without the risks of nuclear power.
    What will it take to get there? With the current geothermal 
installed capacity in the U.S. at less than 3,000 MW, we need to grow 
at 18 percent per year based on EIA predictions.\1\ It will take 
hundreds of billions of dollars of capital, tens of thousands of 
geothermal wells, and millions of acres of land. We should look to 
private industry to invest dollars and drill wells, but government also 
has a critical role.
---------------------------------------------------------------------------
    \1\ Energy Information Administration(2007). Annual Energy Outlook 
2007 with projections to 2030.
---------------------------------------------------------------------------
    The 20 percent goal will not be achieved using the technology of 
the past. Traditional geothermal resources are hard to find, but easy 
to produce. Once a hole is drilled in the right place, usually more 
than a mile deep, geothermal brine or steam flows up the well and can 
be used to generate power. However natural geothermal reservoirs 
require very special geological conditions--not only must the rock 
underground be hot, it must also be naturally fractured so that water 
can flow through it.
    In the past, we have found these reservoirs in the same way that 
the early oil industry found oil--by searching for seeps on the 
surface. Hot springs on the surface are the best place to start 
drilling for geothermal reservoirs deep below. But many of the 
promising sites with hot springs have already been drilled.
    We need new technologies that can find ``hidden geothermal 
reservoirs'' deep in the earth, where no hot springs are leaking to the 
surface. The oil industry developed ways to find oil when there were no 
oil seeps at the surface. The geothermal industry needs reconnaissance 
tools that can detect deeply buried geothermal reservoirs with no 
associated hot springs, and more precise methods to target wells.
    However, to achieve the 20% goal we must develop a new kind of 
geothermal resource, called EGS. We know it is possible to create 
reservoirs artificially in rocks that are already hot, but not 
permeable. In this case a well deep enough to penetrate hot rocks will 
not produce geothermal fluid when it is first drilled. Instead it will 
have to be stimulated with high pressure fluids, in a way that creates 
a substantial network of cracks extending out from the well into the 
surrounding hot rock. This process has come to be known as Enhanced 
Geothermal Systems, or EGS.\2\ Making EGS work economically has been an 
elusive goal, and governments in the US, Europe and Japan have spent 
hundreds of millions of dollars trying over the past 30 years. But now 
EGS technology is within reach. A European Union project in France made 
significant progress, and government and industry are working together 
in Australia on an ambitious venture to demonstrate EGS on a large 
scale. In Germany, a new geothermal industry has responded aggressively 
to the high prices offered for renewable energy.
---------------------------------------------------------------------------
    \2\ Tester, J., Anderson, B., Batchelor, A., Blackwell, D., 
DiPippo, R., Drake, E., et al. (2006). The Future of Geothermal Energy. 
Impact of Enhanced Geothermal Systems (EGS) on the United States in the 
21st Century. Massachusetts Institute of Technology.
---------------------------------------------------------------------------
    How can the U.S. government facilitate geothermal growth, and 
motivate the private sector?
    Incentives.--My view is that incentives that offer higher returns 
for EGS power projects during the early years of development are likely 
to be more effective than cost sharing, since they are directly linked 
to the goal of increasing electricity generation.
    Research.--We need basic research to support the development of 
tools which will enable us to:

          1) Explore for hidden geothermal systems: We need rapid 
        reconnaissance tools to identify prospects and more precise 
        targeting tools to increase the success rate of exploration 
        wells.
          2) Improve the productivity of Enhanced Geothermal Systems: 
        This will require a better understanding of how cracks form and 
        propagate in different stress regimes and rock types. New tools 
        need to be developed that allow specific zones in a hot 
        borehole to be isolated for both fracture creation and short-
        circuit repair. This will allow multiple fracture zones to be 
        created from a single borehole, enhance the water circulation 
        rate, and reduce the cost of development.

    Geothermal research involves a wide range of disciplines that 
benefit strongly from interaction with other industries. Research 
funding should not be concentrated in one or two institutions, but 
strategically distributed to take advantage of synergies in other 
industries and disciplines.
    Education.--Many geothermal experts in the US began their careers 
in the 1970's, as I did. There is an urgent need to train and recruit a 
new crop of geoscientists and engineers. Geothermal courses need to be 
taught in universities, and the basic concepts introduced in schools.
    Leasing and Permitting.--Once the economic feasibility of EGS has 
been demonstrated, there will be another critical role for government. 
To develop enough sites to achieve the national goal, the process for 
leasing land and permitting projects will have to be streamlined, and 
the BLM will need adequate resources.
    In summary, the goal to generate 20 percent of our electricity from 
geothermal resources by 2030 is very aggressive relative to our 
previous experience. But large scale geothermal development will be 
essential if we are to reduce greenhouse gas emissions, and help to 
ensure energy security. The good news is that the technology to make 
Enhanced Geothermal Systems work economically is within reach. If 
government provides incentives for initial development of EGS, funds 
basic research to improve technology, educates new engineers and 
geoscientists in geothermal disciplines, and streamlines the leasing 
and approval process, EGS will become a compelling sector for private 
investment.

    The Chairman. Thank you very much.
    Thank all of you for your excellent testimony.
    I have some written questions that I will submit and will 
ask you to respond to if you could in the next week or two, but 
I did not have any oral questions right now.
    Let me defer to Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman, I will be brief 
in my questions, as well.
    I note, Dr. Shevenell and Dr. Williamson, you both speak to 
the need to make sure that we have those individuals--whether 
they're in the universities or the programs that are focused on 
the technology that we'll be able to advance this. We heard 
Under Secretary Karsner suggest that the goals that we have set 
out are not feasible. They will not be feasible if we don't 
have the individuals that are educated, working on it, trained, 
focusing on this. So, it could be a self-fulfilling prophecy if 
we don't put the funding where we need the funding to make sure 
that we are moving in that direction. So, I appreciate that 
focus, just in terms of making sure that we have the 
individuals in these areas.
    Dr. Williamson and Ms. Petty--you both mentioned the 
incentives, certainly recognize there are some who say, ``Well, 
this is a mature technology, we don't need incentives, we don't 
need financial assistance, we don't need anymore more than the 
existing production tax credits.'' I'm assuming that both of 
you would agree that, in fact, some form of financial 
assistance, or some form of financial incentive continues to be 
necessary in the area of geothermal, is that correct from both 
of you?
    Ms. Petty. Financial incentives that have worked in the 
past include the Standard Offer No. 4 that was part of the 
California Utility Position back in the early 1980s when the 
price of oil was so high last time. This stimulated a great 
deal of the expansion of geothermal that happened during that 
next 5 years, and a lot of the power that we have online now, 
which is generating at much, much lower prices than were 
originally paid for that power back when it went on line in the 
1980s, it came as a result of those Standard Offers.
    The loan guarantees that the Department of Energy made for 
geothermal developers, while it--I think--expanded our 
knowledge of systems and improved our understanding, did not 
develop a lot of power. The tax incentives that we have are 
useful for geothermal, but perhaps not as useful as they have 
been for wind energy. The only happen after production is 
online, they're a production tax credit.
    As we've said, and many of us have said, there's a great 
deal of time between the first discovery of a resource, or the 
first effort to develop it, and the actual generation of power. 
If that time period could be shortened, then these production 
tax credits might be more useful, but because of permitting 
delays, and because of the difficulty of obtaining the 
geothermal rights to land, the delays have made these tax 
incentives, perhaps, less valuable.
    In Germany and Australia, they actually use price 
incentives, and that's getting a lot of power online.
    Senator Murkowski. Let me ask you one question, Dr. 
Williamson, you mentioned as one of your four proposals here, 
we need to look to additional basic research, and doing what we 
can to help identify where our geothermal prospects are. In 
Alaska, we've got a project that we are looking at out on the 
Aleutian Chain, and we've got a company who is looking to use 
Unmanned Aerial Vehicles, drones, to attempt to improve the 
detection efforts to more precisely identify where the hot 
spots are. Is this something where, in your opinion, this kind 
of research could be helpful in reducing the costs? Or, give me 
your sense on that.
    Mr. Williamson. Senator, can I address your previous 
question first?
    Senator Murkowski. Certainly, go ahead.
    Mr. Williamson. The reason I think incentives are important 
is, I believe strongly that we have to address the issue of 
greenhouse gases. If you look at the growth required in 
geothermal additions per year, in order to achieve the 20 
percent goal, it is so aggressive that the only way I can see 
that it an be met is by private industry, as I have seen in my 
career--private industry responding to incentives in the early 
years--only in the early years, and for the first phases of 
development.
    So, that's the reason--if there was no sense of urgency, I 
would not advocate that. But there's a strong sense of urgency 
here, there is a technology issue to be solved before EGS can 
be, in my opinion, is going to be economic. So, that's the 
reason I advocate it.
    Senator Murkowski. I appreciate that.
    Mr. Williamson. Your question about using drones for 
geothermal reconnaissance--I am not familiar with this specific 
example. My focus in my testimony has been not on research 
focused on conventional resources, and I think we can--we have 
developed, as the President of Iceland said, developed the 
ability to explore and understand them very well, there's 
always room for improvement--but my focus is on EGS and on 
hidden systems. If there's no surface expression, then drones 
that detect thermal effects might also not be so effective.
    So, it's hard to predict what areas of research will 
benefit. This is such an aggressive goal, I'm reluctant to be 
negative on any area of research, to be honest.
    Senator Murkowski. I appreciate it. We don't want the 
negativity.
    Mr. Chairman, thank you , and to all of those who have 
given us great testimony today, we greatly appreciate your 
comments.
    The Chairman. Thank you all for being here, and I think 
this was a useful hearing. We had a lot of good testimony and I 
appreciate the good work that you folks put into preparing your 
testimony.
    Thank you, that will end our hearing.
    [Whereupon, at 12:03 p.m., the hearing was adjourned.]
                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

      Responses of Susan Petty to Questions From Senator Bingaman

    Question 1. What level of funding would be needed to generate one 
full-scale EGS project today?
    Answer. a. Commercial Development.--Right now, commercial EGS 
development is both technically and economically feasible at sites in 
the US with very high temperatures, >250C (480F) at shallow depths of 
less than 3 km (10,000 ft). A project would likely start with a 
demonstration plant of about 10 MW that would include an injector and 
one or two producers and a small scale demonstration size steam turbine 
or binary unit. This would cost between $36 million and $42 million 
depending on the flow that could be achieved per well. The next phase 
would expand the project by adding two to three additional wells and 
two more modules of 10 MW each. This would cost an additional $76 
million-$83 million. The next phase would expand the project by adding 
100 MW of capacity. This added 100 MW would cost around $355 million. 
The first phase of development would take about 3--4 years depending on 
permitting issues. The second phase could be added a year later. The 
third phase build out could be completed the following year. It is 
feasible that in this way, the project area could be expanded to as 
much as 500 MW or even more depending on the land area available and 
the behavior of the first phases of development. As data is collected 
from operating these early EGS developments, the ability of developers 
to expand and put more power on line would increase as the cost 
decreased due to ``learning by doing''.
    Figure 1* below shows the total investment, the federal investment, 
the private investment and the potential annual royalty revenues 
possible if geothermal electric power production were to reach 20% of 
the total US capacity. The federal investment assumes that three EGS 
demonstration sites would be used to research techniques and equipment 
that would bring the cost of EGS power down with an emphasis on gaining 
insight in new areas outside the western US. The federal annual royalty 
revenues are based on the current regulations requiring 1.75% of gross 
revenues rising to 3.5% after 10 years operation and the assumption 
that half of all geothermal projects would be built on federal land. 
All costs and revenues are escalated to the year shown based on current 
costs.
---------------------------------------------------------------------------
    * Figures 1-6 and Table 1 have been retained in committee files.
---------------------------------------------------------------------------
    b. Commercial investment dominates this development scenario.--
There is little hope of successfully developing EGS to the point where 
geothermal energy supplies 20% or more of the nation's power without 
commercial development. The private sector has to be involved with 
guiding the areas for research, with managing projects so that they 
yield the results desired and with technology transfer from the 
beginning of each project. Industry needs to ask for the research and 
assistance it needs so that federal dollars are leveraged to provide 
the maximum benefit. The federal investment initially increases as the 
first site is permitted and the research undertaken which will be 
tested at this site is performed. The highest cost represents the 
drilling of wells. It is assumed that sites are chosen with as much 
data and as many wells of opportunity as possible available.
    c. Federal Investment.--These early commercial EGS projects would 
only work at the best sites. To extend EGS across the US requires a 
great deal of research effort to reduce the cost of power to 
competitive levels. During the discussions leading up to the report, 
the MIT panel developed two scenarios for federal funding of research 
and development of an EGS project: 1) Wells of opportunity scenario, 
and 2) Independent development scenario. The cost for the well of 
opportunity scenario, where a site with an existing well would be 
chosen, would be about $87 million spread over at least 3 years and 
more likely 5 years. This cost includes research into the areas of 
highest impact for cost reduction. For the independent development 
scenario, the cost would be about $100 million. The panel felt that 
this effort should be repeated in at least three geologic conditions 
that would demonstrate the technology over a large area of the US. This 
might include 1) a granite below a deep sedimentary basin in the 
Midwest or one of the basins west of the Appalachians in Pennsylvania 
or New York; 2) the metamorphic rocks underlying the oil producing 
sediments in Arkansas, Oklahoma, Louisiana, Mississippi or East Texas; 
and 3) the Atlantic Coastal Plane in Maryland or South Carolina. 
Another possible area would be the Cascades in the Pacific Northwest. 
While most geothermal experts feel there is high potential for EGS in 
the Cascades, there is little data that defines the resource because 
there are few deep wells, particularly in the north Cascades. Drilling 
in British Columbia suggests that the Cascade volcanoes will make 
excellent EGS targets, but we don't have much information other than 
that. It is possible that some resource definition drilling with 
federal funding or cost share would be sufficient to jump-start the 
development of EGS in the Cascades.
    Table 1 shows the EGS panel's estimates of costs for a 
demonstration project that does not use wells of opportunity. Since 
this budget was developed as part of the MIT study, the costs are in 
2004 $.
    Question 2. What is the primary obstacle that keeps geothermal and 
petroleum companies from exploring and exploiting EGS energy?
    Answer. a. Project economics are the primary obstacle.--The 
economics of producing power using EGS technology are not well defined 
because the technology is emerging, but clearly the first EGS projects 
will cost more than conventional hydrothermal geothermal. There is 
still plenty of hydrothermal power to develop that is cost effective 
and has already been explored. No projects have been developed yet in 
the US to demonstrate that this technology is feasible in geologic 
settings here. Power prices in the western states where the best-cost 
EGS targets are found are low, so that only the very best sites are 
economic in these areas. As a result there has been little or no market 
for this power. Renewable portfolio standards are changing this. Oregon 
and Washington just enacted renewable portfolio standards. Michigan is 
considering a law requiring feed-in tariffs similar to those enacted in 
the European Union for renewable energy that includes a high enough 
price for geothermal to encourage the development of EGS. Once a few 
projects get going, there should be significant increase in commercial 
interest in EGS.
    b. Petroleum companies are focused on lucrative oil and gas 
production.--Geothermal doesn't look very attractive to most oil and 
gas producers because they are making plenty of money from their core 
business--oil and gas. Geothermal is a distraction. On the other hand, 
showing oil and gas producers that they can make some money from a hot 
dry hole and defer expensive abandonment costs by converting it to 
geothermal production is gaining some interest.
    c. Stimulate geothermal development by requiring oil and gas 
companies to develop geothermal projects when they lease US oil and gas 
rights on federal lands.--This has worked well for Indonesia and the 
Philippines, both countries with a large geothermal resource and little 
oil and gas.
    d. Reduce cost by researching and testing new technology.--The MIT 
study identified key areas of technology improvement that could reduce 
the cost of EGS power. While well field cost makes up over 75% of the 
cost of an EGS project, reducing the cost of drilling is not the only 
way to reduce this cost. Improved energy conversion efficiency could 
cut the number of wells needed. Better fracturing methods would not 
only increase the flow per producer and thus reduce the number of 
expensive wells needed, but would also reduce the risk of thermal break 
through or rapid temperature decline that would require new stimulated 
volume to be created and possibly new wells to be drilled. High 
temperature pumps for deep installation could allow development of high 
temperature high flow wells in a wide area across the country. Even 
when drilling cost is examined, the fastest way to reduce cost may not 
be the obvious improvement in rate of penetration of the hole. Studies 
done as part of the MIT panel study showed that as much as a 20% 
reduction in well cost for deep wells could be made by improved casing 
design to eliminate one casing string. New oil and gas technology is 
now available that could make this possible. These incremental 
improvements could reduce the cost of power from EGS by as much as 
half.
    Question 3. Would a cooperative international technology exchange 
program accelerate geothermal research, development and demonstrations?
    Answer. a. International cooperation is absolutely necessary.--EGS 
technology is now being developed and tested in Europe and Australia. 
If the US is going to catch up with the technology improvements being 
made internationally, we will need to work out data exchange 
agreements, send our scientists to international meetings, and invite 
scientists working in these areas to the US to assist with our 
technology development.
    b. The need for international cooperation is immediate.--Commercial 
companies are dominating technology development of EGS in Australia. 
While government is still involved, the commercial sector is driving 
the boat. Cooperating government-to-government in Australia may not 
yield the benefits now that could have been realized two or three years 
ago. In Europe, there is still a strong government supported research 
program, but industry is very involved and the next steps will likely 
reduce government sponsored research. If we take the course of strong 
industry involvement in government-supported research, we could see 
this happen in the US.
    Question 4. Who would the key international participants be?
    Answer. a. Government:

    --The European Union in Brussels (DG Research: Dr Jeroen Schuppers 
            ([email protected]). This will cover the majority 
            of the countries in Europe who deals with EGS and 
            hydrothermal.
    --Australian South Australia Government: Hon PAUL HOLLOWAY MLC--
            Minister for Mineral Resources Development. Starting 
            research institute at University of Adelaide for geothermal 
            research.
    --Phone 8303 2500
    --Fax 8303 2597
    [email protected]
    --Postal Address: GPO Box 2832, ADELAIDE SA 5001
    --or the other organization is International Energy Agency/
            Geothermal Implementing agreement (IEA/GIA). A lot of 
            international cooperation is being carried out under the 
            umbrella of IEA/GIA. Roy Baria is in charge of one of the 
            EGS tasks.
    --Australian Federal Government: Geoscience Australia, the 
            Australian geological survey, has a large scale geothermal 
            assessment study going on to map heat flow and temperature 
            with depth over the whole country. I don't have a good 
            contact, but here is the team's email address: 
            [email protected]

    b. Industry:

    --Joerg Baumgaertner (BESTEC GmbH) baumgaertner@bestec-for-
            nature.com
    --Doone Wyborn (Geodynamics) [email protected]
    --Barry Goldstein (South Australian Government) 
            [email protected]
    --Roy Baria (Mil-Tech UK Ltd) [email protected] (Roy is now 
            working with Altarock and will be involved in developing US 
            EGS research policy through our company's cost shared 
            participation should there ever be any funding from DOE for 
            research again.)
      Responses of Susan Petty to Questions From Senator Domenici
    Right now we have about 3000 MW of geothermal power on line. The 
USGS estimated in 1978 that there might be a total of 27,000 MW of 
developable power from identified and explored hydrothermal sources. 
Recent industry assessments suggest that about 5600 MW of this power 
has been somewhat explored and could be developed successfully over the 
next 5 years or so with current power prices (Western Governors' 
Association Clean and Diversified Energy Initiative: Geothermal Task 
Force Report, 2006). Beyond that, the WGA Task Force found that another 
13,000 MW of potential geothermal power is known and could be developed 
as either power prices rise or the cost of geothermal power increases.
    Question 1. What is your assessment of how tough it will be in 
terms of the amount of investment it will take (both public and 
private) to meet the goal?
    Answer. a. Hydrothermal geothermal projects are being privately 
funded now in Nevada, California, Utah and Idaho. More than 400 MW of 
geothermal power are currently being built using private funding. The 
capital cost of these projects ranges from $3000-$3500/kW, with about 
70% of the investment financed through private debt, for a total 
private investment of more than $1,300,000,000 in the coming year 
alone. However, in order to reach 20% of our nation's electric power 
from geothermal, a much larger investment will be needed. Hydrothermal 
geothermal alone can't achieve this goal and except at the best, most 
cost effect sites, EGS is no yet economic. Research into improved 
methods of fracture stimulation, better testing and site assessment 
methods, improved well design and more efficient geothermal power 
plants can reduce the cost of power from geothermal projects that use 
EGS technology. This will make power that uses this technology cost 
effective in more areas of the US.
    b. The MIT study looked at several scenarios for bringing large 
amounts of geothermal power on line. In order to reduce the price of 
EGS power sufficiently to allow large scale market penetration that 
results in over 100,000 MW on line, a research investment of about 
$400,000,000 is needed over the next 8-10 years. After this point 
investment would decline. Some of this investment would be from the 
private sector, either through independent proprietary research , or 
through cost sharing with the federal government. The remainder of this 
investment would need to come from federal and state sources.
    c. Figure 2 shows the estimated federal and private investment in 
both research and development, required to achieve 20% of total 
electric power, or about 123,000 MW, from geothermal sources. While a 
larger and more rapid investment might accelerate the reduction in EGS 
cost needed to increase the rate of market penetration of geothermal 
energy, this would only be possible with a strong investment from the 
private sector. An increase in power of 10% per year seems doable, 
however, with a federal investment similar to that calculated for the 
MIT study. Figure 1 shows the investment as research into four EGS 
demonstration projects of 10 MW each, cost shared with industry. It is 
assumed that industry would build and operate the power plants and 
participate in the project and research design. In this way, technology 
transfer would be encouraged while new technology is being tested. Test 
site would be selected based on the geology and the potential for large 
amounts of power being developed in a similar area.
    a. The federal investment initially increases as the first site is 
permitted and the research undertaken that will be tested at this site 
is performed. The highest cost represents the drilling of wells. It is 
assumed that sites are chosen with as much data and as many wells of 
opportunity as possible available.
    b. Another form of investment is the private investment in drilling 
equipment, service company equipment and manpower needed to drill 
wells, discover and assess resources, design and engineer both 
reservoirs and power plants and operate both plant and field. Figure 3 
shows the number of wells and drill rigs to bring our total installed 
geothermal capacity to 20% of the nation's electric power.
    c. The rigs and services needed to develop geothermal projects, 
using either EGS or hydrothermal technology, are the same as those used 
for oilfield operations. Figure 3 assumes that each of these rigs 
drills 4 successful wells per year. While geothermal drilling requires 
generally larger completed well diameters to accommodate the larger 
flow rates of hot water, land based oil and gas drilling equipment can 
easily be adapted for use in geothermal operations. Geothermal drilling 
procedures and well design differ from oil and gas, which means that 
rig crews need to be trained for geothermal drilling and drilling 
engineers need to understand the conditions geothermal wells will 
operate under. However, the materials, tools, people and equipment are 
for the most part the same. Right now, with oil and gas prices high, 
rigs and equipment are in high demand in the US. However, there is 
little potential for new discoveries on land in the US. As old wells 
are worked over and fields that can be enhanced to achieve more 
production are maximized, equipment is freeing up and becoming more 
available. This will mean competition for rigs and equipment will ease 
and prices should stop rising and may even drop. Rigs, geologists, 
engineers, equipment and services from the oil patch that might become 
surplus could be employed in the development of geothermal energy. This 
might smooth some of the extreme ups and downs that the oil and gas 
industry in the US has experienced and prevent the loss of skilled 
workers and know how to other countries with a less depleted oil and 
gas resource. Currently there are about 7 drill rigs configured for 
geothermal drilling with geothermal trained crews, operating full time 
drilling geothermal wells. This total increased from 3 the previous 
year. There are also several exploratory rigs used almost exclusively 
for geothermal. Four more rigs are planned for the geothermal arena 
next year. In addition, a number of oil and gas drilling companies have 
expressed interest in training their crews in geothermal drilling 
methods and coming to work in the geothermal industry as the number of 
jobs in oil and gas decrease.
    d. Figure 4 shows the people required to develop geothermal 
capacity to more than 20% of the nation's total power. There are 
currently about 5000 people employed full time in the geothermal 
industry according to recent survey by the Geothermal Energy 
Association. This graph shows the number of additional people required 
to meet the 20% target. In addition to the full time technical and non-
technical employment, construction employment adds about 3 people per 
MW during the 18-22 month power plant construction phase. Since these 
workers are not specialized to geothermal, they are not shown below. It 
is assumed they would move over from other industrial construction 
areas to build geothermal plants.
    Question 2. In terms of the technologies that will have to be 
developed or refined, how tough will it be and how long might that 
take?
    Answer. a. The MIT report estimated that with a full research 
effort including a test site, the initial incremental technology 
improvements could be developed in about 5 years. However, a three year 
ramp up period would be needed to acquire and permit a test site and 
for well drilling if no wells of opportunity could be found. At least 
two years and possibly as much as four years following testing would be 
needed to allow technology transfer to move these new methods into 
general use to realize the benefits in cost reduction.
    b. Technology improvement areas include:

   Exploration/Information gathering-Cost of Risk Reduction
    --50% reduction in cost of risk
    --Better information--HT borehole televiewer, HT 3 component 
            seismometer
    --Reduces drilling risk and resource risk as well as cost risk on 
            depth to resource
   Cost of drilling
    --20% reduction in cost of drilling
    --Eliminate one casing string--available from oil and gas 
            technology
    --Improved rate of penetration through better bits--developed by 
            Sandia--can be licensed
   Reservoir Stimulation
    --Double the flow per well from 40 l/s to 80 l/s without thermal 
            breakthrough
    --Reduce the stimulation cost by better stimulation design (do it 
            once, do it right)
    --Chemical stimulation methods
    --Improved instrumentation HT borehole televiewer, HT 3-component 
            seismometer
    --Fracture design code
   Power Plant
    --20% improvement in conversion efficiency
    --Improved turbine design
    --Best available binary technology
   Reservoir Management
    --Modeling software
    --Prevent or correct thermal breakthrough-chemical stimulation/
            diversion
    --Reduce risk of scale or short circuit through rock/water, rock/
            CO2 interaction

    c. Beyond the incremental technologies, the MIT panel felt that the 
development of advanced technology would require continuing research at 
additional geologic settings to ensure the methods are applicable, that 
the differences in geology can be accommodated and to allow for 
development and testing of truly innovative break-through technology. 
This research should extend to at least 3 and possibly 4 geologic 
settings with widely different conditions.
    Question 3. Will these new technologies be able to compete 
economically against the alternatives?
    Answer. a. Hydrothermal power prices dropped from over 14 cents/kWh 
during the 1980s to less than 6 cents/kWh last year. Prices for EGS 
power should follow a similar trajectory. With the incremental 
improvements discussed above, we can see a really large amount of power 
come into the cost range of about 10 cents/kWh as shown in Figure 5. 
This figure shows that with near-term incremental technology 
improvements, the cost of over 300,000 MW could be dropped below 
10 cents/kWh. In addition, learning by doing will mean that as EGS 
power comes on line, the risks and costs will decrease in relation to 
the amount of power on line in similar geologic settings, bring costs 
down further.
    b. At present, hydrothermal power sells to utilities for between 6-
7 cents/kWh. Comparing costs for geothermal power to other renewables, 
solar thermal is in a similar range of about 7-10 cents/kWh, while 
photovoltaics can cost around 30 cents/kWh. Wind power has a lower 
capital cost and operating cost than geothermal, and much lower than 
EGS, but because of the fact that wind is intermittent, the capital 
cost has to be amortized over a much lower number of kilowatt hours. 
The result is that wind power can cost more per kWh than EGS power from 
good sites. The cost of coal power depends on the level of clean up of 
the emissions from the plant. Clean coal (without any carbon emissions 
considerations) has a capital cost similar to a hydrothermal project of 
around $3000 to $4000/kW. With fuel cost, this translates to anywhere 
from 6 cents/kWh to over 9 cents/kWh. Combined cycle natural gas power 
costs about 2.5 cents/kWh to amortize the capital equipment with the 
added fuel cost (natural gas price per million BTU divided by 10,000 
since it takes about 10,000 BTU/kWh). This is about 8.5-9 cents/kWh 
right now. This means that EGS power is only slightly more costly than 
power from combined cycle natural gas plants, a little higher than coal 
power, comparable to solar thermal, much less than photovoltaics and 
around the cost of wind.
       Responses of Susan Petty to Questions From Senator Salazar
    Question 1. What is the best way to promote geothermal energy to 
States that may be more familiar with, and have better access to, other 
forms of renewable energy?
    Answer. a. Market forces will drive geothermal developers to move 
to new areas if incentives to encourage development are used. Renewable 
portfolio standards are definitely a driving force. Because utilities 
may have a difficult time integrating intermittent renewable like wind 
and solar into their grid system beyond a certain number of MW, if the 
RPS requires a large enough fraction of energy from renewables, then 
geothermal will be considered in the mix. Price incentives are, of 
course the fastest way to get renewables to market in new areas. 
Michigan is considering a feed in tariff based on renewable technology 
with high enough prices for small scale geothermal power projects to 
encourage developers into the area. The Michigan basin has high 
potential for EGS power and while costs would be high right now, the 
geology is well known and risks should be low.
    b. Another incentive that could both spur development and reduce 
dependence on foreign oil imports would be tying federal oil and gas 
leasing by oil companies to development of a certain amount of 
geothermal power. This has worked very well in Indonesia and the 
Philippines. These countries have only a modest amount of oil and gas 
reserves. They require oil companies who lease new oil and gas 
concessions to propose to develop geothermal power projects. This 
wouldn't necessarily include really sensitive areas like the Arctic 
National Wildlife Refuge. Oil companies are interested in areas 
offshore from the southeast coast of states like South Carolina, 
Georgia and Florida. While Florida has a fairly low geothermal 
potential given current technology and power prices, South Carolina, 
along with Maryland, Virginia and Georgia have significant potential. 
Large oil companies have the resources to develop geothermal energy in 
these areas. Technology improvements and learning by doing would then 
bring the cost of energy from these Atlantic coastal plane regions down 
to competitive levels.
    Question 2. What percent of our nation's electricity supply do you 
estimate could come from geothermal sources?
    Answer. a. A 20% target is reasonable by 2050.--While it would very 
likely take longer than the target date of 2030, I feel that 20% of 
electric power from geothermal sources is not unreasonable. None of the 
requirements to get this much power online--whether drill rigs, 
turbines or people--are needed in unreasonable numbers. Once the target 
of 20% is reached there will be infrastructure, skilled technical 
support staff and available materials. Demand should reduce the cost of 
power by shifting the focus of the drilling and construction industry 
from fossil fuel power plants to geothermal. With all of this expertise 
and industry focus on getting power on line, the fraction of power from 
geothermal power could continue to increase more rapidly than demand, 
replacing fossil fuel power plants. The available resource is so large 
that this will not limit the development of new projects.
    b. Land availability will be one factor limiting the growth of 
geothermal power.--Only the federal government has the large tracts of 
land that will be needed to support geothermal development. However, 
recent changes in the federal leasing laws penalize EGS projects by 
adding up front capital cost for land acquisition. Because EPAct2005 
requires that all geothermal leases on federal land be competitively 
bid, and because the regulations have established an auction process 
for the bidding, the recent prices for federal leases have been 
extremely high. While this may seem good for the federal government, 
and appear to encourage rapid development to get fast pay back on a 
developers land investment, it makes things difficult for emerging 
technology such as EGS. Several areas in the recent round of federal 
leasing were excellent prospects for EGS development, but not for 
conventional hydrothermal development. Yet these were leased at high 
prices per acre by developers of hydrothermal projects. The large 
upfront capital cost of an EGS project with deeper wells and the 
technology risk associated with an emerging technology make it very 
difficult for an EGS developer to compete for land at high prices.
    c. Development coordinated with other uses.--While there is an 
ample amount of federal land in the West, there is less in the east. 
Eventually, to extend large-scale geothermal power development into the 
Midwest and East, ways will have to be found to integrate geothermal 
development with other land uses on private land. While each geothermal 
power plant has a relatively small footprint compared with other types 
of renewables and with fossil fuel plants, the geothermal rights to a 
large subsurface area are needed to support large scale projects. 
Figure 6 below shows the Geysers, a 1,000-MW geothermal power project. 
Large scale EGS projects are likely to look very similar to this area. 
This image is from an altitude of 10 miles above the earth. Compare 
this to Figure 7, which shows the coal fired plant at Colstrip, 
Montana, from the same height above the earth. The land around the 
Geysers plants is either forested, used for farming or natural. The 
land around the coal plant and mines at Colstrip is disturbed and 
barren.
    Although the federal government can provide large tracts of land 
needed for EGS, it also has in place a potential disincentive for 
developing EGS on them, particularly in the early, formative years. 
Currently, per-acre bonus bids are required when the geothermal leasing 
rights on federal land are auctioned. Unlike hydrothermal geothermal 
development, which relies on finding key parcels to access a geothermal 
resource, EGS mainly needs sufficient acreage to ensure an economic 
project. If this bonus is too high, EGS development might be pushed 
mainly to private land, and the federal government would loose out on 
the technology's royalty-based payout, which under present law could 
amount to over $1 billion annually.
    d. Water availability is another factor limiting the growth of 
EGS.--Once the EGS reservoir is filled with water during stimulation, 
it can be managed so that water losses are very low. However, it can 
take a really large amount of water to stimulate the reservoir at the 
start. This water doesn't need to be potable or even of good quality. 
Treated sewage effluent works well and is being used at the Geysers, 
while poor quality water is being used at other geothermal areas for 
recharge. Water for evaporative cooling is also a real benefit to EGS 
projects since it increases the efficiency of the conversion of heat to 
power, reducing the need for wells.
    Question 3. What percent of our country's heating and cooling 
supply do you estimate could come from geothermal sources?
    Answer. a. Geothermal heat pumps can cut energy use in areas with 
high need for both heating and cooling in half. While this doesn't 
actually supply power, it can reduce our demand for power. Energy needs 
for heating and cooling accounts for about 11% of our nation's total 
energy consumption. Cutting this in half through the use of geothermal 
heat pumps could thus account for as much as 5.5% of our energy needs. 
However, it is really unlikely that all heating and cooling needs could 
be satisfied using geothermal heat pumps. A more reasonable target 
would be half the heating and cooling needs of the country supplied by 
geothermal heat pumps, or about 2.75% of the total energy needs of the 
US.
    b. Direct use of geothermal energy for industry processes, 
especially in combined heat and power projects, could supply a 
significant portion of our nation's energy needs. Industrial users 
consume about 37% of our country's energy. It's possible that half of 
this could be supplied from direct use of geothermal heat, especially 
if large scale geothermal development for power also took place. This 
would therefore account for as much as 18.5% of the energy needs of our 
country. While this seems like a large target, it certainly would 
better use the heat extracted from the earth. Adding heating, cooling 
and industrial uses to EGS power projects would further improve the 
economics.
                                 ______
                                 
     Responses of Mark D. Myers to Questions From Senator Bingaman

    Question 1. Do you or the USGS think that an enhanced geothermal 
assessment is needed?
    Answer. Since completion of the last national geothermal resource 
assessment in 1978, there have been significant advances in the 
understanding of geothermal systems capable of producing electricity 
and in the technology capable of producing electricity from geothermal 
sources. The current USGS national geothermal resource assessment, 
scheduled for completion at the end of 2008, takes into account these 
advances as they relate to conventional geothermal resources and one 
type of unconventional geothermal resource, Enhanced Geothermal 
Systems.
    The full potential of unconventional geothermal resources 
(including Enhanced Geothermal Systems, Geopressured Geothermal., and 
Geothermal Co-Produced with Oil&Gas) has not been adequately 
characterized in light of the advances in geothermal science and 
technology. The resource assessment authorized in S. 1543 would provide 
for a comprehensive examination of these unconventional geothermal 
resources, including an evaluation of how unconventional geothermal 
resources could contribute to the domestic energy mix. In addition, 
because some of the most promising sites for Enhanced Geothermal 
Systems development are located along the margins of known conventional 
geothermal reservoirs, comprehensive geologic examinations of Enhanced 
Geothermal Systems resources would further build upon the current USGS 
assessment effort and facilitate a more thorough characterization of 
domestic, conventional geothermal resources.
    Question 2. If so, how might an enhanced assessment affect usage of 
geothermal energy in the U.S.?
    Answer. The current national geothermal resource assessment effort 
could contribute to the increased usage of electricity production from 
geothermal resources by providing State and Federal government policy 
makers, other Federal agencies, the energy industry, the environmental 
community, and the financing community with information that will aid 
in estimating the potential contribution of geothermal energy to the 
Nation's energy mix. Geothermal energy is an underutilized resource in 
the United States for a variety of reasons, one of which is the lack of 
basic information on this resource.
    Question 3. Is the very modest funding sufficient that the USGS is 
receiving to conduct this geothermal resources assessment ($400,000 
per year for FY2006-2008) to completely categorize both conventional 
geothermal resources, as well as unconventional geothermal resources--
namely enhanced geothermal systems--without compromising the quality of 
the assessment?
    Answer. Present funding levels for the current assessment effort 
allow USGS to pursue an assessment of conventional geothermal resources 
while also conducting limited study of unconventional geothermal 
resources. For approximately $1.2 million (total), the USGS is 
characterizing conventional geothermal resources and assessing the 
potential electrical production from those resources. In addition, USGS 
is providing a provisional evaluation of the contribution of Enhanced 
Geothermal Systems (EGS) to the energy mix of the United States. These 
activities are consistent with those authorized in the Energy Policy 
Act of 2005.
    Question 4. You state that the timeframes specified in the bill may 
not be adequate for proper resource characterization--excluding the 
outer continental shelf area. How much time do you believe is necessary 
to produce a high quality, robust assessment?
    Answer. Under the Energy Policy Act of 2005, the USGS is currently 
conducting a new assessment of conventional moderate-temperature and 
high-temperature geothermal resources and will report on the results of 
that assessment in the fall of 2008. To substantively undertake an 
evaluation of the unconventional resources of the United States, a 
methodology for assessing these resources must first be developed, peer 
reviewed, and published, as the USGS does for all of its energy 
resource assessments. Methodology development will take approximately 
one year. Once that methodology is developed and peer reviewed, the 
assessment of the unconventional geothermal resources of the United 
States would require an additional 2 years.
     Responses of Mark D. Myers to Questions From Senator Domenici
    Dr. Williamson spoke of this legislation requiring millions of 
acres of land. As I look at the maps that show the ``best'' areas for 
development, I see the current land owner is the federal government. I 
also know that many of those lands are within reserves that would 
preclude drilling and surface development and, in many instances, the 
development of the transmission lines needed to get the electricity to 
market.
    Question 1. Can you comment on Dr. Williamson's statement about 
needing millions of acres of land and tell me your views on the 
desirability and feasibility of doing this?
    Answer. Our preliminary evaluation of the resource base for 
Enhanced Geothermal Systems (EGS) indicates that, outside of national 
parks, wilderness areas, national monuments, wildlife refuges and 
similarly restricted State lands, approximately 70,000 square miles (45 
million acres) of public and private land in the western United States 
has significant potential for EGS development, with approximately 2000 
square miles (1.3 million acres) of the highest potential located in 
high temperature areas around the margins of known geothermal systems. 
Although our assessment of the EGS resource is not yet complete, 
successful development of EGS technology could provide the potential 
for generating in excess of 100,000 MW on these lands. Realizing this 
potential depends on balancing many diverse, and often competing, 
interests with respect to land status, resource use, and energy policy. 
USGS, as a science agency, provides impartial scientific data and 
information to land management agencies, agencies with regulatory and 
policymaking responsibilities and others. We are hopeful that the 
information provided will help to support appropriate geothermal energy 
policy.
    Question 2. Are we likely going to need to provide sufficiency 
language to allow the rapid development of this resource on federal 
lands to meet the stated goal of this bill?
    Answer. NEPA compliance will enable Federal agencies to ensure that 
the environmental impacts are fully understood, and the Department of 
the Interior does not recommend sufficiency language.
    Question 3. Do you believe this country can meet the goal of 
getting 20% of our electricity from geothermal by 2030?
    Answer. Meeting the goal of getting 20 percent of our electricity 
from geothermal by 2030 depends on many factors, including the resource 
base, the technology, the land and resource managers, the industry, the 
financial community, and others. These are complex and interrelated 
issues and USGS can only speak to the resource base. The geothermal 
resource base is substantial, but realizing the goals of 20 percent by 
2030 will require aggressive development of identified geothermal 
systems, rapid and successful exploration and development of 
undiscovered systems, and scientific and technological advances that 
will enable the large-scale exploitation of unconventional resources 
like EGS, geopressured geothermal, and geothermal co-produced with oil 
and gas. Given the scale of these challenges, it may be very difficult 
to achieve the 20 percent goal by 2030.
    One potentially significant contribution from geothermal that is 
not explicitly addressed by the 20 percent goal is the potential for 
geothermal heat pump installation to reduce energy demand from 
commercial and residential buildings. USGS has not studied the 
geothermal heat pump resource, but, if the resource is as extensive as 
indicated by the Department of Energy (DOE) and industry studies, 
reduced demand from widespread geothermal heat pump installations 
combined with electric power production from aggressive development of 
conventional and unconventional geothermal resources might have a 
significant impact on energy demand and help in meeting the 20 percent 
goal.
    Question 4. How difficult will that be to accomplish?
    Answer. That depends on a variety of factors, many of which are 
described above, that are outside the purview of the USGS to answer in 
any detail.
    Question 5. Do you believe that geothermal will compete 
economically with the available alternatives, or would we need to 
provide incentives or mandates to force its use?
    Answer. The recent resurgence in geothermal exploration and 
development confirms that a significant number of identified 
conventional geothermal systems can be developed at costs competitive 
with other energy sources under the current state of economic 
conditions and incentives. As to whether incentives or mandates are 
needed, this issue is not within the purview of the USGS.
    Question 6. What is it going to take to complete the called-for 
assessment in terms of costs, time, and new technology?
    Answer. Under the Energy Policy Act of 2005, the USGS is currently 
conducting a new assessment of conventional moderate-temperature and 
high-temperature geothermal resources and will report on the results of 
that assessment in the fall of 2008. To carry out a national geothermal 
resource assessment that would build on current USGS efforts by 
including unconventional geothermal resources, as well as an enhanced 
characterization and understanding of the domestic, conventional 
geothermal resources, a methodology for assessing unconventional 
resources would first need to be developed, peer reviewed, and 
published, as the USGS does for all of its energy resource assessments. 
Methodology development will take approximately one year. Once that 
methodology is developed and peer reviewed, the assessment of the 
unconventional geothermal resources of the United States, and an 
enhanced characterization of the conventional resources, would take an 
additional 2 years. Funding of approximately $1.5 million per year 
would be required for such an effort.
      Responses of Mark D. Myers to Questions From Senator Salazar
    Question 1. In the United States, most geothermal reservoirs are 
located in the western states, Alaska, and Hawaii. What is the best way 
to promote geothermal energy to States that may be more familiar with, 
and have better access to, other forms of renewable energy?
    Answer. One way to highlight the benefits of geothermal energy is 
to emphasize the value to the entire country in terms of reducing air 
pollution, cutting back on greenhouse gas emissions, and fostering 
national energy independence. In addition, few people recognize that 
the entire spectrum of geothermal energy use is not limited to the 
western States. Although conventional hydrothermal resources and the 
highest grade Enhanced Geothermal Systems (EGS) resources are 
concentrated in the western United States, much of the unconventional 
geothermal resource base, including geothermal co-produced with oil and 
gas, geopressured geothermal, and part of the EGS resource, is in the 
central and eastern United States. Also, geothermal heat pumps have a 
significant potential to reduce electric power demand, and this 
resource can be utilized across the country, with most of the 
installations to date located in the eastern United States.
    Question 2. What percent of our country's electricity supply do you 
estimate could come from geothermal sources? What percent of our 
country's heating and cooling needs could come from geothermal 
resources?
    Answer. The current USGS geothermal resource assessment will not be 
completed until the fall of 2008, but preliminary results indicate that 
the combined potential from identified and undiscovered conventional 
geothermal systems as well as EGS exceeds 100,000 MW. This equals 
approximately 10% of the current US electric power generating capacity. 
A complete answer to the question of geothermal energy's contribution 
to the Nation's heating and cooling needs also depends upon the 
potential contribution from direct use and geothermal heat pumps. The 
USGS has not investigated the potential for geothermal heat pumps to 
contribute to the national energy mix, but DOE and industry studies 
suggest the presence of a significant resource.
                                 ______
                                 
      Responses of Hon. Olafur Ragnar Grimsson to Questions From 
                            Senator Salazar

    Question 1. The country of Iceland has gone further than any other 
country in utilizing its vast sources of renewable energy. Why do you 
think the U.S. has ignored the potential of geothermal energy?
    Answer. I have not undertaken any extensive analysis of the US 
Energy history but perhaps the following aspects of the case of Iceland 
could be considered in this respect:

   Iceland changed its energy policy following the increase of 
        oil prices created by the Middle East conflicts of the 1970s, 
        the Arab-Israeli War and the Iranian Revolution. This speeded 
        up projects all over Iceland to replace oil by geothermal 
        power. The price of coal and oil when compared to geothermal 
        has been in favour of geothermal projects.
   Icelandic energy companies realised earlier than US 
        companies that geothermal resources can be utilized for many 
        different lines of profitable business. In addition to the 
        energy production; spas, greenhouses, cosmetics, snow melting, 
        etc. Their business model is therefore more comprehensive than 
        the traditional US view of looking at geothermal energy.
   There has been a tendency within many countries, including 
        the US, to concentrate on big solutions and megaprojects 
        whereas the essence of geothermal is that it can be tailormade 
        to fit one household, one village, one city or a whole region. 
        To make a succesful geothermal development a different approach 
        to energy policies is therefore required as the development of 
        Iceland clearly demonstrates.

    Question 2. What can the U.S. government do in order to create an 
infrastructure that better supports the use of geothermal energy?
    Answer. In this respect the following ideas could be worthy of 
consideration:

   create a comprehensive legislative and regulatory framework 
        to further geothermal development in different parts of the 
        United States.
   make geothermal energy an integral part of the energy 
        debate.
   encourage the Department of Energy to strengthen its 
        geothermal operations.
   give encouragement and incentives to cities and states which 
        have geothermal potential.
   provide financial support for scientific and technological 
        research cooperation.
   actively support the ongoing deep drilling projects, for 
        example the Icelandic Deep Drilling project which is based on 
        an Icelandic-US cooperation.
   give temporary tax credits to experimental drilling 
        projects.
                                 ______
                                 
     Responses of Lisa Shevenell to Questions From Senator Bingaman

    Question 1. Your testimony states that research and development 
funding is critical for workforce training. Is it your opinion that 
basic R&D funding would take care of the shortage of qualified 
technical personnel or would a more specific workforce training program 
be more appropriate for training skilled technical staff?
    Answer. Basic R&D funding should take care of the master's level 
training, although the rate at which students are recruited needs to be 
accelerated. Universities should also begin to implement geothermal 
programs in the undergraduate degrees. Similarly, community colleges 
will need to develop or enhance curricula for technicians to run the 
power plants.
    Question 2. Should we be investing funding in more targeted 
technical internship programs? What would you suggest?
    Answer. These types of programs will be very important. My 
conversations with several in industry indicate they are interested in 
such programs as well as in graduate student fellowships. Based on 
these conversations, it appears that industry will be willing to fund 
such programs, as they are fully aware of their acute need for a 
trained workforce. We at UNR are planning a renewable energy minor in 
collaboration with industry, and one key component of the program is an 
internship program with the industry partners. However, until the 
programs are actually implemented, it remains to be seen the degree to 
which, if any, the federal government should play in funding these 
programs. Grants to help develop new curricula would be helpful to the 
process.
    Question 3. Has your university been negatively impacted by the 
elimination of the federal geothermal program?
    Answer. Yes, we lost our most productive researcher who was helping 
to mentor students through his research projects. Fortunately, if 
stable funding could be demonstrated, he indicated he would consider 
returning to our university. I can put you into contact with 
individuals at other Universities who can relay their experiences in 
losing faculty (and prospective graduate students) if you desire. It is 
impossible to keep people when we can not assure them they will be paid 
for at least some reasonable amount of time. There are plenty of other 
opportunities in the geosciences at this time to pursue alternative 
employment options.
    Question 4. Would a cooperative international technology exchange 
program accelerate the geothermal research, development, and 
demonstration?
    Answer. Such cooperation is already occurring to a large degree. We 
are actively working with companies based out of Canada, Israel, and 
Italy on resource issues. Also international players in developing 
nations have been actively requesting help from us in the form of 
workforce training (e.g., Ethiopia, Chile), yet there haven't been the 
resources to develop training specific to their needs which tend to 
include short courses. Hence we are investigating incorporating the 
foreign students into the normal University coursework, and possibly 
using distance learning, or investigating how we could add to the 
currently successful training program Iceland has held for individuals 
from developing nations for many years.
    Question 5. Who would the key international participants be?
    Answer. Other participants with experience include Iceland, Japan 
and New Zealand, although Iceland's resource is much different than 
most of that in the western U.S. Some of the technologies (e.g., 
drilling) or lessons learned may not be directly applicable to the 
resources in the U.S., but we could benefit from knowledge gained in 
the course of development of their international training programs.
     Responses of Lisa Shevenell to Questions From Senator Domenici
    I note in your testimony that drilling today costs between a few 
million dollars to 10 millions dollars per production well. I also 
gather that a significant number of wells will have to be drilled in 
order to carry out the assessment work called for in this legislation.
    Question 1. Can you give us a range of the number of wells that 
might be needed to carry out the assessment that is envisioned in this 
legislation?
    Answer. The wells you note here are for production wells, which are 
larger and more expensive than what is required for exploration and 
assessment. Expenses for wells drilled for assessment vary depending on 
depth and difficulties encountered, but are typically $100,000 to 
$500,000. The USGS assessment study referenced in the bill will likely 
not have the financial resources to drill many, if any, wells. 
Primarily, they will be assembling data gathered over the years into 
Geographic Information System databases (not available during the last 
assessment), and running more modern models to conduct the nationwide 
assessment. The data to be acquired will come from previously drilled 
wells, wells drilled recently by DOE and industry, geologic mapping, 
geochemical, geophysical and remote sensing studies. The results will 
likely be regional in nature.
    Question 2. I also noted in your statement that you said, ``It 
(geothermal) is not subject to price volatility as are oil and natural 
gas, and it boosts energy security because it is a domestic energy 
supply.'' Are you assuming that geothermal will not see price 
volatility because we have a lot of it and it will be available to 
everyone?
    Answer. I made the statement mostly because the same water is 
reused over and over. Other fuels such as coal and natural gas are 
consumed and continually purchased to operate power plants, and those 
fuels are subject to price fluctuations as we have repeatedly seen. 
Essentially, the ``fuel'' used in geothermal power plants is 
recirculating hot water which is produced at negligible cost (the cost 
of pumping the water). Geothermal power plants do not have a continuing 
need to purchase their fuels as do other types of power plants (oil, 
gas, coal, nuclear), and also have lower environmental costs (e.g., 
costs of nuclear disposal are large).
    Question 3. To follow up on my last question, didn't the public 
believe that about nuclear energy back in the 1950s and 1960s, and 
didn't they also believe the same thing about oil until the 1970s? In 
short, wouldn't this resource be subject to the same unknown market 
variables as other energy sources?
    Answer. There may be other market variables that come into play 
such as transmission issues (which will impact other power sources 
also), but the most expensive part of a geothermal power plant is 
expended in the beginning during drilling of expensive wells and power 
plant construction. Operation and maintenance are considerably smaller 
portions of geothermal energy costs than for other power plants, due to 
minimal fuel costs. In contrast, other sources of energy (coal, natural 
gas) have a more modest up-front cost, but continuing costs for their 
fuels, whose prices fluctuate.

     Responses of Lisa Shevenell to Questions From Senator Salazar

    Question 1. In the United States, most geothermal reservoirs are 
located in the western states, Alaska, and Hawaii. What is the best way 
to promote geothermal energy to States that may be more familiar with, 
and have better access to, other forms of renewable energy?
    Answer. Ideally, we should be unified in a goal to produce 
renewable energy nationwide, utilizing the types of renewables that 
make most sense. Obviously we aren't going to be producing energy via 
wave action in Nevada, but we in the mid-continent should support 
research to do so on the coasts. Similarly, geothermal likely won't be 
economical outside the west for the foreseeable future, but nonetheless 
remains a very important power source for our country. One of the 
reasons you have heard so much about EGS (Enhanced Geothermal Systems) 
is that it has been promoted as a power source that could be used in 
the entire country. There is indeed a tremendous resource throughout 
the planet, but realistically, it won't be economical to create a 
reservoir in places such as New Hampshire, for instance, any time in 
the foreseeable future due to the deep drilling depths needed and the 
prohibitive associated costs. The best way to advance EGS technology is 
through targets of opportunity as we develop conventional systems, have 
needs to enhance reservoir performance or stimulate entirely 
unproductive wells drilled in conventional geothermal projects (as is 
being done at Desert Peak, Nevada), and work with existing deep oil and 
gas wells. If we are really serious about getting renewable energy 
online quickly, we must focus on the known and as yet undiscovered (and 
newly discovered) geothermal resources in the west in the short term 
and expand from there. EGS applications in the eastern U.S. will follow 
a natural progression as the industry evolves and development of the 
western resources becomes more prevalent than is currently the case.
    I believe the best way to promote alternate energy of all types to 
the states is to indicate that all sources of renewable energy are to 
be developed where they are available and most economical. We should 
pursue all forms of domestic energy where they make sense. For 
instance, solar in the northeast is probably not the best place to 
deploy that technology at this time, but we should still invest in 
improving the technology as it may be a contributor in the future even 
in areas with less sunlight than where the technology is currently 
deployed.
    Question 2. What percent of our country's electricity supply do you 
estimate could come from geothermal sources? What percent of our 
country's heating and cooling needs could come from geothermal 
resources?
    Answer. If we are very aggressive in the next 10 years, we could 
meet the 20% goal noted in the bill if we are including all sources of 
geothermal including ground source heat pumps, which could 
substantially offset the use of other energy sources. Attaining the 
goal strictly through electrical power production would be difficult 
without a massive mobilization and effort. But ground source heat pumps 
can be used throughout the entire country so the 20% goal is 
attainable, and there should be support nationwide for this effort. We 
have the geothermal resources to attain ambitious goals and our 
understanding of the systems is growing as we do research and gain 
experience developing the systems. Major limitations we may face are in 
the arena of policy, will, and degree of investment that materializes, 
all of which are difficult to predict. Lack of will is one issue we 
have faced in Nevada where a satellite campus of UNR sits on a 
geothermal resource, but does not utilize it because, in the short-
term, it is less expensive to buy power than to invest in pipelines to 
carry the geothermal fluids. It is a shame, but remains reality at this 
time despite geothermal energy's potential to reduce dependence on 
other sources of power, which by itself is just as important as actual 
power production using geothermal. Direct uses of geothermal simply 
need to be accelerated. Heat pumps can be used practically everywhere 
in the country for heating and cooling needs. If the investment were 
made to deploy them through aggressive cost-shared programs we could 
eventually heat and cool much the nation (http://geoheat.oit.edu/ghp). 
Realizing geothermal's contribution to the nation's energy needs is a 
matter of will and investment, not resource availability.
                                 ______
                                 
    Responses of David R. Wunsch to Questions From Senator Bingaman

    Question 1. Would a cooperative international technology exchange 
program accelerate the geothermal research, development, and 
demonstration?
    Answer. I believe that an international scientific and 
technological exchange would be an appropriate mechanism to expand and 
enhance the U.S. Geothermal program. Several countries, notably Iceland 
and Australia, utilize geothermal resources in a much more diversified 
manner than the U.S. For example, Iceland not only uses hydrothermal 
resources for electric power generation, but they also maximize the use 
of thermal waters in many direct heat applications for business, public 
buildings and households. Demonstration and exposure to these systems 
by U.S. scientists, engineers, and business leaders could lead to a new 
paradigm for geothermal energy applications here. In addition, Iceland 
employs several innovative business models to encourage geothermal 
energy exploration and use. In Australia, they are actively pursuing 
the development of hot dry rock (HDR) engineered geothermal systems, 
and scientific exchange and first-hand experience with their R&D 
efforts would assist U.S. geothermal development efforts. In addition, 
the U.S. scientific workforce has not developed to a level that can 
participate and expand geothermal operations on a widespread, 
commercial scale; so an academic exchange would benefit U.S. interests 
as well.
    Question 2. Who would the key international participants be?
    Answer. As stated above, two leaders in geothermal research, 
development, and use are Iceland and Australia. Other countries that 
have shown interest in geothermal resource development are Japan, 
Switzerland, Sweden, and Germany.
    Question 3. You represent both the state of New Hampshire, as well 
as the Association of American State Geologists. Your testimony asserts 
that there are geothermal technologies, such as the geoexchange system, 
that can be installed anywhere. The reality is that they are much 
underutilized. Why are such energy efficient technologies not being 
deployed more universally throughout our country?
    Answer. Geothermal heat pumps--also known as ground source heat 
pumps or by trade names such as Geoexchange--work by concentrating the 
naturally existing heat stored in the ground. I believe that this 
technology is underutilized because of a lack of understanding as to 
how the systems work, and a lack of education about their other 
advantages. Many people do not equate the constant temperature of the 
earth at shallow depths as a form of ``geothermal'' energy, but instead 
equate geothermal with hot, boiling water. They are also not aware that 
geothermal systems are efficient, dependable, and can be used in most 
regions of the United States. Many energy companies, non-governmental 
organizations, and federal agencies such as the EPA are actively trying 
to promote the use of geothermal heat-pump systems because they are 
efficient, reliable, and a ``green'' technology.
    Secondly, most current system designs are most suited for new homes 
and buildings because or design specifications, and are more difficult 
to retrofit into older homes that have more traditional heating 
systems. For example, the heated water that is generated by a 
geoexchange system is typically 10 degrees (Fahrenheit) or more lower 
than the water temperature that can be generated from a traditional gas 
or oil-fueled boiler system. Accordingly, the heat exchanger, such as 
baseboard heating coils, has to be larger to transmit an equivalent 
amount of heat compared to a traditional system. Thus, it would require 
major renovations (and concomitant costs) to retrofit older homes with 
the appropriate piping, heat exchangers, and ductwork for a new 
geothermal system, and this is not easily affordable for the average 
homeowner. Typically, geoexchange systems are integrated into the 
design of new homes or buildings so these accommodations to the heating 
and cooling infrastructure can be met. The initial installation of 
geothermal heat pumps may be as much as double that of conventional 
home heating and cooling systems, but the investment is returned within 
3-10 years through drastic savings in heating and cooling bills. 
However, often a backup heating system is suggested to supplement heat 
pumps in the areas of the country that experience cold or severe 
winters. Perhaps tax incentives could be provided for owners of older 
homes to expand the use of this technology, and improve the return on 
the investment. Moreover, research and development of innovative ways 
to retrofit older buildings could promote the expanded use of 
geothermal systems.

     Responses of David R. Wunsch to Questions From Senator Salazar

    Question 1. In the United States, most geothermal reservoirs are 
located in the western states, Alaska, and Hawaii. What is the best way 
to promote geothermal energy to States that may be more familiar with, 
and have better access to, other forms of renewable energy?
    Answer. The national geothermal assessment being proposed in S.1543 
would go a long way towards determining what areas of the United States 
might be appropriate for developing primary or engineered geothermal 
energy systems. As correctly noted, most of the nation's hydrothermal 
resources are located in western states, with additional resources in 
Hawaii and Alaska. However, several preliminary assessment tools 
suggest that areas of the country east of the Mississippi River may 
also hold potential for development if engineered systems such as 
binary Hot Dry Rock (HDR) can be developed and made operational. For 
example, heat-flow maps produced by Southern Methodist University show 
areas of the Atlantic Coastal Plain, northern Appalachian Plateau, and 
New England as having temperatures in excess of 100 degrees Celsius at 
depths of approximately 4 Km. However, more accurate temperature 
estimates, and the refinement of the geographic and geologic extent of 
areas of high heat flow could be identified through a new assessment 
using more recent and robust geophysical tools and technologies. It is 
very important that this assessment data be collected and synthesized 
in order to assist private industry with exploration, and subsequent 
investment in developing these resources in areas not traditionally 
recognized as hosting geothermal reservoirs. In addition, while other 
forms of renewable energy, such as wind and solar can contribute to the 
total energy portfolios of many states, they often cannot be counted on 
as continuous energy sources because they are directly influenced by 
changing weather conditions and daylight. Geothermal energy can be 
utilized 24 hours a day and for many years until the heat capacities or 
heat exchange capabilities of the reservoir are diminished. 
Hydroelectricity is also a viable form of renewable energy in the 
eastern US, and in many cases it was the primary power source for the 
industrialization of much of this region.
    However, the amount of dams used for hydroelectric energy 
production have actually decreased over the last several decades, and 
environmental concerns related to fish habitat and maintaining in-
stream flows have diminished the interest in hydroelectric development. 
Geothermal energy plants generally have a small footprint, do not 
produce green house gases, and can be relied upon for extended periods 
of time. Educating the public on the benefits of utilizing geothermal 
energy would be one of the best ways to promote it in regions not 
familiar with its use or accessibility.
    Question 2. What percent of our country's electricity supply do you 
estimate could come from geothermal sources? What percent of our 
country's heating and cooling needs could come from geothermal 
resources?
    Answer. S.1543 would set a goal of achieving 20 percent of total 
electrical production from geothermal resources by 2030. As I stated in 
my previous testimony, this may be an ambitious goal, especially if 
this number refers strictly to electrical energy production, and does 
not consider improvements to efficiency from other geothermal 
applications. For comparisons, Australia has a smaller population than 
the US, and is farther along in the development of HDR geothermal 
systems, but they have limited their geothermal power expectations to 
less than 10% of its base load power needs by 2030. The Office of 
Technology Assessment at the German Parliament estimates that 
theoretically 25% of gross electricity generation could come from 
geothermal, although 2 percent may be more reasonable within their 
current grid. From the US perspective, the 20 percent goal may be 
attainable if energy savings from the use of efficient geothermal 
systems, such as geothermal heat pumps and direct use, were counted. 
For example, the extreme efficiency of geothermal heat pump systems 
means that their owners see between 25-50% savings (30 to 70% in 
heating mode, 20 to 50% in cooling mode) on their heating and cooling 
costs. Although the systems have a higher installation cost, the energy 
savings combined with low maintenance costs often re-pay the initial 
investment within 3 to 10 years. Geothermal heat pumps are also safer 
than conventional combustion heating systems, with no risk of gas 
leaks, fires, or carbon monoxide poisoning. Maintenance is also less 
expensive with geothermal heating and cooling systems. An EPA study 
concluded that geothermal heating systems have the lowest life-cycle 
costs of all systems available today in addition to lowest impact on 
the environment, and highest customer satisfaction ratings. A heat pump 
heating and cooling system also adds to the market value of a home. 
There are also more and more innovative ways being developed to use 
geothermal heat. For example, large office buildings in Toronto, 
Canada, are utilizing the geothermal heat potential in waters of the 
Great Lakes by capturing the cold, constant-temperature water from deep 
areas of adjacent Lake Erie and circulating the water to air-condition 
buildings in the downtown area.
    It is difficult to predict what percent of the nation's heating and 
cooling needs could be met from geothermal sources, but it is certainly 
much greater than we are currently utilizing now. It might also require 
a national effort equivalent to the ``space race'' program to conduct 
the research and development, and implementation of the technologies 
required to reach the goal of 20 percent of our energy needs by 2030. 
However, this would be goal well worth striving for, and would benefit 
our science, engineering, and industrial sectors while boosting our 
economy, and providing energy stability and national security as well.
                                 ______
                                 
 Responses of Kenneth H. Williamson to Questions From Senator Bingaman

Please note that my experience is in the exploration and development of 
high enthalpy geothermal resources and I do not have expert knowledge 
of climate change science, the electricity industry, geothermal 
leasing, permitting or tax policy, but I have tried to address the 
questions to the best of my ability. The answers represent my personal 
opinion and not that of any company or industry group.

    Question 1. Would a cooperative international technology exchange 
program accelerate the geothermal research, development, and 
demonstration?
    Answer. The technology for developing conventional geothermal 
resources is already being shared in such forums as the Geothermal 
Resources Council Annual Meeting\1\, the Stanford Geothermal 
Workshop\2\, and the World Geothermal Congress (International 
Geothermal Association)\3\. Technical cooperation by a group of 
countries and companies is currently coordinated by the International 
Energy Agency\4\. I recommend that these institutions be strengthened 
where necessary.
---------------------------------------------------------------------------
    \1\ http://www.geothermal.org/
    \2\ http://pangea.stanford.edu/ERE/research/geoth/conference/
workshop.html
    \3\ http://iga.igg.cnr.it/index.php
    \4\ http://www.iea-gia.org/
---------------------------------------------------------------------------
    Large scale development of geothermal energy in the US will not 
come from conventional sources, but could be developed from Enhanced 
Geothermal Systems (EGS), if the technology can be proven to be 
commercial.
    The potential that Enhanced Geothermal Systems (EGS) offer as a 
contributor to base-load electric power generation free of greenhouse 
gases, is so large, and so widespread, that it would benefit greatly 
from international cooperation. A key country in the greenhouse gas 
reduction effort that could benefit from strong engagement in EGS 
technology exchange is India. The first step, however, is to prove that 
EGS can be developed commercially.
    I estimate that more than half a billion dollars were spent in the 
past 30 years on EGS experiments by governments in the US, UK, Japan, 
EU, without demonstrating commercial viability. Recent experiments by 
private industry in Australia look promising. I favor EGS drilling 
being done by private industry, supported by basic research in selected 
areas performed by government agencies.
    Question 2. Who would the key international participants be?
    Iceland, New Zealand, the Philippines and Indonesia are currently 
most active in conventional geothermal development. Australia\5\ and 
the European Union (particularly Germany)\6\ are leading in the 
attempts to develop EGS, through private companies in Australia and 
both private companies and government agencies in the EU.
---------------------------------------------------------------------------
    \5\ http://www.pir.sa.gov.au/geothermal/ageg
    \6\ http://engine.brgm.fr/
---------------------------------------------------------------------------
    There is a compelling need to help India find an alternative to 
coal for power generation, and India is reported\7\ to have 
considerable potential for EGS. I recommend that the key international 
participants for the development of EGS be United States, Australia, 
European Union and India.
---------------------------------------------------------------------------
    \7\ Chandrasekhar, V (2007) Enhanced Geothermal Resources: Indian 
Scenario. Geothermal Resources Council Transactions 31, pp 271--273.
---------------------------------------------------------------------------
    Question 3. It is mentioned in your testimony that an annual growth 
rate of 18% geothermal energy will be needed to meet the goal that is 
stated in the bill. Is this reasonable? Can the goal actually be met?
    Answer. S.1543 states that ``it shall be a national goal to achieve 
20 percent of total electrical energy production in the United States 
from geothermal resources by not later than 2030'', and by my 
calculations this will require 130 GWe of geothermal capacity to reach 
20% of EIA projected electricity demand by 2030. This is more 
aggressive than the findings of a report issued by MIT in 2006\8\, 
which found that ``EGS could provide 100 GWe or more of cost 
competitive generating capacity in the next 50 years''.
---------------------------------------------------------------------------
    \8\ Tester, J., Anderson, B., Batchelor, A., Blackwell, D., 
DiPippo, R., Drake, E., et al. (2006). The Future of Geothermal Energy. 
Impact of Enhanced Geothermal Systems (EGS) on the United States in the 
21st Century. Massachusetts Institute of Technology.
---------------------------------------------------------------------------
    The large scale development of EGS geothermal energy will require 
technical breakthroughs. The most optimistic scenario in my opinion is 
that technical breakthroughs will occur within the next year or so in 
Australia, and that legislation in the US (for example Renewable 
Portfolio Standards, or California Assembly Bill 32) combined with 
government incentives for early movers will motivate the private sector 
to begin exploitation of EGS in the US.
    What goal is reasonable? I believe the goal should be set with two 
factors in mind--the urgent need to reduce greenhouse gases (GHG), and 
the cost of alternative sources of electricity that are low in GHG 
emissions. The limits on production of EGS will not be constrained by 
the availability of heat in the earth, but rather by its ability to 
compete in the marketplace with other sources of GHG-free energy.
    Providing the marketplace for electric power is regulated to give 
priority to GHG-free, baseload sources, I favor a goal of 10 percent of 
total electrical energy production in the US from geothermal resources 
by 2030. This is more aggressive than the growth recommended in the MIT 
report\8\, because I assume that EGS will have favorable pricing over 
coal and gas because of efforts by regulators to reduce greenhouse 
gases, and over wind and solar because of the electric utilities need 
to develop baseload power sources to replace coal.
    Question 4. You also state that greater than $400 billion dollars 
of capital investment will be needed to expand the geothermal industry. 
Will the private sector be able to meet the investment requirements?
    Answer. I do not foresee that the availability of capital will be a 
constraint providing the electric power market is regulated in a way 
that restricts GHG emissions, and providing that EGS is 1)shown to be 
technically feasible 2)competes economically with other baseload low-
GHG sources and 3)is not subject to unpredictable delays due to e.g. 
permitting requirements.
    Question 5. What types of incentives do you propose that could help 
the private sector accelerate new geothermal exploration and 
development projects?
    Answer. I propose incentives that pay a premium for electric power 
generated by EGS from specified geological environments, for a limited 
time period and up to a limited capacity. The purpose of the incentives 
must be to motivate capable companies to take the early technology 
risk, in a way that leads to subsequent large scale development of EGS 
power at (GHG-regulated) market rates, if they are successful in 
overcoming technology risk and reducing development cost.
    Profits during the early project years have a large influence on 
net present value, so providing the potential for greater profits for 
e.g. 5 years will motivate firms to take greater risk, improve EGS 
technology at a faster pace, and thereby accelerate the geothermal 
growth rate.
    Question 6. In your many years of experience working in the 
geothermal industry, what were the largest challenges that you faced 
regarding geothermal exploration and development? Are those challenges 
addressed in this bill?
    Answer. I experienced the following challenges during my career:

          1) Over-development in the Geysers Field because of 
        unregulated expansion by multiple operators tapping the same 
        reservoir of steam.
          2) Development of a promising geothermal project, Medicine 
        Lake\9\ in California, delayed for years due initially to low 
        power market prices, and later to a District Court 
        challenge\10\ to the BLM permit.
---------------------------------------------------------------------------
    \9\ http://www.blm.gov/ca/alturas/medicinelake.html
    \10\ http://www.sacredland.org/PDFs/pit--river--decision.pdf
---------------------------------------------------------------------------
          3) Contract terms not upheld by governments in large 
        geothermal projects in SE Asia, drastically reducing investment 
        in the sector for many years.

    The Bill does not address the need to expeditiously address permit 
delays and resolve legal challenges to projects on government land. The 
issue of geothermal fields with multiple operators can be solved in the 
future by unitization.

 Responses of Kenneth H. Williamson to Questions From Senator Domenici

    Dr. Williamson, in your testimony you concluded that ``the goal to 
generate 20 percent of our electricity from geothermal resources by 
2030 is very aggressive relative to our previous experience.''
    Question 1. In your opinion, what would be a more realistic goal?
    Answer. Providing the marketplace for electric power is regulated 
to give priority to GHG-free, baseload sources, I favor a goal of 10 
percent of total electrical energy production in the US from geothermal 
resources by 2030. This is still aggressive relative to our previous 
experience, but is needed to address the issue of greenhouse gas 
reduction.
    Question 2. In your testimony you indicated that it ``will take 
hundreds of billions of dollars of capital, tens of thousands of 
geothermal wells, and millions of acres of land.''
    Answer. My calculations assume that most of the power is generated 
by EGS, which is likely to cost $3,000-$4,500/kW to install, unless 
technical breakthroughs increase well productivity beyond current 
expectations. 20% of the EIA projection for 2030 is 130 GW so capital 
cost would be approximately $400-600 billion.
    Question 3. How much of that ``billions of dollars of capital'' do 
you believe the federal government should help with?
    Answer. I believe that the government should motivate private 
industry to overcome the technical challenges to EGS development, by 
providing incentives in the early years of development to the first 
four companies to move in the sector. For example, providing 5 cents/
kWh above market rates to the first four developers achieving 50 MW for 
five years of production would cost about $400 million. The federal 
government should also determine an appropriate cost for greenhouse gas 
emissions in electricity generation, and implement regulations to 
reflect that cost in the electricity market.
    Question 4. How many wells do you think will be needed? Are you 
talking about something in the hundreds, or something closer to many 
thousands?
    Answer. I believe that it is more likely to achieve the goal of an 
EGS technology breakthrough by motivating industry with higher power 
prices than cost-shared drilling. In my suggestion above, 200 MW would 
likely require roughly 30--60 wells.
    To achieve the S.1543 20% (130 GW) goal by 2030 will require the 
drilling of 20,000 to 40,000 wells.
    Question 5. I am most interested in your comment about ``millions 
of acres of land.''
    Answer. I estimate that between 1 and 3 million acres of land will 
be needed to achieve the 20% goal of S.1543, by assuming a reasonable 
range of well productivity and using well spacing similar to that used 
in EGS experiments in the EU.
    Question 6. Dr. Williamson, as I look at the maps that show where 
the ``best'' areas for development are, I see the current land owner is 
the federal government. I also know that many of those lands are within 
reserves that would preclude drilling and surface development and, in 
many instances, the development of the transmission lines needed to get 
the electricity to market.
    Answer. There are many areas of high geothermal potential that are 
off-limits to developers. Ultimately the government will have to find a 
balance that addresses the need to reduce greenhouse gas emissions and 
improve energy security, while allowing reasonable protection of 
environmentally-sensitive public lands.
    Question 7. Can you expand upon your comment about needing 
``millions of acres of land'' and how we should view the need to 
provide sufficiency language to allow the rapid development of this 
resource?
    Answer. Rapid development will require that adequate resources are 
available to the BLM and Forest Service to issue leases, expedite 
environmental assessments and environmental impact statements and deal 
with legal challenges to permits.

  Responses of Kenneth H. Williamson to Questions From Senator Salazar

    Question 1. In the United States, most geothermal reservoirs are 
located in the western states, Alaska, and Hawaii. What is the best way 
to promote geothermal energy to States that may be more familiar with, 
and have better access to, other forms of renewable energy?
    Answer. I believe the compelling argument to all citizens in the US 
should be the need to reduce greenhouse gases. Geothermal energy 
provides baseload power, and EGS has the potential to supply a 
significant fraction of the nation's energy, reducing the reliance on 
CO2-producing coal generation.
    Geothermal Heat Pumps are an excellent way to reduce space heating 
and cooling costs, and are applicable country-wide.
    If EGS technology can be proven, I anticipate that over time, 
through a process of technology development and process improvement, 
the cost of EGS will be reduced and EGS will become viable in regions 
of low to moderate geothermal gradient and therefore be applicable 
throughout the United States. This will be true providing the 
marketplace for electric power is regulated to give priority to GHG-
free, baseload power sources.
    Question 2. What percent of our country's electricity supply do you 
estimate could come from geothermal sources? What percent of our 
country's heating and cooling needs could come from geothermal 
resources?
    Answer. Providing the marketplace for electric power is regulated 
to give priority to GHG-free, baseload sources, I favor a goal of 10 
percent of total electrical energy production in the US from geothermal 
resources by 2030. This is still aggressive relative to our previous 
experience, but is I believe it is needed to address the issue of 
greenhouse gas reduction.
    I do not have sufficient knowledge of the direct use of geothermal 
heat and geothermal heat pumps, or the US market for heating and 
cooling, to provide a quantitative estimate on the percent heating or 
cooling geothermal resources could provide. Direct use of heat from 
geothermal resources is a more efficient use of the energy than 
electricity generation, since the conversion of geothermal heat to 
electricity typically has an efficiency of 20% or less, depending on 
the resource temperature.
                                 ______
                                 
   Responses of Alexander Karsner to Questions From Senator Bingaman

    Question 1. Is it correct that Enhanced Geothermal Systems (EGS) 
did not factor into the Administration's reason(s) for eliminating the 
geothermal program?
    Answer. The existing Geothermal Technology Program focused on 
conventional geothermal and the decision to terminate was based on the 
assessment that it was a mature technology, and that favorable policy 
changes have resulted in the growth of the industry, independent of a 
federally funded R&D program.
    Question 2. Upon completion of the validation of the MIT study--is 
the Administration prepared to revitalize the DOE geothermal R&D 
program to explore the development of EGS?
    Answer. The Department is carefully reviewing the MIT report and is 
conducting a technology evaluation of EGS technologies by assembling 
groups of industry, university, and national laboratory experts, along 
with other stakeholders, at workshops around the country. Three of 
those workshops have been held thus far. DOE plans to have a final 
report of findings by the end of this calendar year.

   Responses of Alexander Karsner to Questions From Senator Domenici

    Gentlemen, Dr. Williamson spoke of this legislation requiring 
millions of acres of land. As I look at the maps that show the ``best'' 
areas for development, I see the current land owner is the federal 
government. I also know that many of those lands are within reserves 
that would preclude drilling and surface development and, in many 
instances, the development of the transmission lines needed to get the 
electricity to market.
    Question 1. Can you comment on Dr. Williamson's statement about 
needing millions of acres of land and tell me your views on the 
desirability and feasibility of doing this?
    Answer. The Department of Energy defers to the Department of 
Interior as the appropriate entity to answer this question.
    Question 2. Are we likely going to need to provide sufficiency 
language to allow the rapid development of this resource on federal 
lands to meet the stated goal of this bill?
    Answer. The Department of Energy defers to the Department of 
Interior as the appropriate entity to fully answer this question.
    Question 3. Do you believe this country can meet the goal of 
getting 20% of our electricity from geothermal by 2030?
    Answer. This goal's attainment is improbable. The Department has 
significant concerns with the feasibility of the goal of generating 20 
percent of our nation's electricity from geothermal resources by 2030, 
and has yet to see anything put forward that supports the assertion.
    Question 4. How difficult will that be to accomplish?
    Answer. Generating 20 percent of our nation's electricity from 
geothermal resources would require more than 165,000 megawatts of 
geothermal power plant capacity by 2030. The last time that the federal 
government performed a resource assessment was 1978, finding that 
23,000 megawatts of identified conventional geothermal resources can be 
developed for electricity. The difference of more than 142,000 
megawatts would have to come from new discoveries, conventional 
resources that were not viable at the time of the 1978 assessment, and 
unconventional means. None of the unconventional resources are 
presently used to generate commercial power. Given technological and 
resource constraints, the particular goal of this legislation is 
unlikely to be attainable within the timeframe specified.
    Question 5. Do you believe that geothermal will compete 
economically with the available alternatives, or would we need to 
provide incentives or mandates to force its use?
    Answer. Presently, conventional geothermal-generated electricity is 
cost competitive in the regions of the country where the resource can 
be most effectively utilized. Incentives to encourage the production of 
geothermal energy are included both in the Energy Policy Act of 2005 
(EPACT 2005) and in the Tax Relief and Health Care Act of 2006.
    EPACT 2005 provisions directed USGS to update its 1978 geothermal 
resource assessment by September 2008, and instructed the Bureau of 
Land Management and the U.S. Forest Service to develop a Programmatic 
Environmental Impact Statement for the major geothermal areas in the 
Western United States.
    The Tax Relief and Health Care Act of 2006 extended the production 
tax credit for geothermal and other renewables that are put into 
service through December 31, 2008. This provision has had a significant 
impact on encouraging new installations of conventional geothermal 
power facilities.
    Question 6. What is it going to take to complete the called-for 
assessment in terms of costs, time, and new technology?
    Answer. The Department of Energy defers to the Department of 
Interior as the appropriate Agency to answer this question.

    Responses of Alexander Karsner to Questions From Senator Salazar

    Question 1. In the United States, most geothermal reservoirs are 
located in the western states, Alaska, and Hawaii. What is the best way 
to promote geothermal energy to States that may be more familiar with, 
and have better access to, other forms of renewable energy?
    Answer. Possible methods of geothermal energy promotion include 
breaking down institutional barriers to decrease transactional costs, 
making decision makers aware of geothermal benefits, addressing policy 
constraints of land use plans, and addressing environmental problems, 
both real and perceived.
    Question 2(a). What percent of our country's electricity supply do 
you estimate could come from geothermal sources?
    Answer. Currently, the U.S. has approximately 2,850 megawatts 
electric (MWe) of installed capacity and about 2,900 MWe of new 
geothermal power plants under development in 74 projects in the Western 
U.S., according to industry estimates. In 2006, EIA estimates that 
geothermal energy generated approximately 14,842 gigawatt-hours (GWh) 
of electricity. The geothermal industry presently accounts for 
approximately 5% of renewable energy-based electricity consumption in 
the U.S.
    Regarding near-term growth possibilities, the Western Governors 
Association geothermal task force recently identified over 140 sites 
with an estimated 13,000 MWe of power with development potential.
    According to an EIA renewable trend 2005 report,\1\ ``Although 
geothermal capacity increased by only 130 MW during 2005, there are 
proposals to greatly expand the geothermal resource base to be 
exploited. These proposals are based on a recent study commissioned by 
the U.S. Department of Energy, in which scientists at the Massachusetts 
Institute of Technology concluded that the U.S. has 100,000 MW of 
`enhanced geothermal capacity' which it could develop by 2050.'' The 
Enhanced Geothermal Systems (EGS) technology that MIT references in its 
report requires further study. To further explore this and other 
aspects of the MIT study, DOE is holding discussions with industry and 
academic experts, further defining technical barriers and gaps, and 
determining the technical and commercial actions that can help industry 
address the challenges of EGS.
---------------------------------------------------------------------------
    \1\ Renewable Trends. 2005 edition http://
www.eia.doe.govkneafisolar.renewables/page/trends/rentrends.html
---------------------------------------------------------------------------
    Question 2(b). What percent of our country's heating and cooling 
needs could come from geothermal resources?
    Answer. In the U.S., more than 120 operations, with hundreds of 
individual systems at some sites, are using geothermal energy for 
district and space heating. In addition, geothermal heat pump 
installations have exceeded one million, according to the Geothermal 
Heat Pump Consortium. Although this is a very small percentage of the 
total HVAC market, the number of people who are choosing to install 
geothermal heat pumps is growing rapidly (about 20% every year) as more 
learn about the technology. According to EIA (Table 17, Renewable 
Energy Consumption by Sector and Source (quadrillion Btu, unless 
otherwise noted)) geothermal could meet approximately 2.1% by 2030.

     Responses of Alexander Karsner to Questions From Senator Reid

    The Energy Policy Act provides specific directives for DOE's 
renewable energy research efforts. In general, the overall approach is 
spelled out in Section 931, which states:

          (a)(1) OBJECTIVES.--The Secretary shall conduct programs of 
        renewable energy research, development, demonstration, and 
        commercial application, including activities described in this 
        subtitle. Such programs shall take into consideration the 
        following objectives:

            (A) Increasing the conversion efficiency of all forms of 
        renewable energy through improved technologies.
            (B) Decreasing the cost of renewable energy generation and 
        delivery.
            (C) Promoting the diversity of the energy supply.
            (D) Decreasing the dependence of the United States on 
        foreign energy supplies.
            (E) Improving United States energy security.
            (F) Decreasing the environmental impact of energy-related 
        activities.
            (G) Increasing the export of renewable generation equipment 
        from the United States.

    Subsection (c) of this section of EPAct specifically provides 
direction for geothermal energy research. It states:

          GEOTHERMAL.--The Secretary shall conduct a program of 
        research, development, demonstration, and commercial 
        application for geothermal energy. The program shall focus on 
        developing improved technologies for reducing the costs of 
        geothermal energy installations, including technologies for----

          (i) improving detection of geothermal resources;
          (ii) decreasing drilling costs;
          (iii) decreasing maintenance costs through improved 
        materials;
          (iv) increasing the potential for other revenue sources, such 
        as mineral production; and
          (v) increasing the understanding of reservoir life cycle and 
        management.

    Question 1. Please respond for the FY07 spending/operating plan and 
the FY08 budget request--How do the Department's decisions in each of 
those documents with respect to the geothermal energy research and 
development program comport with the statutory direction provided by 
Congress in section 931 of PL109-58?
    Answer. The FY 2007 operating plan supports diversification of the 
energy supply, independence from foreign energy supplies, and national 
energy security. The FY 2007 operating plan for the Department included 
$5 million to support geothermal power co-produced with oil and gas 
demonstration efforts, for an evaluation of enhanced geothermal systems 
to help industry prioritize its technology needs, and to bring to 
completion selected projects on exploration, drilling, and/or 
conversion technologies.
    The FY 2008 budget request recognizes that the Geothermal 
Technology Program's mission and activities were successful and 
directly support DOE's mission to promote scientific and technological 
innovation in support of advancing the national, economic and energy 
security of the United States. Industry application of technology and 
resources developed to date will continue to benefit the nation.
    As noted above, The Energy Policy Act of 2005 (EPACT 2005) sets 
objectives for effective promotion of renewable energy in general, in 
addition to authorizing energy research in specific areas such as 
geothermal. Current Department priorities are focused on technology 
development with broadly applicable and more readily accelerated public 
benefits, consistent with the statutory direction of EPACT 2005.
    The Administration's repeated efforts to close down and defend the 
geothermal research program also appears to contradict the 
recommendations of the last external review of the Department of 
Energy's renewable programs, the 2000 report of the National Research 
Council entitled Renewable Power Pathways. That National Research 
Council's examination of the geothermal program states in clear terms 
the importance of the program, and the recommendation that it continue 
to be funded: ``In light of the significant advantages of geothermal 
energy as a resource for power generation, it may be undervalued in 
DOE's renewable energy portfolio.''
    Question 2(a). Does the Department agree with the National Research 
Council that the US geothermal resource base holds significant 
potential to contribute to national energy needs?
    Answer. The Department agrees that the U.S. geothermal resource 
base is large, and can contribute to diversification of our national 
energy portfolio, primarily through increased private sector 
development.
    One of the challenges our nation faces is meeting the growing 
demand for electric power, particularly in the West. The Western 
Governors Association has estimated that over 60,000MW of new electric 
power generation will be needed to meet growing demand in the next 
decade. How we meet these needs will have profound consequences for the 
West and the Nation.
    The Department's Geothermal Program Strategic Plan stresses these 
values of geothermal energy. It states:

          The Earth houses a vast energy supply in the form of 
        geothermal resources. These resources are equivalent to 30,000-
        years of energy for the United States at current rates of 
        consumption. However, only about 2,600 MWe of geothermal power 
        is installed today. Geothermal has not reached its full 
        potential as a clean, secure energy alternative because of 
        concerns or issues with resources, technology, commitment by 
        industry, and public policies. These concerns affect the 
        economic competitiveness of geothermal energy.
          The U.S. Department of Energy's Geothermal Technologies 
        Program seeks to make geothermal energy the Nation's 
        environmentally preferred baseload energy alternative. The 
        Program's mission is to work in partnership with U.S. industry 
        to establish geothermal energy as an economically competitive 
        contributor to the Nation's energy supply.

    But, the geothermal strategic plan indicated that the program could 
not reach its goals until at least 2040 because of its limited funding. 
It also says, ``Doubling the Program's budget'' would accelerate 
achieving the program goals and they could ``be attained by 2020, 
resulting in an overall budget savings of $100 million.''
    The Geothermal Task Force of the Western Governors Association, a 
part of the WGA's Clean and Diversified Initiative, has reviewed 
geothermal resources of the West. The Task Force identified sites where 
power production could occur in the next fifteen years, a capacity of 
some 13,000MW. However, the Task Force reported that only 1/3 of these 
sites could produce power at commercial prices using today's 
technology, assuming continued federal and state tax support. The Task 
Force recommended that ``geothermal research by the US Department of 
Energy should be increased, particularly into technologies that can 
reduce risk, reduce costs, or expand the accessible resource base.''
    Question 2(b). What actions did the Department take to implement 
the recommendations made by the National Research Council in 2000?
    Answer. Since 2000, the Department has taken actions to implement 
all ten recommendations made by the National Research Council, which 
relate to more than just geothermal. These actions include new or 
expanded research initiatives, technology demonstration projects, 
increased collaboration with other agencies, and improved international 
cooperation. Specifically in terms of geothermal, the National Research 
Council recommended that the Department should reinstate its resource 
assessments of geothermal energy at the U.S. Geological Survey. 
Subsequently, the Department provided both financial and technical 
support to the U. S. Geological Survey for its national resource 
assessment. The National Research Council also recommended that the 
Department should increase its collaboration with European countries 
and Japan on advanced technologies to provide cost-leveraged field 
testing and enabling reservoir technologies. The Department continues 
to share information on advanced technologies with European researchers 
through the International Energy Agency's Implementing Agreement on 
Geothermal Energy. The Japanese geothermal research program has ended. 
The National Research Council also recommended that the Department 
reactivate its programs for the development of advanced concepts for 
the long term, with its first priority on high-grade enhanced 
geothermal systems (EGS). The Department is analyzing a recent MIT 
report on EGS.
    Question 2(c). Has the Department had further communications with 
the NRC about its assessment and any follow-up by the Department? 
Please provide any documents supporting these actions and 
communications.
    Answer. The Department recently engaged with the National Research 
Council to support the NRC's new initiative, ``America's Energy Future: 
Electricity from Renewables: Technology Opportunities, Risks, and 
Tradeoffs.''
    Question 3(a). Does the Department agree with the Western Governors 
assessment that at least 60,000 MW or more new power capacity will be 
needed in the next decade?
    Answer. Energy Information Administration (EIA) baseline demand 
projections indicate that approximately 40,000 MW of new capacity will 
be needed in the western states by 2017 (Annual Energy Outlook 2007, 
Supplemental Tables, Electric Generation & Renewable Resource).
    Question 3(b). How much of this will be baseload power?
    Answer. According to EIA, of the 40,000 MW of new capacity needed, 
approximately 31,000 MW will need to be provided by base load 
technologies.
    Question 3(c). What technologies and sources does the Department 
expect to provide new baseload power to the Western United States by 
2015, 2025? And how much?
    Answer. New capacity additions in the Western United States are 
projected to come from coal steam (approximately 12,700 MW in 2015 and 
48,500 MW in 2025), combined cycle technologies (10,000 MW in 2015 and 
11,500 MW in 2025), combustion turbine/diesel technologies (4,600 MW in 
2015 and 9,900 MW in 2025), and renewable (7,900 MW in 2015 and 9,100 
MW in 2025).\1\
---------------------------------------------------------------------------
    \1\ Annual Energy Outlook 2007, Supplemental Tables, Electricity 
and Renewable Fuel Tables.
---------------------------------------------------------------------------
    Question 3(d). For the technologies that DOE expects will be 
meeting this new power demand, what is the projected cumulative DOE 
research and development expenditure that would be necessary to ensure 
these technologies are ready in 2015? 2025?
    Answer. Research and development of conventional, hydrothermal 
geothermal energy is not required to achieve the projected results. 
Conventional, hydrothermal geothermal energy would benefit from a 
policy directed at commercialization, as in EPACT 2005.
    Question 3(e). Does the Department agree with the WGA's Task Force 
on the estimates of the resource base and its cost of development?
    Answer. DOE agrees with the WGA near-term estimate of developable 
geothermal resources at about 13,000 MW. These are hydrothermal sites 
that would produce base load power.
    Question 3(f). What are the Department's views on the WGA's Task 
Force recommendations?
    Answer. The Western Governors Association geothermal task force 
identified over 100 sites with an estimated 13,000 MWe of power with 
near-term development potential. DOE believes that the goal can be 
attained by industry alone with the production tax credit and 
streamlined leasing and permitting.
    Question 3(g). Does the Department expect geothermal energy 
technology to advance at the same rate absent DOE support? Please 
provide evidence to support the response to this question.
    Answer. The highest priority of the geothermal industry has been 
the attainment of the production tax credit, which the Energy Policy 
Act of 2005 provided. In addition, the Energy Policy Act streamlined 
geothermal leasing and changed the royalty structure to provide 
incentives for local governments to promote geothermal development. The 
Energy Policy Act also mandated that the U.S. Geological Survey update 
the national geothermal resource assessment by FY 2008. DOE has been 
supporting the USGS resource assessment by contributing financially and 
technically. These statutory changes have spurred development of 
hydrothermal resources without the Department's Geothermal Research and 
Development Program.
    The Department's 2003 Strategic plan included geothermal energy 
research as part of its efforts to ``Improve energy security by 
developing technologies that foster a diverse supply of reliable, 
affordable, and environmentally sound energy ...'' Geothermal power was 
part of DOEs ``long-term vision of a zero-emission future in which the 
nation does not rely on imported energy.''
    But more recently, the Department of Energy seems not to agree with 
this assessment. In other budget documents the Department presents 
another rationale for closing out this program. Basically, it sees 
geothermal energy as a ``regional resource'' with limited 
applicability. (see ``http://www 1.eere.energy.gov/ba/pdfs/FY07--
budget--brief.pdf.)
    Today, geothermal resources are used in 25 states for power and 
direct use purposes (not including heat pumps) and advanced ``EGS'' 
technology has the potential to bring geothermal power in use across 
the country according to recent reports. Including geothermal heat 
pumps, geothermal energy is used in all 50 states.
    The Department used to consider the future potential of geothermal 
energy to be quite significant. Today, the nation produces about 2,800 
Megawatts of power from geothermal resources, and the power potential 
alone was estimated to be many times that amount. The DOE Geothermal 
Strategic Plan used to say:

          The U.S. Geological Survey estimated that already-identified 
        hydrothermal reservoirs hotter than 150C have a potential 
        generating capacity of about 22,000 MWe and could produce 
        electricity for 30 years [1]. Additional undiscovered 
        hydrothermal systems were estimated to have a capacity of 
        72,000-127,000 MWe. At depths accessible with current drilling 
        technology virtually the entire country possesses usable 
        geothermal resources. The best areas are in the western United 
        States where bodies of magma rise closest to the surface.

    The Department's strategic plan included a very interesting map 
that showed the potential of heat in the earth to contribute to our 
energy needs. As the map showed, DOE used to view the technical 
potential of geothermal energy to span the entire country from Maine to 
California.
    Question 4(a). How does DOE view the potential of geothermal 
resources?
    Answer. The Department's investment in geothermal has contributed 
to the identification of those resources, accurate characterization and 
modeling of hydrothermal reservoirs, improved drilling techniques, and 
advanced means of converting the energy for productive uses. In fact, 
such progress has been made in geothermal technology that it is at a 
point where it has reached market maturity.
    The Department anticipates that geothermal resources will continue 
to play an important and potentially growing role in our nation's 
energy portfolio, as we look to rapidly expand the availability of 
clean, secure, reliable energy. The industry currently benefits from 
tax incentives and regulatory streamlining in EPACT 2005, and future 
industry investments in enhanced geothermal have the potential to 
significantly expand domestic geothermal energy production.
    Question 4(b). What has happened in the past three years to 
apparently change the Department's views of the geothermal resource 
base and its enormous potential?
    Answer. The Department's view on the size of the geothermal 
resource base has not changed. Geothermal technology has reached a 
point where it has reached market maturity, and the focus has therefore 
shifted to commercialization.
    Question 4(c). What geothermal resource types does the Department 
now consider economic: hydrothermal, hot dry rock (EGS), geopressured, 
co-production from oil fields, direct uses, magmatic, others?
    Answer. The Department considers high--temperature, shallow 
hydrothermal resources for power generation and low--temperature, 
shallow hydrothermal resources for nonelectrical purposes as 
economical.
    Question 4(d). The Department had indicated that there were many 
technological challenges to achieving production from the vast 
geothermal resource base. Does the Department now consider these 
challenges are solved, does the Department have new information that 
indicates its prior assessments of geothermal resources are incorrect, 
or has the Department concluded that federal efforts and technology 
development cannot overcome them?
    Answer. DOE has concluded that hydrothermal technology is mature. 
The FY 2007 Operating Plan for the Department included funding for an 
evaluation of enhanced geothermal systems to help industry prioritize 
its technology need.
    The Office of Management and Budget, in the FY07 and FY08 budgets, 
offered some additional rationales for proposing to terminate the 
geothermal research program, which the Senate has already rejected with 
respect to FY07 and Congress will reject with respect to both years. 
There appear to be three main assertions by OMB.

          1) geothermal technology is ``mature'' and doesn't really 
        need more R&D,
          2) the change in leasing royalty structure from 50/50 to 50/
        25/25 will make a substantial difference, so research isn't 
        needed,
          3) the forthcoming resource assessment by USGS will solve the 
        industry's exploration problems,
          4) with new tax incentives, geothermal power does not need 
        research support.

    Question 5(a). Does the Department consider geothermal energy a 
resource or a technology?
    Answer. Geothermal energy is a national resource.
    Question 5(b). If geothermal energy is a technology, is there one 
technology or are there a series of technologies used to produce energy 
from geothermal resources?
    Answer. There are multiple technologies used to produce energy from 
geothermal resources, such as exploration, drilling, reservoir 
development, and energy conversion.
    Question 5(c). How did the Department determine that geothermal 
technology was mature?
    Answer. Conventional, known, high-temperature, shallow hydrothermal 
resources can be developed using available drilling and reservoir 
technologies. Utilizing such resources to produce electricity only 
requires off-the-shelf power conversion technology. Since the relevant 
technological tools are all available in the marketplace, the 
technology was considered mature.
    Question 5(d). Please describe the criteria used in determining 
whether geothermal technology is or was mature.
    Answer. Geothermal technology consists of the tools to find, 
access, extract, and use geothermal resources. In each of these areas, 
conventional, off-the-shelf technology is available to produce 
geothermal energy in commercial quantities. With the exception of 
energy conversion, technology for conventional geothermal development 
is adaptable from the available tools used to find and exploit oil and 
gas and other mineral resources. Energy conversion technology has 
evolved competitively from experience gained around the world in 
producing geothermal energy. The chief criterion for maturity is 
availability of a suite of technologies in the marketplace at costs 
sufficient to allow the development of a geothermal energy project at 
competitive prices.
    Question 5(e). What other energy technologies or resources that are 
researched and developed with Department funds match that criteria?
    Answer. Hydropower, biodiesel, and conventional ethanol 
technologies have the same level of commercial availability as 
technology for the development of geothermal resources.
    Question 5(f). Please provide to the Committee any studies or 
analysis the Department has done of technological maturity and a chart 
showing the comparable maturity of the technologies it proposes to fund 
and not to fund.
    Answer. The FY 2007 operating plan provided funds for an evaluation 
of enhanced geothermal systems to help industry prioritize its 
technology needs.
    Question 5(g). How will the leasing provisions proposed by OMB 
satisfy the specific objectives for DOE's research efforts with respect 
to geothermal energy as directed by Sections 931 (a) and (c) of EPAct 
2005?
    Answer. The leasing provisions were included in EPAct 2005 and were 
not proposed by OMB in the FY 2008 Budget. The leasing provisions can 
provide ``market pull'' incentives for industry to achieve the research 
objectives specified in Sec. 931 (a) (2) (C) by helping to make 
commercial geothermal development easier and more profitable. 
Streamlined leasing works along with the production tax credit, the 
changes to the royalty structure, and the U.S. Geological Survey's 
national resource assessment, to help promote commercialization of 
geothermal energy. U. S. geothermal industry and its service companies 
can be expected to learn from the increased deployment and develop 
improved technologies for detecting geothermal resources, decreasing 
drilling and maintenance costs, and managing the resource to maximize 
reservoir life time. These market-driven technology improvements should 
satisfy the need for research, development, demonstration, and 
commercial application for geothermal as described in Subtitle C, Sec. 
931 (a) (2) (C) of the Energy Policy Act.
    The Office of Management and Budget, in the FY07 and FY08 budgets, 
offered some additional rationales for proposing to terminate the 
geothermal research program, which the Senate has already rejected with 
respect to FY07 and Congress will reject with respect to both years. 
There appear to be three main assertions by OMB.

           1) geothermal technology is ``mature'' and doesn't really 
        need more R&D,
          2) the change in leasing royalty structure from 50/50 to 50/
        25/25 will make a substantial difference, so research isn't 
        needed,
          3) the forthcoming resource assessment by USGS will solve the 
        industry's exploration problems,
          4) with new tax incentives, geothermal power does not need 
        research support.

    Question 5(h). How would OMB's proposed changes to geothermal 
leasing make continued federal research unnecessary?
    Answer. As noted above, the leasing provisions were included in 
EPAct 2005, not as proposals in the 2008 Budget. The Department's 
expectation is consistent with the position of the U.S. geothermal 
industry, which has determined that a change in leasing policy is 
likely to have greater impact on the rate of deployment than federally-
funded R&D. They base this on Geothermal Energy Association data in 
which no growth is evident despite federal research funding of 
approximately $25 million per year from 1990 through 2005 (as estimated 
by GEA).\2\
---------------------------------------------------------------------------
    \2\ http://www.geo-energy.org/publications/reports/
States%20Guide.pdf
---------------------------------------------------------------------------
    Question 5(i). Please discuss the support, to date, from DOE for 
the USGS resource assessment efforts and the plans, if any, for 
continued support by DOE for this effort? What is the status and 
content of the cooperative agreement drafted or finalized between DOE 
and USGS?
    Answer. DOE and USGS signed an MOU in June 2004 for three years to 
accomplish the following: Document lessons learned from other 
assessments, develop resource assessment methodology and resource 
classification system, compile data collected in a database, and 
develop various models using regional studies. So far, DOE has invested 
more than 1 million dollars in financial support and also provided 
other technical and administrative support. DOE is also committed to 
extend this agreement till the end of FY2008 and provide an additional 
$200K in financial support. The Department has shared the data 
collected from its GRED program with USGS and also offered its national 
laboratory expertise at no cost to USGS.
    Question 5(j). Does the Administration's rationale presume that the 
USGS national resource assessment will discover new resources or 
develop new exploration technology?
    Answer. The USGS resource assessment will not develop new 
exploration technology. The purpose of the assessment is to re-evaluate 
the geothermal resource base using new information that has come to 
light since the last assessment in the late 1970s. The new assessment 
will provide industry with indicators of areas in which geothermal 
resources are likely, allowing them to focus their exploration efforts 
with a higher probability of success.
    Question 5(k). Please provide any information to support the 
Administration's and the Department's assertion that tax incentives 
substitute for the need for federal research support.
    Answer. Since the Federal Production Tax Credit has been extended 
to geothermal energy, over seventy geothermal plants have begun 
development, after a period of more than a decade when no plants were 
built, despite continued research and development investments. This 
suggests that the tax credit has played a role in promoting 
development.
    Question 5(l). Does the Administration support making the renewable 
energy production tax credit permanent or extending it beyond December 
31, 2009?
    Answer. The Administration has not taken a formal position on the 
extension of the production tax credit.

                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

         Statement of UTC Power, A United Technologies Company

                           COMPANY BACKGROUND

    UTC Power, a business unit of United Technologies Corporation, is a 
world leader in commercial stationary fuel cell development and 
deployment. UTC Power also develops other innovative power systems for 
the distributed energy market. This document focuses on issues related 
to the latest addition to our portfolio of clean, efficient, reliable 
technology solutions--namely, the PureCycle power system. This is an 
innovative low-temperature geothermal energy system that represents the 
first use of geothermal energy for power production in the state of 
Alaska and the lowest temperature geothermal resource ever used for 
commercial power production in the world. The technology currently is 
being demonstrated at the Chena Hot Springs resort 60 miles from 
Fairbanks, Alaska and 35 miles off the power grid. Earlier this year, 
UTC Power announced an agreement with Raser Technologies of Provo, Utah 
to provide up to 135 PureCycle geothermal power systems totaling 
approximately 30 megawatts of renewable power for three Raser power 
plants to be located in Nevada.

                                SUMMARY

    Geothermal energy addresses many of our national concerns, but its 
potential is largely untapped. UTC Power's PureCycle system represents 
an innovative advancement in geothermal energy production and is 
operating successfully today in Alaska as part of a cost shared 
Department of Energy (DOE) demonstration effort. This geothermal energy 
breakthrough offers the possibility of tapping into significant U.S. 
geothermal reserves for a domestic, renewable, continuously available 
source of power to meet our growing energy demands. Congressional 
action is needed, however, if the United States is to translate this 
potential into reality. We support the introduction of the ``National 
Geothermal Initiative'' (S 1543) as a key element of the comprehensive 
policy framework that is necessary to advance our nation's use of 
geothermal energy.
    UTC Power recommends several revisions to the bill as introduced 
including recognition of geothermal energy's ability to provide base 
load power as the basis for more favorable tax treatment; and explicit 
reference to research needs related to advanced low temperature 
geothermal energy power production.

                  DESCRIPTION OF PURECYCLE TECHNOLOGY

    The PureCycle system is based on organic Rankine cycle (ORC) 
technology--a closed loop process that in this case uses geothermal 
water to generate 225 kW of electrical power. Think of an air 
conditioner that uses electricity to generate cooling. The PureCycle 
system reverses this process and uses heat to produce electricity.
    The system is driven by a simple evaporation process and is 
entirely enclosed, which means it produces no emissions. The only 
byproduct is electricity, and the fuel--hot water--is a free renewable 
resource. In fact, after the heat is extracted for power, the water is 
returned to the earth for reheating, resulting in the ultimate 
recycling loop.
    UTC Power's PureCycle system can operate on 165 F (74 C) 
geothermal water and by varying the refrigerant can use hydro thermal 
resources up to 300 F (149 C). This is an exciting breakthrough since 
previously experts had assumed that geothermal fluids needed to be at 
least 225 F (107 C) for economic power generation.

     WHAT IS THE SIGNIFICANCE OF LOW TEMPERATURE GEOTHERMAL ENERGY?

    Historically, geothermal energy for power production has been 
concentrated in only four Western U.S. states. The ability to use small 
power units at lower temperature geothermal resources can make 
distributed generation much more viable in many different regions of 
the country. Simply put, PureCycle technology could result in 
significant new domestic, continuously available renewable energy 
resources across the country and around the world with significant 
export potential. The low temperature capability also can be used to 
bottom higher temperature geothermal flash plants and many existing ORC 
binary power plants thus extracting more useful energy with no 
emissions. Compared to other geothermal technologies, the PureCycle 
system produces electrical power at much lower pressure and utilizes 
non-flammable working fluids and therefore doesn't require attended 
operation.
    In addition to traditional stand alone geothermal opportunities, 
there are more than 500,000 oil and gas wells in the US, many of which 
are unprofitable due to their high volume content of water and 
relatively low percent oil. The use of this co-produced geothermal hot 
water, which is abundant at many oil and gas well sites, to produce a 
renewable source of electrical power could extend the life of many of 
these assets for both oil production and production of renewable 
electricity. This would result in significant environmental, energy 
efficiency, climate change, economic and other benefits associated with 
the development of geothermal oil and gas electrical power.

                          RECOMMENDED ACTIONS

    Government action is needed on a variety of fronts to fully realize 
the potential of our nation's significant geothermal resources. UTC 
Power recommends:

1. Extension of the geothermal production tax credit (PTC) and revised 
        ``placed in service'' rules
    While the Senate Energy and Natural Resources Committee does not 
have jurisdiction over this critical incentive program, UTC Power would 
like to take this opportunity to register its support for the longest 
term extension possible of the existing PTC. This important incentive 
is needed to support the introduction of advanced geothermal energy 
technologies as an essential element of market development efforts. We 
also believe that given the ability of geothermal energy to provide 
continuous, base load power and the long lead times necessary to 
develop projects, it should qualify for more favorable terms and 
conditions and the longest extension possible. UTC Power also 
recommends that the PTC be amended to allow facilities under 
construction by the placed in service date of the law to qualify.
2. Robust funding for DOE's Geothermal Research Program
    There are a variety of geothermal energy research, development and 
demonstration needs including full optimization of the potential of low 
temperature geothermal energy production. We support a balanced 
portfolio of geothermal energy RD&D activities that simultaneously 
addresses near and longer term efforts. We urge that Congress authorize 
DOE to pursue advanced low temperature geothermal energy power 
production opportunities including:

        --enhancing the performance of existing successful low 
        temperature geothermal power production systems;
        --improving the efficiency of geothermal resource utilization;
        --assessing additional refrigerant options and evaluating their 
        environmental, safety and operability impacts;
        --developing systems that can operate at even lower 
        temperatures than today; and
        --demonstrating the benefits for other applications including 
        the oil and gas market as well as bottoming higher temperature 
        geothermal flash plants and existing binary power plants.
3. Comprehensive nationwide geothermal resources assessment
    The most recent U.S. Geological Survey for geothermal energy was 
conducted in 1979. This survey used techniques that are outdated today 
and was based on technology available 30 years ago. It did not consider 
low to moderate temperature resources since there was no technology 
available at the time that could utilize these resources in a cost-
effective manner. A comprehensive assessment is essential including 
characterization of low and moderate temperature geothermal energy 
resources.
4. Incentives for geothermal exploration and drilling
    According to the Geothermal Energy Association, 90 percent of 
geothermal resources are hidden with no surface manifestations. 
Exploration is essential to expand production, but exploration is 
expensive and risky. Cost-shared support for exploration and drilling 
should be continued and expanded.

                      SPECIFIC COMMENTS ON S 1543

    We applaud Senator Bingaman's leadership in introducing the 
``National Geothermal Initiative'' (S 1543). This legislation addresses 
many of the pressing research, development, demonstration, education, 
outreach and commercial application needs related to geothermal energy. 
UTC Power offers the following suggestions to clarify the Congressional 
intent and enhance the legislation's effectiveness.
1. Geothermal Energy's Base Load Attributes Should Be Favorably 
        Recognized in Federal Tax Policy
    Sec. 2 (3) calls for modification of federal tax policies to 
support the longer lead times and higher risks related to geothermal 
energy. UTC Power also recommends adding language pointing out that 
geothermal energy has the added advantage among technologies defined as 
renewable for its ability to provide continuous power throughout the 
year. This ``base load'' attribute is an important distinguishing 
feature and also supports the rationale for providing more favorable 
tax treatment to geothermal energy projects.
2. Low Temperature Geothermal Energy Resources Should Be Explicitly 
        Addressed in National Resource Characterization
    Sec 5 (c)(1) calls for the Departments of Energy and Interior to 
``characterize the complete geothermal resource base (including 
engineered geothermal systems) of the United States by not later than 
2010.'' UTC Power recommends that explicit reference also be made to 
the inclusion of low and moderate temperature geothermal resources in 
the resource base characterization.
3. Advanced Low Temperature Geothermal Power Production Technology 
        Should be Specifically Included in DOE's R&D Program
    Sec. 5 (c) (1)(C) calls for policies and programs to ``demonstrate 
(emphasis added) state of the art energy production from the full range 
of geothermal resources in the United States''. Sec. 5 (d)(2)(H) 
directs DOE to ``support the development (emphasis added) and 
application of the full range of geothermal technologies and 
applications''. There is, however, no specific reference to geothermal 
power production research efforts generally or advanced low temperature 
geothermal power production specifically. UTC Power recommends that 
language be added to S 1543 specifically authorizing geothermal power 
production research efforts including advanced low temperature 
geothermal technology to:

          a. Enhance performance of existing successful geothermal 
        power production systems;
          b. Improve efficiency of geothermal capture rates;
          c. Use alternative refrigerants; and
          d. Develop systems that operate at even lower temperatures 
        than today.
3. Demonstration of Geothermal Energy Production from Oil and Gas Wells 
        Should be Explicitly Authorized
    Sec. 5 (d)(2)(F) calls for demonstration of ``geothermal 
applications in settings that, as of the date of enactment of this Act, 
are noncommercial''. UTC Power recommends that S 1543 establish a 
specific program to demonstrate geothermal energy production from oil 
and gas fields. We believe the language in Sec. 4207 of HR 3221 and the 
funding levels specified in Sec. 4214 should be incorporated in S 1543 
to ensure this promising opportunity is pursued.
4. Inclusion of International Component is Welcomed
    UTC Power supports the inclusion of this provision that recognizes 
the significant market potential of international geothermal resources 
such as those located in the ``Ring of Fire'' countries including 
China, Indonesia, the Philippines and Taiwan. The inclusion of language 
authorizing grants and financial assistance for feasibility and 
resource assessment studies under the authority of the US Trade and 
Development Agency is particularly important and useful.

                               CONCLUSION

    Far from being a mature technology with limited geographic reach, 
geothermal energy has the potential to satisfy a significant portion of 
our growing energy needs with a renewable, continuously available 
domestic resource. But appropriate government policies must be adopted 
and implemented to make this a reality. We welcome the opportunity to 
work with Members of the Committee and other stakeholders to refine and 
enhance S 1543 and ensure its enactment and implementation as part of a 
comprehensive package of initiatives that support geothermal energy 
production.
                                 ______
                                 
     Statement of Jefferson Tester, Meissner Professor of Chemical 
   Engineering, Massachusetts Institute of Technology, Cambridge, MA

                                OVERVIEW

    Mr. Chairman and Members of the Committee, I am grateful for the 
opportunity to provide comments on Senate Bill 1543, the ''National 
Geothermal Initiative Act of 2007,'' which was introduced in the Senate 
on July 2 to direct the Secretary of Energy and the Secretary of the 
Interior to conduct a national program for geothermal energy.
    I am updating earlier testimony that I was privileged to provide on 
House Bill 3221 on May 17, 2007 to offer additional perspective on the 
newly proposed legislation introduced by the Senate and how it compares 
to House Bill 3221. My remarks reflect, in large part, the analysis in 
our recently completed national assessment--``The Future of Geothermal 
Energy,'' which was supported by the DOE (See Appendix A for a summary 
of findings and recommendations). I was honored to chair an 
interdisciplinary panel that conducted the assessment. Susan Petty was 
a member of that panel and will be providing her perspectives to you 
this morning. The final report was published by MIT and released in 
January of this year. I believe the members of the committee and their 
staffs have copies of the report.
    Geothermal resources are usually described in terms of the stored 
thermal energy content of the rock and contained fluids underlying land 
masses that that are accessible by drilling. The United States 
Geological Survey and other groups have used a maximum accessible depth 
of 10 km (approx. 30,000 ft) to define the U.S. resource. Although 
conventional hydrothermal resources are already being used effectively 
for both electric and non-electric applications in the United States 
and will continue to be developed, they are somewhat limited by their 
locations and ultimate potential because they require highly permeable 
and porous rock reservoirs containing sufficiently large amounts of hot 
water or steam that are located reasonably near the surface to be 
economically competitive in today's energy markets. Beyond these 
conventional hydrothermal systems are Enhanced or Engineered Geothermal 
Systems or EGS resources, which have enormous potential for primary 
energy recovery using heat-mining technology to extract and utilize the 
earth's stored thermal energy. EGS operates as a closed system with 
cool water pumped deep into hot fractured rock reservoirs where it is 
heated and then returned to the surface to be used as an energy source 
to generate electricity or directly for heating applications. EGS 
resources require stimulation of a reservoir in hot rock large enough 
to maintain fluid production rates and temperatures between a set of 
production and injection wells drilled into the reservoir in the range 
currently achieved by today's commercial hydrothermal resources. EGS 
feasibility is a result of improvements in geothermal technology for 
reservoir characterization and stimulation and in deep, directional 
drilling that have evolved in the last three decades. It is this EGS 
approach that puts geothermal on the map as a potentially much more 
sizable energy resource for the U.S.
    In addition to conventional hydrothermal and EGS, other geothermal 
resources also include coproduced hot water associated with oil and gas 
production, and geopressured resources that contain hot fluids with 
dissolved methane.
    As a very large, well-distributed, carbon free, indigenous energy 
resource, geothermal's widespread deployment would have a very positive 
impact on our national energy security, on our environment, and on our 
economic health. Regrettably, in recent years geothermal energy has 
been undervalued by many and was often ignored as a portfolio option 
for widespread deployment in the U.S. If this legislation is enacted 
and supported with a multi-year commitment at the levels recommended, 
it will pay substantial dividends in achieving high levels of 
geothermal power deployment. Investing now in geothermal research and 
technology development coupled to a program of field demonstrations at 
the levels recommended in Senate Bill 1543 for the next 5 years will 
accelerate the impact of geothermal energy on the U.S. energy 
portfolio.
    The prominence that Congress is giving to restarting a national 
geothermal R&D program is critical to the country. Most importantly, 
the proposed legislation, like the earlier House bill, recognizes the 
enormous potential of geothermal energy to become a major provider of 
clean energy in the U.S. for the long term and describes a robust and 
balanced research, development, and deployment program to be 
implemented by the DOE that would reactivate a national-scale program 
and set the stage for restoring American capacity to advance and deploy 
geothermal technology. The Senate bill also appropriately addresses 
support needed in the resource assessment area to be carried out by the 
USGS.
    In the past few months, I have been fortunate to be able to visit 
several new geothermal plants and projects in the American West, in 
Australia, and in Iceland, to observe firsthand the positive impacts 
that geothermal technology is having. For example, ORMAT's new plant in 
Reno, Nevada completely reinjects all produced geothermal fluids, 
produces no carbon dioxide or other emissions, and uses no cooling 
water in a region where water is a limited commodity. Enthusiasm for 
geothermal in Australia is very high with a strong partnerships of 
private and government support underway to develop advanced geothermal 
technology at Cooper Basin and other sites. In Iceland, deployment of 
geothermal energy has enabled an economic and environmental 
transformation of the country in less than 60 years--from Iceland's 
early years as a poor society that was completely dependent on imported 
fossil fuels in the 1940's to an economically rich society in 2007, due 
in large part to developing a more sustainable, renewable energy 
supply. Iceland's extensive geothermal network developed by Reykjavik 
Energy and other companies now provides 89% of Iceland's heating needs 
and 27% of their electric power, with hydropower providing the 
remainder. Iceland is now actively pursuing a means to eliminate their 
dependence on imported transportation fuels by substituting hydrogen 
produced by electricity generated from supercritical geothermal 
resources. Iceland's example of geothermal utilization is a model that 
the U.S. should strive to emulate, as I am sure that President Grimsson 
will confirm in his testimony. Obviously, Iceland is a special place 
geologically, and only some regions of the U.S. share those features. 
However, the development of EGS technology puts geothermal within reach 
for a much larger portion of the U.S. To maximize our benefits from 
geothermal technology development programs ongoing in Iceland, 
Australia, as well as in many European, Asian and Latin American 
countries, it is important that we encourage international partnerships 
and collaborations.
    Enactment of this legislation will restore U.S. geothermal 
leadership internationally. It will put us on a path to utilize our 
massive geothermal resource to provide dispatchable, baseload 
generating capacity, essentially with no emissions of carbon dioxide 
and using modular plants that have small environmental ``footprints.'' 
These attributes make geothermal a very attractive renewable deployment 
option for the U.S.--complementing interruptible renewables such as 
solar and wind, and thus increasing the robustness of a national 
renewable portfolio.
    Even though the U.S. is the largest worldwide producer of 
electricity from geothermal resources with about 3000 MWe of capacity, 
this is only a small fraction of our country's total electrical 
generating capacity, which now exceeds 1,000,000 MWe or 1 TWe. 
Fortunately, the actual potential for geothermal energy in the U.S. is 
substantially greater than 3000 MWe as pointed out recently in the MIT-
led assessment, by the Western Governors Association, and by the 
National Renewable Energy Laboratory. For example, our analysis 
suggests that with a focused and aggressive national R, D&D program, we 
could enable U.S. geothermal capacity to reach 100,000 MWe in 50 
years--comparable to the current generating capacity of our nuclear and 
hydropower plants. In order to achieve such levels of geothermal 
capacity, a natural transition from the country's high grade 
hydrothermal systems in use today to the massive EGS resource over a 
range of grades would need to occur in increasing amounts in the next 
10 to 15 years.
    Within the geothermal continuum there is a range of resource types 
and grades from high-grade conventional hydrothermal systems that are 
currently in use and being developed in the West to lower-grade 
Enhanced (or Engineered) Geothermal System or EGS resources in the 
East. In order to enable geothermal technology to develop to a level 
where it could provide 10% or more of our generating capacity by 2050 
(that is >100,000 MWe), it is essential that a national program address 
both short and long term technology components simultaneously in a 
comprehensive and coordinated manner. The bill is balanced and 
effectively structured to support critical program elements for both 
hydrothermal and EGS.
    The proposed national program is appropriately ambitious, with a 
multi-year commitment to support both field testing and laboratory work 
in conjunction with analysis, characterization technique development, 
and modeling. Overall, two critical areas would be emphasized--first, 
support for the USGS to enhance the quantitative assessment of the U.S. 
geothermal resource on a site-specific basis, and second, by 
demonstration and validation of reservoir stimulation and drilling 
technologies that can repeatedly and reliably be implemented in the 
field to produce commercial-scale geothermal systems. A scientific 
approach strongly grounded in geoscience and geoengineering 
fundamentals would be used that builds on current methods for 
stimulating extraction of oil and gas and conventional hydrothermal 
resources worldwide. The proposed comprehensive research, development, 
and demonstration effort will lead to both improved and new 
technologies capable of lowering development risks and costs and 
thereby making investments in geothermal development more attractive 
for the private sector.
    It is important to maintain a balanced effort, utilizing high grade 
conventional hydrothermal resources in the short term and realizing the 
massive opportunities for EGS technology in the longer term. For a 
balanced program across the geothermal continuum, I firmly believe that 
the funding levels recommended in Senate Bill 1543 will need to be 
appropriated in order to achieve the national deployment goals. If 
appropriations fall below the levels recommended in the Senate and 
House authorization bills, there is a major risk of significantly 
slowing progress and de-stabilizing the U.S. program because of 
competition between near-term hydrothermal and longer term EGS 
objectives. It is essential to support work in both areas in parallel. 
In order to achieve high levels of generating capacity of 100,000 MWe 
or more, it is necessary to support a vigorous EGS field testing effort 
now in three major areas relevant to its eventual deployment, including 
resource assessment, geothermal drilling and well completion, and 
reservoir stimulation.
    I have included a few specific comments on the bill in the section 
of my written testimony that follows. Thank you again for giving me the 
opportunity to support this important landmark legislation, and thank 
you for your continued leadership on this issue.

                SPECIFIC COMMENTS ON SENATE BILL S.1543

    1. Section 2. Findings.--Article 3 states that ``Federal tax 
policies should be modified to appropriately support the longer lead-
times of geothermal facilities and address the high risks of geothermal 
exploration and development'' but does not provide any details on how 
long a suitable timeframe for tax policies for geothermal is. Because 
new conventional hydrothermal power plant projects starting from 
unexplored ``green field'' conditions now take from 5 to 7 years to 
become fully operational, a long term tax policy that parallels the 
timetable for key goals set forth in the bill needs to be implemented 
to encourage private investment,.
    2. Section 3. National Goal.--Setting a national goal for 
geothermal to provide 20% of U.S. electrical capacity by 2030 suggests 
that 130 GWe or more of new geothermal generating capacity will be 
needed according to electricity supply projections by the EIA. While 
laudable, such a goal is very ambitious and may lead to a distorted 
understanding of actual progress. The Future of Geothermal Energy 
assessment developed pathways for U.S. geothermal capacity to reach 100 
GWe in 50 years. Even in Australia, which is years ahead of the U.S. in 
terms of demonstration programs, EGS is projected to provide 6.8% of 
Australia's base load power by 2030. If geothermal (both EGS and 
conventional hydrothermal) were to reach perhaps only 5 or 10% of 
national generating capacity instead of 20% by 2030, that should not be 
considered a failure as it will have demonstrated the viability of 
geothermal on a national scale with a capacity comparable to U.S. hydro 
and nuclear. Furthermore, given the large magnitude of the EGS resource 
base, with 14,000,000 EJ of accessible stored thermal energy, having 
such enabling technology and technical know how in hand would permit 
continued increases in EGS capacity for the foreseeable long term.
    3. Section 4. Definitions.--The Senate Bill's definition of 
geothermal is too general. It would be helpful to provide examples of 
different types of geothermal resources such as hydrothermal, 
geopressured, EGS, and co-produced hot water associated with oil and 
gas production. Also, it would be helpful to point out that all EGS 
resources can be appropriately and efficiently utilized where at least 
one of the following factors is missing: sufficient natural 
permeability and porosity, naturally occurring geothermal fluids, and/
or high rock temperatures close to the surface.
    4. Section 5. National Geothermal Initiative (c) Energy and 
Interior Goals.--(1)(A)--It is crucial to have the resource assessment 
specifically mentioned and it is extremely important to keep it in the 
bill along with the separate appropriations for it.
    (1)(B)--It is a good goal to keep the annual growth to at least 
10%. That would bring geothermal electricity capacity to about 25 GW in 
2030.
    (1)(C)--The mandate ``to demonstrate state-of-the-art energy 
production from the full range of geothermal resources in the United 
States'' needs to be much more specific. The geothermal provisions of 
the House energy bill, H.R. 3221, have specific measures for how to 
obtain this goal by carrying out three demonstration projects in oil 
and gas and five demonstration EGS projects. This more specific 
approach is preferable because it delineates the scope of the 
demonstration steps which will need to be undertaken to actually meet 
the goals.
    The bill should also have a section (1) (F) calling for the 
development of electricity production from co-produced fluids from oil 
and natural gas production in the short-term.
    5. Section 5. National Geothermal Initiative (d) Geothermal 
Research, Development, Demonstration, and Commercial Application.--
(2)(B) ``Expand funding for cost-shared drilling''. It would be useful 
to include the detail given in the House Energy Bill.
    (2)(C)(i) ``Establish a national geothermal center at a national 
laboratory or a university.'' If there is to be only one center, it 
should be located to work in close conjunction with the National 
Renewable Energy Laboratory (NREL) to increase the effectiveness of a 
national geothermal program. Given the development of the next 
generation of American geothermal scientists and engineers that will be 
needed to reach the Senate Bill's deployment goals, NREL should develop 
strong educational as well as research relationships with a consortium 
of universities.
    (2)(C)(ii) ``support development and application of new exploration 
and development technologies through the center''. This element lacks 
adequate detail for effective implementation. For instance, stating 
that hydrothermal, EGS and general geothermal systems research should 
be conducted would provide appropriate guidance to the DOE to maintain 
a balanced technology research program. To achieve a national goal in 
the range of 20% geothermal power by 2030, it is important both to 
support geothermal resource development using evolving technologies and 
to promote the development of innovative breakthrough technologies 
relevant to EGS development over a range of grades from high to low. 
This should be noted in the bill.
    6. Section 5. National Geothermal Initiative.--It would be helpful 
to incorporate a recommendation of specific EGS field development sites 
that are described in Section 6 (b) (2) of the House Energy Bill.
    7. Section 7. International market support.--As discussed above, a 
strong program of international collaboration and partnerships with 
countries that are active in geothermal development should be formally 
recommended, if possible. Such collaboration would be very beneficial 
to the U.S. effort.

 Appendix A--Summary of a national--scale assessment of EGS resources--
 ``The Future of Geothermal Energy'' (portions of a previous statement 
                provided on April 19, 2007 to Congress)

    For 15 months starting in September of 2005, a comprehensive, 
independent assessment was conducted to evaluate the technical and 
economic feasibility of EGS becoming a major supplier of primary energy 
for U.S. base-load generation capacity by 2050. The assessment was 
commissioned by the U.S. Department of Energy and carried out by an 18-
member, international panel assembled by the Massachusetts Institute of 
Technology (MIT). The remainder of my testimony provides a summary of 
that assessment including the scope and motivation behind the study, as 
well as its major findings and recommendations. Supporting 
documentation is provided in the full report (Tester et al., 2006)--of 
which copies of the Executive Summary have been provided for your 
review. The complete 400+ page report is available on the web at http:/
/geothermal.inel.gov/publications/future--of--geothermal--energy.pdf
    In simple terms, any geothermal resource can be viewed as a 
continuum in several dimensions. The grade of a specific geothermal 
resource depends on its temperature-depth relationship (i.e. geothermal 
gradient), the reservoir rock's permeability and porosity, and the 
amount of fluid saturation (in the form of liquid water and/or steam). 
High-grade hydrothermal resources have high average thermal gradients, 
high rock permeability and porosity, sufficient fluids in place, and an 
adequate reservoir recharge of fluids; all EGS resources lack at least 
one of these. For example, reservoir rock may be hot enough but not 
produce sufficient fluid for viable heat extraction, either because of 
low formation permeability/connectivity and insufficient reservoir 
volume, or the absence of naturally contained fluids.
    A geothermal resource is usually described in terms of stored 
thermal energy content of the rock and contained fluids underlying land 
masses that that are accessible by drilling. The United States 
Geological Survey and other groups have used a maximum accessible depth 
of 10 km (approx. 30,000 ft) to define the resource. Although 
conventional hydrothermal resources are already being used effectively 
for both electric and non-electric applications in the United States, 
and will continue to be developed, they are somewhat limited by their 
locations and ultimate potential. Beyond these conventional resources 
are EGS resources with enormous potential for primary energy recovery 
using heat-mining technology, which is designed to extract and utilize 
the earth's stored thermal energy. In addition to hydrothermal and EGS, 
other geothermal resources include coproduced hot water associated with 
oil and gas production, and geopressured resources that contain hot 
fluids with dissolved methane. Because EGS resources have such a large 
potential for the long term, the panel focused its efforts on 
evaluating what it would take for EGS and other unconventional 
geothermal resources to provide 100,000 MWe of base-load electric-
generating capacity by 2050. Three main components were considered in 
the analysis:

          1. Resource--mapping the magnitude and distribution of the 
        U.S. EGS resource.
          2. Technology--establishing requirements for extracting and 
        utilizing energy from EGS reservoirs, including drilling, 
        reservoir design and stimulation, and thermal energy conversion 
        to electricity. Because EGS stimulation methods have been 
        tested at a number of sites around the world, technology 
        advances, lessons learned and remaining needs were considered.
          3. Economics--estimating costs for EGS-supplied electricity 
        on a national scale using newly developed methods for mining 
        heat from the earth, as well as developing levelized energy 
        costs and supply curves as a function of invested R&D and 
        deployment levels in evolving U.S. energy markets.

                               MOTIVATION

    There are compelling reasons why the United States should be 
concerned about the security of our energy supply for the long term. 
Key reasons include growth in demand as a result of an increasing U.S. 
population, the increased electrification of our society, and concerns 
about the environment. According to the Energy Information 
Administration (EIA, 2006), U.S. nameplate generating capacity has 
increased more than 40% in the past 10 years and is now more than 1 
TWe. For the past 2 decades, most of the increase resulted from adding 
gas-fired, combined-cycle generation plants. In the next 15 to 25 
years, the electricity supply system is threatened with losing capacity 
as a result of retirement of existing nuclear and coal-fired generating 
plants (EIA, 2006). It is likely that 50 GWe or more of coal-fired 
capacity will need to be retired in the next 15 to 25 years because of 
environmental concerns. In addition, during that period, 40 GWe or more 
of nuclear capacity will be beyond even the most generous relicensing 
accommodations and will have to be decommissioned.
    The current nonrenewable options for replacing this anticipated 
loss of U.S. base-load generating capacity are coal-fired thermal, 
nuclear, and combined-cycle gas-combustion turbines. While these are 
clearly practical options, there are some concerns. First, while 
electricity generated using natural gas is cleaner in terms of 
emissions, demand and prices for natural gas will escalate 
substantially during the next 25 years. As a result, large increases in 
imported gas will be needed to meet growing demand--further 
compromising U.S. energy security beyond just importing the majority of 
our oil for meeting transportation needs. Second, local, regional, and 
global environmental impacts associated with increased coal use will 
most likely require a transition to clean-coal power generation, 
possibly with sequestration of carbon dioxide. The costs and 
uncertainties associated with such a transition are daunting. Also, 
adopting this approach would accelerate our consumption of coal 
significantly, compromising its use as a source of liquid 
transportation fuel for the long term. It is also uncertain whether the 
American public is ready to embrace increasing nuclear power capacity, 
which would require siting and constructing many new reactor systems.
    On the renewable side, there is considerable opportunity for 
capacity expansion of U.S. hydropower potential using existing dams and 
impoundments. But outside of a few pumped storage projects, hydropower 
growth has been hampered by reductions in capacity imposed by the 
Federal Energy Regulatory Commission (FERC) as a result of 
environmental concerns. Concentrating Solar Power (CSP) provides an 
option for increased base-load capacity in the Southwest where demand 
is growing. Although renewable solar and wind energy also have 
significant potential for the United States and are likely to be 
deployed in increasing amounts, it is unlikely that they alone can meet 
the entire demand. Furthermore, solar and wind energy are inherently 
intermittent and cannot provide 24-hour-a-day base load without mega-
sized energy storage systems, which traditionally have not been easy to 
site and are costly to deploy. Biomass also can be used as a renewable 
fuel to provide electricity using existing heat-to-power technology, 
but its value to the United States as a feedstock for biofuels for 
transportation is much higher, given the current goals of reducing U.S. 
demand for imported oil.
    Clearly, we need to increase energy efficiency in all end-use 
sectors; but even aggressive efforts cannot eliminate the substantial 
replacement and new capacity additions that will be needed to avoid 
severe reductions in the services that energy provides to all 
Americans.

                     PURSUING THE GEOTHERMAL OPTION

    The main question we address in our assessment of EGS is whether 
U.S.-based geothermal energy can provide a viable option for providing 
large amounts of generating capacity when and where it is needed.
    Although geothermal energy has provided commercial base-load 
electricity around the world for more than a century, it is often 
ignored in national projections of evolving U.S. energy supply. Perhaps 
geothermal has been ignored as a result of the widespread perception 
that the total geothermal resource is only associated with identified 
high-grade, hydrothermal systems that are too few and too limited in 
their distribution in the United States to make a long term, major 
impact at a national level. This perception has led to undervaluing the 
long-term potential of geothermal energy by missing a major opportunity 
to develop technologies for sustainable heat mining from large volumes 
of accessible hot rock anywhere in the United States. In fact, many 
attributes of geothermal energy, namely its widespread distribution, 
base-load dispatchability without storage, small footprint, and low 
emissions, are very desirable for reaching a sustainable energy future 
for the United States.
    Expanding our energy supply portfolio to include more indigenous 
and renewable resources is a sound approach that will increase energy 
security in a manner that parallels the diversification ideals that 
have made America strong. Geothermal energy provides a robust, long-
lasting option with attributes that would complement other important 
contributions from clean coal, nuclear, solar, wind, hydropower, and 
biomass.

                                APPROACH

    The composition of the panel was designed to provide in-depth 
expertise in specific technology areas relevant to EGS development, 
such as resource characterization and assessment, drilling, reservoir 
stimulation, and economic analysis. Recognizing the possibility that 
some bias might emerge from a panel of knowledgeable experts who, to 
varying degrees, are advocates for geothermal energy, panel membership 
was expanded to include other experts on non-geothermal energy 
technologies and economics, and environmental systems. Overall, the 
panel took a completely new look at the geothermal potential of the 
United States. This study was partly in response to short-and long-term 
needs for a reliable low-cost electric power and heat supply for the 
nation. Equally important was a need to review and evaluate 
international progress in the development of EGS and related extractive 
technologies that followed the very active period of U.S. fieldwork 
conducted by Los Alamos National Laboratory during the 1970s and 1980s 
at the Fenton Hill site in New Mexico.
    The assessment team was assembled in August 2005 and began work in 
September, following a series of discussions and workshops sponsored by 
the Department of Energy (DOE) to map out future pathways for 
developing EGS technology. The final report was released in January of 
2007.
    The first phase of the assessment considered our geothermal 
resource in detail. Earlier projections from studies in 1975 and 1978 
by the U.S. Geological Survey (USGS Circulars 726 and 790) were 
amplified by ongoing research and analysis being conducted by U.S. 
heat-flow researchers and were analyzed by David Blackwell's group at 
Southern Methodist University (SMU) and other researchers. In the 
second phase, EGS technology was evaluated in three distinct parts: 
drilling to gain access to the system, reservoir design and 
stimulation, and energy conversion and utilization. Previous and 
current field experiences in the United States, Europe, Japan, and 
Australia were thoroughly reviewed. Finally, the general economic 
picture and anticipated costs for EGS were analyzed in the context of 
projected demand for base-load electric power in the United States.

                                FINDINGS

    Geothermal energy from EGS represents a large, indigenous resource 
that can provide base-load electric power and heat at a level that can 
have a major impact in the United States, while incurring minimal 
environmental impacts. With a reasonable investment in R&D, EGS could 
provide 100 GWe or more of cost-competitive generating capacity in the 
next 50 years. Further, EGS provides a secure source of power for the 
long term that would help protect America against economic 
instabilities resulting from fuel price fluctuations or supply 
disruptions. Most of the key technical requirements to make EGS 
economically viable over a wide area of the country are in effect. 
Remaining goals are easily within reach to provide performance 
verification and demonstrate the repeatability of EGS technology at a 
commercial scale within a 10- to 15-year period nationwide.
    In spite of its enormous potential, the geothermal option for the 
United States has been largely ignored. In the short term, R&D funding 
levels and government policies and incentives have not favored growth 
of U.S. geothermal capacity from conventional, high-grade hydrothermal 
resources. Because of limited R&D support of EGS in the United States, 
field testing and support for applied geosciences and engineering 
research have been lacking for more than a decade. Because of this lack 
of support, EGS technology development and demonstration recently has 
advanced only outside the United States, with limited technology 
transfer, leading to the perception that insurmountable technical 
problems or limitations exist for EGS. However, in our detailed review 
of international field-testing data so far, the panel did not uncover 
any major barriers or limitations to the technology. In fact, we found 
that significant progress has been achieved in recent tests carried out 
at Soultz, France, under European Union (EU) sponsorship; and in 
Australia, under largely private sponsorship. For example, at Soultz, a 
connected reservoir-well system with an active volume of more than 2 
km3 at depths from 4 to 5 km has been created and tested at 
fluid production rates within a factor of 2 to 3 of initial commercial 
goals. Such progress leads us to be optimistic about achieving 
commercial viability in the United States in the next phase of testing, 
if a national-scale program is supported properly. Specific findings 
include:

          1. The amount of accessible geothermal energy that is stored 
        in rock is immense and well distributed across the U.S. The 
        fraction that can be captured and ultimately recovered will not 
        be resource-limited; it will depend only on extending existing 
        extractive technologies for conventional hydrothermal systems 
        and for oil and gas recovery. The U.S. geothermal resource is 
        contained in a continuum of grades ranging from today's 
        hydrothermal, convective systems through high-and mid-grade EGS 
        resources (located primarily in the western United States) to 
        the very large, conduction-dominated contributions in the deep 
        basement and sedimentary rock formations throughout the 
        country. By evaluating an extensive database of bottom-hole 
        temperature and regional geologic data (rock types, stress 
        levels, surface temperatures, etc.), we have estimated the 
        total U.S. EGS resource base to be about 14 million exajoules 
        (EJ). Figure 1 and Table 1 highlight the results of the 
        resource assessment portion of the study.* Figure 1 shows an 
        average geothermal gradient map and temperature distributions 
        at specific depths for the contiguous U.S. while Table 1 lists 
        the resource bases for different categories of geothermal. 
        Figure 2 compares the total resource to what we estimate might 
        be technically recoverable. Using conservative assumptions 
        regarding how heat would be mined from stimulated EGS 
        reservoirs, we estimate the extractable portion to exceed 
        200,000 EJ or about 2,000 times the annual consumption of 
        primary energy in the United States in 2005. With technology 
        improvements, the economically extractable amount of useful 
        energy could increase by a factor of 10 or more, thus making 
        EGS sustainable for centuries.
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    * Figures 1-5 and Table 1 have been retained in committee files.
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          2. Ongoing work on both hydrothermal and EGS resource 
        development complement each other. Improvements to drilling and 
        power conversion technologies, as well as better understanding 
        of fractured rock structure and flow properties, benefit all 
        geothermal energy development scenarios. Geothermal operators 
        now routinely view their projects as heat mining and plan for 
        managed injection to ensure long reservoir life. While 
        stimulating geothermal wells in hydrothermal developments is 
        now routine, understanding why some techniques work on some 
        wells and not on others can come only from careful research.
          3. EGS technology advances. EGS technology has advanced since 
        its infancy in the 1970s at Fenton Hill. Field studies 
        conducted worldwide for more than 30 years have shown that EGS 
        is technically feasible in terms of producing net thermal 
        energy by circulating water through stimulated regions of rock 
        at depths ranging from 3 to 5 km. We can now stimulate large 
        rock volumes (more than 2 km3), drill into these 
        stimulated regions to establish connected reservoirs, generate 
        connectivity in a controlled way if needed, circulate fluid 
        without large pressure losses at near commercial rates, and 
        generate power using the thermal energy produced at the surface 
        from the created EGS system. Initial concerns regarding five 
        key issues--flow short circuiting, a need for high injection 
        pressures, water losses, geochemical impacts, and induced 
        seismicity--appear to be either fully resolved or manageable 
        with proper monitoring and operational changes.
          4. Remaining EGS technology needs. At this point, the main 
        constraint is creating sufficient connectivity within the 
        injection and production well system in the stimulated region 
        of the EGS reservoir to allow for high per-well production 
        rates without reducing reservoir life by rapid cooling (see 
        Figure 3). U.S. field demonstrations have been constrained by 
        many external issues, which have limited further stimulation 
        and development efforts and circulation testing times--and, as 
        a result, risks and uncertainties have not been reduced to a 
        point where private investments would completely support the 
        commercial deployment of EGS in the United States. In Europe 
        and Australia, where government policy creates a more favorable 
        climate, the situation is different for EGS. There are now 
        seven companies in Australia actively pursuing EGS projects, 
        and two commercial projects in Europe.
          5. Impact of Research, Development, and Demonstration (RD&D). 
        Focus on critical research needs could greatly enhance the 
        overall competitiveness of geothermal in two ways. First, such 
        research would lead to generally lower development costs for 
        all grade systems, which would increase the attractiveness of 
        EGS projects for private investment. Second, research could 
        substantially lower power plant, drilling, and stimulation 
        costs, thereby increasing accessibility to lower-grade EGS 
        areas at depths of 6 km or more. In a manner similar to the 
        technologies developed for oil and gas and mineral extraction, 
        the investments made in research to develop extractive 
        technology for EGS would follow a natural learning curve that 
        lowers development costs and increases reserves along a 
        continuum of geothermal resource grades.

    Examples of benefits that would result from research-driven 
improvements are presented in three areas:

   Drilling technology.--Evolutionary improvements building on 
        conventional approaches to drilling such as more robust drill 
        bits, innovative casing methods, better cementing techniques 
        for high temperatures, improved sensors, and electronics 
        capable of operating at higher temperature in downhole tools 
        will lower production costs. In addition, revolutionary 
        improvements utilizing new methods of rock penetration will 
        also lower costs. These improvements will enable access to 
        deeper, hotter regions in high-grade formations or to 
        economically acceptable temperatures in lower-grade formations.
   Power conversion technology.--Although commercial 
        technologies are in place for utilizing geothermal energy in 70 
        countries, further improvements to heat-transfer performance 
        for lower-temperature fluids, and to developing plant designs 
        for higher resource temperatures in the supercritical water 
        region will lead to measurable gains. For example, at 
        supercritical temperatures about an order of magnitude (or 
        more) increase in both reservoir performance and heat-to-power 
        conversion efficiency would be possible over today's liquid-
        dominated hydrothermal systems.
   Reservoir technology.--Increasing production flow rates by 
        targeting specific zones for stimulation and improving downhole 
        lift systems for higher temperatures, and increasing swept 
        areas and volumes to improve heat-removal efficiencies in 
        fractured rock systems, will lead to immediate cost reductions 
        by increasing output per well and extending reservoir 
        lifetimes. For the longer term, using CO2 as a 
        reservoir heat-transfer fluid for EGS could lead to improved 
        reservoir performance as a result of its low viscosity and high 
        density at supercritical conditions. In addition, using 
        CO2 in EGS may provide an alternative means to 
        sequester large amounts of carbon in stable formations.

          6. EGS systems are versatile, inherently modular, and 
        scalable. Individual power plants ranging from 1 to 50 MWe in 
        capacity are possible for distributed applications and can be 
        combined--leading to large ``power parks,'' capable of 
        providing thousands of MWe of continuous, base-load capacity. 
        Of course, for most direct-heating and heat pump applications, 
        effective use of shallow geothermal energy has been 
        demonstrated at a scale of a few kilowatts-thermal (kWt) for 
        individual buildings or homes and should be continued to be 
        deployed aggressively when possible. For these particular 
        applications, stimulating deeper reservoirs using EGS 
        technology is not necessary. Nonetheless, EGS also can be 
        easily deployed in larger-scale district heating and combined 
        heat and power (cogeneration) applications to service both 
        electric power and heating and cooling for buildings without a 
        need for storage on-site. For other renewable options such as 
        wind, hydropower, and solar PV, such co-generation applications 
        are not possible.
          7. A short term ``win-win'' opportunity. Using coproduced hot 
        water, available in large quantities at temperatures up to 
        100C or more from existing oil and gas operations, makes it 
        possible to generate up to 11,000 MWe of new generating 
        capacity with standard binary-cycle technology, and to increase 
        hydrocarbon production by partially offsetting parasitic losses 
        consumed during production.
          8. The long term goal for EGS is tractable and affordable. 
        Estimated supply curves for EGS shown in Figure 4 indicate that 
        a large increase in geothermal generating capacity is possible 
        by 2050 if investments are made now. A cumulative capacity of 
        more than 100,000 MWe from EGS can be achieved in the United 
        States within 50 years with a modest, multiyear federal 
        investment for RD&D in several field projects in the United 
        States. Because the field-demonstration program involves staged 
        developments at different sites, committed support for an 
        extended period is needed to demonstrate the viability, 
        robustness, and reproducibility of methods for stimulating 
        viable, commercial-sized EGS reservoirs at several locations. 
        Based on the economic analysis we conducted as part of our 
        study, a $300 million to $400 million investment over 15 years 
        will be needed to make early-generation EGS power plant 
        installations competitive in evolving U.S. electricity supply 
        markets.

    These funds compensate for the higher capital and financing costs 
expected for early-generation EGS plants, which would be expected as a 
result of somewhat higher field development (drilling and stimulation) 
costs per unit of power initially produced. Higher generating costs, in 
turn, lead to higher perceived financial risk for investors with 
corresponding higher-debt interest rates and equity rates of return. In 
effect, the federal investment can be viewed as equivalent to an 
``absorbed cost'' of deployment. In addition, comparable investments in 
R&D will also be needed to develop technology improvements to lower 
costs for future deployment of EGS plants.
    To a great extent, energy markets and government policies will 
influence the private sector's interest in developing EGS technology. 
In today's economic climate, there is reluctance for private industry 
to invest funds without strong guarantees. Thus, initially, it is 
likely that government will have to fully support EGS fieldwork and 
supporting R&D. Later, as field sites are established and proven, the 
private sector will assume a greater role in cofunding projects--
especially with government incentives accelerating the transition to 
independently financed EGS projects in the private sector. Our analysis 
indicates that, after a few EGS plants at several sites are built and 
operating, the technology will improve to a point where development 
costs and risks would diminish significantly, allowing the levelized 
cost of producing EGS electricity in the United States to be at or 
below market prices.
    Given these issues and growing concerns over long-term energy 
security, the federal government will need to provide funds directly or 
introduce other incentives in support of EGS as a long-term ``public 
good,'' similar to early federal investments in large hydropower dam 
projects and nuclear power reactors.

          9. Geothermal energy complements other renewables such as 
        wind, solar and biomass operating in their appropriate domains. 
        Geothermal energy provides continuous base-load power with 
        minimal visual and other environmental impacts. Geothermal 
        systems have a small footprint and virtually no emissions, 
        including no carbon dioxide. Geothermal energy has significant 
        base-load potential, requires no storage, and, thus, it 
        complements other renewables--solar (CSP and PV), wind, 
        hydropower--in a lower-carbon energy future. In the shorter 
        term, having a significant portion of our base load supplied by 
        geothermal sources would provide a buffer against the 
        instabilities of gas price fluctuations and supply disruptions, 
        as well as nuclear plant retirements. Estimates of the carbon 
        emission reductions possible for different levels of EGS 
        capacity are shown in Figure 5.
     recommendations for re-energizing the u.s. geothermal program
    Based on growing markets in the United States for clean, base-load 
capacity, the panel believes that with a combined public/private 
investment of about $800 million to $1 billion over a 15-year period, 
EGS technology could be deployed commercially on a timescale that would 
produce more than 100,000 MWe or 100 GWe of new capacity by 2050. This 
amount is approximately equivalent to the total R&D investment made in 
the past 30 years to EGS internationally, which is still less than the 
cost of a single, new-generation, clean-coal power plant. Making such 
an investment now is appropriate and prudent, given the enormous 
potential of EGS and the technical progress that has been achieved so 
far in the field. Having EGS as an option will strengthen America's 
energy security for the long term in a manner that complements other 
renewables, clean fossil, and next-generation nuclear.
    Because prototype commercial-scale EGS will take a few years to 
develop and field-test, the time for action is now. Supporting the EGS 
program now will move us along the learning curve to a point where the 
design and engineering of well-connected EGS reservoir systems is 
technically reliable and reproducible.
    We believe that the benefit-to-cost ratio is more than sufficient 
to warrant such a modest investment in EGS technology. By enabling 
100,000 MWe of new base-load capacity, the payoff for EGS is large, 
especially in light of how much would have to be spent for deployment 
of conventional gas, nuclear, or coal-fired systems to meet replacement 
of retiring plants and capacity increases, as there are no other 
options with sufficient scale on the horizon.
    Specific recommendations include:

          1. There should be a federal commitment to supporting EGS 
        resource characterization and assessment. An aggressive, 
        sufficiently supported, multiyear national program with USGS 
        and DOE is needed along with other agency participation to 
        further quantify and refine the EGS resource as extraction and 
        conversion technologies improve.
          2. High-grade EGS resources should be developed first as 
        targets of opportunity on the margins of existing hydrothermal 
        systems and in areas with sufficient natural recharge, or in 
        oil fields with high-temperature water and abundant data, 
        followed by field efforts at sites with above-average 
        temperature gradients. Representative sites in high-grade 
        areas, where field development and demonstration costs would be 
        lower, should be selected initially to prove that EGS 
        technology will work at a commercial scale. These near-term 
        targets of opportunity include EGS sites that are currently 
        under consideration at Desert Peak (Nevada), and Coso and Clear 
        Lake (both in California), as well as others that would 
        demonstrate that reservoir-stimulation methods can work in 
        other geologic settings, such as the deep, high-temperature 
        sedimentary basins in Louisiana, Texas, and Oklahoma. Such 
        efforts would provide essential reservoir stimulation and 
        operational information and would provide working ``field 
        laboratories'' to train the next generation of scientists and 
        engineers who will be needed to develop and deploy EGS on a 
        national scale.
          3. In the first 15 years of the program, a number of sites in 
        different regions of the country should be under development. 
        Demonstration of the repeatability and universality of EGS 
        technologies in different geologic environments is needed to 
        reduce risk and uncertainties, resulting in lower development 
        costs.
          4. Like all new energy-supply technologies, for EGS to enter 
        and compete in evolving U.S. electricity markets, positive 
        policies at the state and federal levels will be required. 
        These policies must be similar to those that oil and gas and 
        other mineral-extraction operations have received in the past--
        including provisions for accelerated permitting and licensing, 
        loan guarantees, depletion allowances, intangible drilling 
        write-offs, and accelerated depreciations, as well as those 
        policies associated with cleaner and renewable energies such as 
        production tax credits, renewable credits and portfolio 
        standards, etc. The success of this approach would parallel the 
        development of the U.S. coal-bed methane industry.
          5. Given the significant leveraging of supporting research 
        that will occur, we recommend that the United States actively 
        participate in ongoing international field projects such as the 
        EU project at Soultz, France, and the Cooper Basin project in 
        Australia.
          6. A commitment should be made to continue to update economic 
        analyses as EGS technology improves with field testing, and EGS 
        should be included in the National Energy Modeling System 
        (NEMS) portfolio of evolving energy options.

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