[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
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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.....................
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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 150C, but
considerably lower temperatures can be used with the application of
binary fluids which utilize the geothermal fluids down to about 80C.
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 120C 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 25C 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.
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* All figures and tables have been retained in committee files.
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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 50C 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 75C and needs to be cooled to 30C 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 400-600C. 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 200-300C; in the USA
they were from 300-400C and above 500C 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 400-600C 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 500-700C in basaltic rocks and at 400-600C 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.
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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).*
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* Figures 1-5 have been retained in committee files.
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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 300C 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 (212F).
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 100F range can be used for aquaculture and
enhancing biogas production. Geothermal fluids in the 150F 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.
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* 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.
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\1\ Energy Information Administration(2007). Annual Energy Outlook
2007 with projections to 2030.
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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.
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\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.
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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
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Appendix I
Responses to Additional Questions
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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, >250C (480F) 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.
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* Figures 1-6 and Table 1 have been retained in committee files.
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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.
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\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/
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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.
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\5\ http://www.pir.sa.gov.au/geothermal/ageg
\6\ http://engine.brgm.fr/
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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.
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\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.
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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.
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\9\ http://www.blm.gov/ca/alturas/medicinelake.html
\10\ http://www.sacredland.org/PDFs/pit--river--decision.pdf
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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.
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\1\ Renewable Trends. 2005 edition http://
www.eia.doe.govkneafisolar.renewables/page/trends/rentrends.html
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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\
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\1\ Annual Energy Outlook 2007, Supplemental Tables, Electricity
and Renewable Fuel Tables.
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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 150C 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\
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\2\ http://www.geo-energy.org/publications/reports/
States%20Guide.pdf
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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
100C 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.