News
Feb 16, 2010Swiss lawsuit repercussions not likely to be felt in Canada
Alison Thompson, CanGEA Founder and Chair, comments on drilling techniques and the current sate of geothermal in British Columbia in the recent Journal of Commerce article “Swiss lawsuit repercussions not likely to be felt in Canada”
Taken from the Journal of Commerce, Western Canada’s Construction Newspaper
Jessica Krippendorf
correspondent
A Swiss geologist was recently acquitted of criminal charges after a geothermal power generation project he was working on set off a series of earthquakes causing $9 million in damages, but it’s unlikely to happen in B.C.
Although B.C.’s seismic potential and plentiful geothermal resources might sound like a cocktail for a similar disaster, experts say the province has more to lose by opting out of geothermal power generation.
Traditional geothermal systems draw hot water from wells drilled two to three kilometers into the earth and use it to generate hydro electricity.
The term is often inaccurately used to describe geoexchange systems, which harness solar energy from the earth’s crust for heating residential and commercial buildings.
The $60 million Swiss Deep Heat Mining Project was an Enhanced Geothermal System (EGS) with wells five kilometres deep.
Water is injected into the rock, fracturing it to release heat and using the steam to generate hydro.
The risk for similar problems in B.C. is low, said Ruben Arellano, energy projects director for Vancouver-based environmental engineer Hemmera Energy.
He said the province has different geology and its resources aren’t located near population centers.
“Switzerland and B.C. are entirely different tectonic settings. The Swiss case was drilling through a tectonically active area, and B.C. has less of those,” said Arellano.
“When you consider the depth of expertise we have here and the relatively few populated areas in B.C., I think the risk of such an event can be managed.”
Ian Moes, a lawyer with Vancouver-based construction law firm Kuhn & Co, said Canada’s Criminal Code doesn’t specifically address induced seismic activity, although Subsection 180 addresses nuisance behaviour that endangers the lives, safety, or health of the public, or causes physical injury.
“This section could apply to deep drilling, however it would be pretty novel,” he said.
“It is more likely that the offending company would be pursued in a private civil lawsuit for monetary damages.”
There are no Canadian decisions regarding seismic activity on record.
Canada has already had 100 years of success with deep drilling techniques, said Alison Thompson, chairperson and founder of Canadian Geothermal Energy Association (CanGEA).
“What do you think the oil and gas industry is doing? When you frack a well, you use the same technique,” she said. “It isn’t statistically impossible, but this isn’t something unique to geothermal. We would say the Swiss case was extreme bad luck.”
Despite having world-class resources, Canada’s level of geothermal activity has remained eerily silent compared to other places in the world.
Thompson said it’s been at a standstill in B.C. because the provincial government is not currently issuing permits or leases.
“We continue to work with industry on a weekly basis to try and get the government to re-open the program,” she said.
Meager Creek, B.C., west of Pemberton, is Canada’s only geothermal site to hold an active lease.
It was originally drilled by BC Hydro in the 80s.
A project summary released by Western GeoPower Corp. in 2007 said exploration suggests a geothermal area of 4.5 to 7.5 square kilometres and an average temperature of 220 to 240 degrees Celsius, qualifying the project as having 100 MW or more of potential development capacity.
Western GeoPower Corp. merged with Polaris Geothermal, Inc., RAM Power Corp., and GTO Resources under the umbrella of RAM Power Corp., headquartered in Reno, Nevada in 2009.
RAM Power Corp. declined comment on the current status of the Meager Creek Project.
Jake Jacobs, media relations for Energy, Mines, & Petroleum Resources said the ministry will be holding a public disposition for geothermal rights in March 2010 and intends to hold two more later in the year.
“A growing interest in geothermal energy resulted in the ministry reviewing how to move forward with geothermal tenuring,” he said.
“The upcoming disposition is the start.” In the meantime, B.C. is losing potential investment dollars.
“Most of the companies actively involved with geothermal power generation that are trading on the Toronto stock exchange are Canadian, and most tried to do work in B.C., which has the country’s best assets,” said Thompson.
“But, they eventually went elsewhere because there is only so much public money a company can raise before the time has come and gone.”
Unlike wind and solar power, which are cyclical and offer low production guarantees, geothermal power has 100 per cent capacity all the time and long-term environmental risks are low, said Arellano.
“If you imagine the earth as being the size of a balloon, the depth of drilling the industry is doing is not thicker than the skin of the balloon in terms of scale,” he said.
“There is a whole lot of energy in the earth and we are just catching the ‘burps and sneezes’ so to speak.”
To view this article in its entirety click here
Feb 15, 2010
Magma Energy Corp. Announces Second Quarter Results
CanGEA member Magma Energy Corp. has announced its second quarter financial and operating results.
VANCOUVER, BRITISH COLUMBIA—(Marketwire - Feb. 15, 2010)-
(All amounts in US dollars unless otherwise stated and all production figures are approximate)
Magma Energy Corp. (TSX:MXY) today reported its financial and operating results for the second quarter ended December 31, 2009. The Company also provided an update on its operations. This earnings release should be read in conjunction with the Company’s MD&A, unaudited Financial Statements and Notes to Financial Statements for the corresponding period along with the audited consolidated Financial Statements, the related MD&A, and the Annual Information Form for the year ended June 30, 2009. This information is available on the Company’s website at http://www.magmaenergycorp.com and has been posted on SEDAR at http://www.sedar.com.
Commenting on today’s announcement, Ross Beaty, Chairman and CEO, said, “Magma Energy continued to grow rapidly in the second quarter of fiscal 2010. We completed a private placement in October which raised $20 million net of costs and closed our previously announced acquisition of a 40.94% interest in HS Orka. A further 2.16% interest is expected to close in March, 2010. These transactions add 75 MW to our producing reserves and add 276 MW to our resource base. Magma was also awarded $10 million in US Department of Energy grants for our Soda Lake and McCoy properties. We ended the quarter with a successful flow test at Soda Lake which enabled us to confirm half of our 8 MW net expansion program, and we expect to confirm the balance in early 2010.”
Financial Results
For the second quarter ended December 31, 2009, Magma reported a net loss of $5.25 million or (0.02) per share. The Soda Lake operation earned revenues of $1.41 million, gross profit of $589,000, and net income of $203,000 after deducting non-cash and other related expenses.
Magma’s share of the operating results in Iceland power company HS Orka are for the period December 14 to 31, 2009. The Company’s share of HS Orka’s net loss was $1.93 million, due to a loss in the value of embedded derivatives in certain of its sales contracts. These contracts are indexed to the market price of aluminum, which declined during the month of December after increasing during most of 2009. HS Orka’s financial condition improved significantly during 2009 due to higher aluminum prices and more stable currency conditions.
On a cash basis for the quarter ended December 31, 2009, the Company spent $3.59 million on operating activities and $53.60 million on investing activities, including investments of $48.71 million of payments for the acquisition of HS Orka, $2.46 million to acquire and explore the Company’s portfolio of exploration projects and $2.57 million on the Soda Lake expansion. In October 2009, the Company raised net proceeds of $19.77 million by way of private placement. At December 31, 2009, Magma had cash and cash equivalents of $53.68 million, working capital of $52.34 million, and long-term debt of $48.32 million.
Soda Lake Operation
The Soda Lake operation produced as expected during the quarter with occasional interruptions due to the Phase 1 expansion program, which is designed to boost production from 11 MW gross to 23 MW gross. As part of the field optimization program, well 45A-33 was successfully flow tested in December and demonstrated the well to be capable of 3 MW of net power. The flow test, along with an additional 1 MW net resulting from plant refurbishments, confirmed half of the Phase 1 expansion program. Magma expects to confirm the remaining capacity increase by the end of March, 2010.
Iceland
During the second quarter Magma completed the acquisition of a 40.94% interest in HS Orka. The purchase was financed by the proceeds of a $20 million private placement that closed in October 2009, from cash on hand and by long-term debt of $48 million secured by a 32% interest in HS Orka. A further 2.16% interest is expected to close in March 2010.
HS Orka is the largest privately owned energy company in Iceland with installed net capacity of 175 MW from its two power plants. Expansion plans for an additional 230 MW are in place and construction has already begun at the aluminum smelter where the power will be sold. Power contracts are currently being negotiated and the transmission line has been approved. HS Orka has 175 MW of Reserves and 640 MW of Resources as defined by the Geothermal Reporting Code.
Magma’s investment in HS Orka and, consequently, in Iceland’s energy industry, is a significant part of the Company’s strategic plans for growth. To support these plans and other global projects, Magma recently opened a new Iceland office staffed with an exceptionally experienced team of geothermal experts.
Exploration Activities
Subsequent to the quarter end, Magma was awarded the 100,000 hectare Pellado property, which adjoins the Maule property. The drilling and magnetotelluric geophysical program carried out by Magma in 2009 at Maule resulted in the discovery of a large heat anomaly, the Mariposa Geothermal Resource (“Mariposa”). This resource straddles the Pellado and Maule properties and is estimated to contain an Inferred Resource of 320 MW of electrical generation capacity, as defined by the Geothermal Reporting Code.
Road construction was completed in late January, 2010 and a planned $15 million exploration program is now underway. The program currently anticipates two wells being drilled on each of the Pellado and, when granted, the Maule properties.
Exploration work on Magma’s US properties during the quarter consisted primarily of environmental assessments, reflection seismology and other geophysical work. A slim hole drilling program is scheduled to commence at Desert Queen in the fourth quarter. In late October, 2009 the US Department of Energy awarded $10 million to the Company for innovative exploration activities at Soda Lake and McCoy. Early stage exploration work occurred at its other Latin American properties and, in October 2009, Magma won two geothermal concessions in Nicaragua.
Mr. Beaty concluded, “Since our IPO in early July 2009, Magma Energy has increased its geothermal power production more than ten fold to 86 MW, and its in-ground geothermal resources by nearly four times to 784 MW. I look forward to this rapid growth continuing in 2010.”
About Magma Energy Corp.
Magma Energy Corp. is a geothermal power company which operates, develops, explores and acquires geothermal energy projects. We have an extensive portfolio of properties throughout the western United States, Iceland and Latin America, including one operating power plant in Nevada and an interest in two other operating power plants in Iceland.
Magma Energy will host a conference call to discuss financial and operating results on Tuesday, February 16, 2010 at 11:30 am ET (8:30 am PT). North American participants dial 1-877-240-9772, International participants dial 1-416-340-8527, and Switzerland and United Kingdom participants dial 00-800-2787-2090. For participants from the UAE, please contact .(JavaScript must be enabled to view this email address) for instructions. The call will also be broadcast live on the Internet at http://www.investorcalendar.com/IC/CEPage.asp?ID=154644. Listeners may also gain access by logging on at http://www.magmaenergycorp.com. The call will be available for replay for one week after the call by dialing 1-416-695-5800/1-800-408-3053 (for International and North American callers) and entering replay pin number 5174721.
To view this article in its entirety click here
Feb 11, 2010
Geothermal Energy Investment - A risky bridge to cross?
North America Clean Energy Magazine asked Craig Dunn with Borealis Geopower to discuss geothermal energy development and some of the current issues moving forward.
Taken from North American Clean Energy
By Craig Dunn, P.Geol.
Risk:
1. The possibility of suffering harm or loss; danger;
2. A factor, thing, element, or course involving uncertain danger; a hazard
Financial Risk:
The quantifiable likelihood of loss or less-than-expected returns
Risk. The word immediately brings up the feeling associated with walking across a rope bridge over a deep canyon—for some there is only dread, but for others, sheer exhilaration. Many feel dread because the bridge could fail, but others see it as an opportunity to cross the canyon. The key to understanding risk is to not just see the danger or loss, but also the uncertainty and possibility.
In the geothermal energy industry, there is a problem with risk. This problem is not necessarily tied up in the danger or loss side of the equation—both developers and project investors are keenly aware that some projects may never produce a single electron worth of electricity. The problem is in understanding and quantifying the uncertainty. How much of a chance is there that a project will fail? For any financial investment, and specifically for any energy project to get funded, investment professionals need to “run the numbers.” What is my risk and potential reward? And, one key question: “what is the possibility of a zero return on my investment,” or, in the above analogue, a bridge failure?
Say there was a million-dollar reward at the other side of the canyon and the bridge had a one-in-a-million chance of failing…would you cross? Likely, most people would “risk it” and cross the bridge. How about a $100 reward and a one-in-a-hundred chance of bridge failure? Now, people are starting to re-assess the risk-to-reward ratio; they are “managing their risk.” So, here’s where it gets tricky. What if there was no confidence in the odds of a bridge failure? Meaning the bridge could fail at any time. How could someone assess the risk to reward?
As much as they might like you to believe otherwise, institutional investors do not risk their lives when they invest in projects, but there is significant financial risk when one considers the number of zeroes involved with any major energy project.
Here is where the predicament lies for geothermal energy development, as the reward for geothermal energy development is high. According to the US Department of Energy, geothermal energy has one of the lowest levelized costs (average cost of power production over the life of a power plant) of any power supply. Unlike wind or solar, geothermal energy does not rely on variable sources of energy; the earth’s heat provides baseload power without fuel costs. Geothermal energy development has one of the smallest environmental footprints for land use and CO2 production, and can be a source of both power and heat. When this cost-effective, clean, renewable energy is needed most, investors should be more than interested in “crossing the bridge.” So, why then is geothermal energy not the investor’s first choice for energy investment dollars?
The answer comes back to quantifying risk to reward. Like any energy development, geothermal projects have an element of risk. Any honest energy developer will admit that not everything goes according to plan and not everything stays on budget. A big issue for geothermal energy is the vast majority of capital risk on the front-end, including: exploration risk, drilling risk, and power facility construction risk, just to name a few. It is not unreasonable to assume that a geothermal energy developer will spend almost 95% of its capital budget before putting electrons on the grid and beginning to recover the reward. Although this is a distinct disadvantage for geothermal energy development, comparably to fossil fuels and other renewable energy sources for power generation, this is still not the key problem. Successful investors do not avoid risk, they manage it. The real issue is correctly quantifying the risk by identifying all the potential pitfalls. If the investor understands the risk, they could put a number on it (the bridge fails one in 100 times), and then they could decide what a reasonable reward should be and “manage their risk.”
If a developer downplays the risk or overstates the reward, they create uncertainty and mistrust for the investment community. “You are saying the bridge only fails one-in-a-million times, but it failed last week. What are the odds of failure today?” If the developer cannot honestly answer the question, then the unknown or uncertain risk can make quantifying the risk-to-reward ratio next to impossible. However, with every “bridge failure,” developers learn how to build a better bridge and improve the odds of success.
This is where the geothermal industry can be proactive and think like the investor. Developers need to provide sound numbers for things like exploration drilling success, resource recovery, and capital costs. “Yes, there is a one-in-100 chance the bridge will fail, but the reward is still a million.” If these numbers are well-researched and accurate, it allows investors to make informed decisions.
With no misconceptions, the benefits for developers are twofold:
- The investor and the developer are well-informed of the actual risk they are taking.
- The investor is comfortable with their reward for taking that risk.
At the end of the day, the developers have already decided that it is worth crossing the bridge for geothermal energy development, and they have already invested or risked their own time and energies. Now is the time to help the investment community understand where the pitfalls are and why the reward is worth the risk. More than ever, the industry needs investors to cross the bridge with them for clean, renewable, geothermal power.
Craig Dunn is a geologist with Borealis GeoPower.
To view this article in its entirety click here
Feb 11, 2010
Magma Energy Announces Management Changes and New Iceland Office
VANCOUVER, BRITISH COLUMBIA—(Marketwire - Feb. 11, 2010) - Magma Energy Corp. (TSX:MXY) is pleased to announce the following senior management changes and additions:
At the company’s head office in Vancouver, Dr. Catherine Hickson has been promoted to Vice President, Exploration and Chief Geologist. Cathie will head all of Magma’s international exploration activities. Additionally, Andrea Zaradic has been promoted to Vice President, Operations and Development. Andrea will lead all of Magma’s geothermal development projects, including the current expansion program at Soda Lake and the large development programs planned at HS Orka’s projects in Iceland.
At our Reno office, the President of Magma’s US subsidiary, Dr. Frank Monastero, will retire effective February 28 and continue his involvement with Magma in an advisory role. Frank was instrumental in Magma’s inception and early development. We extend to Frank our great appreciation for his contribution to the early growth of Magma Energy and offer our best wishes for his retirement.
Dick Benoit has joined Magma’s US subsidiary as Exploration Manager. Dick has 35 years of experience in all aspects of exploration, field development, production and injection operations, and resource management in the geothermal industry both within the USA and internationally. Dick is Past President of the Geothermal Resources Council and recipient of the Council’s Special Achievement Award for outstanding contributions to the development of geothermal resources.
Additionally, Magma has opened a new office in Iceland, and has added a number of Iceland geothermal experts previously engaged with Geysir Green Energy. The office will be headed by Asgeir Margeirsson. Asgeir has had a long career in geothermal power development both within Iceland and internationally, including three years as CEO of Geysir Green Energy, seven years as Chief Operating Officer of Reykjavik Energy, Iceland’s largest geothermal power company and five years as Technical Director of Iceland Drilling, a leading geothermal drilling contractor. The Magma Iceland team will support HS Orka’s planned expansions as well as Magma’s geothermal development projects globally.
Ross Beaty, Magma’s Chairman and CEO, said, “The promotions of Cathie and Andrea are a consequence of their outstanding contributions to Magma’s early growth and their exceptional technical and organizational skills that will drive our future growth. The addition of Dick, Asgeir and our new Iceland team to Magma will strengthen our senior management group internationally. I am really pleased that we have attracted such excellent professionals to our team – they will be needed to advance our growing portfolio of geothermal assets. I am sad to see Frank Monastero retiring and I am very grateful for his efforts in the early growth of Magma Energy. I look forward to continuing to draw on his extensive geothermal experience as needed in the future.
To view this article in its entirety click here
Feb 11, 2010
BC Legislature Recognizes Province’s Geothermal Potential in Throne Speech
In the opening of the 2nd session of the thirty-ninth parliament of the Province of British Columbia, Lieutenant-Governor Steven L. Point highlighted the province’s commitment to clean energy and made special mention of the province’s great potential for geothermal energy development. “Clean energy is this century’s greenfield of opportunity”, Lieutenant-Governor Point stated in his address.
“Building on the contributions of the Green Energy Advisory Task Force, your government will launch a comprehensive strategy to put B.C. at the forefront of clean energy development. We have enormous potential in bioenergy, run of river, wind, geothermal, tidal, wave and solar energy. We will put it to work for our economy. A new Clean Energy Act will encourage new investments in independent power production while also strengthening BC Hydro.”
The recognition of BC’s vast geothermal resources and their potential to satisfy the clean energy demands of future generations is a major step in the development of this clean, base-load renewable energy source. CanGEA applauds the Province’s commitment to simplify procurement protocols and provide fair, predictable clean power calls. In turn, we believe this commitment will attract further investment in the industry and generate significant employment opportunities for the province.
For a copy of the Speech from the Throne please follow the link below:
Feb 10, 2010
NV Energy to Purchase Power from Central Nevada Geothermal Plant
LAS VEGAS, Feb. 10 /CNW/ - NV Energy (NYSE: NVE) announced today that it has signed a 20-year power purchase agreement with a subsidiary of Ram Power Corporation (TSX: RPG) for energy that will be produced by a new geothermal power plant under development in central Nevada. The 32-megawatt Clayton Valley Geothermal Project is expected to be generating electricity by 2014.
Terms of the power purchase agreement, which is subject to approval by the Public Utilities Commission of Nevada, were not disclosed.
The generating plant is being developed on one of five geothermal leases that Ram Power has acquired from the Bureau of Land Management in Esmeralda County, approximately halfway between Reno and Las Vegas. According to the developer, Clayton Valley has sufficient geothermal resources to produce up to 160 megawatts of electricity, which is enough to serve up to 96,000 households. The project will be developed and operated by Ram Power subsidiary Clayton Valley 1, LLC.
“We’re pleased to add more clean renewable energy to our supply portfolio and to expand our use of geothermal power,” said NV Energy President and Chief Executive Officer Michael Yackira. “The advantage of geothermal energy is that it’s available for our customers around the clock.”
NV Energy currently has more than 1,000 megawatts of geothermal, solar, biomass, hydro, waste-heat recovery and wind energy under contract or in the project development stage.
“Based on the 25 years of geothermal project development that Ram Power management has enjoyed in Nevada, we look forward to a successful project and the start of a new era in geothermal power generation in the state,” said Ram Power Chief Executive Officer Hezy Ram. “We anticipate the project will be eligible for various federal and state tax incentives once completed.”
About NV Energy
Headquartered in Las Vegas, Nevada, NV Energy, Inc. is a holding company with principal subsidiaries, Nevada Power Company and Sierra Pacific Power Company, doing business as NV Energy. Serving a combined 54,500-square-mile service territory, NV Energy provides a wide range of energy services and products to approximately 2.4 million citizens of Nevada and nearly 40 million tourists annually.
About Ram Power Corporation
Ram Power is a renewable energy company based in Reno, Nevada, engaged in the business of acquiring, exploring, developing, and operating geothermal properties and has an interest in geothermal projects primarily in the United States, Canada, and Latin America.
To view this article in its entirety click here
Feb 09, 2010
Ormat Nevada Inc. Signs Purchase Agreement for an Advanced Stage Development Property
Reno, Nevada, February 9, 2010 – Ormat Technologies, Inc. (NYSE: ORA) is pleased to announce that its wholly owned subsidiary, Ormat Nevada Inc. has signed an agreement to acquire 100% of the membership interests in HSS II, LLC, which includes the Hot Sulphur Springs Geothermal Project in the northern Independence Valley of northeast Nevada. The Project is in an advanced stage of development and has one successful well. The Company plans to construct and operate a geothermal plant on the site which expected to become operational in 2012.
The Project will sell its output pursuant to a new 20-year power purchase agreement (PPA), signed early February - 2010 with Nevada Power Company (a subsidiary of NV Energy, Inc.) Under the PPA, Nevada Power will purchase up to approximately 40 megawatts (MW) of electricity from the Project, which will be developed in stages with the first stage of approximately 16 MW. The PPA allows for adjustment of the supply amount at the fist year after the commercial operation. The PPA is subject to approval by the Public Utilities Commission of Nevada
Commenting on the transaction, Dita Bronicki, CEO of Ormat Technologies, said: “Upon closing, this acquisition will increase the number of projects that we expect will commence construction by 2010 and will therefore be eligible to benefit from the stimulus provisions targeted for renewable energy projects under the American Recovery and Reinvestment Act (ARRA).”
The Hot Sulphur Springs Geothermal Project is located on and has access to approximately 9,800 acres at the Hot Sulfur Springs site in Elko County, Nevada. Ormat Nevada Inc. is purchasing the interest from its current owners, private equity funds managed by Energy Investors Funds. HSS II owns the Hot Sulfur Springs Geothermal Project. The Company expects that closing of the acquisition, which is subject to customary conditions precedent under the purchase agreement, will take place in the first quarter of 2010.
To view this article in its entirety click here
Feb 05, 2010
Sierra Geothermal Awarded Position in the 2010 TSX Venture 50
Congratulations to CanGEA member Sierra Geothermal Power Corp. who have been named as one of the 2010 TSX Venture 50!
VANCOUVER, BRITISH COLUMBIA—(Marketwire - Feb. 5, 2010)
The TSX Venture Exchange today announced that Sierra Geothermal Power Corp. (TSX VENTURE:SRA) (“SGP”) has been named as one of the TSX Venture 50, a ranking of strong performers listed on TSX Venture Exchange. TSX Venture 50 is comprised of 10 emerging companies in five industry sectors that have been identified as leaders in Canada’s public venture market.
“It is an honour to be named as part of this year’s TSX Venture 50,” said Gary Thompson, President and CEO. “Our listing on the TSX Venture Exchange has provided us with the ideal environment to meet our growth goals and objectives.”
The 2010 TSX Venture 50 were selected based on four equally weighted criteria that include return on investment, trading, analyst coverage and market capitalization growth in Cleantech, Diversified Industries, Mining, Oil & Gas and Technology and Life Sciences sectors.
“We are pleased to celebrate the 2010 TSX Venture 50,” said John McCoach, President, TSX Venture Exchange. “These outstanding companies are proven leaders in their respective sectors and we are proud to have them listed on TSX Venture Exchange. We wish them all continued success.”
About Sierra Geothermal Power Corp.
Sierra Geothermal Power Corp. is a renewable energy company focused on the exploration and development of clean, sustainable geothermal power. It is based in Vancouver, British Columbia and listed on the TSX Venture Exchange under the symbol SRA. Its portfolio of geothermal projects located in Nevada and California exceeds 365 square kilometres (90,000 acres) and has a combined total estimated capacity of greater than 500 MW. SGP intends to finance development by utilizing a combination of corporate equity, joint venture partnerships and project debt, with the support of US government grants and loan guarantees. To find out more about Sierra Geothermal Power Corp. (TSX VENTURE:SRA) visit our website at http://www.sierrageopower.com.
To view this article in its entirety please click here
Feb 04, 2010
Boiling hot
CanGEA’s Chair and Founder Alison Thompson and Policy Director David Gowland comment on Canada’s geothermal energy potential in the Corporate Knights article “Boiling Hot”
Taken from Corporate Knights, The Canadian Magazine for Responsible Business
Written by Melissa Shin, Managing Editor
Imagine if all the oil rigs in Canada suddenly starting drilling for renewable energy.
With high-temperature geothermal energy, it’s possible. “The rig and personnel who drill for oil and gas can be the same rig and personnel who drill for geothermal,”says Alison Thompson, founder and chair of the Canadian Geothermal Energy Association (CanGEA), which now counts 30 companies, including Enbridge and Nexen, as members.
High-temperature hydrothermal geothermal is different from the low-temperature geothermal energy that fuels geo-exchange or geothermal heat pump systems for commercial and residential heating and cooling. Located a few kilometers underground and often visible at the surface as hot springs, this “conventional geothermal” can be used to generate electricity on a large scale. Closed-loop geothermal systems produce virtually no emissions or waste, as all water is re-injected back into the ground to eventually be reheated by the earth.
“This is a huge renewable on the scale of hydro dams,” says Thompson. A 2009 report from the Pembina Institute estimates that 21 billion gigawatt hours of energy are released every year underneath the surface of Alberta, at depths of less than five km. “Even with the conservative assumption that only 0.5 per cent of this potential is recoverable, it represents more than 1,100 times the current total installed generating capacity in Alberta,” says the report. CanGEA estimates that at least 5,000 megawatts (MW) of high temperature hydrothermal potential are available in B.C., Alberta and the Yukon, and could power 3.7 million homes.
A January 2009 Credit Suisse report finds that geothermal energy is the least-expensive form of alternative energy at 3.6 cents per kilowatt-hour; cheaper than coal, which costs 5.5 cents per kilowatt-hour (assuming a 1.9 cent/kWh savings from U.S. tax incentives). And it makes sense to produce: forty-year old Nevada-based geothermal company Ormat Technologies is steadily profitable. “Long before Kyoto, geothermal was already making money without incentives,” says Thomspon.
Geothermal is “not new, it’s new to Canadians,” Thompson adds. First used to produce electricity in 1904 in Larderello, Italy, geothermal fluids such as the Roman Baths have been used as therapy for hundreds of years. Currently, there are 10,000 MW in operation in 24 countries such as Iceland, Germany, the US, and Mexico—and yes, still in Larderello, Italy. The US is the world’s largest geothermal producer with 3,000 MW installed, powering the equivalent of almost three million homes.
Because it is continuous and reliable, geothermal “behaves in a way that utilities are used to,” says Tim Weis, Director of Renewable Energy and Efficiency Policy at the Pembina Institute. This means that geothermal can fill in the gaps of variable renewable energy sources like wind and solar
“We are the trunk line of the renewables industry,” says Thompson.
So why doesn’t Canada have any geothermal on the grid? For starters, since drilling for geothermal is a capital-intensive undertaking, industry needs to know where to look—but data on geothermal potential is woefully outdated.
Since Canada’s formal geothermal energy program, under the auspices of the Geological Survey of Canada (GSC), lasted from 1975 to 1985, much of the data available on geothermal heat flow is a quarter-century old. With two decades of technological improvements, these maps may have failed to catalogue what is now a viable geothermal site.
“Technology’s marched on,” says Thompson. “Power plant technology can now operate with water as hot as your cup of coffee.” In addition, most countries have improved the detail of their data, mapping not only heat flow, but also underground water (which is used to transfer heat), permeability porosity (which allows hot water to move through the rock), and land surface features such as national parks.
Without formal direction or funding from the federal government “we’re decades and hundreds of millions of dollars behind,” she says. “The Americans are spending $350 million on their geothermal program. We’re still spending effectively nothing.”
“It’s really a catch-22,” responds GSC research scientist Steve Grasby. “Until there is active need for the information, it doesn’t necessarily make sense for the government to invest in providing it. But if you don’t have it, you don’t get [outside] investment.”
Red tape at the B.C. Ministry of Energy, Mines and Petroleum resources has added to the frustration from industry. Despite sitting on the geothermal-rich Pacific Ring of Fire, the last B.C. land tenure auction occurred back in November 2004. Meanwhile, fourteen different companies made approximately 175 tenure requests from late 2007 into 2008.
As a result, says Thompson, many Canadian-listed geothermal companies like Magma Energy, where she is Vice President of Corporate Relations, are spending “every single dollar in other countries, except for on the lights in our head office.”Consequently, Canadians with drilling expertise are missing out on hundreds of green jobs.
The B.C. Ministry is now targeting three dates for tenure disposition in 2010, says spokesperson Jake Jacobs. Four parcels of land are out for referral with industry, First Nations, and local governments. As all parties move forward, Thompson urges Canadians to learn from the experience of New Zealand’s Maori indigenous people, who are owners and operators of key geothermal generation properties.
Nicholas Heap, Climate and Energy Policy Analyst with the David Suzuki Foundation, says that such caution is required to maintain a social license to operate.
“Geothermal can be low-impact and sustainable, but it’s not necessarily going to be that,” he says. “If the public perceives this just to be more dirty, high-impact power, we’re not going to get the kind of support that we need to effect a large-scale transition to a renewable and sustainable energy system.”
Part of this perception may come from the fact that while almost all of the steam produced from geothermal plants is water vapour, other particulates including hydrogen sulfide, sulfur dioxide, and carbon dioxide may be present in extremely low amounts. But these can be controlled and utilized in beneficial ways. The Blue Lagoon geothermal spa in Iceland is fed by the output of the nearby geothermal plant Svartsengi, and its warm waters are reputed to be therapeutic. The plant also uses a heat exchanger to heat the municipal water system.
A 2009 report by Northwestern University researchers found that geothermal has the least land use per generated power. “If that land was previously agricultural, most of the use could continue unabated,” says Dan Schochet, Executive Vice President of Ram Power, which operates the Meager Creek Hot Springs exploration project in B.C. (currently on hold).
David Gowland, Policy Director for CanGEA, stresses the need for a long-term view, citing the short-term approach that has caused some Californian sites to run down the resource too quickly. “Countries like Iceland and New Zealand recognize they will be relying on the resource for the long-term so they draw out heat at a sustainable rate,” he says. “They are attuned to successfully managing the resource.”
Despite these benefits, until Canada has a commercial-scale geothermal operation, public awareness and demand will likely remain low.
Tim Weis of the Pembina Institute compares the geothermal industry to a fledgling wind industry. “It really tipped the balance for wind energy when we got a couple of commercial projects in the ground,” he says. “Then that set the stage for substantial, long-term policies.”
Despite lagging behind our peers, Nicholas Heap of the David Suzuki Foundation thinks there’s still time for Canada to create “a planning and development system that makes low-impact renewables a core goal,” he says.
“A lot can be done in a short time if there is the will to do it.”
Enhanced Geothermal
When Google starts spending on a new technology, you know they’re onto something. Google.org has chosen to invest in research and deployment of enhanced geothermal systems (EGS), also known as ‘deep geo’. EGS involves harnessing the energy from hot rock below the earth’s surface, further below conventional geothermal. Google.org’s interest, says spokesperson Charles Baron, is twofold: to develop low carbon technologies to reduce worldwide carbon emissions, and to eventually allow Google.com to decarbonize its operations by purchasing green electricity at a reasonable price.
What’s the potential of EGS? Huge: a 2006 MIT report found that there is more than enough accessible EGS energy to power the entire planet for thousands of years. Just two per cent of the heat that lies three to 10 km below the continental United States could meet 2,500 times the United States’ current total energy use. In Australia, home to Cooper Basin, the world’s largest EGS project (five to 10 GW of potential), only one per cent of that nation’s thermal resource could meet 26,000 times the country’s current total energy use.
“The real magic of EGS is you can drill for it pretty much anywhere,” says Tom Rand, Cleantech Practice Lead at MaRS Discovery District. “London, Adelaide, Toronto, or New York, it doesn’t matter—we’re not limited to those few, thin veins of heat close to the surface!”
But Canada still has a far way to go. “Let’s get a well-established industry before we start to experiment,” cautions CanGEA’s Alison Thompson, who initiated EGS projects in the oil sands when she worked for Nexen and Suncor. “We would be skipping over a massive [conventional geothermal] resource to get to EGS.”
To view this article in its entirety click here
