First published in Cleantech magazine, November/December 2009. Copyright Cleantech Investor 2009

Reno conference sees geothermal sector upbeat

By Jon Mainwaring in Reno

Focus on near-term commercial projects as oil industry gains interest in geothermal

There was an upbeat mood at this year’s Geothermal Resources Council meeting in Reno, Nevada, which was preceded by news from the US-based Geothermal Energy Association that there had been strong growth in new geothermal power projects during 2009. According to a GEA report, the organisation had identified 144 new geothermal projects under development in 14 US states that will have a combined baseload power capacity of 7,100MW. When added to the existing 3,100MW of existing capacity in the US, the country looks set to generate 10GW from geothermal power within the next few years.

The conference this year had several presentations devoted to enhanced geothermal systems (EGS), which is, so far, an experimental technology that involves introducing water artificially to hot, dry rocks in order to produce manmade geothermal power sources. Many of these sessions were focused on EGS in Australia, which has few naturally-occurring hydrothermal systems, but where a burgeoning geothermal energy industry believes it can achieve commercial EGS.

However, despite several experimental, non-commercial EGS projects currently in operation around the world, there were a few sceptical voices who believe that EGS proponents may be getting ahead of themselves. “What bothers me about EGS is that we’re rushing to the marketplace before the science is ready,” said Daniel Schochet, executive vice president of Ram Power, a geothermal business that has recently floated on the Toronto Stock Exchange. “I know that in the US, EGS is still considered as an early-stage development.”

However, Schochet – a veteran of the geothermal industry who spent more than 30 years at one of the industry’s leading companies, Ormat Technologies – conceded that certain EGS techniques could be used to improve the performance of existing hydrothermal systems.

EGS aside, the conference and its associated exhibition were overwhelmingly focused on near-term commercial geothermal projects, and the technologies used to improve the development and performance of hydrothermal systems. A wide range of sessions covered topics as diverse as the financing of geothermal projects, drilling technologies and exploration methods that improve the chances of finding hydrothermal systems.

A potentially exciting development in evidence at Reno was the renewed interest in the geothermal sector from the oil and gas industry. Of course, the oil industry has long had an involvement in geothermal power. Chevron, for example, began geothermal operations in the western US in the 1960s, and today it runs four major geothermal projects in Indonesia and the Philippines that have the capacity to generate 1,273MW.

But while the oil industry in general has flirted with geothermal power during the oil price spikes of the past, its current interest in the sector appears to have become more serious, according to Jean-Philippe Gibaud, business development manager for the geothermal services division of engineering company Schlumberger. “It seems to be different this time”, he said. “We are starting to have more contact with large oil and gas companies regarding geothermal projects.”

It is a sentiment echoed by Dr Frank Monastero, president of Magma Energy Corporation, which floated on the Toronto Stock Exchange in July partly because the risk/reward dynamics of geothermal businesses like Magma appeal to TSX investors who more typically invest in oil, gas and mining companies. “The change we saw in the market in the late 70s and 80s was a wake-up call, but then they went back to using hydrocarbons,” he said. “This time it’s different. What you’re seeing now is a fundamental change in energy, in its production and its consumption, and that change is here to stay.”