AltaRock Energy Inc. and its partners are beginning an ambitious $43.8 million project in the Deschutes National Forest, intended to broaden the possibilities for geothermal power development and financing in the United States.
The Seattle-based geothermal company is currently installing monitoring equipment at the Newberry Volcano Enhanced Geothermal Systems Demonstration following approval from the U.S. Bureau of Land Management in April.
The project is a partnership with Connecticut-based Davenport Newberry Holdings LLC, which acquired leases for geothermal exploration on the Newberry Volcano’s flank in 2006 and has since been exploring the area.
The demonstration project is a first-of-its kind application of a technology known as Engineered Geothermal Systems or EGS. While EGS has been tried worldwide and is successful, the Newberry demonstration will involve stacking multiple water-cycling reservoirs in a single geothermal project for the first time, a prospect that allows for development in drier conditions and also increases production, making geothermal more commercially viable.
Davenport Newberry was initially hunting for very hot geothermal water on 62 square miles of leases, hoping to build a traditional geothermal plant. What the company found instead was extremely hot rock — with temperatures to 600 degrees Fahrenheit — but no hot water. Looking to tap the area’s potential to heat water and drive a turbine, Davenport Newberry paired with AltaRock, which specializes in research and development of EGS.
The technology involves the creation of reservoirs made up of connected cracks far below ground — depths between 6,500 and 11,000 feet. The reservoirs are made using a technique known as hydroshearing, which uses pressurized cold water to widen existing fissures. Once in place, water is cycled through the reservoirs and heated, then brought to the surface as steam, which then can be used to turn a turbine to produce electricity. The steam is condensed into water during the process, and is then injected back into the ground to be reheated.
The Newberry demonstration is years from becoming a working power plant and, if developed, would be small. But success at Newberry would greatly broaden the possibilities of geothermal development in the United States. That is because EGS systems can be located almost anywhere there is hot rock within 2 miles of the surface. That’s important, because traditional geothermal projects are currently located near geysers, hot springs and other sensitive hydrothermal reservoirs that are in limited supply and often found in places where the scenery — consider Yellowstone Park’s famous geysers — precludes development.
Doug Perry, president of Davenport Newberry, said a 2007 study by researchers at the Massachusetts Institute of Technology found that EGS, if broadly deployed, could meet 10 percent of the nation’s energy needs.
"There is a lot of heat in the earth and tapping into that heat is clean and environmentally friendly. You’re not burning fossil fuels and it’s reliable. Basically, geothermal operates at 95 percent. You have to maintain the plumbing but it doesn’t care whether the wind is blowing, the sun is shining or the plants are growing," Perry said.
As the first project to assemble multiple underground reservoirs, the Newberry Demonstration, if successful, would also increase funding opportunities for EGS technology by increasing power output and offering a greater return to investors, making it a better fit for conventional project financing.
Currently, conventional geothermal development costs about as much as a new coal plant. While Engineered Geothermal Systems are more costly — 1.5 times to 3 times more expensive — they can bring down the cost of power if AltaRock can boost their production output.
"What we think we can do at Newberry is at least double the production from each well," said Susan Petty, AltaRock's president and CEO. "If we could double the production of the well we could cut the cost of production from 30 percent to 35 percent. If we are really successful, we could cut it by 40 percent to 45 percent and that would make this a really economically successful proposition."
Petty has been in the geothermal industry for 30 years. A participant in the MIT study, she was inspired enough by the results to launch AltaRock in 2007.
By the end of this year, it should be clear whether AltaRock is successful at Newberry. If so, Petty foresees applying for a commercial power plant at the site, a demonstration project with a capacity between 9 megawatts and 13 megawatts. AltaRock also has other leases and, if development at Newberry isn't permitted, would look for project financing for development on other sites.
For now, the U.S. Department of Energy is bridging the gap between venture capital funding for research and eventual project financing with a $21.4 million grant. AltaRock and Davenport Newberry are funding the balance of the project's $43.8 million tab. Researchers at Oregon State University, the University of Utah, Lawrence Berkeley National Laboratory, Texas A&M and Temple University are also lending their support.
As it moves forward, Newberry will be closely monitored for its seismic impacts. AltaRock is drilling boreholes to place seismometers above and below the surface of the ground to closely monitor the next phase, which will also gauge the success of the project in real-time.
Beginning in September, AltaRock will begin the hydroshearing process to create fractures in the hot rocks.
With success, a power plant design could follow, prompting an Environmental Impact Study and a bid for permits for development.