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Geothermal Picks Up Steam With Alberta Proposal to Retrofit Abandoned Oil Wells

It’s been an awfully rough year for Alberta, with the resource-rich province currently grappling with a 31.5 per cent drop in oil prices, 39 per cent increase in unemployment and a quadrupling in the number of abandoned oil and gas wells.

But for many advocates of geothermal energy, that particular trio of stats represents a massive window of opportunity for the province, especially when paired with the government’s recent decision to phase out coal-fired power and generate 30 per cent of its electricity via renewables by 2030.

In short: retrofit old oil and gas wells to capture geothermal energy, putting thousands of tradespeople back to work, attracting billions in investments and producing baseload renewable power for the entire province.

“The market timing is better than it’s ever been, the economic forces are better than they’ve ever been and I think we’re poised for a true boom,” says Sean Collins, partner at Terrapin Geothermics.

Interest in the idea has been growing in recent months, receiving a major boost in early August with MLA Shaye Anderson’s formal proposal to convert an inactive well to capture direct heat for an 8,000 square foot greenhouse near Leduc.

Currently, the Alberta government is in the process of implementing its Climate Leadership Plan; a spokesperson from the province’s ministry of environment and parks says it will look at exploring the option more, emphasizing it’s a “complex issue that requires input and consultation from multiple agencies and stakeholders” in order to get it right.

Here are a few things that will have to happen for Alberta to take advantage of its massive geothermal potential (which, according to a 2013 study by the Canadian Geothermal Energy Association, could be as high as 8,800 megawatts of power given a five per cent recovery rate at a depth of 3.5 kilometres, far surpassing the combined capacity of Alberta’s coal-fired power plants).

Province Needs Geothermal Regulations

Despite years of pressure from the geothermal industry, there’s no regulatory framework in Alberta (or Canada for that matter) that actually allows for the capturing of geothermal energy.

“You can go and try find it: I wish you luck,” quips Craig Dunn, chief geologist at Borealis GeoPower.

Collins says many wells across North America are already pulling 95 to 99 per cent water up and just “happen to scrape a little bit of hydrocarbons out of the top.” But at the moment, that hot water is treated as a waste product: it’s not allowed to be transported via pipeline for direct heating purposes or harnessed to spin a turbine to generate electricity (or heat another fluid with a lower boiling point to spin the turbine in a process called “binary cycle”).

That must change for geothermal to stop serving as what Collins dubs “the forgotten technology in Canada,” which could come in the form of new legislation or amendments to existing rules.

Jonathan Banks — research associate at the University of Alberta specializing in the mapping and commercialization of geothermal potential in the province — says there will also be regulations required in getting electricity into the power grid; a delayed process will likely deter investors as they want to start generating cash flow sooner rather than later.

It’ll take some work. But it’ll eventually lead to test projects to demonstrate the technology and attract public and private funding, then opening up the doors for widespread commercialization.

Mapping of Geothermal Hot Spots Underway

Alison Thompson, chair and co-founder of the Canadian Geothermal Energy Association (CanGEA), says there are 440,000 wells scattered across Alberta, with 77,000 listed as inactive or suspended and another 180,000 formally abandoned or “orphaned.”

Many of those wells won’t be suited for geothermal retrofits. Banks stresses that wells are abandoned for many different reasons, including economic undesirability and compromised structural integrity. Drawing up salt water through existing well casings can result in “often aggressive and expensive issues,” Banks says. Sour gas can erode the well casing. Others aren’t close enough to cities and towns to harness the potential for direct heating.

Many maps have already been drawn up due to oil and gas drilling. But more work will have to be done to establish the premium spots for geothermal on a case-by-case basis.

Currently, Banks is working with Alberta Innovates – Energy and Environment Solutions and five rural municipalities in the northwest of the province to complete targeted reservoir exploration, mapping in 3D the boundaries of the best reservoirs related to the population centre.

When the team started looking, they were hoping to find 10 reservoirs of a certain criteria, with a combined capacity of 100 or 200 megawatts of power. Instead, they found 50 reservoirs. More mapping with likely lead to more such findings, helping to reduce commercial risk and accelerate technological developments as more retrofits are completed.

Retrain Oil and Gas Workers for Geothermal

All that would be required to make a promising pre-existing well operable for geothermal capture, Banks says, would be a deepening of the well by as little as 10 or 20 metres since water reservoirs tend to sit just below oil and gas pools.

Day rates for drillers are at 20 year lows, he adds, making it a highly cost-effective option.

Lliam Hildebrand — founder and executive director of Iron & Earth, an organization of oilsands workers pushing for investments in renewables — suggests that such opportunities would be just the beginning for labourers.

“If we actually started creating some geothermal power projects, our skills as tradespeople — as welders and steel fabricators and electricians and crane operators and pipefitters — are all directly transferable to the industry with very, very little retraining required.”

Hildebrand says a lot of the jobs would be in the manufacturing of actual steel components like the heat exchange, piping and tubing, as well as the electrical work required to hook the generators up to power lines. Rig operators would have to undergo some specific retraining, he says; CanGEA is already hosting workshops for that component of it.

In addition, it will take some retooling and specialized equipment: “What we really need from the government is this type of research and development and innovation grants to help these manufacturers position themselves as providers for these kinds of manufacturing demands,” he says.

Many orphaned wells are capped with cement and remediated by an industry association, rendering them economically useless for the purposes of harnessing geothermal.

Discussions would have to happen between many stakeholders including companies, leaseholders, the provincial government, the Alberta Energy Regulator and Orphan Well Association to figure out the complicated logistics, especially around leasing and liability issues.

Dunn says purchasing an abandoned oil well for a dollar is like buying a car with a body in the back: “It’s a great deal until you have to figure out what to do with the mess.” There are completely viable geothermal developments, he says, but companies take very significant project risk given potential issues around remediation or other lingering environmental concerns.

“My sense is most geothermal companies are going to be really hesitant: no-one’s going to take over the liability for a well, just because there’s a split incentive problem where companies may give you their worst wells that have things you don’t really know of,” Collins says.

The key, he says, is to target people at the point in time where the operation has the budget to do some removal and convince them to convert the well instead of plug it. Nobody’s gone through the specific leasing process on any major scale to know what the best set-up is.

That’s where the government can step in, helping to bring various players together to establish when the best window of opportunity is for companies to step in and do something different with the well.

Government Help Needed to Level Playing Field

Sara Hastings-Simon, director of the Pembina Institute’s clean economy program in Alberta, emphasizes that government intervention like the Alberta Oil Sands Technology and Research Authority (AOSTRA) allowed for the development of the oilsands, with direct stimulus spending kicking off solar in the U.S.

“Every new energy resource in the history of Canada has received support to build that industry,” emphasizes Dunn. “That’s true across the board: deep natural gas got subsidies for wildcatting, heavy oil got a massive subsidy with royalties and everything else along the way. This is not an equal playing field when you’re breaking into new energy markets.”

Geothermal should be recognized for the point in commercialization that it’s at, Hastings-Simon says. In other words, it has to be treated differently than solar and wind, which have had respective headstarts (geothermal has been historically disadvantaged due to the fact that companies could make more money focusing on extracting $100/barrel oil).

Direct funding is a must, although Hastings-Simon stresses it must be project-based not company-based.

“Obviously you need to be careful and do it in a smart way so you’re not wasting taxpayer dollars, and you need to make sure you’re not doing it for 50 projects at once,” she says. “You’re recognizing the point at which geothermal changes into being a more commercialized technology and the support then changes form again.”

Government also has the power to reduce upfront costs of capital via loan guarantees and accelerated capital depreciation; Hastings-Simon says that could come via the Climate Leadership Plan’s innovation fund, or tied to economic development and trade (as expertise could eventually be patented and exported).

Creating a Geothermal Buzz

Let’s be honest: geothermal’s an extremely cool technology.

The Alberta government has spent decades and millions of dollars promoting its oil and gas sector. Why not turn those same efforts towards boosting the public’s understanding and enthusiasm for geothermal?

Heck, here are a few random facts that could be used in promotional campaigns:

1) Geothermal heat can be used to melt snow on sidewalks and roads, saving cities millions of dollars in snow clearing costs;

2) Since the wells already exist and have been used reliably for decades, there’s a near-zero chance of seismic activity often associated with fracking and drilling;

3) Geothermal can theoretically be paired with carbon capture and storage as supercritical carbon dioxide can transport heat more efficiently due its density; and

4) Alberta’s cold winters would greatly improve the efficiency of geothermal plants given the temperature gradient between the resource’s depth and ambient environmental conditions.

The technology is also rapidly advancing: Banks says his team is developing a heat engine that can take advantage of lower temperature resources in the province, boosting what might be a few hundred megawatts of power to several gigawatts of power.

All up, geothermal represents a stupidly massive opportunity for Alberta to heat its homes, greenhouses and animals barns, generate electricity to replace coal-fired power plants and put thousands of out-of-work tradespeople back to work.

Dunn is hopeful, suggesting the massive handicap against the industry is “very fixable with the right protocol motivations.”

“It’s a clean, renewable resource that is almost perfectly aligned with our current workforce,” he concludes. “Why would we not at least try?”

Image: Geothermal operations in California. Photo: California Energy Commission

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