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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(Valemount, B.C.) — A forestry town is working to re-invent itself as a renewable energy leader with a project that promises community revitalization from the ground up.  

The mountain village of Valemount, British Columbia, located along the Rocky Mountain trench is eyeing the nearby Canoe Reach hot springs — one of the hottest surface hot springs in Canada — as a source of geothermal heat and renewable electricity generation.

“Valemount used to be a typical northern forest town,” Silvio Gislimberti, head of the Valemount Geothermal Association, told DeSmog Canada. “But now we would like to create a geothermal industrial park.”

An old mill that shut down in 2007 provides a near perfect location for Borealis Geopower, the company working with the community to make something of the region’s geothermal potential.

Craig Dunn, chief geologist with Borealis Geopower, said Valemount is one of the best-known hot spots for geothermal development in all of Canada.

“The resource opportunity is pretty incredible all the way down the Rocky Mountain trench, including opportunities like Radium and Fairmont, which are all a part of the system.”

Valemount has a “competitive advantage” according to Gislimberti.

“We know we have a good heat source, that heat source is — relatively speaking — close to the surface, so 1.5 to two kilometres down, and we have easy road access to the Kinbasket Canoe Reach region from existing forestry roads,” he said.

Valemount sits on the end of a long power line, which means any electricity generated in the area could be fed back into the provincial grid. Unlike large-scale hydro projects like the Site C dam, geothermal has a very small environmental footprint. And unlike wind and solar, geothermal can provide base-load electricity production even when the sun isn’t shining or the wind isn’t blowing.

“I think the concept is great,” said Steve Grasby, geochemist with Natural Resources Canada. “Instead of looking at where the high potential regions are in Canada — which can sometimes be far from demand — they’re starting with the demand.”

Grasby said it just makes sense to explore heat resources “near a town that is closer to people and demand.”

“The question is can they find a reliable heat source,” Grasby said. “My understanding is there hasn’t been any exploration drilling done yet. That will be the telltale thing.”

Grasby added geothermal is similar to oil and gas exploration: “You just don’t know until you start drilling,” he said.

Borealis began to engage with the community in Valemount in 2010 after the company received a geothermal exploration permit from the B.C. government. The permit grants Borealis the opportunity many other geothermal developers across the border in Alberta are desperate for — taking a commercial geothermal project from the drawing board to the drill bore.

But for Borealis, and for the villagers of Valemount, the geothermal dream amounts to much more than power generation.

Borealis hopes to build a 15-megawatt power plant that will supply power back to the BC Hydro grid but the community envisions a “holistic energy development program,” as Dunn put it, that will support a whole host of community-led projects.

“Places like Iceland are getting more and more use of what is called heat-cascading,” Dunn said. “So you have a high-temperature resource that may be used for power, then it may be used for brewing applications, and then greenhouses and in the end it may be used to make sure your sidewalk doesn’t freeze.”

Meet The Forestry Town Striving to Become Canada’s First #Geothermal Village https://t.co/6QSYozKwWv #bcpoli #renewables

— DeSmog Canada (@DeSmogCanada) August 19, 2016

Beyond that, Dunn said locals already have plans for the residual heat leftover from the proposed 15-megawatt power plant Borealis wants to power with steam-driven turbines.

“That creates an opportunity for what looks like an eco-village or a geo-park…That means we can have a number of organizations like greenhouses, fish farming, brewery, silviculture, or timber industry applications in close proximity and they can actually take advantage of each other’s opportunities, trading CO2 with each other if necessary from the brewery back to growing operations.”

The local Three Ranges Brewery is already lined up to use the geothermal resources developed by Borealis.

“Three Ranges brewery is one of the Robson Valley highlight reels of new development in the area. It’s a small microbrewery that brews incredible beer — if I do say so myself,” Dunn said with a laugh.

Three Ranges owner and brewer Michael Lewis said he is excited to incorporate geothermal energy into his operations.

“As a brewery we use a lot of temperature control — both on the hot side and the cooling side. My options here are either propane and electric and we use primarily electric, but it would be nice to have a renewable energy resource like geothermal that we could use on the heating and cooling sides and get the best bang for our buck.”

“It would make us the first geothermal brewery in Canada,” Lewis said.

Lewis said the village was quick to establish a Direct Use Heat Committee and the Valemount Geothermal Society when the idea of developing the heat source first arose.

“There’s a rising tide making sure we get something going and become the first geothermal village in the entire country.”

The idea of creating a new zero-waste community while also using geothermal heat is exciting, Lewis said.

“It has the potential for being a really ticketable showcase to show the world what can be done with geothermal.”

Despite the excitement, there is still the issue of the high upfront cost of geothermal. “It’s significantly more expensive because it’s not highly practiced.”

Lewis said even transitioning his brewery to use a geothermal heat-exchange system is going to cost him. “It’s more expensive than doing something with natural gas, but it’s smarter.”

“It’s a part of that pioneering spirit that is this valley.”

Alison Thompson, president and founder of the Canadian Geothermal Energy Association, said the community of Valemount has exhibited an extraordinary amount of interest in geothermal, which puts the project at a huge advantage.

“You can have an association, you can have government, industrial project proponents pushing for projects, but there’s something to be said for pull,” Thompson told DeSmog Canada.

“The villagers are very well informed. That’s what really sets them apart.”

Thompson added the community established a Geothermal Committee and has sought out independent experts to weigh in on questions that come up about the project.

“I think this is what is so unique in Valemount — it’s not one person or one committee, or one business, or group: it is the village.”

“For other communities that are interested, I think they could take a lesson from the way Valemount has nurtured this and rolled it out to be inclusive,” Thompson said.

Corie Marshall, president of the Valemount Geothermal Society, said locals are prevented from growing food beyond the short summer season so the community is planning on using warm water leftover from the proposed geothermal power plant to heat greenhouses throughout the colder months.

“A lot of times in the winter we can get minus 35, sometimes minus 40…We tend to get a lot of snow. There are also times in the summer where people lose their tomatoes because of frost.”

Many people feel conflicted about burning wood for heat and even for heating greenhouses because of the impacts on air quality, Marshall said.

“We’re at the end of a transmission line that comes up from Kamloops. There are times when a branch falls near Kamloops and we’re out of power, three hours away,” she noted.

Geothermal electricity production offers a way to both stabilize the local grid as well as limit the need for electricity from direct heat use, Marshall said.

Marshall said that at this stage the project needs financial support to take it to the next step. Borealis is currently on the hunt for project investors.

“The biggest thing is we need to actually drill holes. Borealis Geopower has done lots of surface studies, a lot of good science, good information but at one point we need to drill holes. The drilling is expensive but now is the best time to do it because so many of the drill rigs are out of work in Alberta.”

“Somebody needs to find — or fund — the first drills and then we go from there.”

When asked when she hopes that will happen, Marshall smiled and said, “yesterday.”

Image: Carol Linnitt

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Canada has no commercial geothermal power plants, despite having abundant potential and, ironically, Canadian energy companies running geothermal power plants around the world.

Canada’s west coast forms part of the Pacific Ring of Fire, a giant horseshoe of active volcanoes and earthquake zones stretching from New Zealand all the way around Alaska to the bottom of South America. The geology putting coastal cities at risk also makes the area great for developing geothermal resources.

Ring of Fire countries New Zealand, Indonesia, the Philippines, the United States and Mexico all have commercial geothermal plants, but not Canada. A groundbreaking 2010 study of Canada’s geothermal potential found the best locations were in British Columbia, Alberta and Saskatchewan, but even Ontario could produce geothermal power if someone dug deep enough.

To develop a geothermal power plant, a firm needs to drill a well deep into the ground to extract hot water to generate steam to turn an electrical turbine. The water is then recycled through another well back underground. The most important factors are the temperature of the extracted water and the flow rate – the hotter the water and the more of it, the better.

Under the right conditions, geothermal energy is generally cheaper than all other forms of electricity generation over the entire life span of a power plant, according to a 2009 report from investment bank Credit Suisse.

As solar and wind energy development has taken off in Canada in the last decade, geothermal – an energy that doesn’t depend on the weather – has not. DeSmog Canada asked Canadian geothermal companies and experts to find out why?

1. Blessed with cheap resources

Canada’s best geothermal plays, where you have to dig the least distance and the water is hottest, are in British Columbia and the Yukon. Both regions are also blessed with cheap and clean hydropower from long-running generating stations. B.C.’s power rate has been traditionally so low, new entrants face too steep a hurdle to compete with existing capacity.

“BC Hydro for 20-30 years has had three to five cents power and that is not something geothermal could have competed against,” Craig Dunn, chief geologist at Borealis GeoPower, a Calgary-based geothermal company, told Desmog Canada.

BC Hydro is trying to moved ahead with plans to develop a new massive hydro station, the Site C dam on the Peace River, which hits a cost point where geothermal is “at par or better,” says Dunn.

In its presentation to the joint review panel on Site C, the non-profit industry group, the Canadian Geothermal Energy Association (CanGEA), said geothermal would be cheaper, create more jobs and be more environmentally friendly than Site C. The argument does not appear to have persuaded BC Hydro, causing the industry to be in at a standstill in B.C.

“If there is no viable new place to sell power in the province, then no one is going to go out and locate those commercially viable wells because they cost millions of dollars,” John Carson, chief executive officer of Alterra Power Corp., told DeSmog Canada. Alterra is a renewable energy company based in Vancouver with run-of-the-river hydro projects in B.C. and geothermal power plants in Iceland and Nevada.

BC Hydro was contacted to comment on this story but did not reply to our request in time for publication.

In Saskatchewan, an area equally blessed with resources of a different kind — fossil fuels — the province hasn’t needed to look for alternatives until recently, Kirsten Marcia of Deep Earth Energy Production Corp. (DEEP) said. DEEP is a Saskatchewan-based company exploring the possibility of developing a geothermal power plant in southeast Saskatchewan.

“I am feeling very optimistic SaskPower will consider a power-purchase agreement when the time is right,” Marcia said.

2. Upfront cost and risk is high

Geothermal may be competitive over the 30-year lifespan of a plant, but it is risky, comes with high upfront capital costs and a slow payoff at the end, making investors wary.

The exploratory drilling for geothermal is as complex and uncertain as oil and gas drilling, but the resource at the end doesn’t return the level of energy density as a fossil fuel play, Jacek Majorowicz, a University of Alberta professor of physics, said.

“We can’t completely define the resource until we are drilling, so the project has front-end risk with long-term return,” Dunn, of Borealis, said. “You have to have a good geologist and a better banker.”

3. Limited government interest and support

As the fossil fuel industry gets $25 billion in subsidies each year and other alternatives have started to get support, the geothermal industry has been virtually frozen out of government support in developing the industry, CanGEA says. The organization formed in 2007 and is small, but recently crowd-funded over $50,000 to hire a policy advisor to work on removing the barriers to developing the industry.

Oil and gas regions are fertile ground for geothermal operations because a lot of the risky and uncertain exploratory drilling is already done by the fossil fuel industry. Marcia with DEEP says Saskatchewan is open to geothermal exploration of its oil and gas regions, but B.C. is not, Dunn says.

“I can’t get a geothermal lease in an oil and gas development in B.C,” says Dunn.

When the Ontario released its feed-in tariff program for alternative energy, allowing producers to sell their energy back into the grid, geothermal was left off the list.

4. Chicken or egg problem

With no commercial geothermal power plant, arguably Canada has no geothermal power plant industry, making their voice easily dismissed when decision makers are developing energy plans.

“We are going to have a lot easier time improving policy and achieving regulatory change when we are relevant, and one of the fastest ways to be relevant is to have active working projects,” Dunn says.

“You can’t do anything until you have a few pilot projects and you learn from them; it can’t all be theoretical,” says Majorowicz, who has published a number of papers on Canada’s geothermal potential, including co-authoring a recent study demonstrating geothermal is competitive with cheap natural gas for heating systems in Alberta.

5. No price on carbon

As a relatively clean energy source releasing a limited amount of greenhouse gases, developing geothermal energy resources would make more economic sense if Canada increased the cost to dump carbon dioxide into the atmosphere.

“We do all of our economic modeling with no price on carbon, because it has been so unstable for so long – most finance guys we deal with won’t accept it,” Dunn says.

With a carbon price, geothermal “goes from being profitable to being very profitable,” Dunn says.

With a viable carbon tax, oil and gas companies looking for alternatives to drilling for fossil fuels would quickly turn to geothermal. “It would be a saviour” because they have the necessary drilling experience to get the job done, Majorowicz says.

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