The Geysers back story: AltaRock closes E-7 work but the beat goes on

The third week of December saw stories across the globe on the cancellation deep-drilling geothermal projects in Basel City, Switzerland and – ostensibly – by AltaRock Energy at The Geysers in California. Reports implied that all projects of this type and even AltaRock itself were in serious jeapordy. Geothermal Digest spoke to both AltaRock CEO Donald O’Shei and Chief Technology Officer Susan Petty to bring their story into better focus.

First and foremost, we can put this to rest: AltaRock, their work at The Geysers, and on EGS are alive and well. O’Shei said that recent media reports were generated by what was a formal – and required – letter to DOE notifying the agency that all the work on well E-7 at The Geysers associated with an earlier $6 million grant had been completed. As we reported here, work at the site had been suspended in early September. The letter simply formalized this fact. Nothing has changed, AltaRock continues to believe “it is one the more advantageous areas for EGS in the country” and the timing relative to the Basil City announcement was an unfortunate coincidence.

The issues with well E-7 are well documented but worth repeating and expanding on. Petty said that drill bits were not breaking, as at least one report stated, but in fact, the hole kept collapsing in on itself and could not be kept open. The real issue, however, is that the well was once used as an injector. Thus the fibrous serpentine rock had been wet, altering he rock and causing it to flow. Thus a new well – one of two possible solutions to the problem – would not give the company in the same problem.

Another solution according to Petty would have been to change the casing procedure and case the well in shorter intervals, which is more expensive. So, the company could spend money on a new pad or on a new casing procedures. It was decided that abondoning E-7 and starting from scratch is more cost-effective, and the AltaRock is looking into funding options for a new well.

We moved the discussion on at this point to the new $25 million grant at the Newberry Volcano site in Oregon. The issue of seismicity is inevitably a topic of discussion when talking EGS. Interestingly, Petty pointed out that volcanoes generally feature ring fractures around them and Newberry is no exception. This localizes the regional stress field, which localizes any induced seismicity, which always is associated with fracturing. The company also has a good deal of data, as the University of Oregon ran an 86 unit seismometer array in the area a year ago. The two dry wells drilled by Davenport Power in 2008, which will be used for fracturing, have rock temperatures higher than 600 degrees F. Ultimately, the goal is to create a commercial-scale site.

Finally, we talked drilling. There are a constant stream of reports suggesting that to make EGS commercially viable, drilling technology needs to be upgraded. Recent DOE grants supporting research in the area suggest they believe this as well. However, O’Shei said that rig costs are not an issue and that the penetration rates are ok. Crews and ancillary costs are the greater expense. Clearly drilling more holes means higher costs all around, so as O’Shei said, if you make a better reservoir, you will need fewer wells. The work at Newberry will go a long way in determining the best way to make a reservoir – unfinshed business at both E-7 at the Geysers and in Basil Switzerland.