National Post (National Edition)
How geothermal power could heat up renewable energy efforts.
Why geothermal power could heat up renewable energy efforts — and give former oil and gas workers new jobs
The energy industry gets a bad rap when it comes to innovation, yet the oilpatch is by far the largest spender on clean tech in Canada, to the tune of $1.4 billion a year. As part of its continuing coverage of the innovation economy, the Financial Post reports on the intersection of technology and energy, from the oilpatch in Alberta, off the shores of Nova Scotia to the plains of Saskatchewan.
In late November 2018 a rig crew arrived on a patch of prairie near Torquay, Sask., in the heart of the province’s most active oilfield to drill the deepest well in provincial history at 3,530 metres.
But the crew wasn’t trying to hit oil or gas. They were targeting a hot sedimentary aquifer for steamy, briny water to be used for Canada’s first geothermal power project.
“I think they truly enjoyed the challenge of drilling for something very, very different,” said Kirsten Marcia, chief executive of Saskatoon-based Deep Earth Energy Production Corp., which is developing the power project.
Marcia said the results of that well were so encouraging that the company will return later this year to drill a deeper well for the still-under-development, five-megawatt geothermal electric generating station she hopes will be the first of many such plants in the country.
The power plant, when complete, will make Canada, already among the 80 countries that use geothermal heat pumps to heat houses and some businesses, the 26th country to use geothermal heat to produce electricity.
It hasn’t been easy to get to even this point. Saskatchewan has had to change its regulatory system to make way for the first geothermal power development, a step other provinces haven’t followed. Marcia had to challenge oilfield service contractors to make some slight changes to the way they drilled the well. Geoscientists trained for other industries — Marcia has a mining background — had to rethink their approach to studying geological data, looking for hot water rather than oil or gas. Finally, SaskPower stepped in with the country’s first power purchase agreement for a geothermal facility, taking a risk on a new-to-Canada technology.
When it comes to innovation, the energy industry gets a bad rap. Yet the oilpatch spends $1.4B a year on clean tech. As part of our coverage of the innovation economy, FP reports on the intersection of technology and energy, from the oilpatch in Alberta, off the shores of Nova Scotia and to the plains of Saskatchewan.
Still, experts say the country is “decades behind” other jurisdictions with similar resources in developing a geothermal industry and they believe a massive opportunity is being wasted to boost the share of renewable energy in the overall power grid, as well as to help 14,000 former oil and gas workers struggling to find new jobs.
The geothermal industry, though still in its infancy, believes it is the long-term solution to both problems as it can offer renewable baseload power generation and tap the skills that laid-off oil and gas workers already possess.
“I would challenge anyone to find something in the oil and gas world that I don’t also have,” said Alison Thompson, chief executive of Borealis Geopower Inc., a 12-year-old geothermal company based in Calgary.
Borealis employs 10 people who would seamlessly fit into any of Calgary’s oil and gas companies. Thompson said her office includes two geologists, two engineers, a geophysicist, environmental scientist, lawyer and accountant — exactly the professions you would find at a startup oil company.
The potential for geothermal power in Canada is often denigrated on the basis that the quality of the resource here is not as good as in places such as Iceland, which is hard to beat because of the giant volcano that formed the island nation.
A 2010 study by the Geological Survey of Canada found the potential for geothermal power in Canada is greatest in British Columbia, Alberta and Saskatchewan, which are home to hot dry rocks, hot volcanic water and warm sedimentary basins. Other areas have pockets, too, given that “40 per cent of Canada’s landmass” has geothermal potential.
Moreover, the study found that technological advancements could mean “as few as 100 projects could meet Canada’s energy needs.”
Simply put, geothermal power uses the heat in the earth’s crust to turn turbines and generate electricity. A project that taps into hot water aquifers brings water and brine to the surface and uses the heat and water to turn turbines that generate electricity before pumping the brine water back into the earth where it will heat up again.
What results is a circular process where brine and water are reused over and over again to produce renewable electricity with little environmental impact.
The potential of the resource is greatest where heat is most prevalent, so volcanic landscapes such as Iceland are ideal. But domestic geothermal power executives like Marcia and Thompson insist the Canadian landscape can be tapped profitably, too.
Much of Alberta and Saskatchewan and parts of Manitoba sit above hot sedimentary aquifers such as those that Deep Earth Energy is targeting. B.C., Ontario and Quebec and the Yukon are peppered with locations that, due to either seismic activity, rock types or volcanic activity, can also be used for geothermal power.
The Canadian industry also has the benefit of existing data, eliminating some finding and exploration costs, since other resource industries have spent billions of dollars exploring the country’s geology and mapping its hot zones while searching for other commodities.
“We wouldn’t even know this geothermal resource existed if not for the oil and gas industry and the potash industry in Saskatchewan,” Marcia said.
Marcia said Deep Earth Energy expects it can produce power for between $6 million to $8 million per megawatt of installed capacity, but notes that a geothermal electricity project runs 24/7 when producing base-load electricity and can, therefore, generate revenue at triple the rate of wind or solar projects, which run intermittently. As a result, she said, geothermal power bests those intermittent forms of electricity on cost.
Geothermal power on a life-cycle basis is the cheapest form of renewable power, according to the U.S. Department of Energy, because it can be used for base-load power generation rather than as an interruptible power supply such as wind and solar. The DOE puts the cost at US5 cents per kilowatt hour, which is lower than wind or solar power without carbon credits.
“It’s a really nice opportunity for technology transfer and for redeploying the workforce and building off the skills that would have never been developed had the oil and gas industry not come forward,” said Thompson, who is also the head of the Canadian Geothermal Energy Association, which represents 13 companies involved in the sector as well as a number of economic development agencies.
The overlapping skill sets between the oil and gas industry and the nascent geothermal energy business is striking, said Carol Howes, vice-president of Petroleum Labour Market Information (PetroLMI), a division of Energy Safety Canada, a not-for-profit corporation.
Shortly after the downturn in oil and gas began in 2014, PetroLMI commissioned a study of energy sector employee skills that could be redeployed in other industries such as agriculture or renewable power, including geothermal.
The study found that 14 different professions from the oil and gas industry could transfer into the geothermal power business, though some, including geoscientists, would need some specialized training to do so.
However, given that only a few geothermal power companies are developing or moving toward developing plants in Canada, Howes said “the number of actual jobs is quite small” at the moment.
The Canadian geothermal industry would need to scale up almost exponentially to get to the point where it could hire laid-off oil and gas professionals.
According to a 2010 report by the U.S.-based Geothermal Energy Association, one 50 MW geothermal power plant in the States would require between 697 and 862 workers at various stages of the project’s life cycle, from exploring geology to operating the plant. To put that in a Canadian context, 280 MW of geothermal power generation would have to be installed in Canada to redeploy the country’s 14,000 or so unemployed oil and gas workers, 10,000 of whom are in Alberta.
Some of the challenges to achieve that level of generation are government policies, unclear regulatory regimes and an uneven playing field for renewable power sources. For example, geothermal power plants don’t qualify for the same incentives that wind and solar projects do in many provinces.
“They should be eligible for carbon credits,” said David Gray, an energy economist and former executive director of Alberta’s Utilities Consumer Advocate.
“It’s one area where we could do better.”
Gray added governments are also guilty of the “over-bureaucratization of renewable power.”
Thompson at Borealis Geopower said many provinces lack regulatory frameworks for geothermal development, so companies such as hers end up “playing a little bit of pinball back and forth between regulations that aren’t really well established.”
The other challenge the industry faces is financing. Deep Earth Energy secured $25.5 million in grants from the federal government last year, allowing it to drill its first geothermal power well.
Thompson said the company supplemented that funding with additional capital from its existing shareholders — many of which come from the oil and gas industry though she didn’t name them — but acknowledged that securing capital has been challenging.
“What a first project will do is break barriers for other projects,” Marcia said, adding that she expects raising money in the future will get incrementally easier.
“They’ ll pay up to be second,” she said of investors.