This article was written for the Daily Oil Bulletin on March 23, 2022 by Carter Haydu.
Eavor Technologies Inc. is working with various stakeholders around the province to develop a pristine multiple drill pad somewhere in Alberta for the purposes of testing new technologies and ideas in the geothermal arena — the Canadian Centre for Geothermal Drilling and Technology Excellence.
“We’ll be looking for support from the Alberta and federal governments for that, but the idea is that you create a kind of gift to the world — Canada’s uniquely Albertan gift to the world, if you want to think of it that way,” said Paul Cairns, chief business development officer. “Alberta drilling technology is some of the best in the world. Come and use the best-in-the-world technologies along with your innovative new idea, and test it and improve it.”
Representatives of several counties in the province have expressed a willingness for their jurisdictions to house this would-be world-class facility for geothermal developers globally to utilize, he told the Bulletin. “Alberta has technology and locations that people from around the world can come and utilize to improve on their technologies, to then go out into the world and produce better, greater and more geothermal projects.”
In terms of developing its own technology, according to Cairns, the biggest happenings for Eavor since its inception, so far, has been through its demonstration facility near Rocky Mountain House, which has been in operation since late 2019, and since then has been proving that hot water can flow out of an Eavor-Loop system as it is designed — a radiator built into the earth that requires no additional electricity.
The demonstration facility also proves crews can drill and intersect an Eavor-Loop system at depth in a multilateral fashion, he noted, and also that the system does not require casing, which is an expensive part of drilling. “We have a totally open-hole system that isn’t producing water from the rock. We aren’t putting any water or anything into the rock. It’s a totally isolated system, but it’s done without steel casing.”
Meanwhile, Terrapin Geothermics Inc. is in a 2025 timeframe to see completion of the Alberta No. 1 project — Alberta’s first conventional geothermal heat and power facility, located in the Municipal District of Greenview.
Although debt financing can cover some of the costs, Catherine Hickson, chief executive officer, Alberta No. 1, said her firm’s project is now on a somewhat “compressed timeline” as proponents are raising capital to match a $25.4 million grant, which is part of the Emerging Renewable Power Program administered by Natural Resources Canada.
She noted that Bill 36: The Geothermal Resource Development Act, which aims to create a dedicated regulatory framework for development of geothermal resources in Alberta, also created some associated delays.
“The back and forth we’ve had with the Alberta Energy Regulator [AER] and Alberta Energy has been useful, but in the end that legislation is not supportive of “pure-play” geothermal development,” she said, adding that Bill 36 awards heat rights de facto to companies already holding petroleum, natural gas, metallic or industrial mineral rights.
Essentially, it means pure-play geothermal developers would be limited to areas with no pre-existing rights holders and government has not declared which of the mineral rights holders would have priority.
Hickson said: “What that does is significantly limit us in terms of where we can apply. Unfortunately, some of the best places already have awarded PNG and metallic and industrial mineral rights to the complete stratigraphic section, from the surface to what we call the ‘basement,’ and those are very old crystalline rocks at the bottom of the sedimentary rock strata.”
For geothermal development to occur in areas that already have rights awarded, she added, Bill 36 will require geothermal firms to essentially partner with existing rights holders, or else buy those rights. “If we have to buy those rights, when the commodity value (heat and electricity) of geothermal is significantly less, particularly now with rising crude oil prices … basically, it’s introducing an additional layer of complexity and cost for geothermal extraction.”
In response, Alberta No. 1 is trying to promote a “holistic vision” of geothermal, Hickson told the DOB. “If there are hydrocarbons, then we can separate them out and give them to whoever the rights holders are. If there’s lithium, then we would work with the lithium company holding the … rights to set up an extraction facility, or just pump everything back down into the subsurface to be gathered again if there are commercial quantities.”
FutEra matters
Geothermal proponents are currently working with the province to highlight the potential of co-production, which Hickson said is demonstrated by the efforts of FutEra Power, a subsidiary of Razor Energy Corp., that is currently developing Canada’s first co-produced geothermal and natural gas hybrid power project.
That project’s first phase will produce up to five megawatts of emission-less ‘green’ electricity at the Swan Hills facility via a hybrid design to boost the project’s output to 21 megawatts upon adding a natural gas turbine to optimize geothermal production. Hickson said this project demonstrates that even when there are hydrocarbons in the deep subsurface, they can be separated and essentially given to the rights holders without impeding geothermal development.
“We’re very happy with that,” she told the DOB. “FutEra is proving that co-production is possible, and there has to be a better, less complicated way, and potentially less costly way, to partner with existing PNG rights holders in order for geothermal development to go forward.”
Oilsands and Eavor
Eavor has partnered with Canada’s Oil Sands Innovation Alliance (COSIA) and C-FER Technologies to conduct a high-level economic feasibility assessment of Eavor-Loop as a method of providing thermal energy to a typical oilsands mine across a 30-year project lifespan. COSIA expects to release the results early in 2022.
“The thing about an Eavor-Loop is it can be built anywhere,” Cairns said. “But it’ll produce different levels of heat and different levels of usefulness depending on what you’re doing at surface. And so, it’s more of a study of: Given we know what an Eavor-Loop can produce in the area, how can it efficiently be used in the area?”
While Eavor-Loop might not be able to provide some of the “tremendous amounts of heat” (i.e. for making SAGD/CCS quality steam) required for oilsands operations, Cairns suggested it could increase the temperature of process water from ambient to a certain degree of heat, at which point normal conventional ways of generating heat, such as burning natural gas, could take over.
This solution essentially offers a ‘green’ and efficient alternative for providing that ‘start-up’ heating. “It’s not just about what processes [for which] Eavor-Loop can provide 100-per-cent of the heat. It’s about what processes does it make good, efficient sense to in part use heat from an Eavor-Loop.”
UAlberta geothermal research
Alberta No. 1 has partnered with the University of Alberta for a study on the combining of carbon sequestration and geothermal energy production, which could increase the economic and environmental benefits from conventional geothermal energy, expanding its potential into more non-traditional markets. Rick Chalaturnyk, professor in the Department of Civil and Environmental Engineering, is leading a team of globally-recognized experts for the study.
The UAlberta research aims to investigate co-injecting carbon dioxide as part of a geothermal well doublet — one production well and one injection well, building upon the value additions of drilling for this renewable resource.
“We’re partnering with them, as well as [NRCan], which has a laboratory — [CanmetENERGY] — that has a group very interested in CO2 sequestration,” Hickson said, adding there are three ways to look at CO2 sequestration. “The first is to use a well that may not be economic for the geothermal development due to lower-than-expected temperatures or inadequate flow rates. A drilled well could be completed for CO2 sequestration.
“The team is also investigating multiple completions, where the CO2 is injected at a shallower level than where we’re injecting our cooled brines. The third option is to inject into the producing geothermal reservoir. What we’ve really been doing for the last year is looking at all of these different ways that a conventional geothermal project could support decarbonizing industries.”
In light of the large fluid volumes moving through a conventional geothermal process, induced-seismicity research is being conducted for the project through a partnership with Terrapin and the University of Waterloo. Hickson said: “What are the impacts of those very large volumes of fluid? We think that there are many things that are innovative and new, particularly in the context of the subsurface in Alberta.”
Eavor: A clean process
Because Eavor-Loop is a closed-loop system, according to Cairns, it avoids the environmental concerns that exist — rightly or wrongly — for many other geothermal technologies.
Traditional geothermal pumps up hot water from a formation and then pumps down cold water to interact with the rock, going in and out of it, he noted, which some believe could cause earthquakes. These concerns are increased when systems utilize hydraulic fracturing to increase porosity, permeability and find an aquifer. Further, he added, there can be concerns with regards to water contamination from the whole process of these methods.
However, Cairns told the DOB, with Eavor-Loop there is no interaction with the formation and there is nothing that comes to surface that could be released into the environment. Water going into the system never gets contaminated by anything downhole. “Even if there was something, somehow, brought to surface, it’s maintained in a closed loop. With us, there isn’t any interaction with the environment, subsurface or at surface.
“We’re also not fracking. We’re not pumping water into a formation and pumping water out of a formation. There is no hydraulic exchange going on subsurface. And so, we’re not causing earthquakes. We know we’re not causing any of those potential problems.”
Eavor is simply taking typical drilling rigs and equipment from oil and gas, redirecting them for another purpose — drilling multilateral radiators into the ground, Cairns said, with the rock being chemically sealed.
“The men and women running those rigs need no new training whatsoever, and they’re using technology from the oilsands, from multilateral drilling, from traditional drilling, and combining it together, in some cases, combining this technology for the first time, and implementing it in a different way.”
Eavor-Loop 2.0
What’s next for Eavor? In the next couple of months, Cairns said, the company will be testing another technology — what it calls ‘Eavor-Loop 2.0’ — at a location in the southern U.S. That project will involve drilling deeper into granite. “Our 1.0 technology is about staying in the sedimentary rock. But in some parts of the world, there is no sedimentary rock. It’s granite right to surface.”
Geothermal from granite rock is not a new concept, noted the chief business development officer. However, whereas most geothermal systems used are convection based, Eavor’s method collects heat via conduction.
“Certainly, our type of geothermal, a closed-loop-built radiator in the granite, is different,” he told the DOB. “Ours is different anywhere we go. If it is in the granite or sedimentary rock, our system is totally unique and different than anything that has ever been done before.”
He added: “Once we do our test facility there, we will then have the opportunity to move on to fully-commercial projects using the 2.0 technology. As far as the economics of a 2.0 technology now back here in Alberta, it would be the least expensive place in the world to drill and build an Eavor-Loop, and you’d be harvesting much more heat and much more energy, and the economics become much better, even in low-priced environments, such as in Alberta.”
European project
As for its 1.0 technology as demonstrated at Rocky Mountain House goes, Eavor will likely deploy the first ever commercial application in Germany, Cairns said. “There are lots of reasons why Germany will work for us, and, why we didn’t look to do a first location in Alberta, with one of the main reasons being the market price of electricity.”
The company’s plan is to build a series of four Eavor-Loop systems in Germany for the first phase of that operation at a total cost of almost C$300 million, which will produce electricity to be sold into the German marketplace, which is on the order of eight to 10 times higher than the electricity prices in Alberta, suggested Cairns.
“And so, while the cost to drill those four Eavor-Loops in Germany is at least double what the cost would be here in Alberta, if not three times higher, the economics of it work because the price that you’re getting for your electricity is up to 10 times higher than what you’d see in Alberta.”
However, he said, Eavor plans to learn from this Germany project, transferring what it learns back to Alberta, and continuing to trim overall costs to where even if the province’s electricity or heating prices do not increase, Eavor-Loop will make economic sense. Alberta does, after all, have an advantage with its relatively-low drilling costs.
“In part we are evaluating this project in Germany based on potential funding from the EU Innovation Fund program that uses the [European Union]’s carbon tax to invest directly in cleantech projects.”
He added: “Canada is replicating this example of re-investment instead of using the carbon tax for general government revenue (i.e. use these moneys to support the repurposing, redeployment and utilization of Alberta’s existing oil and gas skills). The more commercialization we do, the more the price begins to come down and the Alberta market awaits us. Our hearts are in it to be here in Alberta. There’s lots of market here for us.”
Late last year, Eavor announced a collaboration with Deep Energy Capital LLP for deployment of Eavor-Loop. Deep Energy will raise capital to develop projects deploying Eavor’s advanced closed-loop geothermal systems. Eavor has committed €10 million in initial funding.
Alberta No. 1’s plans
The Alberta No. 1 project, Hickson said, will implement proven geothermal technology that already has been deployed worldwide. This is ‘conventional’ in the sense that it brings up brines from the subsurface, the heat is extracted, and it is used to generate electrical energy, as well as for direct-use heating purposes.
“Direct use can be anything from base heating to agriculture, aquaculture, fish raising, timber drying, vegetable drying — think of all the various processes that use low-temperature heat.”
Alberta No. 1 expects to spud its first well at the beginning of 2023, she noted. Right now, she added, Alberta No. 1 proponents are working on desktop studies, looking through the large amount of technical information available. The company will apply for well and surface licences as soon as Alberta releases its new legislation directives. Hickson said she is optimistic about the future of geothermal, especially if it can be combined with carbon sequestration.
“We’re looking at innovative ways to further enhance the investment returns for geothermal projects in addition to innovative ways of increasing the ‘green’ credits that geothermal projects will garner. That’s specifically through carbon sequestration. It’s a pretty important message we’d like to get through. We’re hopeful to be able to build additional projects in Alberta in the future.”