Debates and opinions

When will the real boom in the development of geothermal energy on a global scale take place?

According to an authorized source, the potential for EXPLOITABLE geothermal electricity production was estimated (in 2012) at some 190,000 MWel (in the sense of the conventional resource at temperatures above 180°C) which, updated to the year 2020 and the abundance of medium enthalpy sources ( > 120°C) exploitable by binary cycles (ORC) and combined heat and power ( CHP) cogeneration, could be increased to 250,000 MWel. However, by the year 2025, the installed global geoelectric capacity will struggle to reach 20,000 MWel. In fact, the 2020-2025 growth rate of the installed global geoelectric capacity would peak at 19% compared to almost 28% for the previous five-year period (G. Huttrer, 2020)!

The panorama for direct uses of geothermal heat (by simple exchange, supplemented where appropriate by the implementation of heat pumps, PAC) is becoming clearer, certainly favored by the abundance of the resource stored in the large continental sedimentary basins, which compensate for its structural dependence on the proximity of places of consumption (geoheater, unlike geoelectricity, is not transported beyond a few kilometers). The uses, which are divided into five categories, respectively geothermal probes/PAC, Balneology, space heating/urban heat networks, aquaculture and industrial and agro-industrial process heat, have reached a global installed capacity of 180,000 MWth (of which 1/3 in Europe) up 52% ​​compared to 2015, an annual geocalorific production close to 285,000 GWhth and an average utilization rate of 30% (J.Lund, A.Toth, 2020).

A growth target, realistic in the sense of the rapid development of heat networks and greenhouses heated by geothermal energy, anticipated at 50% would bring the installed geoheat capacity to 160,000 MWth in 2025 and 250,000 MWth by 2030.

Notwithstanding several success stories with exemplary value recorded or in the process of being recorded, at the forefront of which are:

-(i)The approximately 45 district heating doublets/triplets in service in 2021 (out of a total of 64 drilled since 1969 on the emblematic site of Melun l'Almont still in service, a good score indeed), in the Ile-de-France region (target Dogger limestone, Middle Jurassic) on the outskirts of the capital and in the near and distant suburbs represent a real mining, technical and environmental feat combined with an exemplary commitment from the public authorities and the support of the population, which have made it possible to overcome the hazards of childhood illnesses inherent in any new energy sector. Indeed, imagine in an urban environment with a high population density the presence, in addition to heavy oil-type drilling sites, of artesian wells with head pressures and flow rates close to 10-12 bar and 250 to 450 m3/h, without any major incident having affected their operation thanks to the anti-blowout intervention/on-call system (provided by the GEOFLUID well service). By the year 2028, twenty to twenty-five new heat networks targeted at Dogger are planned as part of the energy transition.

– (ii) The spectacular development of geoelectric production, predominantly binary in the organic Rankine cycle (ORC), in Turkey mainly on its Aegean coast (Menderes graben), which increased from almost 100 MWel in 2010 to 1,550 MWel in 2020 (720 MWel in 2015) in a decade. A score that demonstrates the geoelectric potential represented by medium-enthalpy sources (temperatures of 120 to 180°C) which are very widespread and can be exploited throughout the world and, (iii) the commitment of the City of Munich, in Bavaria, to a completely decarbonized agglomeration in 2050, starting with district heating, which will be provided entirely via renewable energy from 2040, mainly by deep geothermal energy (Malm carbonates, Upper Jurassic) supplied by the connection of three peripheral forced heat plants (ORC) and the drilling of intra-muros geothermal doublets , five of which have been drilled and completed to date.

Geothermal energy is struggling to develop at the expected rate.

Indeed, geoelectric but also geocalorific geothermal energy suffers from endemic symptoms, a legacy of its poor relation attributes (or poor man's oil, depending on your point of view...) characterized (i) by an energy content of one, or even several, orders of magnitude lower than that of hydrocarbons; For comparison, the higher calorific value (at source) PCI of a liter of domestic fuel oil is 11, of a kg of butane gas LPG 14, that of a kg of water vapor 0.7 and of a kg of pressurized water <0.2, and (ii) by a dissuasive economic profitability: thus in oil prospects the adoption of discount rates of 20% and return on investment rates ( Pay Back Time , PBT) of two years or less are commonplace, compared to 5% and 6-8 years, the nirvana dreamed of by many geothermal operators.

The geothermal community also suffers from the absence, as a consequence of the above, of its own industry and services that meet specific development needs and cost logic. In fact, the only global geothermal industrialist is represented by the turbine manufacturer ORC ORMAT, supported by its second TURBODEN, a subsidiary of the MITSUBISHI conglomerate and its flash cycle superheated steam turbine department . It is therefore essentially totally dependent on drilling/exploration/production companies, submersible pump manufacturers, and service companies (directional drilling, drilling fluids/muds, casing/completion supplies, cementing, stimulation, electrical well measurements/deferred logging, etc.) in the oil sector. These constraints are slowly tending to reverse, as a result of (i) the slowdown, for the time being more cyclical than systemic, or even regulated, in oil activity, and (ii) the tremor observed in the resumption of deep drilling for urban heating and greenhouse heating, particularly in Europe.

In terms of exploration/production, the range of operators is extremely disparate. Chevron, the second largest American oil company and sixth largest worldwide and for a long time the world's leading geothermal operator, has sold its Californian assets (Geyser fields) and is in the process of selling its Philippine and Indonesian assets (motivated by cost reductions!) worth close to three (3) billion US dollars.

Thus disappears from the scene a major player with technical, logistical and financial means as well as expertise no less major. Another potential player, ENGIE, is considering selling the geoelectric assets of its Indonesian subsidiary, Supreme Energy, in Sumatra (90 MWel installed, 220 MWel planned). What remains are EDC (Energy Development Corporation) in the Philippines (second largest geoelectric producer in the world after the United States), Pertamina, the leading (public) operator of hydrocarbons and geothermal energy in Indonesia (also the world's leading holder of proven geothermal reserves) and ENEL, the leading Italian electricity company, privatized in 1999, and a heavyweight in electricity and gas production, and the world's geoelectric leader through its subsidiary ENEL GREEN POWER dedicated to renewables, which is investing (prudently) in Chile.

It is clear that these operators, with high investment capacity and recognized know-how, invest little in relation to their technical and financial resources and expertise. And this despite incentive measures regarding mining risk coverage mechanisms (Risk Sharing Mechanism , RSM of the World Bank (East Africa and Turkey) and the German Public Bank, KFW for East Africa and Latin America). WHY?

In addition to strictly economic considerations, there are geopolitical concerns, if not fears, regarding the political and territorial stability of states, particularly in South East Asia, Africa and even Latin America, which act as virtual, if not real, brakes.

Yet geothermal energy, while it generates some fears (particularly with regard to the induced seismic risk), has not, to our knowledge, caused any revolts or wars. Can we say the same of oil, gas and mining interests in view of the ongoing conflicts in Burma/Myanmar, Northern Mozambique, Southern Sudan, or those in the process of being so in Uganda/Great Lakes and Bougainville (Papua New Guinea)?

• MORE DISPOSALS, LESS ASSET ACQUISITIONS
• HOW TO STIMULATE A DYNAMIC RECOVERY OF GEOELECTRIC EXPLOITATION IN THE FACE OF THE TRIPLE CHALLENGE
• (I) ENERGY, WITH A 40% INCREASE IN GLOBAL DEMAND BY 2030, INCLUDING A
• DOUBLING OF GEOELECTRIC PRODUCTION (source: IEA, 2020), (II) ENVIRONMENTAL, LIMITATION
• CO2 EMISSIONS AND GLOBAL WARMING, AND, LAST BUT NOT LEAST,
• (III) THE FORESEEABLE DEPLETION OF FOSSIL FUEL SOURCES WHICH PROVIDED 80% IN 2020
• OF GLOBAL ENERGY DEMAND

In 2020, heating networks provided 3% of final energy consumption worldwide, with 5% of this being shared equally between the industrial, residential and tertiary sectors (IEA, 2020).

French production in 2020 approached 50,000 GWhth, an increase of 750% compared to 1990, to a very large extent due to the redeployment of geothermal heating in the Ile-de-France region at the initiative of the public authorities in the form of (i) financial aid for investment, (ii) coverage of mining risk via the creation of the SAF Environnement Court Terme (exploration risk) and Long Terme (exploitation risk) mutual fund, in the process of being duplicated on a European scale (GEORISK community program) and, last but not least , (iii) a resolute commitment via ADEME in research and innovation from which our company has benefited and still benefits, and without which its innovations could not have seen the light of day.

Let's be clear: without the support of public authorities and the initial commitment of urban communities, no development of the geothermal urban heating sector would have been possible.

These successes cannot obscure the recurring structural shortcomings of the current operating/management model nor the need to correct them in the sense of functional restructuring.

Firstly, the market structure is divided/balkanised into almost as many operators as there are sites (the consolidations observed in recent years have not significantly changed the situation).

Secondly, and contrary to the entrepreneurial and synergistic link between heat production and distribution, no distinction is made between the miner/underground producer and the operator of the heat network/surface distributor. In fact, most often the latter or, failing that, the legal entity (Mixed Syndicate) holding the mining title, ensures the technical and managerial management of the structure. It is not a reproach to them to note that they have neither the mining culture and the induced risk, nor the reservoir practice essential for the optimal management of the resource.

Also in terms of assessing a geothermal prospect , there is currently no body independent of public or private project owners capable of certifying the geothermal resource of an exploration or exploitation permit comparable to the standardized procedure in force in the international oil industry. This is even though the recommendations of the IGA (Geneva, 2016) state the possibility of establishing for the geothermal resource a report called Competent Person Report (acronym CPR) written by an independent expert recognized by the profession. This type of report is used systematically in order to avoid possible conflicts of interest that may arise during the negotiation of transactions on exploration/exploitation permits for subsoil resources.

To continue the discussion, we could imagine a production/management of the geothermal resource shared between several operators/miners with recognized skills and means, who take charge of drilling, completion and maintenance of the infrastructures (wells, pumping/monitoring equipment, surface/primary geothermal loop of the heat exchanger), and the risks associated with the guarantee of supply (temperature, flow rates and production peaks, annual volumes) and the sustainability of the resource over the duration of the concession. The miner would thus deliver the resource under the agreed contractual conditions to the surface operator operating the heating network, freeing the latter from the risks linked to the exploitation of the resource.

This restructuring of production/distribution would take up, with a few nuances, the division of labor existing in the hydrocarbons sector between the producer, well/field operator, the transporter/manager of the oil/gas pipeline and the terminal distributor.

Finally, a characteristic, to be frank, has recently appeared on the Ile-de-France geothermal scene in the form of a judicialization of the profession's activity with the consequence that any operating incident or problem most often relating to the physical chemistry of the reservoirs, results in an interim relief/expert appraisal with the assignment of all the actors and the designation of an expert tasked with finding the person(s) responsible for the damage/loss and who will pay, and not to resolve the original process which initiated the damage.

Another damaging consequence of geothermal litigation: the difficulty, or even impossibility, for engineering companies to take out (otherwise at high cost from specialized companies, often foreign) a professional liability policy with insurers. We speak from experience here.

The seismicity induced by geothermal exploitation is at the heart of the concerns of the Geothermal Community in light of the earthquakes, of magnitude varying from 2 to 3, exceptionally 5 on the Richter scale, caused in Basel and Saint Gallen (Switzerland), Landau (Palatinate), Pohang (South Korea) and Vendenheim (Alsace). The earthquakes occurred following high-pressure injections in fault zones that are otherwise seismically active. Microseismic monitoring protocols associated with geomechanical modeling make it possible to define for each project the pressure/injection flow alert thresholds in relation to the induced microseismicity and thus secure an effective prevention policy that is as reassuring for local populations.

Geothermal exploitation also represents a source of mineral and gaseous by-products, like the hydrothermal processes of the genesis of metalliferous deposits, firstly Lithium (mainly on the Salton Sea/Brawley deposits in the Imperial Valley of southern California but also in Alsace) and Helium which are currently undergoing promising development.