Australia's renewable energy future
Geothermal energy
Tuesday, 2 December 2008
Dr Anthony Budd
Project Leader
Geothermal Energy Project
Onshore Energy and Minerals Division
Geoscience Australia
Anthony Budd has worked for Geoscience Australia since 1995 and established the Geothermal Energy Project at Geoscience Australia as a part of the Onshore Energy Security Program in late 2006. He has provided advice on geothermal matters to the Department of Resources, Energy and Tourism, including for the Geothermal Industry Development Framework, the program design for the $50M Geothermal Drilling Program, and the International Partnership for Geothermal Technology. Prior to his geothermal energy work, he researched the origin and emplacement of granites and their relationship to mineralisation in several parts of Australia which included the completion of a PhD at the Australian National University.
It is an honour and a privilege to be here tonight. I have been looking forward to this opportunity to talk to you about geothermal energy.
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Tonight I am going to talk about the who, what, where, when and how of geothermal energy. It is not going to be a very technical talk because there is a lot to get through. There is a lot about the industry as it is developing in Australia. As part of our renewable energy lecture series I don't think I need to go into anything tonight about why we are here, why we are interested in renewable energy.
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I want to use my time to talk about geothermal energy. The reason I call it the 'Cinderella' of renewables in Australia is because it is probably one of the least well known of the technologies. Hopefully, I think, we are going to see a beautiful and happy ending.
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There are a few things that I want you all to take away tonight about geothermal. Firstly, that it is baseload. It is available 24 hours a day, seven days a week every day of the year. Secondly, there is a lot of it.
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Thirdly, it is coming soon. Probably sooner than a lot of people would realise. This is a photo from Geodynamics at their Innamincka test site in the Cooper Basin.
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Fourthly, there are a lot of ways that we can use geothermal energy. It is not just for producing electricity. This slide shows growing bananas in Iceland. Around the side here you can see the pipes where hot water is pumped through this glasshouse.
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Tonight I am going to talk about what is geothermal energy, where geothermal resource are found, how we can use those geothermal resources, what are the benefits of and issues with using geothermal energy. I am going to talk about some misconceptions that I have heard in the time that I have been working in geothermal, and I will talk about when it will come on stream. Also, who is involved and the level of government support that there is for the development of this important industry.
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Firstly, what is geothermal energy? Very simply 'geo' means Earth, 'thermal' means heat; it is the heat of the Earth. The centre of the Earth has a temperature that is estimated to be 5,000 to 7,000 degrees Celsius; and outer space is almost as close to freezing as it can get. We know that heat flows from hot to cold. There is a continuous constant flow of heat from within the Earth through the surface of the Earth and into outer space.
The source of the heat these days is predominantly through the decay of uranium, thorium and potassium. And this is an entirely natural process. Life on Earth is entirely adjusted to the radiogenic decay of these elements and to the heat that is produced. In fact, life is entirely dependent on this heat. Without it the Earth would be just another frozen rock flying through space. So just as life is dependent on solar energy so we are on geothermal energy.
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Geothermal resources, or I should say electricity production from geothermal resources; the yellow stars on this map are the locations where significant amounts of electricity are produced from geothermal resources. The red triangles show significant volcanic belts. You can see that most of the geothermal resources that are used today for generating electricity are in volcanic areas. You can also see that Australia doesn't have volcanoes, which actually is a good thing, because these are actually very dangerous places.
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What about geothermal in Australia? The point about Australia not having volcanoes is probably a very significant one as to why geothermal is not very well understood in this country.
What we have in Australia is a data set of temperatures that have been taken at the bottom of drill holes, holes that have mostly been drilled for oil and gas exploration and production. The distribution of those drill holes are shown on the fly speck map up on the top left. You can see that the distribution is not very good in a lot of areas.
We can project the temperatures recorded at the bottom of those holes – most of them are at least 500 metres deep and a lot of them are deeper – down to a common depth of five kilometres. Then we can interpolate those predicted temperatures and generate this map showing the distribution of predicted temperature of the crust at five kilometres deep.
Work has been conducted on this map for nearly 20 years. It started at the BMR [Bureau of Mineral Resources, Geology and Geophysics], which is what Geoscience Australia is now, from a compilation of petroleum drill holes. This work continued at the BMR for a while and then went to the Australian National University. It has now come back to Geoscience Australia. This map and previous iterations have driven the change in perception of geothermal potential of Australia.
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Something else that changes the perception is that when we take that data set we can do a contained heat estimate of the geothermal resource. We divide the country up into 5 x 5 kilometres squares; take the bottom depth of five kilometres and an upper depth of wherever we find 150 degrees Celsius; we take the average temperature of that block and calculate the amount of contained energy in that block; and then we add them all up.
The total figure is 1.9 x 1025 joules. An easy way to think about that figure is if we took one per cent of the amount of energy that is contained within the upper five kilometres of the Australian crust today, that would equate to 25,000 times the amount of total energy use in Australia in the year 2004/2005. It is a big resource. It is much bigger than any fossil fuel resource that we have in Australia.
This figure has been noted by a couple of Ministers. And I think it has helped shape the perception of geothermal potential in Australia.
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So there is a lot of energy. So now the question: What is a geothermal resource? You might have two questions already. One is, what is the significance of five kilometres depth; and the second is, if we don't have volcanoes where does the geothermal energy come from in Australia? The first one is quite simple. We think five kilometres is as deep as we will be able to drill economically. Drilling costs increase exponentially the deeper you go, so five kilometres is pretty much the accepted depth limit at the moment. That will change with technology.
The second thing for the heat source is that granite is the dominant heat source in Australia. Australia has a lot of granite. Granites tend to concentrate uranium, thorium and potassium. Those elements as they decay release heat. What we need on top is a way of trapping the heat and effectively increasing the temperature. So we need a blanketing layer of sediments on top of those granites.
The next thing we need for a geothermal resource is a way of getting that energy out. The most common way we do that is to circulate water and bring water to the surface. In some places that occurs naturally. The Great Artesian Basin is a fantastic example. It is a huge area with a lot of water down there. You probably all know that there are a lot of water bores in that area that intersect the aquifer. There is enough pressure in the aquifer that the water comes to the surface. And it generally comes to the surface very hot. In some cases up to and over 100 degrees Celsius.
So we have a heat source, a temperature trap, a source of water that can move around freely. And then we just bring that to surface. This is called a Hot Sedimentary Aquifer geothermal system.
You might have heard of a newer technology – and this is really the interest that is driving things in Australia at the moment – called 'hot dry rock', 'hot fractured rock', 'enhanced geothermal systems'. We are now starting to call it 'hot rock system' because that covers a fairly broad range of things. If we have an area where we don't have a natural aquifer or we don't have somewhere where water can flow through the rocks what we need to do is to create a fracture system. We need to create permeability that we can flow water through. Then we need to inject the water, flow it through the rocks, it gets hot and then we bring it back to surface. So that is called 'hot rock'.
For a geothermal resource, we need temperature, and we need a heat exchange medium, usually water, although there is research going into using compressed CO2. And then we need to be able to flow that water around. We need permeability.
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So how are we going to use geothermal resources in Australia? Firstly, you can almost forget what I just talked about, we can use it just outside the door here by using a ground source heat pump. We actually don't need a temperature anomaly. We can dig down only a metre or two below the surface. What we would find is that the rock temperature remains a fairly steady temperature all year round. In summer the air temperature is much higher than the ground temperature. So we can use the ground as a heat sink. In winter the opposite is true. We can extract heat out of the ground to warm air in the building.
There are a number of ways that you can set up these ground source heat pump systems as shown here. I won't go into any more detail about those. There is a company based in Melbourne who have estimated – they have a vested interest in this, of course – if every household in Australia installed one of these systems we would meet our 20 per cent target by 2020.
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So we can use warmer resources. Again, this is another Iceland picture. Guess what they were growing now? Cucumbers. It is the same sort of set up as before [for growing bananas]. There are water pipes running alongside the walls in the greenhouse and they are growing cucumbers.
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This diagram is called a Lindal diagram. It shows a number of things. Firstly, on the temperature scale on the left-hand side it shows the sort of temperature that you really need to generate electricity – over 100 degrees Celsius. The higher the temperature the better for generating electricity. For direct use applications, there is a wider range of temperatures that is suitable. We use that heat energy to do industrial or other processes directly instead of trying to convert that energy into electricity, which you then convert into something else. These are thermodynamically very efficient processes. There are a range of them which are already being used in Australia.
We are using some of these low temperature resources of 30 or 40 degrees Celsius for swimming pools, balneology – which is a fancy word for 'spa'. There is research going on into using these moderate temperature resources of 60 to 80 degrees Celsius for space heating and refrigeration. We would be able to save a lot of electricity if we can use geothermal energy instead of electricity for these processes.
One of the things that really interests me – not that I am doing any specific work in this, but I just find it really interesting – is that you can distil sea water and get fresh water. Here I have it listed at 130 degrees Celsius, but I know there are technologies that can do it at 80 degrees Celsius. So there are people in Australia who are looking at using clean, green geothermal energy to produce fresh water. I don't see how we can get much better than that.
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High temperature resources are what you need to generate electricity.
There are two systems shown here. They are really shown to use as a contrast. The system on the left, the dry steam power plant, is where you would use hot water which can flash to steam; it is a dry steam. That will go straight through a turbine. Now, we are not going to use that sort of system in Australia for a number of reasons. It has to do with the geology and the sorts of temperature we are likely to get and the water availabilities that we are likely to experience here.
What we can use instead is a binary cycle power plant, which is quite an effective and efficient thing to do. We keep the water that flows through our geothermal resource in a closed loop. We pass that through a heat exchanger here. On the other side of the heat exchanger we have another closed loop. In this closed loop we use a fluid with a high expansivity; something like isopentane or an ammonium/water mixture. That is what we use to expand through the turbine.
For these low temperature resources that's much more efficient and effective than trying to do it as flashing through steam, because you are not going to get a lot of steam out of water that is barely at 100 degrees Celsius. So that's why we do that. That is the sort of system that we are going to use in Australia.
I have a short video here that will probably help show how a lot of that system works. So we start with a drill rig. Drill a deep, deep hole. The deeper the better; as deep as you can afford. Then we start to do what we call hydro-fracturing. That's where you pump a lot of water down into the rock. The water goes into little cracks. You pump it up, up, up and those cracks become bigger and bigger and bigger. Of course, as the water flows away from the well it gets hotter and hotter and hotter.
We then drill another well. We intersect that reservoir that we have created and then you start to flow water through from cold to hot. You bring the hot water to surface. Then you keep drilling more wells and you might change the configuration for how you have things set up.
So here we have changed it. We are now injecting cold water in the middle and pulling the hot water out from two wells nearby.
I'll just pause it there [the movie] because there are a few points I want to make. I mentioned that you might have one injection well and several extraction wells. You might set them up in a few different sorts of patterns. There are a number of points to make here. The first thing is about cost. Each well is going to cost somewhere between 10 and 15 million dollars to drill and to complete. It is not that they are not simple – they are not complex either – but there is a lot of engineering involved. You want to have quite large diameters and they need to be fully encased in concrete as well.
From each production well you would be able to generate around about five megawatts nett. So if you want a 100 megawatt power plant you are going to need 20 extraction wells. And then you are going to need a number of injection wells on top of that. You are looking at a lot of capital costs. That's very deep drilling. That's the main point I wanted to make there. I will move on.
There is also surface infrastructure; a cooling plant, a generation plant. The next part of the video shows in more detail the fluid flow through the generation plant. In the bottom part there is the closed loop from within the ground, a heat exchanger, the working fluid going through the expansion chamber, turning a turbine. This part here is a cooling plant. All of that just keeps looping through. Then you generate electricity and ship that electricity to market. So that's how that works.
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Moving on. What are the benefits of geothermal energy use? It's low emission. Once these wells and power stations are built there's going to be no emission from them. No CO2, no other gases coming out of them.
It's baseload, as I said earlier. That's a big point for this renewable energy technology. It's large scale. You should be able to set these plants up that will effectively replace coal-fired power stations. So we are looking at gigawatts potentially.
Peaking. This is a technology that can be turned on and off reasonably quickly. There are advantages to doing that. Although, I think in the early stages of industry I would expect that they will need to repay the capital that has been invested. And they will run these power plants as much as they can.
It is renewable. I will touch on that again later. It is a huge resource. I have already outlined that. The costs are predicted to be very reasonable for renewables as well. I will go into a little bit more detail about those costs. We are looking at, say, between $80 and $120 per megawatt hour. That cost does not take into account at all any carbon credits, MRET [Mandatory Renewable Energy Target] schemes, anything like that. For the size of generation capacity, these power plants will have quite a small footprint.
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What are the issues with geothermal energy use? I would be a shyster if I stood up here and said that there weren't any.
Start-up costs. When I showed you that video I made the point about how expensive these things can be to set up. I don't know how much it costs to build a coal-fired power plant, but to build a 500 megawatt power plant in the middle of Australia and to also build the electricity line to ship that power is going to cost you about a billion dollars.
Water and ground water use. I've shown you a couple of places where water is potentially used in these instances. Firstly, if you have a hot rock system that doesn't have any water, any naturally occurring water, you are going to have to inject some water into it. We are not actually talking about a large volume of water and we are not expecting to lose that water either.
The other time that you might use water is in the back-end of the binary power plant where you have to cool the water or the fluid before you circulate it back through the heat exchanger. But, again, there is a fair amount of work that is going on now in Australia and overseas to find ways of setting up cooling plants that don't use water.
Now the coal industry is very interested in this as well, of course, because we saw earlier in the drought – I think it was earlier this year – there were coal-fired power plants that had to scale back their generation because they couldn't get access to water.
Seismicity. We call it induced seismicity for this technology. In the video we showed you how to create the fracture system under ground. You need to inject water at high pressure so it gets into the fracture systems and opens those systems up. If you do that you create small earthquakes. I think one of the best ways to get a picture of the scale of the risk that we are faced with is with this picture here [right hand side of slide]. It shows a drill rig drilling and developing a geothermal resource in the middle of a town called Basel in Switzerland. In the mid-1500s this town was levelled by an earthquake, so you can understand the people who lived there would be fairly worried about earthquakes.
As they went about doing the hydro fracturing in this drill hole they created earthquakes that had a magnitude of about 3.7. That was at a depth of about three kilometres. At about three kilometres depth a magnitude 3.7 earthquake doesn't actually do a lot at the surface. There were no reports of significant damage to infrastructure from these earthquakes but the ground shook, it made a hell of a noise and people were really scared, understandably.
Let me make a few points about it. Firstly, they did this sort of work in Cornwell in England. Before they did the fracturing, over the radio they broadcast the sounds of what the people living in the area could expect. They are addressing the perception – an education there.
Second thing is the choice of site, guys. Middle of a city that has been previously levelled by an earthquake! All right, there was no damage that was done, no significant damage, but all the same.
I was in San Francisco recently, sitting in my hotel room. I heard these almighty noises. It turned out to be fighter jets flying over. It reminded me what to expect when one of these things happened. With the sort of shaking you get from those things, that is probably not a bad analogy.
The next issue is radon and radioactivity, very briefly because the next slide is about this as well. If we are circulating water through rocks – granite that has elevated levels of radium, thorium and potassium – might we not concentrate those elements and end up producing a radioactive fluid? And might we also not release radon? I think the next slide illustrates that well enough.
With each of the first three issues I think they are all manageable; they are all issues that need to be addressed at each site. Overall we are talking about a technology which is transportable to one place or another. But when you get down to each drill hole, the geology of each drill hole is going to be a bit different. I think site-specific monitoring, assessment of all of these risks should be done – I won't say any more on that.
Now, overall geothermal energy really is quite environmentally benign. All of these things that I talked about should not be show-stoppers. If we want energy, which we do, we are going to have to generate it somehow, and geothermal is a very good option.
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Radiation. High heat producing granites; they are the granites that we are talking about as being the heat source. The level of uranium in a high heat producing granite is about 0.002 per cent. In a naturally occurring uranium ore body it is about 0.22 to 2.45 per cent, down here. In a nuclear fuel rod we are looking at about 3 to 5 per cent of uranium, and that is enriched uranium, uranium 235. In a nuclear bomb it is about 90 per cent. I think you can see this puts it into perspective. We are dealing with natural things. The concentrations are not in any way extreme. If they were, if these granites had extremely high uranium, you wouldn't be using them in your bench tops in your kitchen.
There is more risk from walking along several beaches in Australia. They have more zircon and minerals that concentrate uranium and things like that. So let's keep this in perspective. It is not a hugely significant risk. How, it makes commonsense to look at each site.
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In my job I have come across quite a few misconceptions about geothermal energy in Australia. I thought I would talk about some of those and see if I can address some questions that you might want to ask.
Firstly, will using geothermal energy cool the Earth? There are a number of points about this. We actually access very, very small volumes that we extract heat from. The second point is that this is a very natural process. The Earth is a very, very large volume. The heat is passing through the Earth anyway.
I guess with that first point, if you put up enough wind turbines you might slow the wind down too. I think that is a suitable way of thinking about it.
Will it heat the atmosphere? The idea here is that if we are extracting heat from within the Earth and we are actually doing it at a faster than natural rate and putting it into the atmosphere, that we are going to heat the atmosphere. Well, everything we do heats the atmosphere. This technology actually introduces less heat than burning fossil fuels or using nuclear. Again, we are not going to be generating a lot of heat and pumping it into the atmosphere that wasn't happening anyway.
Sometimes it is said that hot rock energy is not renewable. It is. I have asked a few people about this. Probably the most considered answer that I have had comes from Professor David Blackwell at Southern Methodist University in Dallas. He says there's about a 4:1 timeframe: if you extract energy from a volume and then stop extracting it, it will take about four times as long as you were extracting it for the temperature of that rock to come back. That is a longer timeframe than the usual definition of renewable, but it does happen. We can also use these systems in a sustainable manner. We can control the amount or the rates at which we extract heat.
Another misconception is that the closed loop is to contain radioactive elements. The loop I am talking about is the underground loop where you circulate water through the granites or other rocks to heat that water and bring it back to surface.
I have already discussed why that is not the reason we use it. It is not because of concerns about radiation; it is because of efficiency and economics. We need to pump water down underground. That takes energy. We don't want water to go underground into the reservoir and then lose it from the reservoir because that wastes energy. Secondly, we are not getting that hot water back. They are the reasons for a closed loop.
It has been suggested that we could use this hot rock technology anywhere. Well, when we can drill to 10 kilometres deep cheaply and quickly, probably we can do it anywhere, but not yet.
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I was actually asked this this morning on the radio: is it too remote? This harks back five or so years when all the attention was being focused in the Cooper Basin. A very common point was that it is going to cost us a lot of money to ship that electricity from the centre of Australia to where we need it. It will, but it is a very big resource. We need to get to an economy of scale to be able to do that.
Another point about that is the question of how much electricity are we actually going to lose in transmission? By using high voltage DC lines we are not going to lose a lot. We might lose about 3 per cent between Perth and Brisbane. You'd lose more at either end when you have to convert the electricity. I think Geodynamics are looking at a transmission loss of about 7 per cent. It would be preferable not to lose any, but you can't do that. The losses are quite low.
This issue about seismicity, even if it is only a perception, perhaps it is a good thing that the initial stages of development of this industry are going to be remote.
Technology doesn't work. That's one that is rolled out quite often – well, it does. There has been research into this for over 30 years. It has been shown to work overseas. There really aren't any significant hurdles to implementing this technology. There are some engineering ones. But I have no doubt they are being addressed now. As I said, this does work overseas so it will work here.
If it was easy it would have been done by now. Well, the simple and easy answer is that fossil fuels are too cheap. It is the same misconception for a lot of renewable energies really. It is too expensive. Actually, it is one of our cheapest options of the renewable energies.
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Here is an indication of the potential costs. This comes from a report requested by Minister Ferguson, the Minister for Resources Energy and Tourism. He asked the industry members to give him their best estimate of cost. The industry's best guess is that costs are going to be around about $90 per megawatt hour.
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Another way of looking at it, this graph is from the Electricity Supply Industry Planning Council in South Australia. It compares generation costs against emission levels. You can see here that geothermal, in the magenta, is thought to be one of the cleanest technologies and cost competitive with the other clean technologies.
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How and when will geothermal energy be used in Australia? It is already being used. The building that I work in at Geoscience Australia has one of the largest ground source heat pump systems in the world. I can tell you it works very well and it does save us money. There is already a very small amount of electricity that is produced in Australia, at Birdsville, where they generate a small sum of 85 kilowatts. We already use lots of hot springs around the country for spas.
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This map shows, in blue, the distribution of exploration leases. There probably should be more than are shown in Queensland. Northern Territory doesn't have any at the moment. But last week they introduced legislation to parliament, and that will go to a vote early next year. So hopefully we will soon start to see exploration in the Northern Territory.
This is a story about a very fast growth. The first licences were granted in 2001. Now there are 43 companies that hold licences. Ten of those are listed on the [Australian] Stock Exchange. Three hundred and sixty-three licences have been granted or applied for. As a company applies for a licence they have to declare how much money they are going to spend on that patch of ground. You sum up all of that and it comes to a billion dollars worth of activity over the next few years. It is a very fast growing industry. If we go to the next phase of development, I think we are going to see a lot of green collar jobs being generated by this industry.
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Some of the activity going on at the moment is aimed at sea water desalination and absorption chillers for air conditioning and refrigeration. But probably the one that gets most attention is baseload power generation. These figures are for just one company, Geodynamics, working in the Cooper Basin. They expect to have a pilot plant up and running in the first half of next year. Then they expect a pilot plant to 50 megawatts to be running by 2012. They expect to be generating half a gigawatt of electricity and shipping that into the national electricity market by 2016.
Geodynamics have estimated that they have the capacity in their leases in the Cooper Basin to generate 10 gigawatts. Australia currently has about 60 or 70 gigawatts of generation capacity.
Actually, I was asked this morning on the radio how much electricity could we generate from geothermal. I stumbled a bit and I said, 'Well, we could generate all of the electricity for Australia.' Well, we could, but it would take a long time. The report that McLennan Magasink Associates put together said that the companies that responded – now, bear in mind that there were only about 10 responses from about 40 companies that actually hold licences – said that they have plans to have installed about 2 gigawatts of generation capacity hooked onto the national electricity market by 2020. That means about 40 per cent of the MRET target. I actually think that target is a very conservative figure.
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This graph comes from the same report and it shows how the companies think they are going to start going through the process of pilot to demonstration to commercial production.
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Universities are becoming more active. For example, the University of Queensland has $15 million of state funds and, I think, another $5 million of their own money. That is going on a five-year program. The Western Australian Geothermal Centre of Excellence is worth about $2.3 million. Some of the other universities – Adelaide, Newcastle and Melbourne – are starting to ramp up as well.
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There are a couple of key organisations that have formed. I am running out of time, so I am going to have to really speed up. We have the Australian Geothermal Energy Group (AGEG). It is like a society of everyone who is interested in geothermal energy. Then there is the Australian Geothermal Energy Association (AGEA), which is the peak industry representative body.
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I just wanted to talk very quickly about where I work [Geoscience Australia] and how we fit into the picture. We are a part of the Department of Resources, Energy and Tourism. An easy way to think about what we do is that we apply geoscience to Australia's most important challenges.
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In 2006 we were appropriated $58.9 million for a five-year program as part of the Energy Security Initiative. The funding is for Geoscience Australia to provide reliable, precompetitive geoscience data to assist the development of onshore energy resources and to work towards securing a sustainable energy future for Australia.
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Some of the work that we are doing includes a lot of geophysical and geochemical data acquisition.
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In the project that I work in, the Geothermal Energy Project, the main thing that we are looking at is mapping the heat distribution in the Australian continent, and we also provide an advice and education role.
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I showed this map briefly before. This is the distribution of bottom hole temperature data points. The point I want to make here is that the data is not good enough.
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It is even more so for heat flow measurements. Heat flow measurements provide a more robust way to estimate the temperature at a depth. But there are only 200 or so data points in Australia. It is clearly not enough. We do not know well enough the temperature distribution in the Australian crust.
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So at Geoscience Australia we are putting together a capability to go out and do new heat flow measurements.
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There is field work, there's lab work, and there is also computer modelling that we can do. This is how we bring together all sorts of geoscience data sets that we have, including seismic, gravity and magnetic. We can bring them together into software packages and make predictive models about where we think there might be useful geothermal resources.
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We provide advice principally to our parent department. Some of the things that we have worked on include a geothermal drilling program. We have participated in a geothermal industry development framework, which was released at Parliament House by Minister Ferguson yesterday. We provide ad hoc advice to the Minister and we also contribute to an international partnership on geothermal technology.
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We sometimes get asked, 'Well, what's government doing to support geothermal?' The government is actually doing quite a lot. We have got the Onshore Energy Security Program, where I work at Geoscience Australia – some of that money goes directly to geothermal. The geothermal drilling program is worth $50 million and it will probably take about five years or so for that money to go out.
Geothermal companies will have access to a clean energy program which is worth another $50 million. I am just trying to look up these names here. There is the Renewable Energy Demonstration Program which is worth $435 million. They are competitive schemes that the geothermal industry will be able to apply to. And the Australian Government has already spent over $30 million in grants to geothermal companies. So there is a lot of support for this.
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At Geoscience Australia we do what we can to help educate about geothermal resources.
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And lastly – this will probably finish me up pretty much on time – going back here, one of the things that we have been involved in this year is on the organising and technical committees of the inaugural Australian Geothermal Energy Conference.
I would like to acknowledge a grant from the Sir Mark Oliphant Conferences, International Frontiers of Science and Technology, which we used to run our conference. Much appreciated.
Discussion
Chair (Mike Dopita): Thank you for what I think is a very informative and surprisingly objective analysis of the geothermal issues. I think you have covered a great deal of the requirements for infrastructure. Before we get onto questions, could I ask people to put their hands up and wait until I acknowledge them? That way the two runners with the speakers will then know who to bring the microphone to so I can keep the cadence of questions rapid.
I just wanted to ask one question, though, if I may, as chair. You mentioned that the government grant for the drilling program is $50 million in total. And yet you said to drill one of these holes is $10 million. That means you can drill five of these holes?
Anthony Budd: We have, I think it is, a really smart set-up. But I would say that because I helped design it. The $50 million grant is being divided up into $7 million grants per project. What we are looking for is proof-of-concept projects. What we mean by 'proof-of-concept' is proving that you can flow fluid from surface under ground and bring a hot fluid back to surface and then close that loop. That is what we call a proof-of-concept project.
An entire deep proof-of-concept project is going to cost $35 to $40 million. Government is putting in money less than on a 1:1 ratio. But we really do expect that it is going to help.
Since the grant was announced there is a lot of activity which can be directly attributed to a building of confidence in the industry. The government has said there is $50 million for this. That has attracted a lot of interest. One of the problems that the industry faces is getting access to drilling rigs. So the drilling contractors, knowing there is a minimum of $50 million – and if you multiply that by the multiplier you are actually looking at $250 million or so – there is $250 million that they are going to be able access. That is the sort of confidence that is given to the drilling suppliers. So that they can think, 'Well, okay, the oil and gas is not the only group of people that I can get business from. I can get business from the geothermal industry too.' As I said, I think it is a great scheme, but I am biased.
Question: Two questions. Should the Australian Government play a role in provision of electricity transmission network infrastructure at geothermal and other renewable technologies?
Anthony Budd: That is not something that I can comment on.
Question: I say 'yes'.
Anthony Budd: Other than to say that that question is being examined.
Chair (Mike Dopita): He is employed by the government. I'll say 'yes'.
Question: What sort of capacity factor are you looking at in each of the geothermal plants? You said at $90 a megawatt hour geothermal is one of the cheapest forms of renewable energy. I think nearly all wind producers in Australia would argue the toss on that. Ninety dollars a megawatt hour is pretty expensive wind. I think it is probably hard to argue that it is in fact the cheapest form of renewable in Australia.
Given that, is the renewable energy target enough to stimulate geothermal or, like solar PV, would geothermal also like to see something like a feed-in tariff to stimulate geothermal activity?
Anthony Budd: The first one I think actually nails it. The capacity factor is expected to be over 90 per cent. If anyone knows what the capacity factor is for wind, I think you will get an understanding of the significance of that. The costs – that's not an area that I work in. I default to the costs that I see in things like the electricity supply industry planning council, that sort of thing.
I should say, also solar is not shown on this graph. I don't know where it fits.
As far as I know, the geothermal companies, when they look at their future costs and whether or not they are going to turn a profit, as far as I know, yes, they are looking at the MRET scheme and they are looking at some form of pricing for carbon. But I wouldn't be able to tell you the sort of dollar amount.
Question: Thank you very much. A wonderful overview. Thank you. A comment. There is an excessive water supply in the Ord River. Continuing excess water, if you need more water.
My question, what is the possibility of microwave power transmission to ship the electricity around?
Anthony Budd: Sorry, but I have got absolutely no idea. You are asking a geologist here.
Question (cont.): It was technology developed by NASA 30 years ago.
Anthony Budd: I have not heard of discussions on it. That's all I can say.
Question: Could you tell us more about this business of fracturing the rock? What sort of pressures are required for getting the water in, and are the earthquakes that you get the result of the energy that you are putting down there, or just that you are allowing things to slip?
Anthony Budd: It is just that you are allowing things to slip. There would be a range of pressures. I've got to be honest; I wouldn't be able to give you a good figure. The pressure that you have to overcome in Australia is generally the weight of the rock column. So it is fairly considerable pressure. I think 10,000 psi is a figure that springs into mind. That is the sort of size pump that you need to use.
This is not technology that is unique to the geothermal industry. In fact, this is technology that is being borrowed very much from the oil and gas industry.
Question: One and a half questions, since that is what we are allowed. How far apart can the injection and extraction holes be to get water between them? How long is it going to be before the rocks have cooled sufficiently so that you can no longer get any decent heat out?
Anthony Budd: Fantastic questions. Thank you. If you take Geodynamics example, they have already set up their drill holes that are nearly a kilometre apart. That gives them a significant volume of rock mass to pass the water through and pick up energy.
Modelling that they have had done and that has been in their annual reports – I am not trying to boost Geodynamics' share price or anything, but they really are the most advanced in Australia, so they provide the best information that we have – they are looking at a useable reservoir life of between 30 and 50 years. You have to keep that in mind when you think about the start-up cost of this. The infrastructure is going to be there for a long time, 30 to 50 years. Whereas, generally when you try to finance these things you need to pay it off in 10 to 15 years. So there is going to be a long period of time where you are going to be making a pretty significant profit, remembering that the fuel is free.
Question: Given in the first slide, or one of the early slides you showed, the existing power plants were exclusively in volcanic regions associated with subduction zones, I can understand that they are hot places, but surely there must be large granitic hot bodies elsewhere in the world that are suitable?
Anthony Budd: As I said, there is certainly research being done on this elsewhere in the world – in America, England, Japan; they are the three that come to mind. And in France, the corner of France and Switzerland, and in Germany as well. They are all areas where this technology has been trialled and in fact put into place.
Yes, there are lots of granites throughout the world. In fact, if you go deep down enough in the crust you don't need granites, there is enough natural heat flow coming through that the temperatures that you get would be hot enough to use.
Even in those volcanic areas that I showed on that map people are looking at the enhanced geothermal systems technology rather than just using the more traditional volcanic related resources.
Question: You mentioned that baseload power is met easily by geothermal. How does it handle peak loads? Related to that, can you co-locate solar thermal?
Anthony Budd: Yes, you certainly can co-locate solar thermal. Potentially that is quite a sensible thing to do. Yes, you can handle peak load. Just thinking about this, what you would need to do for peak load, of course, is you need to be able to meet that generation load. You need to have that much installed capacity.
As I mentioned, this is technology that you can turn on and off. You could, if you want to, use geothermal for peak load, but I don't see why you would. Has that answered your question well enough? Actually using solar with geothermal is potentially quite a smart thing to do.
If you consider in the middle of Australia your day time temperature is about 45 degrees Celsius, if you have to use air cooling on the back end of your binary cycle power plant your efficiencies during the middle of the day are not going to be as great as they are early in the morning. There is certainly a good argument for using boosting from either solar PV or solar thermal at those times.
Question: A very simple one thanks. Your early maps of the continent, the temperatures in the continent showed Tasmania as basically blue. There is a listed KUTh geothermal explorer in Tasmania. Can you comment on that?
Anthony Budd: I have to be careful what I say because they give me a bit of heartache over there. It is a function of the data that we have available. That is simply what it is. I have tried to make the point that we don't know enough about the distribution of temperature in the Australian crust. Tasmania a great example. That map of temperature predicted from bottom hole temperatures has been influential. Generally it has been a very positive influence. However, there certainly are places where we can use other data, heat flow measurements, for example, or even geological models that we can get an understanding that the map derived from bottom hole temperatures is not adequate.
Question: My question is about the micro fractures in the hot rock system. It is important that they be connected. But I'm just not too sure how you are going to keep them open, and do you want them ever connected?
Anthony Budd: During the micro fracturing you set up a very, very sensitive seismic monitoring array. That gives you a fairly good indication of where fracturing is occurring. It doesn't necessarily show you how interconnected the network is. That's why one of the next things you need to do is a flow test under ground. You can introduce tracers, short-lived isotopes or other chemicals. You can introduce those and you monitor how much of those things you get back out when you bring that water back to surface.
Keeping them open is an engineering problem. It is certainly not an insurmountable problem. I think that is probably the shortest answer I can give you.
Question: What is the effective lifetime of the actual bore holes?
Anthony Budd: The bore holes, as far as I know, they can have a life of up to 50 years. The power plants at Wairakei in New Zealand have been producing or generating electricity for 50 years. As far as I know some of the original wells that were drilled there are still being used today.
Again, as far as I know, in the oil and gas industry, the wells have very long life.
Question: On the question of the uncertainty about the distribution of the hot areas where in one of the earlier slides you showed the hot spots for example in south-west Queensland, but then in the thermal bottom hole imaging there was not much shown there. Is that all one can say about that, that there just is this uncertainty about where to drill. Secondly, where and what is the Gawler Craton?
Anthony Budd: What do you mean you don't know where the Gawler is? Are you Australian? No. I guess I've got to say, I have a bit of a vested interest in saying there is a lot of uncertainty in the geoscience data. That's my job. Of course I am going to say that. But, really, I think it is true. There is a lot of uncertainty. We do need a lot more work. But certainly what I was trying to portray is that we don't know enough about the distribution.
The Gawler Craton [South Australia] includes the Olympic Dam copper/gold deposit. You know, one of the world's largest gold deposits. The area I was working in was at Tarcoola, which is at the bottom of the Ghan railway where it meets the Transcontinental railway. Beautiful spot. Highly recommend it.
Question: You are talking a lot about high expense granites which have to be cracked, which is going to be pretty expensive. Is there anywhere in the world where they are using high temperature, in other words, with high geothermal gradient aquifers where you may have bottom water temperatures that are very, very high where you could cut your costs considerably if you could use something like that?
Anthony Budd: Yes, absolutely. That's what a lot of companies are actually working on in Australia. I probably didn't bring it out as much as I should have in this talk. Certainly there are three places in Australia where they are looking at using a hot sedimentary aquifer model, which is pretty much what you are talking about.
In the Great Artesian Basin and in the Gippsland and Otway Basins there is a significant amount of exploration which is going on at the moment. It is actually quite likely that the first electricity from geothermal that goes into the national electricity market is going to come from the Otway Basin. The Perth Basin is another area where explorers are looking for this sort of thing.
Chair: I would like to thank the audience for thinking. It's really great to have a thinking audience. I think you can see from the scope and range of the questions that there is a very clear understanding of the issues and problems here. I thank the audience.
Of course we would like to thank our speaker, Anthony Budd, who has given such a remarkably lucid and clear exposition of the issue. I am sure that Anthony will be happy to take additional questions after the meeting. Thank you all very much. See you in February.
