Results of the first geothermal lease auction by the Texas General Land Office released Tuesday indicate a strong interest in developing the state's geothermal resource for power generation. Texas is particularly attractive because in some cases geothermal energy can be captured from producing oil and gas wells, and abandoned wells offer a pre-existing tap to the earth's heat.
Nevada-based geothermal developer Ormat paid $55,645 to lease the submerged land on 11,000 acres in seven coastal counties in Texas. The average price of $5 per acre is more than twice the minimum bid of $2 per acre. Tracts range from 1,174 to 2,480 acres and are in Jefferson, Galveston, Chambers, Calhoun, Jackson, Nueces and Kleberg counties.
"We got more bids than we expected," said Jerry Patterson, General Land Office commissioner. "I think that's a good sign geothermal might just be an economically viable form of renewable energy for Texas."
Ormat spokesman Paul Thomsen told NGI that the typical geothermal well is 4,000-6,000 feet deep and costs $3-6 million. Geothermal wells are drilled with larger diameters than oil and gas wells; however, producing oil and gas wells as well as abandoned and reworked gas wells are suitable for geothermal projects. Using an abandoned well to tap the earth's heat obviously saves a substantial amount of project cost.
Texas is one of 14 western states where a recent report found "extensive undeveloped geothermal resources." The 140-page report prepared for the Geothermal Energy Association (GEA) and released Feb. 2 said Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming also show promise for geothermal development. Western states offer the best geothermal prospects because higher temperatures can be reached at shallower depths than in the East.
The GEA report found that the unidentified geothermal resource base could provide up to 150,000 MW. "If federal and state policies address the issues identified in this report, the potential for geothermal development is incredible," said Daniel Fleischmann, the report's author. "While the U.S. geothermal industry already has close to 60 projects and over 2,000 MW in the pipeline -- the development of which will double current capacity -- much, much more is possible."
And much of that geothermal development could involve the oil and gas industry, directly or indirectly. Last month, Texas lease winner Ormat and the U.S. Department of Energy (DOE) agreed to partner in the study of electricity production from hot water produced in the process of oilfield production. The project is to be conduced at the DOE Rocky Mountain Oil Test Center (RMOTC), near Casper, WY. The project will use an Ormat organic rankine cycle (ORC) generation system to produce commercial electricity.
Ormat will supply the power unit at its own expense while DOE will install and operate the facility for 12 months. Ormat is to bear about two-thirds of the cost, which is projected to be less than $1 million.
In Texas, about 8,000 wells suitable for geothermal power generation have been identified by Richard Erdlac, a professor at the University of Texas, and the DOE's geothermal research project, according to Ormat. The firm is now assessing some of these wells for on-site power generation using its ORC technology.
Ormat has plants producing power in New Zealand, the Philippines, Mexico, Iceland and Kenya, as well as in Nevada, California and Hawaii. In Texas, Ormat provided the power plant technology used in a solar pond project in El Paso during the 1980s.
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