craig dunn, chief geologist borealis …valemount.ca/sites/default/files/docs/edo/craig_dunn.pdf ·...
TRANSCRIPT
The ideal energy investment? Renewable, reliable source of electricity and heat
Long term revenues with known fuel costs
Small environmental footprint
Mature industry worldwide
Low levelized costs of stable power
Baseload power production
First Nations & Community Support
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How does geothermal work?
Source: Dickson & Fanelli, 2004
Geothermal explained in 2 minutes!
High temperature geothermal resources around the world
Electricity production from geothermal resources – worldwide (EIA)
Canadian Energy Potential GSC Report 2011:
“Canada has enormous geothermal energy resources that could supply the country with a renewable and clean source of power”
CanGEA: “>5,000MWe of potential in Canada”
BC Opportunities ◦ Meager Creek ◦ Lakelse Lake ◦ Canoe Reach
Yukon, NWT
Mining facilities
Oil & Gas Applications
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Geothermal = Earth Heat Heat (thermal) derived from the earth (geo)
Thermal energy is contained in the rock and fluid in the earth's crust
10kms deep = 50,000x time more energy than all the oil and gas resources in the world
Whole spectrum of opportunity from power to greenhouses
Using Earth’s heat for Power Hot water/steam is derived from
the rock ◦ Heat ◦ Fluid/water ◦ Permeability
Heat is the resource (not water)
Heated water through the turbine to produce electricity (& waste heat)
Water re-injected into rock formation to be reheated
With proper resource management: can run indefinitely
Renewable energy source: (NRCan)
Good and Getting Better
Constant improvement on subsurface resource ◦ Drilling speed is increasing
exponentially ◦ New technology for drilling (impact
drilling, spallation drilling) ◦ Consistent capital cost reduction in
$/MWe for binary systems
Canadians are global leaders in in subsurface resource extraction! ◦ Geoscientists/Engineers per capita ◦ Mining Industry TSX… ◦ Technology/knowledge transfer ◦ We should be leading this globally
Geothermal Energy Association: Taylor 2010
Worldwide Source of Power Mature Industry: Italy since 1904
Currently: >3.4 GWe in US Market ◦ Global Leader (similar geology to
Canada) ◦ 60% of Northern California’s
Power
Global Geothermal: Iceland, New Zealand, Mexico, Philippines, Japan, Africa, Turkey, Nicaragua… ◦ >12 GWe online in 24 countries ◦ 530MWe came online in 2013 ◦ ~30 GWe under development
How about Canada?
Making Power from Heat Water temperature of the water
and flow rates are key to success!
Technology can be operated on geothermal resource temperatures below 80C
Electricity production is based on ΔT; More Heat = More Power
Binary Power Facility
Binary Turbine Technology ◦ Cutting edge power production technology ◦ No emissions ◦ Tiny environmental footprint
The Mammoth Pacific binary geothermal power plant, located at the Casa Diablo geothermal field in California
Bagnore Binary Plant (Monte Amiate) Acentifugal radial flow turbine
‘Innocuous’ or even inviting design ◦ Husavik Kalina Cycle Plant, Iceland
Road Trip? ◦ Raft River, Idaho ◦ Neal Hot Spring, Oregon ◦ Klamath Falls, Oregon ◦ Steamboat, Reno, Nevada (one of 27 plants)
Why Geothermal Energy? Renewable, reliable source of electricity and heat
Mature Industry Worldwide
Long term revenues with no fuel costs and near zero emissions
Small environmental footprint
Geothermal power plants deliver continuous base load power
Preferred choice of energy for many utilities
One of lowest levelized costs of power
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Timely Project Development Phase 1
Identify Site, Secured Rights, Exploration drilling
Phase 2 Drilling and Confirming
Phase 3 Securing PPA & Transmission,
Final Permits
Phase 4 Construct Surface Facilities Project Phase
Opportunity
Core Skills
Finance
Inferred Resource Indicated Resource Enter Market Produce Power
Subsurface Exploration
Subsurface Development
Contracts Economics
Surface Operations
Venture Equity Construction Debt
Higher
Lower Risk Optionality
NPV
Permits define & reduce options
PPA adds significant value
Confirmation reduces risk
Crunching the Numbers Temperature * Flow= MWe MWe * capacity of geothermal
facility = MWh
Location/geothermal reservoir dictates potential MWe
$/MWh x MWh/year = Annual Revenue
20-30 year capital financing (against EPA or PPA)
$4-6 million per MW installed costs
O&M: <$25MWh for Binary Plant Rest is economic modeling, just like
natural gas or wind power facility
Direct Heat Opportunities Only 15% of heat resource converted to electricity; ~6 MW of very low cost thermal energy
Potential Heat projects ◦ You’ll hear lots more about this in
the next 2 talks
Heating opportunities is built into initial project design ◦ Well location ◦ Surface Piping
District Heating at a GeoPark
The concept of district heating and the rationale for it.
Why Canoe Reach? Valemount area is ‘end of line’ for baseload power delivery ◦ ‘Difficult to serve’ region ◦ BC Hydro does not readily have available
power
Borealis offers an opportunity to invest in the necessary (geothermal) power generation to make up BC Hydro’s shortfall ◦ Investment opportunity instead of project
expense ◦ Solid returns that complement your business
model
Important ‘strategic’ attributes ◦ Community supported energy project ◦ Clean, green, small footprint, power project ◦ Leading edge technology
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Power Line (red)
TransMountain Pipeline (Black)
Project Area
Valemount Glacier Destinations: Proposed Facility
Team: Borealis GeoPower “Trusted Advisors to the Geothermal Industry” Privately held Canadian corporation
Experienced team, industry leading players with world class capabilities ◦ Pioneering geothermal development
methodology ◦ Multiple 1sts for geothermal development in
Canada
Business Strategy for Project development ◦ Identify customer & market opportunities
first ◦ Not “exploration” rather economic filter and
geologic assessment ◦ Assess local conditions and overall project
risk ◦ Engaging existing energy industry (ongoing
partnerships with Utilities & First Nations) ◦ Willing to ‘bootstrap’ & de-risk exploration
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Borealis Geopower Projects! Canoe Reach: Valemount, BC
◦ Well known geothermal hotspot/opportunity ◦ ~15MWe power facility ◦ City of Valemount & local First Nations support ◦ Permitted in 2010, active exploration program
Lakelse Lake: Terrace BC ◦ Hottest hot spring in Canada ◦ Joint Venture -Kitselas First Nation, Borealis
Geopower ◦ 10-15MWe power facility - 15km south of Terrace
BC East of Lakelse Lake ◦ SDTC funding for innovation: exploration began in
2014
Fort Liard, NWT ◦ 1st ever Geothermal Permit in NWT ◦ NRCan Clean Energy Funding ◦ Partnership with Acho Dene Koe First Nation ◦ Offsetting NTPC diesel generation (~$0.67/kWe)
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A Project Vision for Geopower Clean, renewable power to local
grid system
Community and First Nations Support
Baseload, long-term stable power
Direct heat opportunities ◦ Greenhouse ◦ Aquaculture
Tourism Destination ◦ Natural ‘Geothermal Ponds’ ◦ Ecofriendly community
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Opportunity BC Hydro cannot currently provide additional electrical power at ‘end of line’ near Valemount BC, without significant line upgrade
Opportunity to be part of a Geopower solution: ◦ Recognized geothermal resource ◦ ~15MWe Power plant ◦ Renewable power “greening the
pipeline” ◦ Support from Community and First
Nations
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Current Power Situation
Power Supply in Valemount, BC: ◦ Community is located at the second last
station on 138 kV North Thompson Valley transmission line
◦ Station vulnerable to any outages along entire line & current power delivery is capped
Kinder Morgan is proposing to expand its Trans Mountain Pipeline (designed with electrically powered compression) requires additional 17MWe for expansion at end of line
Valemount Glacier Destinations- Master Plan requires >5MWe baseload/stable power supply
Power generated here could ‘backfill’ the line ◦ Avoids costly line upgrades to the entire
North Thompson Valley transmission line: therefore lower shippers ‘cost of service’
◦ Increases power & transmission stability ◦ Reduces line losses
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Valemount: End of Power Line
Solutions Options for Incremental 15-20MWe Power
Expand/Upgrade existing ~300km line: ◦ Costs estimated between $250-$400 million ◦ Timeline for upgrade uncertain: estimated for 2020
Diesel ◦ Estimate cost: $250-$400/MWh ◦ Pricing unstable: as based on commodity pricing ◦ Net cost to Shippers ~ $1MM/day (temporary solution) ◦ Externalities: pollution, GHGs, noise, permitting…
Natural Gas ◦ 2010 Clean Energy Act “93 per cent of the province’s
energy needs be met by “clean or renewable resources”” ◦ Long term pricing based on uncertain Natural Gas
commodity price
Geothermal ◦ Renewal, baseload energy supply tailored to power
demands ◦ Community & First Nations support ◦ Total capital cost <$80 million, earning reasonable
returns
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Canoe Reach Resource Canoe Reach Project is <20 km south of the town of Valemount, British Columbia (SW of Jasper, AB)
Permit area straddles northern arm of Kinbasket Lake ◦ In Rocky Mountain Trench between the Rocky
Mountains and the Columbia Mountains
Known and Explored geothermal resource: ◦ Previously owned/permitted area with
geophysical work completed ◦ Hotspring and mudpots up to 700C at surface ◦ Deep reservoir >200C geothermal system
with accessible shallower brines in the 150-170°C range
◦ Deeply faulted: Rocky Mt. Trench (NW-SE) -through Kinbasket Lake and intersecting with Purcell Fault (striking east/west)
◦ Historic exploration programs ◦ Geochemical analysis ◦ Geophysical/Resistivity Survey
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Community Support Town
◦ Seeking employers (former timber industry town)
◦ Identified power need: limiting growth ◦ Previous and current council supports
geothermal energy development ◦ Contract and studies for using direct heat
First Nation ◦ Considerable support for renewable energy,
specifically geothermal ◦ Advocate Fred Fortier: Simpcw Chief- June 2015 ◦ Outspoken about geothermal energy as source
of power for other first Nations communities
Highlighted Opportunities for Community: ◦ 1st, baseload power generation alternative to
large-scale hydro ◦ Estimated ~15MWe net for initial project design ◦ Direct heat projects & rejuvenation of “drowned”
hot springs’ opportunity
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Work Plan – History & Next Stage
Stage 1 (to date) – Non-Invasive Exploration ◦ Geochemical (Soil & Biochemical) ◦ Soil Degassing & Temperature ◦ Geological mapping ◦ Geophysics: MT Surveys 2007 & 2015 ◦ 3D modelling ◦ Permitting ◦ ~$1.5mm spend to date
Stage 2 (next) – Advanced Characterization ◦ Require confirmation of resource
◦ Geophysical Surveys: Infrared, Gravity, Seismic ◦ Slimhole drilling & suite of measurements
◦ Time Frame: 6-8 months (2016) ◦ Expected results:
◦ Verification of resource temperature & reservoir model
◦ Production drilling cost estimates ◦ Initial plant designs based on confirmed resource
attributes
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Work Plan – Build-out Final Stage (to Spark) – production facilities ◦ Total Cost estimate
◦ Drilling the Wells (production & injection) ◦ Plant build out (ORC, Condenser, Field piping) ◦ Grid Interconnection
Timeline to Power online: (Q1, 2019)
Expected results ◦ ~15 MWe (net) to Grid ◦ Resource potential modelled ◦ Direct heat opportunities ongoing ◦ Social license ‘buy in’ with Village of
Valemount, Simpcw First Nation
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Economics EPA terms public via BC Hydro Standard
Offer Program or Clean Power Call pricing ◦ >$107.5/MWh plus inflator, heat sales &
carbon pricing not included ◦ 20-30 year Tenure w/ renewal options
Expected Final Stage Cap Structure ◦ Total cost: ~$5.0 Million/MWe, <$80 Million ◦ Depends on investor interest, but 50% project
debt (off balance sheet)
Modelled ROI range ◦ Bulk of plant is fixed cost and modular
installation (ORC units, condenser, piping) ◦ Drilling is variable, but within a range (and at
an all time low in BC right now) ◦ Unlevered Internal Rate of Return (IRR) of ~
11-13%
Cost of next ‘Best’ Alternative ◦ BC Hydro upgrades to the North Thompson
Valley Line: Cost >$250 million
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Summary / Next Steps Why Invest?
◦ Solid returns, complementary to local business development
◦ Community and First Nations Support ◦ Baseload renewable energy for the next
generation
Expected Economics ◦ ROI, ~11-13%, unlevered ◦ 20-30 year contract with BC Hydro, price
inflators, additional options to sell ‘waste’ heat
Next stage ◦ ~$6.0 MM to round out exploration
program and power agreements ◦ ~$20.3 MM to drill out heat reservoir –
both contain multiple off-ramps for investors, should actual conditions not meet forecast
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Geopower: a review… Sustainable (billions of years of heat)
Heat resource to baseload power production (turbine technology)
Need: Heat, Water, Flow
Mature industry worldwide
Small environmental footprint
Upfront risk for long term profitability
Long & complicated project development
Clean, renewable heat/energy resource
The ideal energy for the next generation? C O N T A C T :
C R A I G D U N N , P . G E O : B O R E A L I S G E O P O W E R
C R A I G @ B O R E A L I S G E O P O W E R . C O M
W W W . B O R E A L I S G E O P O W E R . C O M
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