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Geothermal power plants are an almost pollution free source of electricity. Typically they are installed near shallow subsurface sources of steam and / or hot water characterized by faults, seismic activity, earthquakes and volcanoes.

The source of geothermal power generation is steam at a temperature of ~300 degree C. To access geothermal steam involves drilling a vertical well to the source. A second well is drilled to the lower water level of the steam source. The steam is directed into a steam turbine which in turn generates electricity. The condensed turbine exhaust is re-injected back into the underground reservoir.

Usually there are no special geothermal power plant requirements. Conventional open cycle steam turbines, such as those manufactured by General Electric Company (GE), have been used.

There are essentially three types of geothermal power plants used depending on the source.

The first type known as a Dry Steam Power Plant, receives super heated steam from a very hot rock subsurface. Because of the temperature, there is no condensed water present and the geothermal steam is fed directed into the steam turbines.

Examples of these types of plants are found in northern California and have been in operation by utility companies, such as Pacific Gas & Electric (PCG), since 1960.

The second type known as a Flash Steam Power Plant, pumps hot water from the well into a flash drum where it separates into steam and condensed water. The steam is directed into the turbines and the condensed water re-injected back into the well. Examples of these types of plants are found near San Diego and Bakersfield, California.

The third type known as a Binary Power Plant, does not have enough heat in the pumped hot water. The water is directed through a heat exchanger used to vaporize a secondary fluid which in turn drives the steam turbines.

Geothermal power plants in California account for 5% of the state's electricity. USA generated geothermal power generation accounts for ~40% of total world production.

Calpine Corporation (CPN) of San Diego operates 19 of 21 geothermal plants in California. Other noteworthy geothermal power companies include Constellation Energy Group (CEG), IdaCorp Inc. (IDA), Nevada Geothermal Power Inc. (OTCPK:NGLPF), Ormat Technologies Inc. (ORA), PG&A Corp. (PCG), Polaris Geothermal (OTC:PGTHF), Raser Technologies (RZ), Sierra Geothermal Power Corp (OTC:SRAGF), US Geothermal Inc. (UGTH.OB), Western GeoPower Corp (WGPWF.PK) and WFI Industries (WFILF.PK).

Chevron's (CVX) geothermal plants in Indonesia and the Philippines produce enough energy to power 7 million homes. Unocal (UCL) and Halliburton Energy (HAL) are leaders in the development of 280 degree C high temperature cements. Sandia National Laboratories [SNL] is in the forefront of geothermal well instrumentation.

Geothermal steam and / or hot water sources are typically located in relatively shallow pools in the rock subsurface. The temperature increases as the depth increases below the earth subsurface. On dry land and free of volcanic activity, the temperature is typically 41 degrees C higher for every 1.6 km below the surface. With a well drilled to a depth of 3 to 10 kms, steam can be successfully produced from water upon contact with subsurface rock. Steam produced in this manner is known as an Enhanced Geothermal System [EGS] and sometimes referred to as a Hot Dry Rock [HDR] system.

A 2006 MIT report suggests that there is enough hard rock at a 10 km depth in the United States subsurface, to supply the entire world's energy requirements for 30,000 years.

To produce a sustainable source of steam, the HDR system requires sufficient heat at a subsurface depth, a hard rock layer capable of being fractured, an insulating layer above it and a source of water.

Variations of the HDR System are currently being tested in the USA, Australia, France, Japan, Switzerland and Germany.

In the USA the challenge of an HDR System is drilling to the steam generating source rock layer at a depth of ~10 kms. ExxonMobil (XOM) has demonstrated its capability by drilling an 11 km well in its Chayvo, Sakhalin gas field.

The second challenge is utilizing fracturing technology at the required depth and successfully fracturing the hard rock. This involves typically pumping a mixture of sand and water under high pressure into the hard rock layer causing it to fracture.

There are many companies currently utilizing fracturing technology in the oil & gas industry. They include; Devon Resources (DVN), Encana Corp. (ECA), EOG Resources (EOG), Continental Resources (CLR), Duvernay Oil Corp. (DDV) and Apache (APA). However, I don't believe any of these companies have used fracturing technology at the required depths.

It is also unknown if the USA hard rock sub surface has a suitable insulating layer above it ensure containment.

A one time source of water is not considered an issue.

In some circles it is felt that Australia's subsurface granite layer buried below thick insulating sedimentary layers are more ideal to HDR development than comparable subsurface layers below the USA, Europe and Japan.

Another reason Australia's subsurface is more favourable, stems from the fact shallower depths are needed to achieve the required minimum temperature of 250 degree C for steam generation.

Geodynamics Limited (OTCPK:GDYMF) has acquired a substantial Australian land base for HDR development.

From their calculations, they estimate that nine cubic kilometres of hot granite at 250 degrees C has the stored energy equivalent of 40 million barrels of oil. Geodynamics' Habanero 3 well, drilled using its 'Lightning Rig', reached a depth of 4,221 meters (13,850 feet) on January 22, 2008. They have verified 400,000 petajoules of high grade thermal energy, large bodies of granite to exist and the required temperature of 250 degree C for power generation. Geodynamics' long term production model supports a generating capacity of more than 10,000 MW.

Their 1 MW pilot plant is tentatively scheduled for production in Q4 2008. Proof of Concept certification, to demonstrate the viability of heat extraction from the hot rock reservoir and a confirmation of geothermal reserves, will be signed off prior to start-up by a team of independent geothermal experts from the USA.

Their 50 MW power plant is scheduled for production in 2012. It will produce zero emissions, require no external water supply and provide a continuous source of electricity to 50,000 Australian households.

Geodynamics estimates that it can produce power at $62 per MWh, including capital, operating and maintenance costs. This is considerably lower than current wind technology of ~$80 per MWh, and has the added advantage of continuous operation. The company expects to eventually drill 37 wells and build a 300MWe plant that would feed into the national grid and produce electricity at a cost that would rival new entry coal-fired power plants.

Disclosure: I have shares in EOG, ECA, CLR and APA.

Source: Geothermal Energy Sources 101