CRAIG DUNN, CHIEF GEOLOGIST BOREALIS …valemount.ca/sites/default/files/docs/EDO/Craig_Dunn.pdf · The Mammoth Pacific binary geothermal power plant, ... Recognized geothermal resource

An Opportunity: Geothermal in Canada

CRAIG DUNN, CHIEF GEOLOGIST

BOREALIS GEOPOWER

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

2/16/2016 WWW.BOREALISGEOPOWER.COM 2

Geothermal 101


How does geothermal work?

Source: Dickson & Fanelli, 2004

Geothermal explained in 2 minutes!

https://www.youtube.com/watch?v=VhBq0E53WD0&list=PLTxBlzMRFvgxoILGP3LxO1M9j8MdOP-ti&index=2



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

Here…NOW… 2/16/2016 WWW.BOREALISGEOPOWER.COM 6

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

How does drilling work?

Drilling Overview

https://vimeo.com/151918171

https://vimeo.com/151918171

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?

http://geothermal.marin.org/GEOpresentation/sld011.htm

http://geothermal.marin.org/GEOpresentation/sld054.htm

Global Geothermal Power Plants 2/16/2016 WWW.BOREALISGEOPOWER.COM 12

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


Geothermal power plants deliver continuous base load power

Preferred choice of energy for many utilities

One of lowest levelized costs of power

WWW.BOREALISGEOPOWER.COM

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

Level the playing field!

Source: National Bank Financial Research Report


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.

https://www.youtube.com/watch?v=L6LCVTUpmv4

DEVELOPING GEOTHERMAL ENERGY AT CANOE REACH, BC


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


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


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)

WWW.BOREALISGEOPOWER.COM

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


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


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


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


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


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


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


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


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


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


Geopower: a review… Sustainable (billions of years of heat)

Heat resource to baseload power production (turbine technology)

Need: Heat, Water, Flow

Mature industry worldwide


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


mailto:[email protected]

Documents

CRAIG DUNN, CHIEF GEOLOGIST BOREALIS …valemount.ca/sites/default/files/docs/EDO/Craig_Dunn.pdf · The Mammoth Pacific binary geothermal power plant, ... Recognized geothermal resource