Great age of steam ready to rise again

American Greg Raasch used to eagerly await the speeches by New Zealand geothermal researchers at conferences in the 1970s.

Our engineers and scientists were at the forefront of the industry, pushing the boundaries of geothermal power development and generation.

Then, slowly but surely, New Zealand started fading from the geothermal scene. Cheap natural gas from the Maui gas field meant money and effort was no longer spent exploring and developing geothermal energy.

Now, with Maui declining and the days of big hydroelectric schemes seemingly gone, New Zealand is again turning to the energy resource bubbling beneath the surface. And we are now turning to people like Raasch, who were once inspired by our researchers, to prod the New Zealand geothermal industry out of its slumber.

As Mighty River Power's new general manager of geothermal, Raasch, 54, is helping oversee a massive growth in exploration, development and spending on new wells and stations in the central North Island.

After working on schemes in the US, the Philippines, Indonesia and most recently Chile, Raasch was recruited by Mighty River as part of a massive push to expand its geothermal exploration and production team.

New Zealand has 450 megawatts of geothermal capacity, contributing about 7 per cent of the country's electricity needs. State-owned Mighty River has spent around $200 million on geothermal exploration and development in the past two years, with another $200 million due to be spent in the next two.

Mighty River and the NZX-listed Contact Energy are leading the geothermal charge, last year drilling 12 wells between them. Forecasts are that 20 wells will be drilled before the end of this year, an exploration rate not seen since the mid-1950s.

Across the industry, there are high expectations that the amount of electricity coming from geothermal stations will double over the next decade.

What makes geothermal so special - when done right - is that it is both renewable and reliable. A lot of political and public attention is focused on windfarms, which at their absolute best can produce electricity 50 per cent of the time. Even then, not all turbines on a windfarm are spinning, meaning that power supply is sporadic and unpredictable.

Raasch, showing off Mighty River's Rotokawa geothermal station near Taupo this week, demonstrates how a seemingly jumbled maze of pipes, tubes and tanks add up to a fiendishly ingenious method for extracting energy from hot water and steam.

Nine turbines and five generators are used at different stages of the journey, with hot water and steam arriving at the surface from nearby wells at 230C before being reinjected one kilometre from the site at a minimum of 130 degrees. That's still hot, but any cooler and it risks lowering the pressure of the field.

Steam is sent first through a main turbine, with the rest of the hot water and exhaust heat from the first turbine used to heat the chemical pentane, which has a low boiling point - and is used to spin an array of other turbines - before being cooled and reused.

Rotokawa operates at 98.9 per cent availability, meaning it is pumping electricity into the lines day in, day out, around the clock. Routine maintenance shuts down the Rotokawa plant for just 10 days a year, far less than other power stations.

With such a renewable and reliable resource, just bubbling away underneath our feet, how could such an industry ever fall out of favour?

Well, says Mighty River chief executive Doug Heffernan, renewable does not mean the same thing as cheap, or free.

Fuel for a geothermal station is effectively free, but a lot of money and time must first be spent finding it, then developing it for use in generating electricity.

Once built, geothermal stations are hard to beat, says Heffernan. He notes that a single megawatt of geothermal power is worth around two or three coming from wind power generation.

"A successful geothermal project is as good a electricity project as you could get," he says. "Environmentally they are unobtrusive. They don't have ugly emissions - they're using a renewable resource in a sustainable way. A very low environmental impact when you think about the alternatives."

Contact contributes about two-thirds of New Zealand's geothermal generation from its Wairakei, Poihipo and Ohaaki stations. Mighty River is developing a new 70MW station at Kawarau.

Brian White, executive officer of the New Zealand Geothermal Association, is happy with industry predictions of a 10-year doubling in geothermal energy production.

"The geothermal industry is a well-established industry, but it is on the point of change," he says. "For a long time there have been frustrations that not a lot has been happening, but now we see that the price is right and geothermal is happening. We're seeing a lot of activity by Mighty River Power and Contact."

As natural gas prices had risen with the depletion of the Maui field, geothermal was now a cheaper way of making electricity than using gas.

Along with new exploration, geothermal researchers were also doing more analysis of old research, conducted in the "old Ministry of Works days".

But as the Maui field ran down, so too can geothermal fields, if not exploited properly. Both White and Mighty River's Greg Raasch point out that it is not in anyone's interests to run a field down.

"If you run a field down quickly, then you're not going to get the returns. You've got this high capital investment that you want to make sure carries on producing, to get your return on that capital," says White.

It costs around $5 million to drill an exploration well - sending bits up to three kilometres deep into hot rock and often acidic, hot water. At the end of such a drilling, there can be bad news too - because despite already spending up big on geophysical research, exploration wells can come dry.

Modern techniques to manage reservoirs sustainably also mean that equally deep "re-injection" wells are needed, so water is put back into the ground to help sustain field pressure.

Including the cost of drilling wells, Mighty River is spending $200 million on a 70MW station at Kawarau. This can be compared to the $450 million Genesis Energy is paying to build a new 385MW natural-gas-fired station at Huntly. Genesis, however, will be paying a big fuel bill for its gas, accounting for around two-thirds of its life-cycle costs.

Raasch compares geothermal development to hydro-electric schemes - where most of the money is spent "developing the fuel" which once harnessed, either behind a dam or in a reservoir, comes at no cost. "The issue is that you have to take the risk and drill the wells, to prove the resource, before you place the order for the kit," says Heffernan.

New technology and computer modelling techniques have started to make previously uneconomic exploration more viable, said a US researcher in geothermal drilling techniques, Stephen Bauer, on an earlier visit.

Drilling technologies were adapted from the much larger oil and gas exploration sector, he said.

The geothermal sector is too small to have much research and development done for its own specialised equipment.

Bauer's development of specialist electronic sensors has helped bring down the cost of drilling holes into hot, acidic and gaseous environments.

Getting approval for geothermal schemes is part of the cost of setting up a station, but all Mighty River's developments are alongside Maori partners, who own the land above the hot water and steam.

Their wish for a sustainable use of the resource matches the business aims of Mighty River, says Heffernan.

"Ultimately the commercial driver is to make sure that the field is still generating power in two or three generations. That's the philosophy we've embarked on at all our developments, which are all involving Maori partners."

The goals and visions of Maori partners had "come together" with the commercial imperatives of Mighty River Power - namely to use the reservoir in a sustainable way.

This "coming together" forms the bedrock of our current geothermal renaissance.