AltaRock Takes Another Crack at Geothermal Drilling

Remember AltaRock Energy? The geothermal startup suffered a setback last year when it ran into technical difficulties with its $17 million demonstration project in California. The company said it would look for a different spot for the project, which is crucial for showing that its novel approach could produce abundant electricity around the clock.

But now the company has found a new test site. It’s in central Oregon, on a government land leased by Davenport Newberry Holdings, which already created a geothermal well pad in the area back in 2008. The federal Bureau of Land Management, which is charged with reviewing the proposed project, is holding a public tour of the project site today. The agency is gathering public comments on the proposal; deadline for submitting them is Nov. 22.

AltaRock, based in Sausalito, Calif., is an interesting company to watch because it’s a believer in so-called “engineered geothermal systems” or “enhanced geothermal systems.” The idea is create geothermal reservoirs in areas without naturally occurring steam fields.

The key is to drill a well deep into the earth and inject cold water at a high pressure to fracture the hot rocks. To produce electricity, a pump sends the water into the well, where it flows along fissures of the hot rocks and extends them. In the process, the water soaks up the heat. More wells are needed to reach down to the bed of fractured hot rocks to retrieve the heated water and harvest the steam to run the turbines above ground.

EGS technology is more difficult than it sounds. The company needs special tools to break through tough rocks to drill wells of a few miles deep. It also needs to calibrate the right amount of water pressure to create a desired system of fractured rocks. Figuring out where to drill the production wells – to pull up the heated water – can be tricky. The company will have to predict the paths of the expanding fissures to make sure the production wells intercept them. Drilling a well typically costs a few million dollars.

Rock fracturing creates disturbances deep inside the Earth, and some critics say the technique could create earthquakes powerful enough to threaten the safety of nearby residents. That concern shut down an EGS project in Switzerland. AltaRock faced similar protests from residents living near its original project site at The Geysers in Northern California.

If done successfully, EGS has the potential to greatly expand the country’s geothermal energy production, which offers greener electricity than fossil-fueled power plants. Unlike a solar or wind farm, a geothermal power plant can produce electricity around the clock (called base load), making it a more ideal replacement of fossil-fueled power plants.

AltaRock has attracted some of the best known investors in Silicon Valley: Google (s GOOG), Kleiner Perkins and Khosla Ventures. The startup announced a second-round funding of $26.25 million in August 2008. Since then, the company, along with its partner Davenport Newberry, has snagged a federal grant of $21.45 million for the test project in Oregon. The companies said they would put up an additional $22.36 million to finance the project.

The project, to take place at the Deschutes National Forest, involves injecting groundwater into an existing geothermal well that is nearly 2 miles deep. The injection should create a network of fractured rocks that will then heat up water during subsequent injections. AltaRock has proposed to drill two production wells to extract the hot water (here is a FAQ sheet about the project).

The company plans to install sensors surrounding the well pad to monitor seismic activities during injections. The sensors will be located in boreholes of up to 1,500 feet deep. Overall, the project would cover 2 acres.

AltaRock mainly wants to figure out the best ways to engineer a geothermal reservoir and steam extraction. The data it collects from this project would be used to design a geothermal field with power generation capability. The company will have to hire a consultant to prepare a seismic report to identify the likelihood that the project would cause earthquakes and what AltaRock can do to minimize the shakes.

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Photo courtesy of Martin_VMorris