Controlling costs to maximize production of enhanced geothermal systems. Work is being conducted to investigate the costs of drilling and completing wells and to relate those costs to the economic viability of enhanced geothermal systems (EGS).

Work is being conducted to investigate the costs of drilling and completing wells and to relate those costs to the economic viability of enhanced geothermal systems (EGS). This is part of a larger parametric study of major cost components in an EGS. The possibility of improving the economics of EGS can be determined by analyzing the major cost components of the system, which include well drilling and completion. Determining the sensitivity of EGS cost components will help to identify areas of research to reduce those costs. The results of this well cost analysis will help quantify well development cost for EGS.

EGS reservoir performance is controlled by the interplay of a complex set of parameters: reservoir, geology, drilling, well completion, plant design and operation. In order to identify, analyze and mitigate the economic risks of any EGS prospect, one must first understand the relative importance of each of these parameters, how its relative importance changes under different constraints, and how they interactively affect EGS production. To date, no comprehensive parametric study on EGS is known to have been conducted within the industry because EGS is considered an emerging technology. The parametric studies have considered only a limited set and range of parameters, thus potentially skewing their results.

To better understand EGS economics, the U.S. Department of Energy (DOE) has commissioned the Idaho National Laboratory to conduct a parametric study of EGS's major cost components and establish a baseline of information relating to EGS development costs. The drilling study reported in this document is part of that overall parametric study, undertaken to determine the relationship between available energy at depth (temperature gradient, flow rate and energy conversion efficiency), and energy costs with depth (drilling and pumping costs).

The amount of work that can be extracted from a geothermal fluid and the rate at which this work is converted to power increase as the fluid's temperature increases. The relationships between temperature and work (ideal or actual) illustrate the preference for higher fluid temperatures. Since drilling costs per foot generally increase with depth, and temperature gradients are at best linear with depth (if not slightly decreasing), it is apparent that, at some depth, the increase in temperature does not warrant increased drilling costs. Drilling cost results published to date are based on assumed relationships between drilling costs and depth that have no statistical basis and only illustrate the impact that drilling costs will have on the ability to access higher-temperature EGS resources. This indicates the need to know the precise relationship between drilling costs and depth. Once that relationship is established, a more realistic evaluation can be made - one that incorporates these costs. Because pumping costs from increased lift and greater frictional loss with length of wellbore increase with depth, and parasitic load impacts power generation potential as well, all must be included in a study of comprehensive cost of EGS power versus depth.

The initial goal is to assemble reasonable drilling-costs-with-depth formulae for various regions of the United States and couple them with energy-recovery-with-depth as they relate to regional temperature gradients. Additional controls on the economic depth relationship will be the selling price of energy produced and the flow rate of each well. Obviously, higher gradient areas and areas with relatively low drilling costs have greater interest.

The objective of drilling is to reach the target depth or pay zone at the lowest cost, highest degree of safety, and minimal degree of damage to formation. To achieve this, two requirements must be satisfied. The first is proper design of the well program, which includes evaluating the formation, coring and testing. The second is proper choice of a drilling rig, which includes the ability to reach the target depth rapidly and economically with the highest degree of safety. The well program is 40 percent of the well costs. The remainder of the cost is proportional to the time for drilling, which includes rig day rate, rental tools, etc.

A distribution of the well program cost follows:

• Fixed costs, which includes location or site preparation and roads: 8 percent to 12 percent.
• Fixed costs, which includes moving, casing, cementing, service companies, evaluation of formation, coring, etc.: 23 percent to 27 percent.
• Completion, which includes perforating and site cleanup: 4 percent to 6 percent.

Proper planning of the well is key to optimizing operations and minimizing expenditures. In order to minimize the costs of drilling, it is imperative to gather as much information as possible about the area being drilled. This includes the gathering the costs from surrounding wells. Although gathering specific costs of drilling is beyond the scope of this project, a short summary is included to detail what information should be gathered before a drilling venture is undertaken.

The first step in planning a well is to gather all available data on past wells. It is important to be completely familiar with all sources of information, the availability of the sources, and the information normally associated with the sources.

Consider the geology expected to be encountered to reach the target depth. Knowing the geology will help determine casing depths, such as the depth of fresh water. Competent geology will determine surface casing requirements. Understand the production objective of the well, such as hole size, production casing requirements and completion requirements. Know the geologic markers, along with the anticipated formation tops, to determine other well planning activities such as logging, formation testing and cores.

The information to successfully complete the well program can be obtained from an adjacent well or “control wells.” Obtain such information as mud logs, electric logs, bit records and drilling rig inventory, where available, to determine the most cost-effective procedures in drilling a well.

A review of drilling costs with depth has been generated for regions and states of potential EGS sites. Publicly available geothermal drilling cost data are very limited. Geothermal drilling cost information for depths greater than 10,000 feet is so limited as to make it statistically unreliable for cost-estimating purposes. Since EGS development might occur at depths greater than 10,000 feet, references to oil and gas drilling costs should be considered when determining an EGS project cost and the economics of power production from these depths and reservoir types. ND

This article is excerpted from the report, “Estimating Well Costs for Enhanced Geothermal System Applications,” prepared by K.K. Bloomfield and P.T. Laney of the Idaho National Laboratory for the U.S. Department of Energy.