A New Use for Orphaned Oil and Gas Wells?
How best to reduce the massive backlog of idle oil and gas wells with unknown or insolvent operators, better known as orphan oil and gas wells, has been a prominent topic in the United States lately. The Biden administration, for instance, has proposed spending $16 billion on plugging and abandonment (P&A) activities via its broader, multitrillion-dollar infrastructure program. Others, notably the Texas Well Protected Energy Foundation profiled recently in Rigzone, are calling for shifting responsibility for P&A from government to the nonprofit realm.
More recently, Petrolern LLC – an Atlanta-based service and technology firm specializing in subsurface engineering and downhole tools – has advanced another idea: repurpose some of the orphaned oil and gas wells to produce geothermal energy. The company has developed a system called “ConvertDeck” that it maintains efficiently evaluates large numbers of orphaned wells to determine which are likely good candidates for geothermal conversion.
“Geothermal energy has up to now been a small contributor to U.S. and global energy,” Alan J. Cohen, technology partnerships director with Petrolern, told Rigzone, adding the resource has primarily been exploited in high-temperature volcanic belts in certain regions of the globe. “Drilling new geothermal wells is very expensive and can be up to 50% of the total project cost. Repurposing lower-temperature oil industry wells in sedimentary formations provides a valuable new source of geothermal energy.”
Cohen pointed out that sample conversion project proposals for various Petrolern clients show geothermal electricity costs below 4 cents per kilowatt-hour (kWh), adding that such projects can yield internal rates of return exceeding 10 percent as well as six-digit job creation. Moreover, he pointed out that wells converted to geothermal service release zero emissions.
“The system is entirely closed,” he said.
Cohen, along with two of his colleagues at Petrolern, shared additional details about the prospect of producing geothermal energy from orphaned oil and gas wells. Read on for their insights.
Rigzone: Briefly, please explain what ConvertDeck is and how the system works.
Alan J. Cohen: ConvertDeck is a patented, unique, expert system-based screening tool to select appropriate late-stage or unplugged/abandoned oil industry wells to convert them to profitable geothermal electricity or heat. It is a multi-faceted approach that integrates geology, reservoir, wellbore, surface power plant, infrastructure, environmental, and economic criteria and how they are all connected and makes expert recommendations for field conversion of the wells for use in geothermal power, heating, or cooling applications.
Rigzone: What makes an orphan oil and gas well a good candidate to become a geothermal well?
Cohen: Petrolern’s approach requires a good response in the several categories listed, essentially the right reservoir or aquifer and well bore conditions, proximity to electricity or heat markets, and with good economics. It is noted that blind selection of orphan wells for conversion may result in significant capital losses. A major value proposition of ConvertDeck, therefore, is de-risking conversion projects.
Rigzone: With orphan wells, the operator is either unknown or insolvent. In the case of converting an orphaned oil and gas well to geothermal, who would operate the geothermal wells and how would operatorship be established?
Cohen: Ownership issues are now under discussion with regulatory agencies in several states, so we don’t wish to pre-empt these discussions.
Rigzone: What are the steps necessary to convert an orphaned oil and gas well to geothermal service?
Hamed Soroush, CEO, Petrolern:
- Well preparation
- Engineering the system if needed, including examining various aquifers and target zones in the well. and not simply the original producing zone. Perforations or recompletions may be needed.
- Installation of surface facility – the wellhead power plant
- Dispatch to the end users, and all the usual project administrative and contracting work for the wells, power plant, construction, financing, and power sales.
The inaugural projects will use modular power systems with about 100 kilowatts of gross power. Later projects will involve larger power plants – 5 megawatts or bigger.
Rigzone: What sort of workers would be needed for this, and could people with “oil and gas” skill sets easily transfer their skills to geothermal well conversions?
Soroush: Geologists, geophysicists, geomechanics engineers, reservoir engineers, well and completion engineers, chemical engineers, mechanical and electrical engineers. Oil and gas skills can definitely translate over and add significant value. Blue-collar workers would be especially needed on workover rigs, pump rigs, piping construction, and power plant operations and maintenance. We estimate that our approach can create up to 200,000 jobs, many of them redeploying oil and gas workers.
Rigzone: How would energy from geothermal wells reach the electrical grid?
Kevin Kitz, Power Systems Advisor, Petrolern: There are multiple options on how to monetize the thermal energy from converted wells. The most obvious is to put the power on the grid, which requires some type of power purchase agreement. But it may be more valuable to ship the power on privately owned power lines to a facility that can use it to serve house load. This could include other oil and gas operators, including displacing gas-fired compression, or larger industrial customers with a relatively steady power requirement.
It is also possible, especially in colder climates, to ship geothermal heat instead of geothermal power. One of the first screening steps of ConvertDeck is to assess potential markets. If a low-temperature well is 50 miles (80 kilometers) from the nearest power line, that is not going to be a good candidate for conversion. Petrolern also has the expertise to identify the potential markets and to negotiate the contracts for that energy delivery.
Rigzone: How does 4 cents per kWh for geothermal electricity – after deducting well-abandonment costs – compare to other electricity sources such as natural gas, nuclear, wind, and solar?
Cohen: We can achieve under 4 cents without subtracting well abandonment costs. When well abandonment is accounted for, we can in principle get close to 2 cents per kWh on some projects. That compares well with other electricity sources, especially when one considers that – except for periodic maintenance – the geothermal electricity is always on, whereas, solar and wind operate largely only at limited times during the day.
Solar-generated electricity, for example, currently averages about 5 cents per kWh, and the U.S. Department of Energy has targeted it to reach 2 cents per kWh by 2030. We are already there on some of our geothermal projects.
Geothermal also brings a lot of benefits, including more jobs, converting existing wells to provide long-term value for the local community, and is much cheaper than utility power if delivered straight to an end user. In short, geothermal power has the best cost/benefit ratio both for local communities and users of power. It is also worth noting that geothermal is one of the few power sources that is zero-emission 24/7.
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