Accelerating geothermal development with a play-based portfolio approach

Abstract

Over the past decade in the Netherlands, most operators have only developed a single doublet. The learning effect from these single events is suboptimal, and operators have only been capable of developing doublets in areas with relatively low exploration risk. This ‘stand-alone’ approach can be significantly improved by a collective approach to derisk regions with similar subsurface characteristics. Such a play-based portfolio approach, which is common in the oil and gas industry, can help to accelerate the development of the geothermal industry through unlocking resource potential in areas marked by high upfront geological risk, effectively helping reduce costs for the development. The basis of the methodology is to deploy new information to the play portfolio by trading off with the risk of the first wells, resulting in a strong geological risk reduction. The added value of the portfolio approach is demonstrated for the Netherlands in this paper through a comparison with a ‘stand-alone’ development. In the stand-alone approach, each new project will be equally risky, and therefore relatively unprofitable. In the case of a portfolio approach, all experience about the play is used optimally for derisking. In case of success, subsequent projects will have a higher chance of being successful, due to the experience gained in previous projects. Even if a project fails, this may help in increasing the probability of success for subsequent projects. For plays that are initially considered too risky for the market to start developing, the value of information (VoI) of a play-based portfolio approach will help by derisking the play to such an extent that it becomes attractive for the market to develop, even at high initial risk. It can be demonstrated for several geothermal plays in the Netherlands that by adopting the portfolio approach, the probability of a play being developed becomes higher, the number of successfully developed projects increases and the average profitability of the project will also be higher. Five more advantages are: (1) continuous improvement by integrated project development, (2) cost reduction through synergy, efficiency and standardisation, (3) optimisation of the surface heat demand and infrastructure, (4) the possibility of structural research and development (R&D) and innovation, and (5) financing advantages. The advantages reinforce each other. A preliminary estimate of the geothermal potential of the Netherlands adopting the portfolio approach is between 90 and 275 Petajoules (PJ). For about 350 doublets being developed, producing about 70 PJ, the value of the advantage of the play-based portfolio approach is €2 billion for the three main plays: Rotliegend, Triassic and Jurassic/Cretaceous. The learning effects of synergy, efficiency and standardisation are expected to be significant.

Comparison of hydrocarbon and geothermal energy production in the Netherlands: reservoir characteristics, pressure and temperature changes, and implications for fault reactivation

“…However, due to the different economic requirements for geothermal production, also other areas without hydrocarbon fields are also of interest for geothermal (e.g. van Wees et al, 2020)…”

“…The structural elements are divided in three types; highs, where Permian and/or Carboniferous rocks have not been deposited or have been eroded, platforms, which are characterised by the absence of the Jurassic formations due to erosion, and (inverted) basins, where the Jurassic has been preserved (Kombrink et al, 2012). In the following, we briefly summarise the main hydrocarbon and geothermal plays in the Netherlands; for an extensive overview see for example, Wong et al (2007), Mijnlieff (2020), van Wees et al, (2020) and Willems et al (2020), as well as for production licences and geological information of hydrocarbon fields.…”

“…As a hydrocarbon reservoir is depleted, a large fraction of fault area within the reservoir may experience stress build-up (e.g. van Wees et al, 2019). This could lead to sudden larger faulting events.…”

Low - medium enthalpy geothermal resource assessment in deep reservoirs of the Llanos Basin - Colombia

“…The definition of geothermal plays in the Llanos basin was based on the selection of distinctive characteristics in elements such as reservoir (igneous, metamorphic, or sedimentary), type of porosity (primary or secondary), type of aquifer (confined, semi-confined or free) and aquifer recharge (surface water, diagenesis, etc. ), following the guidelines and recommendations published on the subject [90]- [93]. The risk of potential energy generation from the analyzed reservoirs is defined as high, moderate and low, depending on the presence -reservoir quality (>20% low risk, 20 -10% moderate risk, <10% high risk), reservoir temperature (>120ºC low risk, 120 -100ºC moderate risk, <100ºC high risk) and reservoir depth (< 2km low risk, 2 -4 km moderate risk, > 4 km high risk).…”

Geophysical characterization of geothermal fields: Inversion of temperature data and ground motions

“…As play types are mostly permeable sedimentary rocks, suitable target formations can be exploited without reservoir stimulation, and their development can take considerable benefit from past hydrocarbon exploration (e.g. van Wees et al, 2017;van Wees et al, 2020). While the use of direct heat from geothermal is going through a rapid increase (e.g.…”