GEOTHERMAL ENERGY
Suddenly seeking steam
Published: Sunday, October 7, 2007 at 7:36 a.m.
Last Modified: Sunday, October 7, 2007 at 7:36 a.m.
GEYSERS -- Search for renewable energy source heats up
Steel derricks towering nearly 180 feet into the sky are driving drills deep into the earth, seeking energy locked within the rock two miles below.
It’s not oil these rigs are drilling for, but another reservoir of liquid gold — steam.
COBB -- The exploration for geothermal energy in the hills of Lake County has triggered the biggest boom at The Geysers in more than two decades.
The most prominent symbol of the region’s resurgence is the Bottle Rock power plant, which sat in mothballs for 17 years until a group of entrepreneurs reopened it this summer to capitalize on the suddenly sizzling geothermal market.
“This is giving it new life. The steam here is a quality source. Hopefully, we will find it all,” said Louis Capuano, president of ThermaSource, a Santa Rosa geothermal company staking its claim in the new gold rush at The Geysers.
In just 18 months, the company has raised $42.5 million and expanded from four to 155 employees. It is one of several energy companies tapping the ancient steam fields that straddle Sonoma and Lake counties with renewed frequency, reflecting rising demand for geothermal power across the Western states.
The major driving force has been a move in more than 25 states to require utilities to buy more of their electricity from renewable sources. Geothermal is California’s leading renewable fuel and the state needs even more to meet its mandate for generating one-fifth of all electricity from geothermal, wind and other renewables by 2010.
“We are hopeful that we will hit that. Geothermal is going to play an important role,” said Claudia Chandler, spokeswoman for the California Energy Commission.
Signs of revival are abundant at The Geysers, the world’s largest geothermal operation.
At its peak two decades ago, the underground steam fields were home to 27 power plants that produced more than 2,000 megawatts of electricity. But production gradually declined as steam pressure diminished in the wells supplying plants.
Today, there are 22 plants generating about 1,000 megawatts of electricity.
With demand for geothermal energy rising, power plant owners are refurbishing wells and drilling new ones to produce more steam. To reduce the rate of decline in wells, the steam fields also are being recharged with treated wastewater pumped from Santa Rosa and Lake County, and more is on the way.
Calpine, the largest operator at The Geysers, is spending $200 million to increase production at its 19 plants and perhaps build new facilities even as the San Jose company reorganizes under bankruptcy protection.
“The demand for renewables provides the opportunity to expand at The Geysers. The resource is economical or we wouldn’t be doing it,” said Mel Scott, the Calpine spokesman.
The restarting of Bottle Rock symbolizes both the reemergence of The Geysers and a huge advance for Capuano’s geothermal drilling and engineering company.
“This has got staying power,” Capuano said.
Bottle Rock already is putting out double the electricity the plant produced when it was shut down in 1990. The plant’s previous owner, the state of California, ceased operations due to declining power generation.
Next year, the plant may be producing as much as 30 megawatts, enough electricity for 22,500 homes. PG&E buys the power, providing initial returns for the plant’s new owners.
“We have new horizons,” said Ron Suess, who partnered with Capuano and other investors to purchase Bottle Rock from the state in 2001 for $1.8 million. “You have to look at history and learn from it. We’ll see how successful we are in that.”
Poor well construction and maintenance were largely to blame for Bottle Rock’s diminished power production, Capuano said. But there is ample steam to power the plant, said Capuano, whose team ran tests on an old well to examine its potential.
Then, Capuano and Suess sold much of their interest to a private investor who ultimately sold Bottle Rock to US Renewables Group and Riverstone Holdings, a pair of equity firms investing in renewable energy projects nationwide.
The plant was restarted in June after Capuano’s crews improved six existing wells and drilled three new ones. They are working on several more to bring up more steam. A number of plant improvements also have helped increase power production, including a new turbine rotor design and vacuum pumps.
“The opportunity to partner with ThermaSource was one of the attractions,” said Tom King, managing director of USRG Management Company. “ThermaSource has been the premier drilling services company serving the geothermal sector. Their experience and expertise will help accelerate the expansion of geothermal energy.”
US Renewables and Riverstone also bought into ThermaSource with $22 million so the company could purchase its first drilling rigs and expand operations. ThermaSource obtained an additional $22.5 million from Glitnir Bank, of Iceland, a major investor in geothermal projects.
“We expect great opportunities in the next several years in the geothermal industry and believe that ThermaSource will be at the center of much of that growth,” said Stephen Schaefer, Riverstone’s managing director.
ThermaSource was founded by Capuano in 1980 after the Mississippi-born petroleum engineer worked six years for several energy companies at The Geysers.
The company has planned, designed and supervised exploration and drilling on geothermal projects in the West and in nations around the Pacific Rim. But until a year ago, Capuano and a handful of employees used leased equipment and hired crews under contract.
“We’d go to the oil and gas industry and take what we could get,” Capuano said. “Now, we’re rolling.”
With its financial backing, ThermaSource in the past year has purchased three drilling rigs and is looking to buy up to two more, each at a cost of $10 to $12 million.
One is working at Bottle Rock. The second is drilling to explore potential geothermal fields for the Fort Bidwell Indian Reservation in far northeastern California. The third ThermaSource rig operates in the Imperial Valley under contract with Iceland America Energy. The company also leases a rig drilling at Bottle Rock, and operates a rig for Caithness Energy at Coso Junction in the High Desert region of Southern California.
“I’ve got other wells waiting in line,” Capuano said.
The fast-growing company plans to hire more crews. Jobs to be filled include rig hands, drilling engineers and drilling supervisors. Sonoma and Lake counties have a pool of experienced geothermal hands, but ThermaSource also goes into oil fields in Sacramento and Bakersfield and other Western states to find workers.
Drilling wells to strike pay dirt in The Geysers hilly terrain is an art that begins with geologists setting a target deep underground. A series of 30-foot-long sections of pipe with a drill bit attached, which can cost as much as $55,000, dig down and then angle toward the steam reservoir within underground fractures of the earth.
At Bottle Rock, the drill heads straight down to a depth of about 6,000 feet and then gradually angles toward the target about 10,000 feet down. Keeping that line straight is critical to striking steam.
The typical drilling rig runs 24 hours a day for two months or more. Crews work seven days on and then get seven days off.
As the drilling engineer on every ThermaSource contract, Capuano travels to work sites often and keeps in close contact with his crews by cell phone.
“I still talk to each of these crews at 6 a.m., in the mid-afternoon and again at night to make sure they’re all alright before they go to bed,” he said.
ThermaSource is the only drilling contractor specializing in geothermal drilling in the United States. There are other oil and gas drilling companies that do some geothermal.
While he remains president and chief executive, Capuano gave up majority control to the investors. Capuano went from owning 100 percent of a $4 million company to owning a smaller piece of a company with up to $40 million in projected revenue this year, but that’s fine with him.
“I’d rather have a small piece of a very large company,” he said. “I like the idea of being able to put people to work so they can earn a good living.”
You can reach Staff Writer Michael Coit at 521-5470 or mike.coit@pressdemocrat.com.
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