Premium content from Houston Business Journal by Ford Gunter
Date: Sunday, May 31, 2009
A Bay City company is receiving a federal research grant for a project designed to generate electricity from abandoned natural gas wells.
Gulf Coast Green Energy will extract geo-fluid — essentially hot saltwater — from a nonproducing natural gas well and run it through a heat exchanger before dumping it back into a disposal well, creating electricity in the process.
The project is part of a series of federal contracts awarded through the Research Partnership to Secure Energy for America, a Sugar Land nonprofit dedicated in part to advancing technology in maturing oil and gas fields.
RPSEA will chip in about $150,000 to match a similar amount put up by the company for a three-year test on a nonproducing well.
Loy Sneary, president and CEO of Gulf Coast Green, says bringing a dead well back to life serves a dual purpose by providing electric power and sparking a new revenue stream.
“It’s very attractive for owners of wells that are nonproducing,” Sneary says. “If a well produces electricity for 15 to 20 years that just reduces your risk. If you hit a dry well, it reduces your risk.”
Mike Ming, president of RPSEA, says the system could help offset operating costs.
“Wells that are somewhat marginal are very susceptible to operating costs,” says Ming. “If you want to increase recovery from wells and increase well life you can do that by lowering your baseline operating cost. This offsets purchases of electricity from external sources, so it effectively lowers your operating costs.”
Excess electricity from a well close enough to transmission infrastructure could be sold back to the grid.
“If you generate electricity on-site you’re negating the need to buy electricity from elsewhere,” says Ming.
He says the contract, which would mark the first commercial application of exotherm technology, is expected to be finalized within a month or so.
“It’s a high-potential area,” he says. “It’s one of the more applied areas of geothermal energy capture.”
He notes the project was one of the few that met almost all of RPSEA’s criteria.
Says Ming: “Our selection committee was really enthusiastic about this particular project.”
Fluid operation
Sneary says the test project will likely take place in Mississippi. The Gulf Coast region has a lot of wells that match the water temperature and flow-rate qualifications — between 180 and 200 gallons per minute — to run the generator.
Inside the heat exchanger, the saltwater, which must be a minimum of 180 degrees, is run through a tube that abuts another tube containing the “working fluid,” a refrigerant that boils off at a low temperature.
“The high-pressure vapor turns a twin screw expander,” says Sneary. “It’s very similar to a steam turbine, but it operates at about one-tenth the speed, and we use working fluid instead of steam.”
The test project, a 50-kilowatt-per-hour unit will be run with assistance from Denbury Resources Inc.in Plano, the geothermal lab at Southern Methodist Universityin Dallas and the U.S. Army Corps of Engineers in Mississippi.
The manufacturer, ElectraTherm Inc.of Carson City, Nev., has a 500 kilowatt-per-hour unit as well. Gulf Coast Green is the exclusive regional distributor for the units.
The average home operates on 42 to 45 kilowatts per hour. Sneary says the cost of electricity needs to stay above about 8 cents per kilowatt for the system to make financial sense and pay for itself in, at most, three years. But that scenario doesn’t include any carbon credits or green tax breaks that might be coming out of Washington to further benefit the business model.
Depending on the application, Sneary says, the project will qualify immediately for a 10 percent to 30 percent investment tax credit payout.
The system is built to last for 30 years, but Sneary admits that there is a gray area around just how long a well can generate electricity. It’s something that his seven-person, two-year-old company intends to address with part of the RPSEA money.
Gulf Coast Green is also involved in another RPSEA project to develop an environmentally friendly drilling platform. The Houston Area Research Council is taking the lead on that project and participants include Houston-area companies BP America Inc.and Newpark Mats & Integrated Services LLC, as well as Devon Energy Corp., Texas A&M University and SMU’s geothermal lab.
The two projects are part of 43 ongoing RPSEA projects worth almost $60 million dealing with small producers such as the geothermal project, unconventional natural gas projects or ultra-deepwater projects.
RPSEA is currently accepting proposals for a second round of projects, and Gulf Coast Green is interested.
Says Sneary: “We have not submitted for next round, but we are looking.”
Original article by Houston Business Journal at http://www.bizjournals.com/houston/stories/2009/06/01/story10.html
