Developing a Feasibility Assessment Strategy for Offshore Geothermal

Abstract

Abstract The author team completed a pre-feasibility study for offshore geothermal energy production. This work was performed as an exercise to build a feasibility assessment strategy focused on offshore opportunities. Presented in this paper is an overview of geothermal energy and how to convert existing oil and gas wells for geothermal energy production, review of technical considerations for use in an offshore setting, and a case study which assessed the potential for well conversion in the Gulf of Mexico to demonstrate economic viability of offshore wellbore repurposing. We first defined an archetype well and infrastructure for assessment and then examined aspects such as infrastructure age, opportunity for well conversions on a given platform, reservoir properties, and well conversion strategies. Then, the geothermal resource potential for an offshore well and associated platform was evaluated using public data and published geologic and geothermal literature for the general Gulf Coast Basin. Next, the geothermal electrical potential was evaluated using three main variables: 1) flow rate, 2) geothermal temperature at the surface, and 3) ambient air temperature. Both temperature and flow rate estimations utilized existing public domain production data, including measured well temperatures, estimated temperature at depth, and reported production estimates. Detailed review and analysis suggest existing wells that may be or can be tied back to a common area are moderate to low temperatures, approximately 250 – 350 °F. This temperature, combined with historic production rates, is estimated to be between 300 kW and 3 MW of electricity potential, depending on repurposing methodology and total flow rate potential. Investment in the low production model (~300 kW) will most likely have an approximately flat to negative return with an average Internal Rate of Return (IRR) of 0 ±1% and Payback Period (PP) of 19 ±1.5 years. The high production model (~3 MW) will most likely have an approximately positive return with an average IRR of 10 ±2% and a PP of 14 ±2.6 years. Key assumptions that impact the economic estimates include well workover cost, power production rate, power plant cost, and operating expenses. In an offshore setting, it is important to consider long-term strategy of the existing infrastructure for developing potential financial cut-offs or maximum project timelines. The first-order power production and economic assessment example here, to our knowledge, is the first to build a systematic analysis assessment focused on a single piece of existing infrastructure for repurposing or co-production. This methodology provides sufficient information to make development decisions and can be combined with mid to long term corporate strategy, on the 5-20+ year time scale.