Geothermal energy production: A renewable alternative to oil & gas well abandonment in Canada

By Tetiana Semeniutina, School of Public Policy, University of Calgary

According to the recent release from the Alberta Energy Regulator, as of December 2022, of the nearly 464,000 wells registered in the province, more than 170,000 were no longer producing but not yet fully remediated. It’s important to understand that after decades of fossil fuel production, the number of suspended (inactive), orphaned, and abandoned (decommissioned but not fully reclaimed) wells will only increase every year in Canada.

Currently, most of the conventional oil wells in Alberta produce less than 25 barrels per day from mature fields. Hundreds of thousands of oil & gas wells across Canada have reached their end of economic life, often due to low hydrocarbon production combined with high water cuts, mak- ing continued production uneconomic. In some of these wells, high bottom hole temperatures are responsible for the steam generation to be hot enough for use in geothermal energy solutions. Capturing this heat to produce geothermal energy as an additional value stream helps make continued hydrocarbon production feasible. Although abandoned wells are plugged and considered relatively safe by regulators, they can act as subsurface leakage pathways that connect oil & gas reservoirs to groundwater aquifers and the atmosphere, contributing to soil, water, and air quality degradations and climate change. Significant costs are imposed on energy companies and governments for decommissioning no-longer-producing wells. However, an alternative is for the oil & gas industry to take advantage of these wells and use them for geothermal energy production.

Geothermal is a renewable source of energy that has a minimal carbon footprint and can be used for both power generation and heating. Geothermal involves extracting hot water or steam from underground reservoirs and using that resource to produce electricity or by utilizing the heat. Unlike solar and wind power, geothermal power plants can generate electricity consistently, constantly, and regardless of weather conditions. In North America, geothermal energy is produced primarily from deep, hot, volcanic rocks, using steam or hot water, mostly extracted from

Figure 1: Global levelized cost of renewable energy by technology, and capacity factor for geothermal hydraulic fracturing systems. Conventional geothermal development requires drilling deep, high-temperature wells, which can be expensive and risky.

Figure 1 shows global levelized cost of renewable energy by technology, including geothermal, and operational capacity factors for geothermal from 2010 to 2021. Currently, geothermal production has higher installed costs, operation, and maintenance costs than hydropower, solar PV, and onshore wind projects. But geothermal power plants have a high-capacity factor, averaging greater than 75 per cent – meaning that they can operate nearly all the time, helping to offset higher capital and operating costs. These factors suggest that geothermal can balance intermittent sources of energy like wind and solar, making it an essential part of Canada’s renewable energy mix.

As a rule, at least a quarter of the costs for harvesting geothermal energy is drilling, and approximately one-third of the costs is completions. A promising solution is partially avoiding these costs by repurposing existing oil & gas wells to generate geothermal power at the end of their economic production life. Mature wells can provide plenty of valuable data, such as lithological characterization of the reservoir, borehole temperature, petrophysical logs, porosity, and permeability. Another advantage, given federal and provincial methane regulations and carbon pricing, is that geothermal systems can detect potential methane emissions from wells (any venting would instantly cause a change of pressure in a geothermal system), and methane capture technology can neutralize it. But all these benefits may be achieved when appropriate wells are selected at the right time for repurposing. A monitoring system should be developed to identify late-stage wells best suited for repurposing, taking into account geology, reservoir characteristics, well integrity, infrastructure, engineering and economic aspects, etc.

It should be noted that inactive and suspended wells are more economically feasible for repurposing than abandoned wells. In the case of fully abandoned wells, instead of offsetting abandonment costs, it’s necessary to drill through their second cement plug, followed by a wireline checking for obstacles and measuring the temperature gradient, and pressure testing to confirm the casing integrity, which will incur additional costs.

According to NRCan Geological Survey and CanGEA reports, Canada has enormous geothermal energy resources that are broadly distributed across the country. Heat flow in the Canadian Cordillera is similar to the western USA Basin and Range (the region producing the most geothermal power in the world).

The highest heat flow values measured in Canada occur in the Garibaldi volcanic belt (>200 mW/m2 ). Other regions of very high heat flow occur in parts of western Canada, particularly in northwestern Alberta, northeastern British Columbia, southwestern Northwest Territories, and southern Yukon. However, Canada currently has no geothermal electrical production on a commercial scale. In 2023, Saskatchewan’s Deep Earth Energy Production Corp. began construction of Canada’s first large-scale facility for producing electricity from geothermal heat. Clear policy signals demonstrating government support in the long term are critical for business decisions to invest in geothermal technologies and infrastructure.

Hence, repurposing existing oil & gas wells partially avoids expensive drilling costs for new geothermal wells. It can also defer the need for costly plugging and abandonment, while continuing to provide useful energy in an environmentally responsible manner and supporting Canada’s energy transition. Geothermal power releases greenhouse gases at rates far lower than gas- or coal-fired power plants, and binary (closed-loop systems) power plants are considered greenhouse gas free. This source of energy may strengthen Canada’s domestic energy supply and increase energy exports to markets demanding clean, renewable energy. v