EXPLORATION RISK IN GEOTHERMAL PROJECTS

The exploration risk (also geological, resource or discovery risk) is the risk of not finding an economically viable amount of energy, defined by temperature and productivity of a geothermal reservoir – which is calculated from the flow rate in l/s per pressure reduction in bar. Sometimes, also the risk of a technically challenging chemistry of the geothermal brine is subsumed under the exploration risk. While an adverse chemistry can usually be tackled by technical measures and subsurface temperatures can relatively well be predicted, the largest uncertainties are associated with the flow rate that can be delivered from a geothermal reservoir. Results from a recent survey amongst various geothermal stakeholders throughout Europe, conducted by the Horizon 2020 research project GEORISK, confirmed that the top three overall risks for deep geothermal projects are fluid-related (i.e. insufficient fluid in formation,  low or degrading flow rate, see GEORISK 2019[1]).

Even when best practice exploration codes are followed, actual reservoir parameters can only be verified after at least one full-size well has been drilled to target depth. By that time, funds in the order of magnitude of several million Euros have already been spent. The high exploration risk that is especially present in the early stages of geothermal project development, makes it difficult to mobilise the required risk capital for funding early exploration surveys and first drillings. In order to facilitate broad investments in geothermal, it is necessary to provide sufficient investment security by mitigating the exploration risk (e.g. Wendel et al. 2010[2], Robertson-Tait et al. 2015[3]).