On October 12 2016, Hinton Town Council directed Administration to provide $225,000 from the Automated Traffic Enforcement reserve to fund the Pre-FEED study to determine the feasibility of the Hinton Geothermal District Energy Project.
The feasibility study will provide Hinton Town Council with important information and analysis including options, risks and opportunities with financial implications of the Hinton Geothermal District Energy Project. It will be a key resource in support of grant funding applications from the Provincial and Federal Governments.
Hinton Geothermal District Energy (HGDE) Pre-FEED Study Details
The Study will cover the characteristics of the geothermal resource, candidate gas wells to be repurposed, likely Project development activities, budgetary costs, timelines and other pertinent project matters. The Study will discuss heat potential based on a review of published and proprietary information in accordance with the Canadian Geothermal Resource Code. Resource production, distribution system and customer service capital requirements will be assessed with Class 5 budgetary cost estimates. A Phase One project economic analysis will be provided with levelized cost and scenario sensitivities. The Study will identify options, risks and opportunities with financial implications.
Upstream Project - Geothermal Resource Production
The Study will address resource prospectivity, provide a Class 5 estimate of the costs of resource production facilities, estimated operating costs and identify risks and opportunities relative to both capital and operating costs. The Study will address regulatory requirements and suggest a Project upstream development schedule.
Midstream Project - District Energy System
The Study will make a Class 5 cost estimate of the distribution facilities, estimated operating costs and identify risks and opportunities relative to both capital and operating costs. The Study will address regulatory requirements and suggest a midstream project development schedule.
Downstream Project - Customer Energy Services
The Study will make a Class 5 cost estimate of the interconnection facilities and HVAC replacement equipment recommended to receive service from the distribution system, estimate operating costs and identify risks and opportunities relative to both capital and operating costs. The Study will tier prospective customers based on a hierarchy of heating systems, estimated conversion costs, operating savings, thermal load and load profile, each after correlating potential efficiency retrofit improvements. The Study will provide energy efficiency audits of each of the nine proposed customer buildings to suggest potential energy savings options. The Study will address regulatory requirements and suggest a downstream customer interconnection project development schedule.
Project Financial Assessment
The Study will provide a pretax unlevered financial analysis of the Project with simple payback, rate of return and levelized cost of service outputs.
The Study will analyze and summarize the characteristics of the resource to be produced, the oil and gas wells to be repurposed or new for-purpose geothermal production and/or injection wells to be drilled, the preferred means to contract these activities, process, budgetary costs, timelines and other pertinent project matters. The preliminary assessment of heat potential will be in accordance with the Canadian Geothermal Resource Code. The distribution system and stakeholder service matters will be defined and assessed with timelines and Class 5 budgetary costs. An economic model for the entirety of a first phase geothermal district energy project will be provided with levelized cost and scenario analysis.
Project Timeline/Completion: It is difficult to predict the beginning in time and duration of time required to complete each of the multiple Study tasks within the several subproject (upstream, midstream, downstream) swim lanes. The significant unknowns are relative to technical matters and the engagement of necessary project stakeholders. As a matter of example, the time required for engagement with oil and gas field operators cannot be perfectly predicted. Geothermal repurposing technical matters and the number of wells to be evaluated remain to be determined. Further, the companion regulatory engagement is an open ended process. It is expected that the Study work will take approximately 90 days to complete (assuming reasonable stakeholder engagement) and up to 30 days to document. Epoch is prepared to begin work in October 2016 with an anticipated 1Q17 delivery of the draft Study report.