Energy Matters: DEEP Completes Successful FEED and Feasibility Engineering for a 32 MW Geothermal Power Facility

July 5, 2021

The following is a media release released by DEEP Earth Energy Production Corp. on June 21, 2021


DEEP Earth Energy Production Corp. (the “Corporation” or “DEEP”) has successfully completed the Front-End Engineering and Design (FEED) with a corresponding Feasibility study and report on its first geothermal power facility in southeast Saskatchewan. A Canadian first, the facility’s nominal output is expected to be 32 MW and will produce up to 33.4 Megawatts (MW) net power during the winter and a minimum of 20 MW net power during summer, due to seasonal variability in the output of the air cooled binary power plant (lower ambient air temperatures result in higher geothermal power production). Future construction phases have the capacity to increase power outputs to 160 MW during the winter months. Engineering services were provided by Enerpro Engineering Inc. GeothermEx (a Schlumberger Company) is completing a full review of the FEED and Feasibility study.

Total capital costs for the first facility came within the target range and are estimated at approximately CAN$8 million per MW. The report details the capital costs and project schedule, highlighting a start-up date of January 1, 2024. Costs are expected to be driven down further based on: operational learnings and economies of scale in drilling, manufacturing, and construction. Compared to wind or solar, geothermal capital costs are higher, but the non-intermittent (24/7 baseload) characteristic of geothermal creates attractive revenues, offsetting the higher upfront costs.

Currently, 74% of Saskatchewan’s power comes from traditional carbon-based generation methods (coal and gas fired power plants). By supporting the commitments of Saskatchewan and Canada to power our future with clean electricity, this facility will eliminate approximately 155,000 tCO21 from the atmosphere each year, the equivalent to removing 34,000 cars off the road every year. For every 1 MW of clean geothermal energy produced, approximately 1,200 homes can be removed from non-renewable power generation sources.

Geothermal projects are not exposed to rising non-renewable fuel costs and carbon pricing. Using a carbon tax rate of CAN$65/tCO2 for 2023 and beyond for the DEEP geothermal project, the taxpayers of Saskatchewan will be paying CAN$10 million less in carbon tax per year (155,000 tCO2/year x CAN$65/tCO2). This is a big win for Saskatchewan.

The DEEP geothermal power facility will generate power from hot (120-125°C) water produced from open hole “barefoot” horizontal wells drilled into the Deadwood Formation (the deepest sedimentary unit in the Williston Basin). The ORC technology converts heat from these fluids by passing the geothermal fluid through a heat exchanger to transfer its heat to the organic working fluid, which vaporizes and expands through a turbine, generating power. The working fluid is condensed and re-used continuously in a closed loop. After passing through the heat exchanger, the geothermal fluids are re-injected back into the reservoir in locations that are suitably distant from the production wells to sweep more heat from the reservoir over time.

The well field will be completed with 10 horizontal production wells and 8 horizontal injection wells drilled to a vertical depth of approximately 3,500 metres. Each well will have a horizontal (lateral) length of 3,000-4,000 m, resulting in a total well bore length of approximately 7,000 m. The well pairs will be separated by 750 m. Each production well will be installed with a down-hole electric submersible pump (ESP). This arrangement is designed to meet the specified target flow rate, minimize capital costs, maintain reservoir pressure and enable heat sweeps.

This globally unique “ribcage” geothermal well field arrangement has been adapted from conventional oilfield design and completion practices and is being advanced by local, world-class oilfield expertise. This is helping to redeploy a highly skilled workforce into a new clean energy sector for Canada. Approximately 250,000 person hours of work will be required for the drilling and completions alone, with an additional 130,000 person hours being added during project construction. Essentially, thousands of new jobs will be created by this project in southeast Saskatchewan and across the Canadian prairies. DEEP’s geothermal project design could prove to be transformative in deep sedimentary basins around the world, providing a compelling example of how oil and gas technology and people can support the development of clean baseload power.

“We are taking the “best of both industries” by merging highly skilled oil and gas expertise with specialized geothermal reservoir and power generation expertise,” said Kirsten Marcia, DEEP President & CEO.

To further reduce GHG emissions, DEEP will use the stranded flare/vent gas that is associated with local oil and gas infrastructure to supply the necessary power for ORC facility loads, mostly pumping power. At nearby oilwells, flare gas is burned as a waste product because the cost to collect it is not economically viable. This waste gas produces GHG emissions into the atmosphere. Utilizing this otherwise wasted flare gas to power the pumping requirements, and using modern carbon capturing and sequestering technology can power DEEPs pumps and capture an additional 60,000 tonnes of CO2 annually that would otherwise be flared and wasted. This will also provide the oil producers in the area that are supplying the flare/vent gas real relief from rising carbon taxes, making their operations more environmentally and economically sustainable.

DEEP has a signed Memorandum of Understanding with a midstream company in the area to secure a long-term feedstock supply of flare/vent gas to power the facility’s parasitic power requirements. DEEP is also considering CO2 sequestration opportunities for other producers and CO2 emitters in the area by using its previously drilled test wells and transferring the carbon credits to those producers to aid in methane and CO2 reduction from oilfield operations. This will provide additional reductions of CO2 emissions in Saskatchewan and provide stability to the royalty generating producers.

In addition to power generation, there are many strategic direct use geothermal heating opportunities currently being explored. Major greenhouse developments can support research into diverse high-value crops to increase farm profitability and also supply locally grown produce. As Canada looks to close offshore open-net salmon farms in British Columbia, there are new opportunities for aquaculture operations and infrastructure in Saskatchewan using geothermal heating. There is also capacity for a specialized manufacturing, storage and distribution hub. These would all provide major long-term local employment opportunities and address national food or supply chain security concerns. Heat would be sold to these end users with no carbon tax and no commodity price risk.

DEEP’s vision to build 100-160 MW of geothermal power and direct heating infrastructure will be a new, green CAN$1 Billion industry for southeast Saskatchewan. It is important that we extend our sincere gratitude to Natural Resources Canada and the Province of Saskatchewan who have been major supporters and financial contributors to this project that will create jobs and reduce GHG emissions.

In the spirit of reconciliation and of transformative change, DEEP is proud to support Special Advisor to DEEP, George Lafond and his family who are honouring Chief Alphonsine Lafond with a fund investing in young Indigenous women – The Alphonsine Lafond Fund for Innovation. On this National Indigenous Peoples Day, we celebrate leaders like Alphonsine – an Indigenous Saskatchewan woman who overpowered the constraints she encountered and believed in a world of equality. For more information, please visit: https://saskatooncommunityfoundation.ca/funds/alphonsine-lafond-fund-for-innovation/

For more information on DEEP, please visit www.deepcorp.ca or contact:

President & CEO, Kirsten Marcia: (639) 638-0484, info@deepcorp.ca or
Wade MacBain, Investor Relations: (306) 717-1818, wmacbain@deepcorp.ca
Public Relations & Media, Cynthia Block: (306) 230-8262, cynthia@blockcommunications.ca

Future Oriented Financial Information Disclaimer:

Some of the statements in this news release may be forward-looking statements or statements of future expectations based on currently available information. Such statements are naturally subject to risks and uncertainties. Factors such as the development of general economic conditions, future market conditions, unusual catastrophic loss events, changes in the capital markets and other circumstances may cause the actual events or results to be materially different from those anticipated by such statements. DEEP, including its directors or officers, do not make any representation or warranty, express or implied, as to the accuracy, completeness or updated status of such statements. Therefore, in no case whatsoever will DEEP or its directors or officers be liable to anyone for any decision made or action taken in conjunction with the information and/or statements in this update or for any related damages. You should consult your professional advisors before deciding to make an investment decision in DEEP.


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