Pmc. 1Ith Geothermal Workshop 1989

OHAAKI = A POINTER TO THE FUTURE JohnW. Malcolmson

Eiectricorp Production, Eiectridty Corporation of New Zealand Ltd

ABSTRACT But the Minister's statement to Parliament in 1947 This paper briefly outlines the history of the really marks the beginning of the development of the Ohaaki geothermal field and story. Conventional steam plant was virtually discusses some of the more recent legislative and damned for anything but standby purposes on the environmental issues that would now have to be grounds of high capital cost, long delivery and taken into account if a similar power station were cost and availability of fuel. Imported oil, even built today. These legislative and environmental then, was considered prohibitively expensive, and issues will make it more difficult to build future New Zealand was seen as a very limited geothermal power stations in New Zealand. There resource. But the statement contains these are also a number of design concepts that may be significant words: approached differently If the project were comnenced today. These are briefly outlined and "There is one possibility which must not be discussed. overlooked and that i s the use of natural steam for power generation. It is proposed to investigate this matter without delay..."

INTRODUCTION From that time on geothermal development was a reality. The DSIR began on the trail which made Electricorp will never build another Ohaaki! New Zealand the world leader in the investigation and application of geothermal power. By 1950 During this address I will cover the reasons why investigation had concentrated along a three and a Electricorp will never build another Ohaaki. half mile line running east west near the areas of However, before I do so I want to briefly describe natural activity at . The Public Works the history of the development of Ohaaki and Department had six dri11ing rigs in operation. outline some of the aspects that we w i l l have to Steam was already being encountered although the take into account for future developments. light rigs were limited to a depth of about 150 metres. By 1952 two bigger drilling rigs were WHAT LED TO OHAAKI? brought i n and two bores were put down to a depth of 1200 metres. 20 MW of generation was already Ohaaki is the latest chapter in a story which had thought to ba justified and the Minister was its beginnings shortly after the Second World War. expressing "the utmost confidence' in geothermal It is worth casting our minds back to the vastly steam as a significant power source. From then different situation in New Zealand at that time on, driven by a dedicated and enthusiastic when compared with the present i n respect o? partnership of DSIR and the Ministry of Works, and demand. Wairakei went from strength to strength. Overseas consultants were appointed, and an initial 40 HW I n 1946 the State Hydro-electric Department, i n development was approved, in conjunction with a its first year of independent existence, already heavy water distillation plant for the UK Atomic faced a chronic power shortage i n the North Energy Authority. In 1956 the heavy water plant Island, with the prospect of 10 percent annual was cancelled and the station output increased to demand growth into the foreseeable future. 69 MW. In parallel with this a coal fired station was in hand at Mercer () and with I Water power had, up to then, been the o.nly increasing optimism about Wairakei s future technology considered appropriate and the potential the power planners were beginning to see remaining resource was seen as the light at the end of the tunnel. The merit order River upstream of Karapiro. This demanded of alternative generation was at that time: a daunting rate of development at a stage when Kaitawa (Waikaremoana) and Karapiso were sti11 'Existing hydro 0.23 pencelkwh under construction. New hydro 0.50 pencelkwh Geotherma1 0.40 pence1kWh Steam 0.75 pence1kWh A few small fuel burning thermal plants were in Coal cost fifty two shillings and sixpence Per ton service. The only two of any significance were Kings Wharf and' Evans Bay but it is of Interest to recall that there was a steam station at Huntly But geothermal generation had some quite which merited a mention i n the General Manager's determined opposition in some quarters. The then Report to the Minister for the year ended 31 March Chief Engineer of the State Hydro Department, 1947. This station had run over the evening peak M G Latta, had published a paper in 1950 on future period for five days a week from June to November power supply to the North Island which had put 1946 forward the possibility of an inter-island link. The proposal was widely criticised at the time as impracticable. Cook Strait was seen as a fearsome stretch of sea with a bottom composed of precipices and canyons. Nevertheless its proponents persisted and i n 1957, backed by overseas experience, the relatively new Combined Comnittee on the NZ Electric Power Supply made a John W Malcolmson

strong recomnendation to Government that the resource. Until this question of resource practicality and cost of installing submarine ownership i s resolved no developer i s going to cables across Cook strait be properly venture into an investment over which there i s no investigated. security.

The rivalry between the supporters of geothermal Resolution of this question may take some time as power on the one hand and the inter-island link on the Tribunal now has a large backlog of claims to the other was exacerbated by the decision to hear. proceed with a further 53 MU of power at Wairakei and defer by one year the investigation of the DC Present legislation relating to resource use is 1ink. also overshadowed by the Resource Management Law Reform Review and, at the time of writing, the With hindsight the rivalry was unnecessary. The next public part of this process is the country needed both and both were eventually introduction of a Bill into Parliament. However built. Wairakei started generating in 1958 and by an emphasis of the new legislation is likely to be 1963 was developed to its final stage. Its on sustainability of resources. There is also progress and development has been well documented likely to be an emphasis on integrated consents by others, through its peak generation of 169 MU and a regional a1location of resources. down to a plateau of around 145 MU which has been maintained by various field developments to the The question as to who manages the resource must present day. Its record of load factor and be sorted out and it is hoped that this will be availability is impressive, both having remained achieved by this review. The conflict of the not far from 90 percent over long periods. resource allocation responsibilities between the jurisdiction of the Act 1953 and It is easy now to criticise the euphoria which in the Water and Soil Conservation Act 1967 needs to the middle to late 1950s led to over-estimating be resolved. the potential of the Wairakei field. But other fields were already being studied. In the early The Corporation is generally supportive uf the 1960s a consultant's report was obtained on a Resource Management Law Reform proposals to possible further geothermal power station at administer geothermal energy resources in the same Te Mihi, west of Uairakei. Although fears of manner as for water resource management. We can adverse effects on Wairakei resulted in this see no reason for additional geothermal licensing project being set aside, it is of interest that as this can be covered under the normal industrial steam fan new wells In the Te Mihi area are now safety legislation. making an increasing contribution to Wairakei. However, a more promising prospect was under study The Crown need no longer play a role as a at- Broadlands to the north. Drilling comnenced geothermal developer and should fulfil only its there in 1965 and by 1970 18 wells had been sunk, roles of policy development, natlonal interest and and the power potential was assessed as 120 MW. oversight and safety inspection. Also with the likely move to a regional allocation of resources, Further field investigations, in particular field most functions can be fully undertaken by the new draw down tests carried out by the Ministry of Regional Councils. Works and Development to determine basellne parameters and engineering studies, continued on a Additlonally, while accepting that ownership of stop-start basis as a response to changing the resource should control access, multiple or electricity demand forecasts, comQeting claims on large scale uses of one geothermal resource are natural gas resources, coal extraction problems not seen as appropriate If sustainable resource and the o i l crises. use is to be achieved without over regulation. More than any other policy or circumstance, thOs It was not until 1982 that Government finally gave will lead to exploitation and degradation of the approval for work to proceed on the design and field to the extent where no one wins on that construction of New Zealand's second geothermal field. power station. This has already become a problem with the recent OTHER GEOTHERMAL FIELDS splitting of the Wairakei field between two major users. The Corporation's assets have been clearly Over the years a number of other geothermal fields devalued by the decision to re-allocate same of have been studied for their electricity generation the geothermal resource to another user. The potential. Some, like Mokai, have been taken as Corporation's assets had been bullt to uti1ise the far as well output testing, while others have not field they no longer have full access to. A proceeded past a resistivity survey. Most similar affect on investment decisions could occur investinations are now at a standstill and it is at any water right renewal ifexisting or initial unlikely, because of the high risks facing allocation conditions were changed substantially. developers, that these will recmence for some In the future no potential developer w i l l make an years yet. investment in a new generating station that has no surety over-the supply of its basic fuel. That Investigations to further knowledge about the surety would only be provided if water rights geothermal resource as a broad objective does not cover a whole field and are for periods closer to appear to be part of the Government's current the life of the station. energy or scientific strategy. Nor is it currently in the interest of any developer to Electricorp considers that the answers to the undertake such exploration. questions raised about resource ownership could directly affect Its existing interest in the use The undeveloped geothermal fields a1 1 have their of the geothermal resource for electricity limitations, and developers face the risks of generation and its confidence on access to future uncertainties over resource ownershlp and the resources. The Corporation is therefore likely to threat of the imposition of royalties. be prudent in its expenditure of capital in such a risky environment. This is likely to be the case RESOURCE AND FIELD OWNERSHIP AND MANAGEMENT for all developers.

With the broadening of the powers of the Waitangi Tribunal, the Maori people signalled their claims for the ownership of the geothermal resource as separate from, but possibly related to the ownership of the land above the geothermal John W Malcolmson

RESOURCE RENTS/ROYALTIES Any negotiations with comnunities or landowners are now between equals. If the land vendor or Closely associated with the ownership of statutory authority wants too much for its land or geothermal resources is the topic of resource rent consents then the Corporation or other potential or royalties. The Crown as the current owner has developers will walk away from the project. If proposed that it realise the economic benefit of the conmunity wants development to occur then it this ownership through a resource rental or has to be prepared to seek a middle ground. royalty system. We are pleased to see the enlightened attitude of at least one local authority in zoning for Electricorp considers the targeting of any such geothermal development relating to electricity system must ensure that the value of the resource generat1on. is used as the basis for the rental. The currently proposed royalty is not related to the It is only by full local consultation and value of the resource per se and is In effect a negotiation that a sound scheme that will be both single industry tax. This will be, correctly I an asset for our own comnercial activities and believe, perceived as an additional cost on the also for the cmunity can be designed. The electricity consumer. results of this consultation may have a significant bearing on any future geothermal SUSTAINABLE RESOURCE MANAGEMENT development. This will apply to any geothermal resource developer, and the success or otherwise As I have already mentioned, it i s likely that the of this consultation will determine whether or not new resource management legislation will place a a project proceeds. high emphasis on sustainable resource use and I believe that this should be encouraged. Any COMMUNITY CONTRIBUTIONS difficulty in determining what is a particular level of sustainability should not be a reason for The Corporation's many power stations throughout not pursuing such a policy. However it should be the North and South Island contribute a great .deal realised by the public that use of a geothermal to the tourist and recreational opportunities of resource will always have its costs and that all those areas. is an excellent example of this, and our information geothermal resources are likely to decline over centre at Wairakei includes comnentaries in time. Japanese. Considerable effort has gone into developing the facilities we have created for the A developer of a geothermal resource should optimise the field use so that the resource is not use of all people in New Zealand and those who depleted in the short term but is available for visit our country. We would want to continue long term utilisation. This may mean that in providing tourist and recreational opportunities future geothermal developments may have to be when new power stations are built. constructed in smaller modules so that an over expenditure in capital plant is not made. Over The Corporation believes however that for the time the plant can be optimised to the proven size cannunity at large to be able to continue to enjoy of the geothermal resource. the benefits provided by electricity it will have to accept that this cannot be without some cost. COMMUNITY CONSULTATION This Is true whether electricity generation is to be tan fossil fuels or renewable resources such Section 4(1) of the State-Owned Enterprises Act as water and geothermal. 1986 states that the principal objective of every state enterprise shall be to operate as a In evaluating potential generation sources the successful business, and to this end shall be: Corporation aims to achieve investments which provide a balance between environmentally significant features and its generation (a) as profitable and efficient as comparable businesses that are not owned by the activities. This can be achieved by full local Crown; and consultation, judicious siting of activities, and by ensuring that significant environmental isues are avoided or addressed in the design of the (b) generation facility, eg reinjection. A good (c) an organisation that exhibits a sense of outcome will be when the comnunity gains the social responsibi11ty by having regard to development while preserving its significant the interests of the community i n which it environmental assets. operates, and by endeavouring to accomnodate or encourage these when able Not only is the developer expected to contribute to do so. to the broader comnunity welfare, but the move to local authority rates being based on capital value This objective is also pursued by other successful means that electricity generators will now be businesses even though the objective i s not so significant rate payers within a comnunity. This explicit. To achieve this objective the cost must be taken into account when a new Corporation has sought ways in which it can .development i s being considered. undertake its operations and at the same time contribute positively to the life of the local Comnunity expectations are such today that all comnunitles. As a state owned enterprise we potential developers will have to contribute to welcome the flexibility which was not always local comnunities if they are to gain access to available to the Crown to participate in this way. development resources. This will be brought about by the move to regional allocation of resources. The Electricity Corporation is now like any other The cmunity in turn will have to learn that a developer and has no special privileges such as developer does not have a bottomless pocket. If the Crown had when it was a developer. The the costs of development are too high, potential Corporation has no access to the Public Works Act projects will not proceed. for land purchase, and must gain statutory consents in the same manner as any other MAORI INTERESTS deve1oper. I referred earlier to the Maori interest in the The loss of these privileges has improved the geothermal area. ability of the Corporation to deal with 'problems' or to purchase or gain an interest in land etc. John W Malcolmson

Electricorp is comnitted to working with the greenhouse effect. While New Zealand is only a tangata whenua, not just in geothermal but in all very minor contributor to world CO2 build-up it is spheres of its generating activities. There is a likely that the alarm on the greenhouse effect significant level of cumon interests in the use will continue to grow and will have a significant of the geothermal resource and, as has been bearing on any developer's ability to comnission demonstrated at Ohaaki, both the Uaori comnunity future coal fired thermal generating plant. and Electricorp can benefit from such a development. Even the generation of electricity using geothermal resources makes some contribution to THE FUTURE FOR ELECTRICITY the greenhouse effect through the discharge of C02.

The Corporation must also have the interest of the FUTURE ELECTRICORP DEVELOPMENTS users of electricity, the public of New Zealand, in mind when determining its use of any resources In order to operate profitably and efficiently the for future electric power generation. An Electricity Corporation requires a number of inability to acquire the most appropriate options available for generation of electricity investments may incur unnecessarily higher both now and i n the future. These options need to electricity prices for future communities. reflect a range of energy sources, both non renewable and renewable, including the use of geothermal energy for electric1ty generation. The Energy, and in particular electricity, has become principal objective is to identify the cheapest a primary, basic comnodity that is fundamental in sources of electricity generation which are also modern industrialized societies. New Zealand i s a acceptable to the cmunity. well developed country with abundant supplies of energy and electricity and these supplies have I n both the North and South Islands, the formed the cornerstone of New Zealand's social Corporation's emphasis in the short to medium term development and economic growth for over half a will be to improve the overall efficiency of it's century. An adequate and easily accessed supply of electricity system rather than to construct new electricity has been a major factor in New power stations. It considers that Its present Zealand's urban, comnercial and industrial growth. generating capacity will be sufficient to meet Today however new energy sources for the market demand until the end of the century. generation of electricity are becoming more and Improved use of existing assets also involves more difficult to develop and fewer sources are expansion of inter-island transmission capacity in now available. Within the total New Zealand the near to medium term. However the flrst decade energy sector, electricity represents some 45% of after year 2000 is likely to see an increased the total energy supply. level of construction of new power stations. The reasons fo r t h i s w i l l be to: However given its healthy natural resource bast and efficient contribution to energy supply, meet load growth electricity should continue to have a central role i n meeting New Zealand's energy requirements thus make up for reduced future availability providing positive assistance to national economic of gas growth. * RENEWABLE ENERGY SOURCES to replace older thermal power stations i n the North Island Development of New Zealand's renewable energy * resources for electricity generation was a basic and to replace any generation lost fan goal in government energy planning over the 1950's reductions in existing water rights. and 1960's. As a consequence, some 75% of New However decisions on the timing and type of a new Zealand's electricity comes from renewable energy sources. In 1988 the total annual generation for power Station wi11 be affected by electricity public supply was about 28,700 GWh. Of this, only demand, competition, fuel prices and availability, 7,100 GWh was obtained from North Island hydro and the greenhouse effects, and the actual loss of geothermal combined, yet the main demand for water rights for existing generation facilities. electricity is in the North Island. The choice of particular stations can best be made close to the time. However the lead time for The arguments over the advisability of using investigations dictates that it is prudent to renewable or non-renewable fuel sources for investigate a number of options so that at the electricity generation have continued since the time of having to make a decision the cheapest sixties. As we move into the period when the end cost of electrlcity is obtained. of the Maui gas field is in sight there is likely to be a stronger lobby against the use of valuable Water conservation orders have been placed on a gas for electricity generation. number of rivers that have hydro-electric generation potential thus preventing their use for Since the sixties there has been a strong lobby such purposes. opposing the damning of rivers for hydro electricity generation. It has been quite Water i s a scarce resource and although there i s ironical that the modification of a river into a potential for further hydro-electric development I lake has been seen by some to be more must emphasise that in only one case, that of environmentally damaging than the use of Luggate at 98 MW, are water rights held for future non-renewable energy sources. The lobbying hydro-e1ectric generation. against the use of water for electricity generation is likely to continue as Electricorp The gas available for use in thermal electricity and others forego their perpetual water rights for generating stations in New Zealand is finite and finite rights. If the effects of this lobbying constrained. At present rates of draw off New are severe then this may increase the use of Zealand has proven gas reserves for only twenty non-renewable resources such as gas and coal for years, and an unproven quantity from then on. While some gas fields such as Kupe and some of the future electricity generation. smaller onshore fields in Taranaki may be economic to exploit there is the question of price. The As major producers of C02, thermal power stations price level will be determined by the requirements are seen to be a significant contributor to the of other users. the expense of field development John W Malcolmson

and the international demand for oil. While it In periods where demand growth is larger, say may still be economic for electricity generators above 3%. a geothermal power station could be very to use gas, unless new fields are discovered, gas useful to 'fine tune' any mismatch between the may could only be available for electricity increase in capacity provided by thermal units, generation for say 20-25 years. and the forecast demand increase.

Clearly, already we have entered into the era TECHNICAL CHANGES where unless gas is taken from existing users or new gas finds are made, there is not enough gas We believe that design and construction times for available for additional gas fired generating future geothermal power stations can be much plant. shorter than was the case for Ohaaki. This is not intended as a criticism of the team that was Because of the finite nature of the non-renewable involved i n Ohaaki, but i s a result of a number of fuel sources, the fact that the cheaper will factors that were present when Ohaaki was soon be depleted, and the fact that the cheaper investigated, designed and approved for hydro electricity generation sites are finite in construction, and which are no longer present or number, it is obvious that electricity prices can relevant. I am confident that the time from only stay at their present levels for a limited approval to construct to first power can be number of years. In the long term the rate of significantly reduced from the 6 years between increase in the cost of electricity will depend on approval to construct and first power for Ohaaki. the availabi1ity or not of the cheapest generation sources. It will only be at this time that the The risks of field overdevelopment exist in every demand for electricity from geothermal resources field and this is a factor which should be taken will again be economic. into account at the outset. As was the case at Wairakei, the power station capacity may prove to be overly optimistic if the field does not come up GEOTHERMAL AS PART OF ELECTRICORP'S DEVELOPMENT to expectations. Any new field should be STRATEGY approached from the beginning with a staged development programne. This would allow the steam Electricorp sees a bright future for the field to be proven using smaller units and then, generation of electricity from the utilisation of if the steamfield is proven, additional units can geothermal energy, but only at the right price. be added. This staged development approach would As I have already mentioned, it has a number of mean that a developer would not have to spend as advantages as an energy source, particularly in much money up front investigating the size of the relation to the greenhouse effect. field, or waste a large amount of steam proving the field. A smaller size, modular style, Its use is not without environmental impact. approach to field design and development will However, we now have the capability, with careful allow economies to be gained by using more 'off and comprehensive consideration of the options the she1f generating plant and enable available, along with a significant injection of construction to be undertaken at optimal locations money, to minimise these environmental impacts. A reducing pipe runs. It will also be quicker to number of you here will have contributed to thls Install plant and therefore gain a faster return capability and it is pleasing to record the fact on capital expenditure. that Ohaaki in particular makes use of a nunber of innovative concepts to operate as a station with On the plant side the experiences at Ohaaki have minimal environmental impact. indicated that puenped condenser extraction may be preferable over barometric leg. This would depend While I speak of a bright future for geothermal on the topography of the site and would need very energy in the electricity industry, as previously noted, the current capacity of Electricorp's careful design of an anti-flooding protection generating stations is far greater than the system. Advantages would be reduced cost and present demand and any decision by Electricorp or construction time. any other developer to build a new geothermal power station is likely to be some years off; Although not yet proven, we believe that we may years we can all use to our advantage. have been overly concerned about the potential aggressiveness of circulating condensate. Electricorp envisages that any future geothermal power stations it builds will not have a large The economic benefits of the two pressure system number of the features of Ohaaki. adopted at Ohaaki will depend on the rate of decline of HP steam pressure. However, the costs Significantly they will be likely to be of a involved, particularly the costs of refurbishing modular style with capacity more matched to the the HP sets ex Wairakei to satisfy statutory currently assessed sustainable level of the requirements, were significantly higher than the geothermal fields output. estimates on which the original decision was based. Although the construction of new geothermal power stations will be dictated by electricity market Other plant design issues that are worthy of conditions rather than by a desire to utilise a consideration in the future are: proven resource, it is anticipated that the period between determining the capability of the field choice of variable speed reinjection pumps and its development for power generation will be whlch provide flexibility but are costly; less than has been the case in the past. Put bluntly, developers are not in the business of choice of type. A circular spending any more money than necessary or any forced draught tower Is cheaper than a natural earlier than necessary on investigations. draught one and may give an acceptable plume rise and subsequent dispersion. Geothermal development could be thought of as occupying a 'niche' in the electricity generation choice of horizontal versus vertical expansion area. In periods where there is a slow growth loops and compensators in piping runs. rate in the demand for electricity the smaller capacity of geothermal power stations, when compared with thermal power stations where economies of scale are significant, will result in geothermals being a suitable size to match the load growth. John W Malcolmson

While those engineering issues are likely to mean that the approach to project design is different for a new station this does not indicate that there are errors in the design of Ohaaki. It indicates only that we can always learn from what we have done and do it better next time. In the case of future geothermal developments the changed legislative environment, resource ownership issues and the need for continuity of water rights indicate that any developer of a geothermal resource wi11 have to approach things differently i n the future.

CONCLUSION

I have briefly outlined the history of the development of the Ohaaki Power Station. The Corporation is both pleased and satisfied with its construction. However I believe that it is the last of its type in New Zealand. The economics and environmental changes that are currently occurring are such that any developer of a geothermal field will have to pay as much attention to the external issues associated with the development as to the technical plant issues.

HOWELLAND COOLING TOWER UNDER CONSTRUCTION

HOTWELL LEVELCONTROL PIPEWORK

Photos: DesignPower