DPG-DTEC Tawau GE Geothermal Proposal Apas Kiri, Sabah, Malaysia Created: 2017.09.15 Until: 2017.10.30 Unit 3-2-608, East 3 District, Phone: + 86 28-68730102 New Century Global Center, Fax: +86 28-68730103 DPG-DTEC No. 1700, North Section, http://dpg-dtec.com Tianfu Ave. Chengdu, China [email protected] DPG-DTEC Contents INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Apas Kiri, Sabah, Malaysia ................................................. 6 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ABOUT US . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Who We Are .............................................................. 8 What We Do? ............................................................. 8 OUR TEAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 GEOTHERMAL RISK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Location - Ring of Fire ...................................................... 10 Project Acquisition ......................................................... 10 Reduced Risk - Known Resource ............................................. 11 RISK MITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 FINANCIAL RISK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 FINANCIAL RISK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 CASE STUDY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 TGE Apas Kiri Geothermal Project Apas Kiri, Sabah, Malaysia ................................................. 14 Design / Engineering ...................................................... 15 Turnkey Construction & Commissioning ...................................... 15 SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 CLIENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 PROJECT DETAILS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Preliminary Work Scope .................................................... 18 Contract Acceptance and Execution .......................................... 18 Detailed Power Plant Design and Enginnering ................................ 18 Phase 1 .................................................................. 18 Phase 2 .................................................................. 18 Phase 3 .................................................................. 18 Equipment Procurement and Construction .................................... 19 Project Completion, Commissioning and Acceptance ........................... 19 Operations and Maintenance ............................................... 19 PROJECT DETAILS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Phase 4 .................................................................. 19 Phase 5 .................................................................. 19 Phase 6 .................................................................. 19 TECHNOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 TGE Apas Kiri DPG-DTEC 2 Copyright © 2017 All Rights Reserved Geo Proposal DPG-DTEC AK-1D Analysis & IBHX Engineering ......................................... 20 TECHNOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 TECHNOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Turboden Heat Balance ................................................... 22 Proposed Power Plant Design ............................................... 23 TECHNOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Dual Closed Loop Working Fluid Systems ..................................... 23 TECHNOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Project Cost Savings from Previous Design ................................... 24 Proposed Well Bore and IBHX Engineering ................................... 24 Water Chemistry and IBHX Coating .......................................... 24 Performance and Risk Management Insurance ................................ 24 Drilling and Logging ...................................................... 24 Months .................................................................. 25 TIMELINE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 TERMS & CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Apas Kiri 30 MWe IBHX Generation .......................................... 27 Project ROI ............................................................... 27 BUDGET DETAILS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Heat Exchanger Discussion ................................................ 29 Nomenclature ........................................................... 29 Greek Symbols ........................................................... 29 Definitions .............................................................. 29 THERMODYNAMICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Geothermal ORC Power Plant Cycle ......................................... 30 Power Plant Modeling & Simulation ........................................ 31 MODELING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 WELL ENGINEERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 IBHX Geothermal Well Engineering ......................................... 32 Best Practice Handbook ................................................... 32 Introduction ............................................................. 32 Temperature ............................................................ 33 BEST PRACTICES GEOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Geology ................................................................ 34 TGE Apas Kiri TGE Apas Kiri DPG-DTEC Copyright © 2017 All Rights Reserved 3 Geo Proposal Geo Proposal DPG-DTEC Geochemistry ............................................................ 34 Drilling practices ......................................................... 34 Well design ............................................................. 34 BEST PRACTICES WELL DESIGN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Casing depths ........................................................... 35 Casing diameters ......................................................... 35 BEST PRACTICES CASING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Casing materials ......................................................... 36 Casing connections ....................................................... 36 Cementation of casings ................................................... 36 BEST PRACTICES DRILLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Perforated and slotted liner ................................................ 37 Drilling rig and associated equipment ....................................... 37 BEST PRACTICES DRILLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Drilling fluids ............................................................ 38 Well control ............................................................. 38 BEST PRACTICES DRILLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Running the open-hole liner ............................................... 39 APPENDIX B AK-1D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 AK-1D WELL REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 AK-1D - TOC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 AK-1D EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 AK-1D EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 AK-1D INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 APAS KIRI RE PPA (FIT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 APAS KIRI PPA TOC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 AK PPA RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 APAS KIRI PPA SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 AK PPA TGE Apas Kiri DPG-DTEC 4 Copyright © 2017 All Rights Reserved Geo Proposal DPG-DTEC ANNEXURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 APAS KIRI PPA LOCATION MAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 AK MAP AK1, AK2 WELLPADS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 AK COMPLETION DIAGRAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 AK FEED-IN APPROVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 AK FIT APPROVAL CONDITIONS A - F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 AK FIT APPROVAL CONDITIONS G - I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 AK FIT APPROVAL CONDITIONS J . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 List of Figures Figure 1 Schematic of traditional geothermal power generation . . . . . . . . . . 6 Figure 2 Schematic of IBHX geothermal power generation . . . . . . . . . . . . . 7 Figure 3 Apas Kiri project location . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 4 AK-1D test well profile. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Figure 5 Schematic of IBHX and Turboden geothermal power generation and optional district heating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Figure 6 Schematic of IBHX delivering 315.55°C heat from geothermal source to ORC. IBHX fluid returns to well at 179.44°C. IBHX reheats working fluid by 136.11°C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Figure 7 Turboden Heat Balance Diagram. Represents one of three units per well. 22 Figure 8 Schematic of Aon Risk Management and Risk Mitigation Process and Flowchart. Strategy combines all contracts, insurance finance and waranties under one point of management. . . . . . . . . . . . . . . . . . . . . . . 25 Figure 9 Schematic of ORC Mathematical Model . . . . . . . . . . . . . . . . . . . 31 Figure 10 Downhole fluid conditions - BPD . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 11 Casing strings and liner for a typical well. . . . . . . . . . . . . . . . . . . . . 35 TGE Apas Kiri TGE Apas Kiri DPG-DTEC Copyright © 2017 All Rights Reserved 5 Geo Proposal Geo Proposal DPG-DTEC INTRODUCTION Apas Kiri, Sabah, Malaysia 30MWe Geothermal Power Plant The 30MWe Apas Kiri Project in Tawau, Sabah, Malaysia is an excellent project for the deployment of our In-Bore Heat Exchange (IBHX) technology. The project has been under development by Tawau Green Energy (TGE) since 2011 and has already completed many of the development tasks such as securing a twenty-one (21) year Power Purchase Agreement (PPA) with a FiT fixed at RM 0.45/kWh ($0.11/kWh), grant funds to develop access roads, development of four (4) wellpads and drilling of the first exploration well, AK-1D. In addition, TGE has completed extensive subsurface studies including... • Geology • Geophysics • Geochemistry • LiDAR (light detection and ranging) surveys. The outcomes from all of these surveys were analyzed and integrated into the Apas Kiri Well Report. GeothermEx Inc, USA and Jacobs New Zealand produced the report. The Executive Summary and Introduction are included in Appendix B. The complete report is availble upon request. Their consensus is that seven production wells and four injection wells would be required to support the export capacity of 30MW. It was also estimated that the overall potential of the Apas Kiri geothermal reservoir could exceed 70MW. The investor backing TGE in this project pulled their investment in the spring of 2017. This presented an opportunity for DPG- DTEC to propose our In-Bore Heat Exchange (IBHX) technology as an alternative. We had spoken to TGE early in the year and were informed that we are welcome to develop a well at Apas Kiri if we bring our own finance. Now, it appears, the whole project has become available for consideration using the IBHX. We have the opportunity to acquire the project. There is a wide range of differences between the conventional binary technology originally proposed for Apas Kiri and our IBHX technology. There is nothing wrong with that, per Se. Enhanced geothermal is a valid technology and the above studies and analysis show that. However, the technology that we bring to Apas Kiri challenges this old thought and ushers in the new. Geologists and Engineers that have reviewed the potential of the IBHX in comparison to the development of deep geothermal reservoirs immediately see the potential. Take, for instance the studies undertaken at Apas Kiri. The recommendations are to drill seven production wells and four injection wells. Our proposed technology can achieve the same results with one well and exceed expectations with two production wells and no, zero injection wells. How can that be, you say? Let me explain... The IBHX is designed and engineered to the specific conditions of each well. But, regardless of well Figure 1: Schematic of traditional geothermal power generation TGE Apas Kiri DPG-DTEC 6 Copyright © 2017 All Rights Reserved Geo Proposal DPG-DTEC INTRODUCTION characteristics, the IBHX is a heat exchanger. It operates using a closed-loop organic working fluid. It’s only function is to extract heat from the formation and transfer that heat to the turbo generator’s working fluid. Similarly, in a nuclear power plant, the only purpose of the nuclear reactor and reactor vessel is to heat a working fluid in a closed loop. In both these cases, the super-heated working fluid is then pumped through a secondary heat exchanger. In the case of the IBHX, this occurs on the surface in the Turboden turbo generator. A small amount of heat (~25% - ~45%) is exchanged in this stage. The hot working fluid still retaining ~55% to ~75% of the heat is returned to the well. Figure 2: Schematic of IBHX geothermal power generation Following the laws of thermodynamics, the working fluid that is returned to the well only needs to be reheated by the delta of the heat used in the secondary heat exchanger. Our assumption (from the AK-1D well report) is the IBHX outlet temperature is 315°C and that the IBHX working fluid will enter the Turboden heat exchanger at a temperature of 315°C. The Turboden turbo generator will use 138°C or 44% of the heat from the IBHX to flash expand the working fluid in the turbo generator. Due to Turboden’s efficiency, the unit does not require much thermal energy. The IBHX working fluid is then returned directly to the well via the IBHX at a temperature of 177°C. The geothermal formation only needs to reheat the working fluid by 138°C or the delta of the energy used. The IBHX captures heat the whole length of the heat producing formation so raising the temperature from 177°C to 315°C is very quick and efficient. This conservative use of the available heat and subsequent “recycling” of the heat remaining in the IBHX working fluid yields 3x to 4x more thermal energy and is the differentiating factor between the two types of system designs. In contrast, the Enhanced Geothermal binary plant design uses the natural fluid in the well. It is passed through a heat exchanger on the surface and a working fluid is heated just as with the IBHX. However, whether it is water, steam or brine, there are inherent deficiencies and risks when using the natural fluid in this way... • Heat extraction is limited to where the formation is producing • Mineral content that is potentially harmful can build up scale within the heat exchanger, increasing O&M costs • As scale builds up performance and efficiency decline • Insufficient pressure and/or brine flow severely limit the amount of energy that can be produced • Excess heat, ~60% to ~80% is injected far from the borehole and is wasted. It has to reheat as it flows back to the well The proposal that follows delves into the additional cost savings from the elimination of injection wells and the reduction of the number of production wells needed. But, if those wells are eventually developed, the Apas Kiri site could produce substantially more power than was originally estimated using the conventional enhanced geothermal design. Conservatively, as much as 120MW. We look forward to developing this vast geothermal potential for Malaysia and all of Southeast Asia. We strive to be the lowest cost energy produced of all sources of energy. Mark Weiss Managing Director DPG-DTEC TGE Apas Kiri TGE Apas Kiri DPG-DTEC Copyright © 2017 All Rights Reserved 7 Geo Proposal Geo Proposal DPG-DTEC ABOUT US Having a strong international team helps us offer both efficient and cost effective geothermal solutions customized perfectly for our clients needs. We are an international collaboration of individuals and companies that provide high quality, cost effective solutions in renewable energy project development, engineering, equipment procurement and construction. We deliver premium renewable energy solutions throughout the world. We work with a wide range of valuable suppliers and technologies in our endeavor to provide our clients with quality, cost-effective solutions to their energy needs. We have an experienced and dedicated team of energy professionals. We are your best choice for a wide range of renewable energy technology development, engineering and construction services. We work closely with you in order to understand your business requirements and utilize the appropriate technology to get you the best design for your renewable energy system. Who We Are What We Do? Our professionals have proven industry and technical experience We focus mostly to transform our client’s energy independence and use innovative system design and construction techniques dream to a reality by providing quality systems. We help our along with standard methodologies to provide innovative client’s achieve their business objective on an overall aspect. energy solutions on time and under budget. We are committed to delivering excellent services focused on quality of work, cost control and time management. • Project Development / Project Management We strive to improve the quality of our technology offerings • Conceptual Design / Systems Engineering and by applying this, unleash the inherent underlying potential of our system designs. Our vision is to provide first rate, high • Technology Specification / Technology Procurement quality power generation solutions to our clients. Meeting these requirements allows us to exceed our client’s expectations while • Project Construction / Operations & Maintenance we expand and propel our professional business growth. TGE Apas Kiri DPG-DTEC 8 Copyright © 2017 All Rights Reserved Geo Proposal DPG-DTEC OUR TEAM We have a clear understanding of geothermal project development requirements, and we have the knowledge, skills and experience to successfully complete the proposed project. Drakon Power Group LLC (DPG) is a unique renewable energy development company. Our goal is DPG to provide a versatile integrated project solution, specifically designed to guarantee the success of the Owner/Investor/Client from per-construction design to O&M for the life of the power plant. We have built strong relationships with leading renewable technology manufactures and leverage them to provide our clients with the most cost and energy efficient renewable energy systems in the industry. DPG brings a flexible and nearly endless list of available services focused on our client’s project needs. From simply providing our clients with Tier 1 rated renewable products, to design-build engineering and construction consulting with onsite support, we deliver quality. In addition, DPG has the relationships to provide various project financing programs and options. This allows DPG Project Developer to assist in bringing any size project to construction and completion. Dongturbo Electric Company Ltd (DTEC) is an international corporation headquartered in DTEC Chengdu, China. With manufacturing bases in Deyang and Kunming, China, we are mainly engaged in the manufacturing of power & electric equipment, EPCC (engineering, procurement, construction, commissioning), and export and import business. DTEC also has branches and joint ventures in Malaysia, Thailand, and Philippines. Our business scope covers EPC, supply equipment and materials for thermal power including boiler, turbine, generator and their auxiliaries, BOP, electric and C&I etc; EPC and equipment supply for PV, thermal solar power, Wind & PV hybrid and energy storage systems; spare parts supply and power plant overhaul and maintenance. We have established close partner relationship with design institutes, manufacturers, erection EPCC companies, traders and end customers both in China and all over the world. DPG and DTEC signed a Memorandum of Understanding Collaboration early in 2017 agreeing to cooperate on the development of geothermal and other renewable energy projects in China and Southeast Asia. Since our inception as partners, we have Thousands of candles strived to bring a unique new geothermal heat extraction can be lit from a single candle, technology to China and Southeast Asia. It is this geothermal and the life of the candle will not technology that we propose to design and deliver in Malaysia, be shortened. Happiness never Thailand, Sichuan Provence, Yunan Provence and Tibet, China. decreases by being shared. We can provide both power generation and thermal heating as well as Hybrid power and heating applications. DPG-DTEC [email protected] TGE Apas Kiri TGE Apas Kiri DPG-DTEC Copyright © 2017 All Rights Reserved 9 Geo Proposal Geo Proposal DPG-DTEC GEOTHERMAL RISK Location - Ring of Fire Project Acquisition Geothermal energy as a heat source for electricity generation by the geological risk. The geological risk includes the risk of not is a renewable energy with many advantages: It is base load finding an adequate resource (short-term risk) and the risk that energy, it is produced local to where it is consumed and it is the resource naturally declines over time (the long-term risk). environmentally friendly. The AK-1D exploration well completed at Apas Kiri in August, 2016 indicates a fantastic resource for our IBHX thus the initial Apas Kiri, in the state of Sabah, Malaysia is surrounded by short term risk for this project has already declined while the producing geothermal power plants located in Indonesia and the long term risk is greatly alleviated by the conservative use of the Philippines. The Malaysian government has recognized that the geothermal heat that the IBHX extracts. Apas Kiri project is the first geothermal project in Malaysia. As such, they have provided grant money to develop the roads and well pads. They have granted access to the national park where the resource is located and they have facilitated the approval of a twenty-one year PPA with the state-owned power company for the purchase of the power. The project has been developed to the level of having the first exploration well drilled yielding a great deal of data on the available resource. This is presented in a comprehensive well report that has been provided. Since much of the CAPEX and OPEX is now known, we can accurately propose this project. Typically, the bankability of a geothermal project is threatened Figure 3: Apas Kiri project location TGE Apas Kiri DPG-DTEC 10 Copyright © 2017 All Rights Reserved Geo Proposal