Henry Veizades, Veizades & Associates. Iceland Geothermal Conference 2013 March 5-8, 2013, Harpa, Reykjavík

2.  What is Project Management (PM)?
 Ensuring Project Success
 Planning Process
 Fast Track Approaches
 Case Studies
› Success and Failure Examples

3. “The project manager is expected to
integrate ALL aspects of the project,
ensure that the proper knowledge and
resources are available when and where
needed, and above all, ensure that the
expected results are produced in a
timely, cost-effective manner.”
– Meredith and Mantel

4.  Project Mangers have to Plan and
Manage:
› Cost
› Schedule
› Resources (Labor, Equipment, Etc)
› Quality
› Performance
› Safety
RISK

5.  Project Managers do not focus on RISK
 What is the largest RISK in geothermal
projects?
› Geothermal Resource
 Highest project cost
 Unknown parameters
 Highest deviation from original
budget
Poor Planning = High of Failure

6. Identifying
RISK
Securing
Finances
Proper
Scheduling
Design,
Construction,
&Procurement
Contracting
Approach
Planning
Process

7. Tools Available to PM:
 Reservoir Assessment & Site Exploration
 Feasibility Study
 Detailed Project Estimate
 Detailed Schedule
 Contracting Approach
 Experienced Design/Construction Firm

8. Reservoir Assessment
 Geophysics & MT Survey, Flow Testing,
Interference Test, 3D Reservoir Model
Site Exploration
 Geochemistry, Topo & Field Mapping, Weather
Station
Goal: Understand Geothermal Resource

9. Feasibility Study
 Identifies RISK and mitigation methods early in
project
 Defines reservoir development plan
 Recommends cycle selection
 Small % of total project budget
 Very high importance

10. Typical Topics Covered:
 Cycle Selection
 Cost Estimate
 Project Schedule
 General Arrangement
 Design Criteria
 Land Acquisition & Permitting
 Local Issues & Electrical Intertie

11. Life of a Geothermal Project
 Exploration Phase
› License, PPA, Legal Framework
› Land Appropriation & Permitting
› Reservoir Assessment & Development
› Feasibility Study
› Obtaining Financing
 Engineering Design Phase
› Well Field Design & Construction
› Power Plant Design & Construction
2-5 Years
2-4 Years

12. 0 12 24 36 48
Resource Gathering System
Power Plant
DETAILED DESIGN
Feasibility Study
Reservoir Assessment
Well Drilling & Well Pad
Site Exploration/Development
Legal Framework
PROJECT DEVELOPMENT

13.  Procurement & Timing
› Well Field Development
 Drill rigs, strings, bits, flow test equipment
› Plant Design
 Turbine, Generator, Pump, etc. lead times
 Cooling Tower construction duration
› Commissioning Schedule
› Existing Plants
 Planned Outages

14. “Fast Track” Project Prerequisites:
 High confidence in reservoir
 Solid understanding of scheduling issues
 Detailed feasibility study and resource assessment
 Experienced design and construction firm
 Correct contracting approach/project delivery
method

15. “Fast Track” Drawbacks
 Owner must assume risk
 Equipment must be bought early (or used)
 Design elements are sacrificed
 Risk of expanding design budget
 Financiers wary of extra risk

16. Fast, Good Cheap, Quality
Fast:
 Accelerated project schedule
 Better return on investment, incentives
 Sacrifice quality design, efficiency, and
performance
 Higher risk
 Usually the first to go

17. Fast, Good, Cheap,
Cheap:
 Lower project costs - better return on
investment
 Easier to finance
 Sacrifice good design, quality, efficiency,
durability
 Higher risk of long term problems

18. Fast, Good, Cheap – Can only pick two
Quality:
 Higher quality design, better efficiency,
performance, longevity
 Lower overall risk
 More expensive- lower return on investment
 Longer project schedule

19. You are given the options of Fast, Good and
Cheap, and told to pick any two. Here Fast refers to
the time required to deliver the product, Good is
the quality of the final product, and Cheap refers to
the total cost of designing and building the
product. This triangle reflects the fact that the three
properties of a project are interrelated, and it is not
possible to optimize all three – one will always suffer.
In other words you have three options:
 Design something quickly and to a high
standard, but then it will not be cheap.
 Design something quickly and cheaply, but it
will not be of high quality.
 Design something with high quality and
cheaply, but it will take a long time.

20.  Germencik Geothermal
› Aydin, Turkey

21.  Preliminary Site Exploration completed
by MTA is 1988
 Guris Awarded license in 1998
 Initial Reservoir and Project Assessment
Completed in 2005 through a USTDA
Sponsored Feasibility Study
 Project Completed and Commissioned
in 2009

22.  Project Challenges
› High Gas 1.8 to 2.2% NC Gas in the reservoir
› High Calcite Scaling in production wells
› High Injection Pressure
› First Privately Developed Project in Turkey
› Owner had no prior Geothermal Development
Experience
› Owner Required EPCM contracting approach
› Constrained Project Schedule as a result of
financing requirements and land acquisition
delays

23.  High NC Gas
› Required Efficient Gas removal system
› Advanced Direct Contact Condenser
› Hybrid Gas Removal System

24.  High Calcite Scaling in production wells
› Long Term Scaling Testing
› Multiple Scale Inhibitors Tested
› Testing Resulted in Optimum Scaling
mitigation system

25.  High Injection Pressure
› Injection Testing performed during Long Term
Flow Test
› Success during Long Term Test defined
injection Requirements

26.  First Privately Developed Project in Turkey
› Land Acquisition challenges delayed project
implementation
› Special Governmental Intervention to
complete land procurement process

27. Owner had no prior Geothermal Development
Experience
› PM requested “Geothermal 101” Training
 Learned about Reservoir Risk and mitigating
approaches
 Followed Recommendation presented in
Feasibility Report
 Evaluated Risks and implemented Strategies to
Minimize Risk

28. › Owner Required EPCM contracting
Approach
 Engineering, Procurement and Construction
Management performed by owner using a
dedicated experience team
 Relied on International Firms to supplement
Turkish Consultants

29.  Constrained Project Schedule as a result of
financing requirements and land acquisition
delays
 Direct communication with local authorities
 Special Procurement and Land Acquisition
Approach

30.  Aggressive and Directed Project Management
1. Owner Required Detail Feasibility Study
2. Feasibility Study Identified high risk items
3. PM directed solution to all high risk items
4. PM understood reservoir risks and defined
mitigation measures
5. Delays in project completion were a result of
deviation from the Feasibility Study cost
estimate.

31.  Alașehir Geothermal
› Manisa Province, Turkey
› USTDA Funded
 Developed detailed Feasibility Study:
› Identified all risks
› Recommends risk mitigation measures
› Focuses on reservoir development
 Currently in drilling phase
 On track for success

32. Numerical Simulation Figures

33. Production Well
Geologic Log

34.  Did not implement results of Feasibility Study
 Changed Equipment Selection and Project
Development Strategies
 Inexperienced drilling strategies
 Transitioned from PC to EPCM approach
with inexperienced contractor
 Selected unproven project elements
 Project late, over budget and did not meet
proforma requirements

35. 1. Detailed Understanding of all project elements
2. Develop Project Team with previous
Geothermal Experience
3. Reevaluate project development approach
through out project Implementation
4. Prepare a Detailed Feasibility Study and focus
on risk identification
5. Insist on Tried and True over new and
unproven technologies
6. Develop realistic project schedule and
budget

36. Henry Veizades
5 Third Street, Suite 400
San Francisco, CA 94103
email: HGVeizades@veizades.com
tel: +1.415.394.8855
www.veizades.com
Questions?