Assessing a Dutch Geothermal Direct-Use Project: A Detailed Buyers Technical Due Diligence
Sproule ERCE performed a detailed buyer’s technical due diligence of the Duijvestijn Geothermal Operation. This geothermal asset has been producing direct-use heat for a large greenhouse complex that is used to grow tomatoes year-round. The objectives of this study were to provide the client insights into: the history and status of the surface and subsurface installations, current and near-future potential risks and their implicated costs, and the feasibility and financial merits of future expansion.
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Project Highlights
- Technical Due Diligence of Geothermal Operation
- Financial Outlook Modeling
- Assessment of Compliance and Organization
- Multicriteria Risk Evaluation
Challenges:
Assess the Producing Project: The geothermal asset has been producing for several years. A detailed assessment was necessary to determine the condition and status of the reservoir, wells, and surface facilities.
Navigate Regulatory Changes: At the time of the Technical Due Diligence, forthcoming changes in the regulatory framework for geothermal operations complicated the assessment of compliance.
Coupling Above and Below Ground: To value the complete geothermal asset, it is essential to couple the assessment of the subsurface (reservoir and wells) with the activities at surface (facilities, heat energy system, and heat offtake demand).
Navigate Regulatory Changes: At the time of the Technical Due Diligence, forthcoming changes in the regulatory framework for geothermal operations complicated the assessment of compliance.
Coupling Above and Below Ground: To value the complete geothermal asset, it is essential to couple the assessment of the subsurface (reservoir and wells) with the activities at surface (facilities, heat energy system, and heat offtake demand).
Solutions:
Operational Experience: Sproule ERCE leveraged its extensive geothermal operational experience to assess the status of the asset and identify potential risks and their impact on future cost (capex or opex).
Subject Matter Experts: Sproule ERCE gathered a diverse team of subject matter experts including of reservoir, well, production and facility engineers, geologists, regulation specialists, and financial experts.
Multicriteria Risk Evaluation: To provide a clear overview and relative ranking of the identified risks Sproule ERCE performed a Multicriteria Risk Evaluation and ranked all risks. For intermediate to high risks, mitigation measures were forwarded.
Subject Matter Experts: Sproule ERCE gathered a diverse team of subject matter experts including of reservoir, well, production and facility engineers, geologists, regulation specialists, and financial experts.
Multicriteria Risk Evaluation: To provide a clear overview and relative ranking of the identified risks Sproule ERCE performed a Multicriteria Risk Evaluation and ranked all risks. For intermediate to high risks, mitigation measures were forwarded.
Values:
In-depth Technical Understanding: Sproule ERCE’s Technical Due Diligence provided the client with detailed insights into the current status of the geothermal asset as well as the potential short- and long-term risks.
Present and Future Value: The potential financial impact of present and future risk was presented to support the client with an informed evaluation of the geothermal operation.
Way Forward: Sproule ERCE proposed mitigation measures to ensure long-term heat production. Furthermore, Sproule ERCE reviewed the expansion potential of the geothermal asset and included commentary on the way forward for additional geothermal heat production.
Present and Future Value: The potential financial impact of present and future risk was presented to support the client with an informed evaluation of the geothermal operation.
Way Forward: Sproule ERCE proposed mitigation measures to ensure long-term heat production. Furthermore, Sproule ERCE reviewed the expansion potential of the geothermal asset and included commentary on the way forward for additional geothermal heat production.