Author: Hon Paul J. Lewis | Date: 25 April 2019
The Unlocking of the Geothermal Potential for Montserrat programme had the primary aim of demonstrating an exploitable geothermal resource on the island of Montserrat. Montserrat’s reliance on expensive fossil fuels and the high costs of electricity production has long been seen as a constraint to its economic growth prospects. Exploiting a potential geothermal resource has been a key objective of the Government of Montserrat for many years and was incorporated into both the island’s Sustainable Development Plan 2008-2020 and Energy Policy.
Lower electricity costs and moving to greener, renewable sources of energy would be more attractive to private sector investors considering doing business in Montserrat. In addition, the country would have increased energy security and be less exposed to fluctuations in high fuel costs.
High levels of capital investment required and the risks associated with this type of work meant there would be little interest from the private sector to invest in exploratory drilling. Montserrat with a small population of approximately 5,000, represents a small market with limited attraction for private sector actors to invest at the exploratory stage that is drilling of wells. As a result, DFID Ministers agreed to fund the exploratory drilling phase of the Programme in 2011.
In 2012, Government of Montserrat successfully tendered for the services of both a drilling company IDC and a drilling supervisory company Capuano engineering company to undertake the required works. The drilling of two wells was completed by government on time and within budget and both of the wells, named MON 1 and MON 2 showed the existence of a geothermal resources in testing.
This is evidence that the Ministry of Communication, Works, Energy and Labour has delivered successfully when assigned duties on the geothermal project.
In 2013, DFID Ministers approved the drilling of a further well to augment the production capacity of MON 1 and 2 by allowing for one of the three wells to be used for reinjection purposes.
It was expected that with government delivering the two wells successfully the same management team would continue for well 3 however DFID insisted on a different arrangement.
DFID for some reason made a decision against the wish of GOM to lead on the drilling and drilling supervision.
DFID also made the decision to use its own procurement system to procure the drilling company IDC and the supervising company GRG.
DFID entered into direct contract with IDC the drilling company
DFID entered into direct contract with RGR
DFID then limited the role of government to facilitating and securing the land, preparing the site, the drill pad and dredging the Plymouth jetty to allow the ship to land equipment.
Government was also asked to recruit the Project Manager and provide office space in MCWEL.
This complex arrangement is contrary to best practices. The government disagreed with this approach and warned of the dangers of this arrangement. DFID insisted on taking this approach.
DFID had to authorize the two companies it entered into contract with, to engage with the Project Manager as the company’s only answer to the entity with whom they were contracted. The Project Manager had the additional role to then mange the activities assigned to government. The ministry warned that this arrangement would only lead to confusion and will eventually frustrate the Project Manager. The Project Manager out of frustration eventually resigned and left island. The Project Manager started on May 3 2016 and left August 31 2017 as the complex arrangements were untenable.
Drilling of the third well started on Monday 22 September 2016. The end date for the third well drilling was set in the business case as December 2018.
MON 3 was drilled from the surface down to 2.668kilo meters at a temperature of 186 degrees Celsius in 2016.
Collapse took place around 2.200 kilo meters. The fragility of the well’s structure required the well to be sealed with mud to prevent any further collapse. A geology well logging and injection test was conducted to establish permeability. There was no permeability and feed zone established.
The third well is currently capped and will require rehabilitation works for it to be used as a production or reinjection well. DFID and IDC entered into a negotiation lasting from 2016 up until near the end of 2018.
On conclusion of negotiations between IDC and DFID;
IDC on accessing the drilling rig reported that the rig is in no condition to continue drilling and decided to remove their rig and transport to Iceland for repair. IDC at the same time with a drilling contract in St Vincent took remainder of the equipment to
In addition to the above situation, December 2018 was the end date stipulated by the business case for drilling of third well thus with no contract signed to continue drilling by DFID and IDC before December 2018, it meant that the end date for drilling the third well expired with the third well was incomplete.
It is obviously disappointing IDC and DFID failed to agree on a solution to deliver a successful third well especially given the decision of entering directly into contract with each other initially.
Madam speaker DFID had insisted on engaging the market for the surface plant development as its funding would only be provided for the drilling of the wells.
The government’s early market engagement provided information to the market on the two completed and tested wells MON 1 drilled to a depth of 2298meters BOH temperature of 230 degree Celsius and MON 2 drilled to the depth of 2870meters BOH(bottom of hole) temperature of 270 degrees Celsius. The market was also informed that a third well was under construction.
The engagement started towards the end of 2017 and was completed early 2018. The main purpose of the early market engagement was to see what interest if any was there for the financing, designing, procuring, constructing, commissioning and operating of a geothermal surface plant for generating electricity here on Montserrat.
Seven companies responded to the early market engagement showing an interest in the financing and development of a geothermal surface plant after accessing the information provided on the wells.
The results of the early market engagement was discussed with DFID and a request made for financing technical assistance to develop the technical specification required in preparation for, issuing a RFP request for proposal. The necessary legal assistance and public private partnership experts would be financed also. The technical assistance would be financed under the technical assistance portion of the CIPREG Capital investment for resilience and economic growth. The total amount for the CIPREG is 32 million pounds.
Madam speaker not withstanding announcing the next steps for geothermal energy production and how the various components are likely to be financed this government has demonstrated its commitment to integrating several renewable sources on the grid to include wind, geothermal and solar.
This government starting with solar has introduced over 10% green clean energy to the grid in March 2019 with the integration unto the National Electric grid of a 250kw utility scaled solar project. Work has already started with project activities to allow us to start the 750kw with battery backup. The completion of the 1 MW utility scaled solar project with battery storage will bring the amount of renewable energy on the grid to over 40% of its peak demand. This is a reintroduction of renewables onto the grid after 23 plus years a significant achievement. Fuel savings will reduce fuel surcharge thus reducing the electricity bills of consumers, a relief to MUL customers. We are giving serious considerations to reintroduction of wind back on the grid. Wind has the potential of generating electricity day and night and will be a good complement to the solar.
Madam speaker I thank you for the opportunity to present this ministerial statement.