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Geothermal Ventures: A Comprehensive Approach to Technical Risk Assessment​

Netherlands / 2024 / Geothermal Consulting

Sproule conducted a thorough technical due diligence assessment on the geothermal asset portfolio of a leading operator, aiding a private equity firm in its acquisition of a majority stake. Drawing on Sproule’s extensive operational expertise and deep knowledge of geothermal systems, our team performed a detailed review of the subsurface geology, proposed well designs, reservoir and surface facilities engineering, project execution plans, financial forecasts, and the operator’s overall risk management strategy.

Project Highlights

  • Technical Due Diligence of Geothermal Development
  • Financial Outlook Modelling
  • Assessment of Risk Mitigation Strategy
  • Multicriteria Risk Evaluation

Challenge

Subsurface Uncertainties: In the realm of geothermal project, the absence local well data, necessitates a careful analysis of subsurface uncertainties. This is critical for accurately determining geothermal resource potential and evaluating proposed design concepts.

Developing Preliminary FEED: Throughout the technical due diligence phase, the subsurface characterization, risk assessment, and Front-End Engineering Design (FEED) of the geothermal project were still in development, requiring careful scrutiny.

Unique Project Design: The proposed geothermal concepts involved an unconventional and opportunistic approach to the well and completion design.

Solution

Assembling Technical Specialists: To effectively address subsurface uncertainties and associated risks, Sproule assembled a multidisciplinary team of subject matter experts to validate the proposed geothermal potential and concept design.

Leveraging Operational Experience: Given the uncertainties associated with development projects, understanding the operator’s risk mitigation strategy is vital. Sproule’s operational experience provided the context for a thorough assessment.

Conducting a Multicriteria Risk Evaluation: To clarify the landscape of identified risks, Sproule implemented a Multicriteria Risk Evaluation, systematically ranking each risk for informed decision-making.

Value

Comprehensive Technical Review: Sproule delivered a detailed evaluation of uncertainties, advancing FEED studies, and pinpointing key risks, equipping the client with essential insights for their investment.

Contextualizing Risk and Benchmarking KPIs: All identified risks were contextualized within the larger portfolio, complemented by KPI benchmarks, offering the client a comprehensive perspective on the potential investment opportunity.

Portfolio Perspective on Financial Outlook: A thorough analysis of present and future risks was presented, aiding the client in making informed evaluations regarding the geothermal asset portfolio.




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