Alcoa backs Iceland geothermal project

Pittsburgh-based aluminum maker Alcoa (NYSE: AA) said today it made a "significant contribution" to a geothermal power project in Iceland.

The amount of the investment was not disclosed.

The Iceland Deep Drilling Project consortium is investigating the economic feasibility of producing energy and useful chemicals from geothermal systems at supercritical conditions.

These are natural systems where underground water becomes super-heated by close proximity to almost molten rocks.

Alcoa said the supercritical, or high-temperature, geothermal systems could potentially produce up to 10 times more electricity than the geothermal wells in service today.

"If we could connect supercritical geothermal energy to our world class aluminum smelting expertise, and the metal's unrivaled ability to reduce greenhouse gas emissions generated by such things as transportation, then we are really beginning to make a difference that will be beneficial all over the world," said Bernt Reitan, Alcoa exec. VP.

The three Icelandic power companies in the consortium, Hitaveita Sudurnesja, Landsvirkjun, and Orkuveita Reykjavikur, will each fund the drilling of a 3.5 kilometer to 4 kilometer deep well in their own geothermal fields.

Orkustofnun, the national energy authority, is also part of the consortium.

Alcoa said the first wells will be drilled in 2008 at Krafla in northeast Iceland and tested the following year.

The company said two new 4 kilometer wells will be drilled at Hengill and Reykjanes geothermal fields during 2009 and 2010, and, subsequently, deepened.

Pilot plant testing is expected to be completed in 2015.