KenGen Risks Losing Olkaria Wells Over 18-Year Licence Blunder Kenya Electricity Generating Company (KenGen) faces a serious legal and operational risk at Olkaria after an error in the coordinates of its geothermal licence left part of the company’s wells, steam infrastructure and other assets outside its legally recognised area. The licensing mistake, made nearly two decades ago, remains unresolved despite the Ministry of Energy and Petroleum acknowledging the problem in 2017. The dispute has raised questions about the security of KenGen’s investments, the government’s management of geothermal resources and the potential consequences for Kenya’s electricity supply. Olkaria is the country’s most important geothermal centre and accounts for the overwhelming majority of Kenya’s installed geothermal generation capacity. Licence Error Exposes Strategic Assets The problem dates back to September 19, 2008, when the Ministry of Energy and Petroleum issued KenGen a licence covering ...
El Salvador Invites Global Interest for Geothermal Well Drilling in Chinameca
The early engagement signals the beginning of a major development effort that could strengthen El Salvador’s position as one of the leading geothermal producers in Latin America. By inviting industry stakeholders to express interest before the formal procurement process begins, the project sponsors are seeking to ensure that the drilling campaign benefits from the best expertise available globally.
A Strategic Step Toward Geothermal Expansion
Geothermal energy has long played a significant role in El Salvador’s electricity mix. Thanks to its location along the , the country possesses abundant geothermal resources created by volcanic and tectonic activity beneath the surface.
The new initiative focuses on the , an area known for its geothermal potential. The field lies near the , a geological formation whose underground heat reservoirs could provide reliable power generation for decades.
The project is expected to form part of a broader geothermal development program supported by international partners and development institutions. Early market engagement is a crucial preparatory stage designed to help project developers understand industry capabilities, refine technical specifications, and design a procurement structure that will attract competitive bids once the official tender is released.
For a sector where drilling success often determines project viability, engaging the market early can significantly improve project outcomes.
Understanding Early Market Engagement
Early Market Engagement (EME) has become an increasingly common practice in large infrastructure projects, particularly in the energy sector. The approach allows project sponsors to interact with potential contractors and service providers before launching formal procurement.
Through this process, developers can obtain valuable feedback on issues such as:
- Technical feasibility of drilling programs
- Availability of specialized geothermal drilling rigs
- Expected drilling costs and timelines
- Operational challenges specific to the project area
- Contractual structures that best distribute risk
By opening dialogue with the market at an early stage, project developers can refine their plans and ensure that tender documents are realistic and attractive to industry players.
For geothermal projects, this is especially important because drilling operations represent one of the most expensive and technically complex aspects of development. A single geothermal well can cost several million dollars depending on depth, geology, and equipment requirements.
The Role of the World Bank
The initiative is being supported by the , which has been actively promoting geothermal development across emerging markets.
Through financing, technical assistance, and risk mitigation mechanisms, the World Bank has helped many countries explore and develop their geothermal resources. In El Salvador, its support aims to reduce exploration risk and facilitate investment in new geothermal infrastructure.
The Chinameca project is part of a broader effort to accelerate renewable energy development while strengthening energy security and economic growth. By supporting geothermal development, the World Bank seeks to help countries harness a resource that offers stable electricity generation with minimal environmental impact.
Unlike solar or wind power, geothermal energy provides baseload power, meaning it can operate continuously regardless of weather conditions.
The Importance of Drilling in Geothermal Development
Drilling is the defining stage of geothermal exploration and development. Even when geological surveys suggest the presence of underground heat resources, only drilling can confirm the temperature, pressure, and productivity of the reservoir.
The upcoming drilling campaign at Chinameca is expected to include several types of wells, including:
- Exploration wells to confirm geothermal potential
- Production wells to extract hot fluids from the reservoir
- Injection wells to reinject cooled geothermal fluids back into the reservoir
Each well provides critical data about the geothermal system, helping engineers determine whether the resource can support a commercial power plant.
Drilling operations often reach depths of 2,000 to 3,000 meters or more, depending on geological conditions. Specialized equipment is required to withstand high temperatures and corrosive geothermal fluids.
Because of these challenges, geothermal drilling demands expertise that often overlaps with the oil and gas sector.
Opportunities for Global Contractors
The early market engagement process opens the door for drilling contractors, equipment suppliers, and geothermal specialists from around the world to participate in the project.
Potential participants may include companies with experience in:
- High-temperature drilling operations
- Directional drilling technologies
- Geothermal well logging and testing
- Reservoir evaluation
- Drilling fluids engineering
Oil and gas drilling companies are also increasingly entering the geothermal sector, bringing technologies and expertise developed in hydrocarbon exploration.
For many contractors, the Chinameca project represents an opportunity to expand their presence in the growing Latin American geothermal market.
El Salvador’s Geothermal Legacy
El Salvador has long been recognized as a geothermal leader in Central America. Two major geothermal fields already contribute significantly to the national power grid
These facilities have demonstrated the country’s ability to harness geothermal energy effectively. Over the years, geothermal power has accounted for a substantial share of the country’s electricity generation.
The expansion into Chinameca represents the next phase of geothermal development in El Salvador, potentially adding new capacity to the national energy system.
Developing additional geothermal fields will also help diversify the country’s renewable energy portfolio and reduce dependence on imported fossil fuels.
Environmental and Economic Benefits
Geothermal energy offers several advantages that make it particularly attractive for countries seeking sustainable power solutions.
Reliable Baseload Energy
Unlike solar and wind power, geothermal plants operate continuously, providing stable electricity around the clock.
Low Carbon Emissions
Geothermal power plants produce significantly fewer greenhouse gas emissions compared to fossil fuel-based power plants.
Long-Term Energy Security
Once developed, geothermal fields can generate electricity for decades with proper reservoir management.
Local Economic Development
Geothermal projects create employment opportunities during exploration, drilling, and plant construction phases. They can also stimulate local economies through infrastructure development and supply chains.
Challenges in Geothermal Development
Despite its advantages, geothermal development also faces several challenges.
High Upfront Costs
Exploration and drilling require substantial capital investment before the resource potential is confirmed.
Geological Uncertainty
Even in promising geothermal areas, drilling results can vary significantly.
Technical Complexity
High temperatures and corrosive fluids require specialized materials and engineering solutions.
Financing Risks
Private investors often hesitate to finance geothermal exploration due to the inherent risks involved.
This is why development institutions such as the World Bank play a critical role in supporting geothermal projects in emerging markets.
Why Chinameca Matters
The development of the Chinameca geothermal field could significantly enhance El Salvador’s renewable energy capacity. If successful, the project may lead to the construction of a new geothermal power plant capable of generating clean electricity for thousands of households.
Beyond its direct energy benefits, the project could also serve as a model for geothermal development in other parts of Central America and Latin America.
By demonstrating how early market engagement can attract international expertise and improve project planning, the initiative may inspire similar approaches in other geothermal-rich countries.
The Road Ahead
The early market engagement phase marks the beginning of a broader procurement process. After gathering feedback from interested stakeholders, project developers will finalize the tender structure and launch the official bidding process.
Companies that participate in the early engagement phase will gain valuable insights into project requirements and timelines, potentially positioning themselves for future participation.
Once the drilling campaign begins, the results will determine the scale and pace of geothermal development in Chinameca.
If the resource proves commercially viable, the field could become one of El Salvador’s next major geothermal power hubs.
A Growing Global Geothermal Momentum
The Chinameca initiative also reflects a broader global trend. Countries around the world are rediscovering geothermal energy as a key component of the clean energy transition.
Advances in drilling technologies, reservoir modeling, and geothermal engineering are expanding the range of locations where geothermal energy can be developed.
From East Africa to Southeast Asia and Central America, geothermal resources are increasingly being recognized as a strategic asset in the transition toward low-carbon energy systems.
Conclusion
El Salvador’s call for early interest in geothermal well drilling at the Chinameca field represents an important step toward unlocking new renewable energy potential. By engaging the global market early in the process, project developers aim to ensure that the drilling campaign benefits from world-class expertise and competitive participation.
See also:Bijeljina Launches Three-Year Geothermal Energy Utilization Plan
With the support of the World Bank and the involvement of experienced geothermal contractors, the Chinameca project could mark a new chapter in the country’s geothermal journey.
If successful, the initiative will not only expand El Salvador’s clean energy capacity but also reinforce the growing role of geothermal power in the global energy transition.
Source: World Bank Group
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