Analysis of Geothermal Risks for Estimating Insurance Costs

Abstract

The analysis of risk is crucial to decision-making in any relatively new and developing industry. This paper describes a general methodology to analyze geothermal risks for the purposes of estimating possible insurance costs. Currently the methodology is being applied in a study conducted by Coopers and Lybrand for the Department of Energy (DOE) to determine the need for and feasibility of a geothermal reservoir insurance program. This paper identifies specific hazards that were identified in the study as posing significant risks to geothermal developments, and describe the methodology employed to assess their probability of occurrence and estimate cost consequences. Specific findings pertaining to the need for and feasibility of a geothermal reservoir insurance program are not provided. Views expressed are the author's own and are not necessarily shared by Coopers and Lybrand or the Department of Energy.