Extraction timing and economic incentives for geothermal reservoir management

This article considers the best extraction program for a hot water geothermal reservoir with emphasis on the optimal time to begin extraction. Using a production function relating the rate of extraction to the quality of produced energy, an operational model is presented that gives the best time to begin production, the optimal pumping rate and the best planning horizon. Also investigated is the effect of economic parameters and incentives on these decision variables. This paper studies some means by which regulatory agencies can influence the timing and rate of exploitation of geothermal energy by manipulating economic incentives, and provides information for both public and private decision making in the management of this resource.