Vallourec S.A. (VK) Earnings Call Transcript & Summary

Good morning. Welcome to today's webcast. Vallourec's THERMOCASE Vacuum Insulated Tubing, a cost-effective solution for geothermal applications. I'm Kurt Abraham, Editor-in-Chief and Chief Forecaster of World Oil, and I will be your moderator today. Geothermal energy has a clean and sustainable resource generated by the heat below the earth surface. Vallourec's THERMOCASE tubing has been a key component in a new closed-loop extraction technology developed by GreenFire Energy to expand the scope and reduce the cost of geothermal power generation. THERMOCASE VIT is an ideal candidate for such application with best-in-class insulation performance in high service temperature. Due to the nature of the pilot, some specific performance required adjustments of design parameters to allow safe performance of the VIT in the field during the test. During this webcast, Gabriel Roussie will share the specificities and benefits of this solution and give an insight into the successful project with GreenFire Energy. Now a little bit about our speaker this morning, Gabriel Roussie joined Vallourec in 1995 at the Vallourec Research Center, focusing initially on manufacturing processed and automotive parts simulation. From 1998 to 2006, he held several positions in the OCTG division as project manager, developing expandables and riser connections. After a few years in the drilling division as an R&D director, he joined the OCTG division again as innovation director. And since 2016, he has been the THERMOCASE product line manager based in Houston. He holds a master of science and engineering degree from ECN France, is registered as a Vallourec product application expert and is a contributor to 36 VAM patents on VAM premium connections, risers and drill pipes. Now before we get started, let's review some general housekeeping notes. [Operator Instructions] So now let's get started. Gabriel, please proceed.

Thank you, Kurt. Good morning, everyone. I'm going to start this presentation with a couple of pages about Vallourec Group. And then we'll be -- I'll be presenting what THERMOCASE is about, what this product is about with some track records and applications. And then we'll get into this GreenFire geothermal project that is subtitled to this presentation. So I have a good chunk about that. And then I will wrap up with a few developments we've been going through. And obviously, we have a Q&A after that. Let's get started. So Vallourec Group is a solution maker. We are -- I started at the [ research ] center, and I really enjoyed all these years with Vallourec as an engineer, supporting customers with new ideas and new developments. So -- and we are able to do that in many countries, as you can see, 20 countries. And we have the largest portfolio of solutions on our markets. So that's in a nutshell what we can do at Vallourec. And I believe we can deliver trusted solutions and THERMOCASE is one of them, and I'm going to show that. Next page is about Tube-Alloy, which is a company of Vallourec Group based in the U.S. We've been serving the oil industry for 40 years with accessories and engineered products. So THERMOCASE is a product from Vallourec Tube-Alloy. And at Tube-Alloy, we serve mostly end users with accessories, but also OEMs with threading specialty components. Okay. That's it for the general view. It's not about -- too much about that, but just a quick overview here. So let's get into what THERMOCASE VIT is. So THERMOCASE VIT a high-performance insulated tubing. It has a double wall. And between the walls, we pull deep vacuum to provide insulation between the ID and the OD. That vacuum is gathered. It is a system that is able to maintain the vacuum over a long period of time. It also includes a multilayer insulation system that prevents radiations from migrating from the ID to the OD. The main applications of such an insulated tubing are thermal wells with steam injection. That is very common in Canada, but in many areas in the world as well. The next application I have here is well integrity. Here, mostly, it's about protecting the casing from the effect of heat. Then there is a flow assurance application for insulated tubing, which help maintain temperature on the produced fluid to avoid formation of solids going its way up. And any -- really, any application where temperature or heat management is critical can be a candidate for insulated tubing or this THERMOCASE VIT solution. There are benefits to using an insulated tubing. It's really -- the main one is, there is no need for any specific installation operation. It runs like tubing. It's -- it doesn't require any specific equipment to run it. It comes to rig ready to use. It may have a positive cost impact in the production in the early days. So while it's definitely a CapEx increase compared with standard tubing due to the added wall and the conversion process, it may provide benefits really quickly, in some cases, just within months after installation. It's very durable. So it's not something that you use once and then you don't have it, you have to replace it. During walkover, you can reuse it. It's very long lasting. It has a 20-year design life. And we have proven performances over several years in critical applications. The benefit of why, let's say, you would consider VIT usually despite its CapEx cost is that it provides reduced OpExes. So there are some examples here on this page. I'm going to see if I can have some time later into detail a little bit. But this today is mostly about geothermal. So my economic pages will be about geothermal. Okay. Just a summary on this slide is difficult, but I'm going to just rephrase a little bit what VIT does, just to explain what heat transfer mechanism we are able to prevent with VIT. So just this illustration shows you several heat transfer. So we have the convection in the water. That case which is -- it could happen in any fluid. So these are movements of the fluid that move the heat around and mix the heat between various areas of the fluid. That's clearly what could happen if we didn't have a vacuum between the pipes. We could have convection in the gas that's there. The conduction is what happens in the steel. So you have one side of the steel that's hot. The other side will get hot rather quickly because steel is not a very good insulator. You will see conduction in the steel. The evaporation part could happen if you have a phase change somewhere. We don't have that so much in our applications, though it could happen. VIT will not affect that change of phase in the fluids, but we don't have fluid in the VIT that could change phase either, so that's not really covered. And as far as radiation goes, this is one that most applications or most simulation would forget about. In many applications, we don't have that behavior in our wells. But in some cases, you could. So that is an important factor, and VIT prevents radiation very well with the MLI system we have. So basically, VIT prevents convection, conduction and radiation and doesn't address evaporation. That's not happening in our product. It could happen in the wells, phase change. So here is just a very quick way to measure how VIT insulation performance compares with other types of insulation, possible insulations or even just plain materials. So you can see carbon steel up here. It's a very high number. It's not a good number. So it's the high end of the number, the worst, in fact, in terms of insulation. So this is thermal conductivity. We call it k-value here. And you can see the VIT body at the bottom, very close to the vacuum, which is -- has no conduction. But the VIT body is the number we can achieve with our mechanical assembly system and with our vacuum system. So it's an exceptionally good insulation, and magnitude is better than plastic or even polyurethane, which we know is a good insulator already, just even magnitude is better than polyurethane. Okay. That's really a quick overview on the thermal properties. Here is a busy slide for sure, but it's a long history as well. So you can see, we started as GE in the late 60s. And so this concept of Vacuum Insulated Tubing was invented during the '80s later on with GE and Kawasaki. So that is really a long history, and this technology has been around a long while. It's been there, and it's been perfected over the years. You can see in these dates that I'm showing are showing improvements or new applications, new developments. So what this slide really illustrates is that the product has adapted to the market evolution. For example, in the late '90s, the construction of the THERMOCASE plant in Houma, Louisiana. This is where we build VIT today, was designed to sell the Gulf of Mexico with APB problems, which appeared at the time. So that's one of the examples. And you can see, 2019, we have this first close of geothermal application. That's another example that I will be developing today. So again, a long history through the years with GE, Kawasaki, [indiscernible] and now Vallourec taking the lead in developing the product and providing it where it's needed. Actually, it's needed. It can be used anywhere. So you can see the applications here. Not all of them are on the slide. But you can see anywhere in the world, we have been serving, including Asia, Russia, Europe, but also Africa, South America and a lot, of course, in North America. But anywhere in the world, we have been able to serve from this company here located in Houma, Louisiana. To make things a little bit more specific, and I have these 2 slides about the construction. So this is historic construction, we call it 750. And this construction uses the outer pipe to carry the loads through the thread. And so from the outside, the tubing really looks like another tubing, any other tubing, and the insulation is made on the ID. You can see the internal pipe being attached on the ID of the outer pipe. So that is good for strength. The outer pipe has usually more strength than the inner, and this is the highest strength solution within the VIT. The next solution has been developed to improve clearance. So this solution provides a thread, this time, on the inner pipe. And on this case, it's an upset inner pipe. And the coupling in this case can be flushed with or less -- has an OD less than the pipe OD, the outer pipe OD, which means you have less or better clearance. We have better clearance with such a solution. The drawback usually is, you lose a little bit of strength, so that needs to be balanced. But we call this model 970. And this one had an extended coupling and an [ XL ] insulator. And this is -- this has been adopting in many instances because of the improved thermal performance as well. Okay. So some more about what we've been doing with this product, so in terms of applications and track records. So you can see here a good list of projects in the Gulf of Mexico. We've been serving the Gulf of Mexico since many years, more than 20 years now. This is only a reference of the last 10 years. The volumes of pipes that is being used is relatively small. It's a niche application. In fact, a good thing about VIT is it can be mixed very easily with any tubing. And what that does is you can switch back and forth. So you put the VIT exactly where you need it. Obviously, that helps you with the economics. So usually, on a 20,000-foot well, only 3,000 feet of VIT are needed. This is a nice illustration of who -- what customer and some of you are around here on the call, so I wanted to thank every customer who trusted us over the years. And obviously, not all of the customers are on this. So anyone who trusted us, and I'm sure some more will come, but this shows that this product has been very convincing and been very useful in many wells around the world and in many critical applications as well. So as a summary on the application side. This is a slide that I have for thermal well and steam, definitely the most applications are SAGD, CSS is also using VIT in some cases. In the case of well integrity, I talked about APB, which annular pressure buildup, the issue we have to prevent in mostly subsea HPHT wells. But there are also other well integrity issues. Not all of them are listed, but one of them that is important is permafrost preservation and natural hydrate protection, and that could be surface or land or it could be subsea. In terms of flow assurance, it's mostly avoiding formation of condensates, like paraffin or wax and also hydrate control, so avoid formation of hydrates extended time. So that was a wrap-up of general application that we've been serving over the years with VIT. So this one project with GreenFire is a new application. Definitely, it's innovative. And I'm going to spend a little bit of time explaining this. So the first explanation is going to be, okay, this is geothermal, what VIT can do for geothermal. It's not been used as far as I know yet for commercial geothermal projects. Most geothermal projects don't use tubing. So we -- the only application we saw on traditional applications so far is VIT could be used to prevent heat losses in cold spots, during -- cold spots, sorry, or let's say, an aquifer that could cool some section of the casing where the steam is flowing and you would lose some of that power through steam condensation. So the VIT could help bridge those cold spots with a few joints of insulated casing, and this would help recover the [ SLP ] losses that those aquifers generate. That's one possible application VIT. We haven't -- we have yet to find a good application for it. It needs to be planned quite well ahead of time because obviously, the casing can't be changed and you need to plan for it early on. So in the case of GreenFire, so the application is a single well, supercritical CO2 geothermal technique. So the test was about using or retrofitting a single well that is producing steam, but trying to capture it through VIT with heat -- downhole heat exchanger system. So this is what I'm going to deep dive into and explain how it works and what we did to help make this test successful. The traditional geothermal use an injection well and production wells. So you inject water. Water flows through the formation. Hopefully, it reaches the production well, and you can recover the steam there. That is very powerful, very efficient. When you can do that, you get a good system that's been working in many areas. The closed loop system on the right, instead of injecting in 2 different wells or the closed system we are talking about today is a closed loop system on a single well. So you inject the fluid through the tubing, and it heats up at the bottom of that same well and moves back up the same well in the annulus around the tubing to the surface. And obviously, it's hot when it moves up. It's cold when it moves down. And you don't want to lose that differential temperature. That's what you're trying to generate. So in order to avoid that, you have to insulate the downflow from the upflow. That's why VIT is needed in this particular application. So that's what we did with GreenFire in a nutshell. So that is what we are successfully able to implement. Here is a quick evaluation of why VIT could be or how VIT could be economically viable on a closed loop system like this. So this is -- this chart shows, it's a published document. It shows cost of geothermal wells in several areas. One of them would be Europe, but you have U.S. The cheapest one would be on the left. So I chose something in the middle, not expensive, not cheap, something in the middle. And with that, the numbers I have with this is about EUR 6 million for the first 3,000 meter well and then close to EUR 4 million for the next -- for every 1,000 meters beyond that. So yes, the slope changes. Of course, a deeper well cost more per meter. So that's the base cost of standard wells. The next parameter is closed-loop systems will improve on the heat rate, what I call heat rates, which is how many wells you need to actually produce. And so you have injection wells. You have production wells. You have some of the wells that don't communicate as well as you would like to. So they are -- these are the costs that I'm talking about here. So typically, 60% is commonly experienced from a standard conventional high-temperature geothermal to closed loop. So that is what I'm basing. This is CapEx cost of the well itself. I'm not talking about CapEx cost on the surface, and I'm not talking about OpEx costs. But still, I would like to mention that the closed loop system has a positive impact on the broader chart of refrigerant, which is going to lead to more efficient surface facility, better corrosion management and reduced parasitic power loss. So what this does is you can select a refrigerant to have surface facility that you can optimize. You don't have water circulating into the formations, loading itself which causes compounds so you can manage your well conversion a lot better with a chose -- a refrigerant of your choice. And you have parasitic power loss which is how much energy do you need to pump water down the wells, and that is taking away some of the electricity you're generating at the surface. With the closed loop system, you can save on that, and you have much less parasitic power losses. So that's the model basic. Next page is showing you a scenario. In this scenario, we have 3 production wells and a couple of injection wells and 4 traditional, typical high temperature geothermal, producing about 15 megawatts. And the cost of the well itself, not talking about the surface, not talking about operations is 3 -- a bit more than EUR 3.27 million per megawatt for conventional. If you save with the heat rate, so 100% heat rate, close to 100% heat rate with closed-loop systems and then add VIT, obviously, you have to add the VIT to the wells and possibly add, let's say, 1,000 meters to each other well to maybe improve the closed-loop system ability to recover heat from the well. So you go deeper, you go hotter on those wells. You are back to EUR 3.06 million per megawatts for the closed loop. So what that shows is that the VIT portion, which is needed, is going to be well within the cost of the heat rate that you're losing on the injection wells or dry wells on a conventional geothermal. That's just the base case. And I didn't use particularly aggressive numbers here for the VIT. I'm using an average number for pretty much anything. So VIT here is relatively high-performance VIT, but still a low spec in terms of materials, for example. And so it's an average number. And you could definitely find VIT 5x cheaper or 5x more expensive, depending on which material or which size is being specified. But this is a good number to work with for this kind of applications. So again, don't forget with this that surface CapEx and OpEx are typically better on closed loops, so not accounted for in these numbers. And closed-loop systems because there are less wells to drill, also reduce drilling risk. And so we believe with that analysis that closed-loop systems can economically also enable areas where previously you could not develop a traditional geothermal. Maybe new projects now become possible with closed-loop systems and still within good production rates. So that's 2 pages about the economics. And so I'm going to wrap this discussion a little bit with some of the work we did with GreenFire. So the THERMOCASE VIT definitely was needed for the test. There is no question about that. If you produce steam and it directs with the standard tubing, it's going to lose its power quickly against cold water that you're injecting on the next tubing or annulus. So in this case, we had to test both reverse and forward flow. So that means the temperature could be either hot on the inside of the tubing and cold on the outside, or cold on the inside and hot on the outside. This is, with the highest temperature differential, quite a stress on the VIT. So we had to create a unique configuration for this particular test. And this is how we came up with that reverse preload, and slightly reverse preload, which was able to meet those test requirements. So normally, you -- when you design a well, you know what flow you're going to have to use. So we wouldn't have to do that on a normal production system. But for this particular test, we have to do this to make sure the VIT was going to work on both situations. So this is just an illustration. It's a bit technical, but just to show you, you have 2 ellipses on these graphs. So one ellipse is inner. One ellipse is the outer. And just because of temperature, as you can see from left to right, you go from ambient to surface temperature. The temperature differential creates a shrinking of the available performance area, which is intersection of both ellipses for the well. And that is without preload on the top line. And we implement -- when you implement preload between inner and the outer, now you can recover that surface envelope that you didn't have if you didn't have preload. So I just wanted to mention, there is more to it than just selecting a pipe on the VIT. Usually, you have to work out the service temperatures and make sure that the construction of the VIT will be able to sustain those surface temperatures. Okay. Conclusions. So VIT solution, we started in 2019, early '19 with the construction, and it was delivered on time for the GreenFire Energy test. This was the first reverse preload construction on these VITs. We ran the VIT using our Smartengo running expert and with VAM field supervision. So everything went really smooth. And the VIT -- and GreenFire successfully completed the construction and began testing the power system right away in 2019. So we were very happy to be invited to a demo last year in the fall, which was very impressive on how well this project had been managed. And we can be happy that this collaboration with GreenFire led to this success, and we are very happy to be part of these developments. And we hope that the technology will pick up and be commercial soon. So I want to read this nice words from Joe Scherer, who is Chief Executive Officer of GreenFire Energy. But we are -- it's a very good success story for us, so that's why we're excited to share it with you. So as a wrap-up to this presentation, I have a few Pages about some other application that VIT we have developed for THERMOCASE VIT. So one is ground freezing. In this case, the idea is to circulate a cold refrigerant, cold fluid inside the VIT, so that it keeps its low temperature until it reaches an area in the wells where we want to cool the well to freeze the water that's there. So there is an aquifer and that aquifer needs to be solid, basically it's frozen before the drilling of a mine shaft. You can see the size of those mine shafts are very large. And so during the drilling phase, it's being frozen. And obviously, after that, the cement or the completion will protect the wells. But during the drilling phase, it needs to be drilled -- it needs to be frozen. So that's what VIT can be used for. Just an interesting application. You can see lots of different applications like these IDs, like this with temperature are coming up, and we are able to support those. So what we've been doing in the last few years is increase the capacity. We've mostly delivered tubing so far up to 7 inch. We've delivered 9 5/8 a couple of years ago, it was very successfully implemented. We have sizes up to 16 inch, and we currently are building a 16 inch order for Alaska. So we definitely have extended the range from 7 inch up to 16-inch on those VIT, VIC now, you could say vacuum insulated casing. Anyway, so that's the same technology, just bigger. And we are able to implement and deploy those custom dimensions in a matter of months, depending on how -- what the project requires. So as a summary on these applications. So supercritical CO2 geothermal, it could be another refrigerant, but CO2 has been considered ground freezing. And we also had some interesting ideas about using VIT for asphalt transport doing well abandonment technique. We've improved the performance in design holes. You saw this software that I showed you the ellipses with. So it takes a while to really put that together, but it's basically needed to understand or to design VIT that will perform in the fields as expected. We've developed larger ODs, up to 16-inch insulated casing. This one is being used for -- during the drilling phase to protect the permafrost melting against the drilling fluids moving up from the well that comes hot enough to melt the permafrost. And then we have extended range of insulation properties towards the low end, less insulation, but more cost efficient. Not necessarily what you want to do within insulation, but sometimes cost can be -- if you don't need the top performance of what THERMOCASE can do on the 700 and 900 series, we have some lower insulation performance as well. And we are also working at extending the range of materials available for HPHT applications. We've been working on extending the range. So typically, for HPHT, tubing have been in the 110, 115 range. We are moving that up a notch for the next generation of HPHT wells. And that wraps up the presentation. I think we can switch to the Q&A.

All right. Very good. Thank you, Gabriel. We will now transition to the question-and-answer portion of our webcast. [Operator Instructions] So let's start with our first question. And that question is, I want to know about the metallurgy of the VIT. Is it CS? Is it titanium?

Okay. So we have 2 main offer for VIT. One is mostly L80 for steam applications or geothermal, so that's carbon steel. And the other one is Super 13Cr for offshore HPHT applications. Those are the 2 main materials available. We do have ability to work with other materials. But so far, it's not been commercially discussed. So any need to build VIT with alternative materials we can consider, and we do have all the engineering and ability to work with those requirements.

All right. Here's a follow-on question. How is the preload created mechanically?

Yes. So it's an interesting question. So the preload, the reason why we need preload is because temperature creates thermal expansion on the hot side. And on the cold side because VIT is so good at insulating, the cold side doesn't expand. So you have 2 pipes connected to each other. One wants to expand. The other one doesn't, and you get high stresses. So that's a mechanical stress coming from the temperature differential, so the thermal expansion. So there are several ways you could -- so what is preload about? Preload allows to minimize how much stress is going to be generated doing the, let's say, field use of the VIT and the temperature differential. So what you do is, if it's hot on the inside, in service, what you would do is you put the inner pipe in tension and the outer pipe in compression. And what that will do is once the inner pipe will heat up, it will catch up, and so it will expand. And the compression -- so the tension will reduce down to 0 and then only will start to be in compression. And so you will go from tensile state to a compressive state, thanks to that preload. And that's a normal way of doing preload. So obviously, the reverse preload is the opposite. I'm not going to spend the time reviewing this, but you can figure it out. So I think the question was about how do we do it. So it's mechanical in our case, but other options are possible. Thermal is an option. You could just heat the inner pipe to whatever temperature is needed to generate that much preload, then do the assembly of the inner and outer. And that situation is, let's say, a replicate of the field condition, and you have that preload created by a thermal process. So mechanical and thermal are 2 options. They both have merits and disadvantages. In our case, we do it mechanically. This allows a very good control and very good stability on the preload we generate.

All right. This next question is, in your experience, how does the preload affect the burst and collapse ratings of the VIT?

So the -- so yes, so this is -- the pipe itself has an ellipse, as we know, which if it is loaded, let's say, on the ellipse shows, the tension and compression on the horizontal and the pressures, so internal pressure on the upside and external pressure on the downside. So maybe I should show this ellipses just for everyone to have some support here. So if I go, let's say, I take this at ambient temperature with no preload, you go to the right, and you can see you lose external pressure resistance. And that would apply mostly to the outer pipe. And that's normal on any pipe, and it doesn't change on VIT. So clearly, what we do here with the preload, for example, here, you can see this pipe here has a limited external pressure resistance. This one has improved its own pressure resistance. So -- and in the case of the finished product in service, the common envelope here is much bigger than it was before. So this preload does improve the overall performance of the VIT. And we do account for these burst and collapse requirements into our design. So solution usually is to balance the pipes. So for example, if there are some cases, so maybe I shouldn't detail that too much, but there are some cases where if you have an unbalanced between a very strong inner, for example, and a weak outer, it's not going to work very well. And even though those were designed for burst and collapse, just like conventional on VIT, it creates complication. So usually, what we do -- that's why we do it. We review the loads, the service loads of the VIT in service, and we apply a good selection of wall thicknesses and preload to make sure the VIT will perform properly. So I just wanted to mention on the collapse and burst performance, there is clearly a construction situation with VIT that needs to be taken care of. Conventional tubing will not see as much differential as a VIT. So VIT, you have vacuum. There is a vacuum. This is 0 pressure. It's not going to change. At 20,000 feet in the well, it's still going to see 0 in the vacuum. And obviously, at 20,000-feet depth, it's hard to withstand the pressures, so against 0. So that is -- this is where VIT has limitation in depth that it can reach compared with the standard tubing. So the most successful applications of the VIT, VIT is at the surface. And in many applications and actually most of the applications, it's also where you have the highest temperature differential, and that's where it's most efficient. So that's why it's been very successful in solving many problems because you use it only where the temperature differentials are the largest, near the surface, where the pressures are not overly affecting the performance of the pipes. So in a nutshell, I'm going to summarize. You have to account for absolute collapse and absolute burst pressures. You can't rely on differential pressures when you design with VIT. We can help define the right walls and preload for any application. And VIT should mostly be useful where you have the highest temperature differentials.

All right. Gabriel, we have another question here. They're asking, what material do you use to insulate the inner tube from the outer one prior to the vacuum?

Yes. So that's the material we use for -- which we call MLI. So in fact, the vacuum is -- we remove any kind of gas. So we don't -- so vacuum is vacuum. No gas, okay? So it's very low, low pressure, very few molecules. Maybe you can't cut the molecules, but the pressure is so low, you should assume there is no material. What we use in the annulus beside pumping the gases out is getters. So these getters are metallic. They are not evaporable, and they maintain the vacuum over time. So they are basically chemical pumps to maintain the vacuum a very long while. So that's one of the material we use. The next material we use in the annulus is we avoid contact between the inner and the outer, so during maybe a bend or if the inner wants to buckle. It got into compression, it wants to buckle locally. So if it buckles, then it's going to touch the outer. So we prevent that using centralizers. So those are metallic as well. So usually, we use the same grade as the pipes. And then the last component is the MLI. This MLI is multilayer, so it's an automation of nonconductive and high- or low-emissivity materials. So usually, it's aluminum. That -- is these layers are attendance of -- so several layers of that will prevent the radiation. So this insulation is we put here and there. MLI is only for radiations. The insulation for convection is vacuum, and conduction is vacuum as well. So that's the material we have, all the materials we have, and those materials are rated very high temperature. So nonconductive would be fiberglass, and the other one is aluminum. So all the materials we have in the vacuum are extremely high-temperature rating.

Okay. The next person asked, in the economic viability numbers presented, the traditional and closed-loop numbers are very close. So can you explain why?

Yes. So I try to -- so this is the Page most possibly. So I try to explain a little bit that. So I used average numbers and I used assumptions. So I think the economics will turn around those numbers. So how many wells do I need to drill? First column here, 100% heat rate. How many wells do I need to drill? Probably less. And this is the amount I estimated. Okay. You need to put some VIT in there, and that VIT may depend on the applications, but I picked the number. So I put that VIT in. So clearly, you have to expend some money on the VIT. And then, sure, possibly closed-loop systems can't recover as much as traditional systems because exchange surface is lower. So you want to extend that well a little bit deeper, gets a bit hotter. And you can do that, but that's got an expense as well. Like, this is 1,000 meters extension on already a deep well. So some money has to be spent there, and that includes extension casing. It includes every single VIT to the well itself. So -- but this is just a scenario. And obviously, in many cases, you will have to run the exact same numbers. So I say these numbers are close, just to illustrate, that the VIT itself is a portion of it. But in fact, the main question is going to be how many wells can I save and how much deeper do I need to drill. And that can balance itself. Maybe it can on some projects. Maybe it can actually balance that very well. And in some projects, maybe not so well. So I shot these numbers just to make some figures. Keep in mind, maybe 1,000-meter deep keeps -- gets you a lot more surface exchange area. So that's what I used. And you can keep in mind this number here, 1,000 meter deeper and maybe this number here for a 3-well system. That's what I would say. But overall, it's all going to be very specific to the project, the area you're drilling, your drilling costs. You've seen this graph here on the left. If I pick this number or if I pick this number, it's a totally different picture. But I think, yes, keep in mind, this, I believe, is -- are the key elements of economical equation for the well cost on the geothermal wells.

All right. This person asked, which connection are you using on VIT? Can we use API connections?

So we have a whole range at Vallourec of VAM connections. Definitely, we have also premium and semipremium. So when you go to HPHT application, you go with a premium connection that's qualified to ISO Level 4. And that's no question about it. You don't go API. In many applications, VIT is being used with API connections. So most of them don't have good sealability, so you would want to improve that. But the way API, I mean, have been modified, they are usually using plastic rings, which don't perform well on the temperature. So at the very least, in many applications, we recommend to have a semipremium solution, which is very competitive with API, usually even compatible with API. So again, we've used many solutions. Usually, I would at least recommend a semipremium for, let's say, the applications where the sealability is not critical. But still, just think about it in the steam injection application. If you have steam in the annulus, you're losing a lot of energy, but you're also losing life on your VIT. So we've seen that over and over. So I think the best way is to go with at least semipremium for steam applications.

Okay. Next person is asking, what are the bending limits of 4.5-inch and 5.5-inch insulated tubings?

Okay. So as you can possibly imagine, I don't have that on top of my head, but we are able to support you with these kind of questions. So usually, what we do is we get in touch with a few questions on the application. So that question, for example, can't be answered if we don't have the temperature rating required. So yes, we would do that. But obviously, on that call, I can't answer this.