In this study, the use of the ground as the hear source for a heat pump was studied by computer simulation The heat extraction system consisted of vertical pipes drilled into the ground where groundwater was present. Along with available thermal energy, potential environmental effects, such as freezing and thermal pollution, were examined. Ir was found that the presence of groundwater enhances system performance by decreasing the possibility of freezing but, on the other hand increases the range of thermal effects in the ground. The temperature of the ground as well as extraction arrangements also have a significant effect on system performance.