A length of pipe is placed under the ground and filled with a glycol and water mixture. This pipe needs sufficient length to allow the mixture time to reach the ambient ground temperature.

The heat pump has coils of copper tubing filled with a refrigerant that are wrapped around the pipe. The refrigerant is used to heat or cool the mixture 
In winter the refrigerant draws the heat out of the mixture then distributes the heat through the building

In the summer it is reversed and the heat pump draws the heat out of the air and heats the mixture thus cooling the building