The Frackers Have Started Exploring for Renewable Energy
Oil and gas corporations are increasing their investments in geothermal energy in the hopes that the same technology that drove the shale revolution can transform the emerging industry into a major generator of renewable power.
The fossil fuel industry is pouring hundreds of millions of dollars into new geothermal energy companies and projects, including Devon Energy, Chevron, and BP. Many of these businesses are utilizing frackers’ technologies to seek for subterranean heat rather of oil and gas.
Surprisingly, the oil and gas, technology, and green power sectors all came together to form the new geothermal industry. The drillers’ ability to tap into subterranean heat sources has the potential to power tech corporations’ power-hungry data centers with carbon-free electricity that is available 24/7.
Areas with high levels of geothermal activity, such as some regions in the United States, Indonesia, and New Zealand, make it easier to locate pockets of subterranean heat. Finding heat at lower elevations is more challenging and costly. As a result of these limitations, the sector continues to generate less than 1% of the nation’s electricity.
That should change as a result of technological advancements in well drilling, modeling, and sensor technology: More than 65 million American households might be powered by geothermal energy by 2050, according to the Energy Department.
Drilling results indicating reducing costs in the industry led to new funding for a business called Fervo Energy.
The industry started to shift around five years ago when tech giants like Google tried to power their entire business on renewable energy all the time and discovered that intermittent sources like wind and solar couldn’t handle the load.
“It created this huge market momentum around looking at something new,” admitted Tim Latimer, chief executive of Fervo. “Once again, geothermal has been brought to the forefront thanks to that.”
Heating and cooling with geothermal energy is the norm. This method does not use heat but rather the constant subsurface temperature just below the surface. On hot and cold days, that means less heating and cooling is required.
More regions of the globe might profitably produce power from geothermal energy, according to Fervo, who used horizontal drilling and pumped water underground via cracks in rock, a procedure comparable to hydraulic fracturing.
When the water reaches its boiling point, it transfers that heat to another liquid at a lower temperature before returning to the top. The process turns water into steam, which in turn turns turbines to create power. The industry is under pressure to lower the price of geothermal electricity since it is currently more expensive than renewable energy sources like wind, solar, and natural gas.
Devon, Liberty Mutual Investments, Mercuria, and John Arnold—a billionaire and former trader at Enron—are among the investors putting $244 million into Fervo. Devon is investing $100 million in a clean energy business, which is one of the largest investments made by an oil and gas corporation.
Canadian firm Eavor Technologies, which aims to streamline geothermal power by effectively burying a huge radiator underground and pumping fluid through it, has received $182 million in investment from a number of investors, including BP and Chevron. Sage Geosystems is a startup founded and run by a former executive of Shell, and Chesapeake Energy has just invested in it.
It is possible to collect geothermal energy in addition to fossil fuels from existing wells, or convert older oil and gas wells to provide geothermal power; this could hasten the expansion of the business.
Energy firms have a firm grasp of subsurface geology, a track record of successfully constructing infrastructure projects, and a ready supply of capital. According to Barbara Harrison, VP of offsets and emerging technologies at Chevron New Energies, this is the reason why Chevron is collaborating with other businesses to pursue geothermal pilot projects in the United States, Indonesia, and Japan.
She clarified that unlike wind and solar, her company is opting to invest directly in innovative geothermal technology.
According to Latimer, a former drilling engineer for BHP Billiton and a native Texan, about 60% of Fervo’s 80 employees have experience in the oil and gas industry.
The first four horizontal wells drilled by Fervo for a Utah project cost $4.8 million each, down from $9.4 million for the company’s first commercial project in Nevada a few years ago. The target price for the company’s electricity is $100/MWh, which should be reached soon.
Google data centers and other area projects are already receiving electricity from Fervo’s Nevada business, which the company has just started distributing to the local grid. Hundreds of thousands of houses could be powered in Utah by its projected electrical output.
Arnold, a prominent energy investor who invested $30 million in Fervo via his family office, said, “Once the industry is proven, I would not be surprised for today’s oil-and-gas industry to either buy or build their way to be significant players in advanced geothermal.”
According to Maud Texier, Google’s worldwide director of sustainable energy and decarbonization projects, the tech giant is actively seeking out additional geothermal power sites. In her opinion, geothermal power’s ability to act as a buffer against renewable energy sources like wind and solar is driving up its price tag. The involvement of corporate buyers is crucial, according to Texier.
Additional backing is arriving from the nation’s capital. Trio of projects, including those from Chevron and Fervo, were recently awarded $60 million by the Energy Department, with additional funding coming from tax incentives included in the 2022 climate law.
