Discover the renewable energy source poised to grow with the help of the oil industry

“Not since, say, the 1970s, when there was a huge pivot to the geothermal side of the house, have we seen the kind of interest that we see today,” said Kelly Blake, president of Geothermal Rising’s Board of Directors. , a professional association specializing in geothermal energy.

“It really looks like geothermal is on an upward trajectory right now, in terms of innovation, funding, interest at all levels of the company, but also government,” Blake added.

The Biden administration is pushing oil and gas companies to seriously consider incorporating geothermal projects into their business plans. At a December meeting of the National Petroleum Council, Energy Secretary Jennifer Granholm called geothermal a favorite subject to her.

“It’s kind of overwhelming when you consider the skill set and know-how this industry already has in extracting energy from underground,” Granholm told the gathering of company executives. oil companies, which included the CEO and chairman of Exxon. Darren Woods. “I know you manage [carbon] molecules, but you can handle a lot. Think: you also drill holes. You go below the surface, you know where things are. And fracking really opens up a huge opportunity for geothermal enhancement.

As the name suggests, geothermal refers to heat energy below the Earth’s surface. It relies on drawing from reservoirs of hot water that are brought to the surface to generate electricity and for heating and cooling. Most of the reservoirs in the United States are located in the West, but the emergence of potential new technologies could also expand its use.

Companies that invest in geothermal projects and meet prevailing wage requirements would be eligible for a 30% tax credit under the Reducing Inflation Act, with an additional 10% applied if the project meets national content requirements or is located in an energy community., which include areas where a coal mine has closed or which have been economically dependent on the extraction and processing of fossil fuels.

The bipartisan Infrastructure Act authorized $84 million for four demonstration projects of improved geothermal systems – applications for which are expected to open early next year. The Energy Department also set a target to reduce the cost of improved geothermal systems – which could improve existing reservoirs or create new ones – by 90% by 2035. And it examines the potential for generating geothermal energy and heat from abandoned oil and gas wells.

“Over the past 15 years, a large number of wells have been drilled in the United States because of the shale revolution,” said Sarah Jewett, chief strategy officer at Fervo Energy, a company that develops geothermal projects from new generation. “All of this technology has evolved and developed and can be directly applied to geothermal energy, but never needed to be applied.”

Companies already normally associated with oil and gas drilling in the United States have begun to delve deeper into geothermal projects. Baker Hughes, one of the largest drilling companies in the world, is expanding its geothermal business and has has formed a partnership with Continental Resources and Chesapeake Energy – two independent oil and gas giants – to test whether they can profitably turn spent natural gas wells into geothermal facilities.

The increased interest stems from a number of carrots and sticks, said Ajit Menon, vice president of geothermal at Baker Hughes. While government subsidies help, the private sector also wants to find ways to comply with new reliability regulations in California and elsewhere that seek carbon-free baseload electricity that can be generated around the clock.

“Development today, both from a tech startup perspective and with strong interest and support from or at least potential support from government institutions, is probably the most exciting time. I’ve seen for geothermal for a long time,” Menon said.

Geothermal development can also benefit from the know-how and data that oil and drilling companies have already accumulated over the past decade. industry already has maps of existing geothermal hotspots, and advances in engineering have the potential to make even “dry” geothermal wells – those that have heat but no fluid – profitable in the future.

Oil and gas giant Chevron Corp. in December signed a partnership for its Chevron New Energies business to partner with Sweden’s Baseload Capital to develop a new generation of geothermal development technologies, including a project in the Weepah Hills mountains in Nevada.

“If you look at geothermal, we’re leveraging some of Chevron’s core capabilities,” said Barbara Harrison, vice president of offsets and emerging technologies at Chevron New Energies. “That’s why we’re looking at geothermal to be able to sustain our operations versus other more traditional renewable energy resources.”

Yet technology faces its own challenges beyond technical barriers such as the need for better exploration technologies. Among them are permit hurdles and comparatively higher costs than traditional renewable energy sources, such as wind and solar.

Capital costs for the development of conventional geothermal energy range between $3,000 and $6,000 per kilowatt-electric, while the capital costs of onshore wind or utility scale solar photovoltaic range between $1,700 and $2,100/kWe, according to a Department of Energy report based on 2016 data.

Lauren Boyd, acting director of the DOE’s Office of Geothermal Technologies, said the lengthy processes developers must go through to get geothermal online aren’t “necessarily aligned” with other industries doing similar groundwork. . And, she said the oil and gas industry has pointed to the long clearance times this could slow down the development and timing of profitability.

“If you waste seven years getting permits, that’s not attractive, especially for industries like oil and gas that have very large operations. [where] things happen pretty quickly,” Boyd said.

Geothermal is the “most expensive black sheep” compared to wind and solar, Jewett said, but she and other advocates warn it’s not just a comparison “of apples with apples”. The DOE is examining how communities and utilities can better leverage geothermal energy, given that it is a base load Powerful producer who can provide flexible and reliable production, Boyd said.

Proponents also point to the need for even more funding from lawmakers to help the capital-intensive technology lower its costs in the future.

“As an industry, we are or have been historically happy with the funding we can get, but when you look at the distribution of funding between the different types of energy, geothermal is really a drop in the ocean. “, said Blake of Geothermal. Rising said.

Still, working on behalf of the industry has been a longstanding bipartisan interest, with tech receiving increased funding under both Republican and Democratic administrations, making it an area of ​​potential focus as lawmakers head into a divided Congress. in January.

“At the end of the day, the value of this solution, especially when you think about the many basic energy sources that may continue to go offline, it can really fill the void and the industry is in a perfect bipartisan position. ,” Blake said.