Major oil companies are leveraging their deep pockets and expertise in well geology to support and partner with energy startups that want to unlock renewable energy from beneath the surface.
Geothermal energy has been around for decades and is gaining new momentum as many economies, including the United States, reach net-zero targets. Some of the largest oil and gas companies, including Chevron, BP and Devon Energy, are investing directly in geothermal projects and startups. Some newly formed geothermal companies are using horizontal drilling and hydraulic fracturing to capture heat beneath the surface, a technology that has pioneered the shale revolution in the United States.
The cost of drilling for geothermal energy is high, but in recent years the company has managed to reduce the cost. However, with geothermal energy accounting for more than 1% of electricity generation in the United States, the cost needs to fall further, and dramatically. The U.S. Department of Energy wants to increase the use of "heat under your feet," but current technology can only get a fraction of the U.S. heat. As a result, the U.S. Department of Energy supports research and innovation to advance enhanced geothermal systems (EGS), drilling wells to capture heat deep underground. The U.S. Department of Energy says a sector-wide effort aims to dramatically reduce the cost of EGS by 90 percent to around $45 per megawatt-hour by 2035. "Investments in EGS could unlock affordable and clean energy for more than 65 million U.S. homes and exponentially increase opportunities for geothermal heating and cooling solutions across the country," the U.S. Department of Energy said. ”
According to the U.S. Energy Information Administration (EIA), the U.S. had geothermal power plants in seven states in 2022, accounting for about 04%。California, Nevada, and Utah are leaders in geothermal energy in the United States, and Hawaii, Oregon, Idaho, and New Mexico also generate some geothermal energy.
With funding from major oil companies, employees with oil and gas backgrounds, and horizontal drilling and hydraulic fracturing, several startups have recently launched new projects and raised funds to expand operations.
For example, Fervo Energy uses precision directional drilling techniques to drill horizontally in geothermal reservoirs. "This allows us to drill multiple wells at a single location, significantly reducing our surface footprint and reducing drilling risk," the company said. Horizontal drilling has also contributed to greater access to previously hard-to-reach geological areas, increasing the total resource potential of geothermal energy. ”
Fervo used horizontal drilling in a project to provide clean energy to Google's data center in Nevada, USA, which went into operation in November. Just last week, Fervo said it had raised 2$4.4 billion in new funding, led by Devon Energy. Oilfield service providers Helmerich & Payne, among others, were early investors in Fervo. The company said early drilling results at Cape Station, a 400MW project in Beaver County, Utah, in the United States showed reduced drilling time and reduced costs, significantly exceeding DOE expectations for EGS. The CAPE plant is expected to start delivering clean electricity to the grid in 2026.
Executives told Wall Street that drilling costs for the first four horizontal wells at Fervo's U.S. Utah project had been halved from $9.4 million each at its first commercial project in Nevada to $4.8 million each. Fervo aims to reduce its electricity costs to around $100 per megawatt hour soon.
Oil companies are also among the investors of E**or Technologies, a Canadian geothermal solutions company. At the end of last year, the Austrian OMV led a round of 1US$8.2 billion in funding, which was funded and supported by existing investors, including bp ventures.
For its part, Chevron is using its subsurface geoscience to drill wells and drill in geothermal projects to help reduce the carbon intensity of its operations. America's supergiants are partnering with innovators, entrepreneurs, and ** to develop and promote new technologies. Chevron is piloting an advanced closed-loop geothermal pilot project in Japan in partnership with Mitsui Petroleum Exploration.
In the U.S., Chevron and Fervo Energy own two of the three winning projects selected by the U.S. Department of Energy last month to receive up to $60 million in funding to demonstrate the effectiveness and scalability of enhanced geothermal systems.
Chevron New Energy's pilot demonstration will use innovative drilling and stimulation technologies to capture geothermal energy near existing geothermal fields in Sonoma County, northern California, USA. Fervo Energy's pilot project in the Milford Renewable Energy Corridor in Utah, USA, aims to produce at least 8 MW of electricity from each of three wells at a location with no commercial geothermal power generation. Mazama Energy's third project aims to demonstrate the first such UHG EGS on the west side of Newberry Volcano in Oregon, USA. (Compiled by Xiao Chen).
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