The global push for clean energy and sustainability has grown enormously in recent years, with polluting industries shifting from traditional resources to more environmentally and economically viable alternatives. Among these, geothermal energy is a promising contender, particularly for its potential to utilize existing oil and gas expertise. Geothermal energy taps into Earth's natural resources for two primary purposes: electricity production and district heating. The choice between these applications hinges on underground temperatures and regional energy demands. Power generation typically requires reservoirs above 150°C, while district heating systems can operate between 50°C and 150°C. Geothermal electricity production dominates the market globally, with the United States at the forefront.
Geothermal drilling is a technique used in the industry to access the Earth’s underground heat reservoirs, offering a clean and reliable power source. According to a report by SkyQuest, the geothermal drilling market, valued at $134.51 billion in 2019, is expected to reach $189.26 billion by 2031, growing at a CAGR of 5% over the forecast period (2024 to 2031).
However, despite its immense potential, geothermal power currently accounts for only 0.4% of global electric generation and 1.6% of the US energy mix, despite the country being a leader in geothermal power. This adoption has been limited due to geographical constraints, investments, and technological challenges. Traditional geothermal systems have been confined to areas with natural reservoirs of high-temperature water in porous rock close to the surface, such as regions along the Pacific “Ring of Fire”, including California. But times are changing. With advancements in drilling technologies and a growing urgency for the energy transition, geothermal energy is gaining renewed attention from both the renewables sector and, interestingly, from oil and gas companies, with top players including Baker Hughes, Deep Rock Manufacturing, and Halliburton, to name a few.
Why Oil and Gas Companies are Going Geothermal
Oil and gas companies show increasing interest in geothermal drilling, which is not just a coincidence. These companies have a lot of expertise in drilling operations that can be directly used to expand geothermal energy production. The connection between traditional fossil fuel extraction and renewable energy development offers significant opportunities for both sectors. Here are some reasons why geothermal energy is an appealing prospect for the oil and gas industry:
Continuous power generation
Geothermal energy offers many distinct advantages over other renewable energy sources. Unlike intermittent sources such as wind and solar, geothermal power plants can operate continuously, providing a stable and reliable baseload energy supply. Additionally, geothermal energy has a significantly lower carbon footprint than fossil fuels and solar PV. Modern geothermal power plants release no greenhouse gases and possess life cycle emissions that are four times less than those of solar PV and between six to twenty times lower than those of natural gas.
Transferable skills and technologies
The oil and gas drilling techniques, especially those developed during the shale boom, directly apply to geothermal drilling. Many petroleum engineering and geoscience skills, including geological and geostatistical modeling, reserves estimation, rock mechanics understanding, and geophysical imaging, are highly transferable to geothermal energy development.
Opportunities for diversification
As the world shifts towards renewable energy, geothermal offers oil and gas companies a way to diversify their portfolios and remain relevant in the sector. It provides a promising avenue for companies to leverage their existing capabilities while adapting to changing market demands. This diversification helps oil and gas players mitigate risks associated with the energy transition and improve their sustainability profiles.
For example, OMV and BP are actively pursuing geothermal opportunities as part of their low-carbon growth strategies. They have invested millions in Eavor Technologies, a Canadian geothermal startup spearheading next-generation geothermal technology. In 2023, Eavor completed their “Eavor-Deep™” project in New Mexico, drilling a two-leg multilateral well down to 18,000’ TVD and reaching a temperature of 250°C, successfully meeting project objectives.
Types of Geothermal Energy Systems
The real excitement in the geothermal sector comes from the development of unconventional geothermal systems. These systems are not limited by the geographical constraints of traditional geothermal and can potentially access geothermal power from resources previously considered unrecoverable due to rock type or location.
Enhanced Geothermal Systems (EGS)
Enhanced geothermal systems have been developed since the 1970s to improve the permeability of geothermal systems through hydraulic, chemical, and thermal stimulation. This technology allows access to high subsurface temperatures in areas with low rock permeability or lacking a natural water source. By injecting high-pressure water into these formations, engineers can create fractures that allow for the circulation of fluids and heat extraction. This technique has the potential to increase the number of viable geothermal sites worldwide dramatically.
EGS utilize technologies pioneered by the oil and gas sector, such as directional drilling, hydraulic fracturing, and reservoir stimulation. These techniques enable access to deeper and hotter rock formations, significantly expanding the potential for geothermal energy production. The U.S. National Renewable Energy Lab estimates an EGS resource has the potential of over 5,000 gigawatts in the US alone, more than 400% of total U.S. electricity generation. To support this forecast, the U.S. Department of Energy (DOE) launched Enhanced Geothermal Shot™ in 2022 to help bring EGSs to America nationwide. The initiative aims to reduce the cost of EGS by 90% to $45 per megawatt hour by 2035, aiding in the transition to a clean energy future while also creating job opportunities and economic prospects in the US.
Advanced Geothermal Systems (AGS)
Advanced geothermal systems take the concept of geothermal energy extraction a step further. AGS utilizes deep, large, artificial closed-loop circuits where a working fluid circulates and absorbs heat from subsurface rocks through conductive heat transfer. The fluid is heated without direct contact with the hot rock, and the heat is then brought to the surface for direct heating or electricity generation. This approach eliminates the need for reservoir stimulation, reducing the risk of induced seismicity and lowering water consumption.
Geothermal Oil and Gas Hybrid Systems
The oil and gas industry's expertise and infrastructure are proving valuable in advancing geothermal energy production. Companies are exploring ways to repurpose existing oil and gas wells for geothermal energy extraction. These systems utilize geothermal fluids from existing wells to extend the life of the well, deliver energy savings, and reduce greenhouse gas emissions. It's a perfect example of how oil and gas infrastructure can be repurposed for renewable energy production.
Challenges in Scaling Up
While the potential of geothermal drilling is enormous, it's not without its challenges. Here are some key considerations:
- High-temperature drilling: Geothermal wells often need to be drilled to 7-10 km depths to reach fluid at temperatures high enough for electricity production. This deep drilling in high-temperature environments presents unique technical challenges that require drilling at faster rates of penetration (ROP), demanding advanced machinery/tools and operators with the right level of aptitude.
- Economic viability: The initial costs of geothermal projects can be high, particularly for enhanced geothermal systems. In a publication by the International Renewable Energy Agency (IRENA), the global installed costs for geothermal plants fall between 1,870 and 5,050 USD per kW. They can exceed the latter depending on site conditions. These substantial investments, coupled with the inherent risks of subsurface exploration, can deter potential investors and slow the growth of the geothermal sector. However, once operational, geothermal plants have low operating costs and can provide energy for decades.
- Seismic concerns: Some enhanced geothermal techniques, particularly those involving hydraulic fracturing, have raised concerns about induced seismicity. The scientific community is still divided on the extent of this risk.
- Regulations: The current regulatory environment poses significant barriers to rapid innovation and deployment. Permitting processes for geothermal projects, particularly on federal lands where many resources are located, can be lengthy and uncertain. This uncertainty adds to the overall project costs and can discourage investment in geothermal drilling and development.
Despite these challenges, oil and gas companies are well-positioned to drive innovation in the geothermal sector. Their expertise in subsurface characterization, drilling technologies, and project management can be invaluable in overcoming the technical challenges of geothermal energy production. Major oil and gas industry players are already moving into the geothermal space. For instance, as mentioned previously, Baker Hughes, a leading oilfield services company, is developing a holistic approach to geothermal field construction. They're integrating surface and subsurface systems to optimize thermal output and improve project economics.
The potential for geothermal energy is immense, opening the doors to new project opportunities across the sector. The U.S. DOE estimates that with technological advancements, geothermal could provide up to 90GW of electricity-generating capacity by 2050, providing over 10% of the US’s electricity generation, enough to power up to 65 million homes.
Drill Deep for Top Talent!
Here at Bedrock, we have decade-long experience in the US shale market and have successfully sourced and placed talent across the geothermal sector. From deploying specialized teams to contract engineers and supervisors, we have a proven ability to provide top-tier workforce solutions. We are also strategically located near all US oil and gas projects, ensuring you can have dedicated, on-the-ground support.
If you’re struggling to close your talent gap or are starting a new project, contact Bedrock today to learn how we can power your geothermal ambitions with our industry-leading staffing expertise.