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The Oil Crash Could Be Geothermal’s Big Break

Geothermal power requires similar infrastructure and skills as fossil fuel extraction, which means laid-off oil workers could switch to greener work pretty easily.

David McNew/Getty Images

As oil and gas companies falter under the weight of Covid-19 shutdowns, price wars, and their own massive debt burden, an unlikely beneficiary seems to be emerging: geothermal power. Ordinarily, geothermal is the runt of the renewable power litter. But because it uses much of the same infrastructure as is used in fossil fuel extraction, geothermal might offer an appealing off-ramp for some of the tens of thousands laid off in the oil and gas industry, while helping build a low-carbon future.

That said, there’s a long way to go. Geothermal currently provides less than 1 percent of the country’s power, with half of its infrastructure built in the 1980s. Even so, the United States leads the world in installed geothermal capacity. Worldwide resources are distributed widely, from Italy to Mongolia, Turkey to Indonesia; Iceland and Kenya each derive huge percentages of their power from geothermal sources. In the U.S., geothermal extraction points are currently spread across eight Western states.

Geothermal potential here, though, is enormous. The U.S. Geological Survey, in 2008, estimated that geothermal in California could provide up to 15,000 megawatts of power—about a fifth of the current capacity of the state’s existing power plants. That capacity grows in tandem with technological breakthroughs. A 2019 study from the Department of Energy found that geothermal power has the potential to provide between 16 and 20 percent of the country’s electricity.

Tim Latimer helped found Fervo Energy in 2017 after starting his career as an engineer in the oil industry in Texas. “The skill I had developed to that point was poking deep holes in the ground,” he told me. “What I learned in researching geothermal was that I could do that for no-carbon energy.” Fervo specializes in applying technologies used in natural gas extraction—like hydraulic fracturing and distributed fiber-optic sensing—to geothermal power. “We use all the same equipment” as in natural gas fracking, he says, “but the systems we design with them are quite different.”

The collapse of oil prices in the last several weeks has been a boon to his business. Oilfield service companies, wracked by sweeping layoffs around the country, have been keen to offer Fervo equipment at lower rates than usual, now that there’s less competition from fossil fuel drillers. “As equipment is going into storage, people are really interested in putting that equipment to work,” Latimer said. “We’re getting more interest from service companies and better prices.”

Every member of Fervo’s team got their start in the oil and gas business. “It’s a seamless transition,” Latimer says. “If you’re somebody who knows how to operate that drilling rig and have spent your career learning how to make decisions on the drill site, it’s very easy. We’ll use drilling rigs that may have just come off an oil and gas well. Technically, there are things that have to be different. Our engineers have to learn different things about how the wells work, but from a workforce standpoint, it’s highly similar.”

While still tiny in terms of deployment, and facing geographic limitations, geothermal could be a major complement to renewables, since it’s available around the clock, rain or shine, wind or no wind. Some firms have also explored the possibility of recovering lithium from the superheated brine unearthed in geothermal power production before it’s reinjected underground, potentially producing a critical ingredient in the batteries that store solar power and increase reliability. That’s a serious side benefit, given the great need for lithium going forward, if society is to transition off fossil fuels.

The problems facing geothermal have as much to do with economics as geography. Like fracking, geothermal requires massive upfront capital costs to initiate production. But it’s also more like traditional oil drilling, in that there’s a high risk of drilling up “dry” wells that can’t produce any power. Even amid low interest rates, these factors have made it a hard sell to investors eager for quick returns. And its high production costs translate to higher prices that can make it a less competitive option for power providers compared with wind, solar, or gas.

Policy can make a big difference. California—where about 8 percent of power is produced from geothermal—is set to build the state’s first new geothermal plants in nearly a decade, part of a more general spike of interest in geothermal over the last year. In the Golden State, that growth is being spurred by the state’s climate goals, which aim for carbon neutrality by 2045. The policy signals to investors that natural gas won’t be around forever and makes no-carbon power sources like geothermal more attractive, even if they’re more expensive in the short term. So far, Community Choice Agencies—locally controlled electricity providers in California—have been the most active in procuring power from geothermal.

Like any energy source, geothermal is no panacea. As with wind or large-scale solar installations, geothermal drilling is still drilling, and getting buy-in from surrounding communities will mean undergoing a proper environmental impact review and public comment period, avoiding protected areas, and following careful safety precautions. And since geothermal drilling, like all other activity in our society, exists within an energy system still run predominately on fossil fuels, the transportation of necessary drilling equipment still runs largely on carbon-based fuels.

The similarities between traditional and geothermal drilling have created an odd coalition in Canada between renewables and oil sands companies. The ultimate goal for fossil fuel companies in Canada isn’t exactly in line with strong environmental goals, of the sort championed here by Green New Deal advocates. The Canadian oil sands companies hope to power their oil sands extraction with geothermal power, a source they view as firmly in line with an “all of the above” approach to energy.

Interest from U.S.-based fossil fuel companies has been comparatively muted, waxing when prospects for incumbent fuels look bleak and waning when they improve again. Despite having been around in some capacity for decades, geothermal in the U.S. remains a relatively small and somewhat undefined industry player. The shape of federal support for domestic geothermal—or the lack thereof—could play a big role in determining whether the industry develops for the benefit of the public or for existing polluters to use as political cover for the continued extraction of dirtier fuels.

If the U.S. were to make decarbonization a national priority, it could shoulder the risk for early-stage geothermal development as it did for upstart technologies during World War II, stimulating private investment. Such a backing could provide not just tax credits and ramped-up research and development, through programs like ARPA-E (the government agency dedicated to promoting advanced energy technologies) but also next-level support like pledging to procure geothermal power for government use. In doing so, the government could also make sure the public benefits from this technology are shared broadly. Federal backing, for example, can ensure that laid-off oilfield workers are hired on geothermal rigs at wages and benefits comparable to those they made digging up fossil fuels. It can also enforce standards on companies receiving federal support for siting, environmental impact assessments, and community input.

All this might sound a little far-fetched at the moment, but given the rapid, in some cases existential, changes underway for fossil fuels, there may now be a bigger opening than ever for newcomers—particularly those that can almost literally pick up where bankrupted oil drillers left off. When they include it at all, green groups tend to treat geothermal as one of several items on a wishlist for the kind of new energy sources that emissions-conscious governments should be investing in; most people simply don’t know much about it. There remain a lot of unknowns about what a massive, thriving U.S. geothermal sector could look like. The Covid-19 crisis could be an opportunity to map one out that’s built firmly in the public interest and align the needs of thousands of laid-off workers with those of the planet.