A little covered but growing alternative power source attracting large sums of both private and federal funding is geothermal energy. As working rig counts have fallen dramatically since this time last year (Baker Hughes reports only 899 rigs working this week, down over a thousand from a year ago) geothermal exploration may provide a still small but growing alternative market. We are not talking about shallow hole 200-500’ heat exchanger projects for residential and small commercial buildings, these funds are flowing into deep well steam generation projects usually intended for electricity generation. A NY Times report focuses rather too much on the possibility that a project to drill two+ miles into the earth’s crust in northern California may suffer the same fate as a project stopped last year in Basel, Switzerland. The Basel project drilled successfully 3 miles down but when the team came, injected water under pressure to fracture the subterranean rock, it apparently caused a 3.4 magnitude earth quake. We say apparently because it could not be conclusively proved but even some of the drill managers conceded it was probably as a result of their activities. The fear in Northern California is that AltaRock Energy a private equity firm formed last year and supported by $36m from the Department of Energy will cause the same mishap set as it is 2 hours north of San Francisco. The firm is adamant they will not and a lot rides on their ability to deliver. Conservative estimates by the Geothermal Energy Association based on research by the US Geological Survey suggest proven and estimated reserves as up to 73,286 MW able to access steam at 200-300 degrees F. This research covered just the 13 westernmost states. But a report by MIT estimated that with a reasonable investment in R&D, the US could generate up to 100 GW – now that becomes a very significant amount of energy and would begin to have an impact on oil imports and green house gas emissions.
Drilling technology is well up to the task, oil companies are capable of drilling up to 5 miles down on the continental US and most of these reserves are available at half those depths. The challenge is more in controlling the fracturing of the hot rocks and maintaining steam temperatures over the life of the project. With oil extraction costs and challenges rising it is a surprise the oil companies are not more active in a field where their hard earned skills in deep drilling should give them a clear advantage.