New Project Funding Heats Up Race To Scale US Geothermal

Chevron and Occidental plan to launch separate projects to help secure the commercial future of geothermal development in the US.

A shuttered geothermal power plant in northern California was acquired in 2020 by Baseload Capital, which plans to refurbish and restart power generation at the site.
Source: Baseload Capital US.

Two recent announcements involving Chevron and Occidental Petroleum may add much- needed momentum behind the effort to scale up geothermal energy production in the US.

While the US is a world leader in geothermal output, the niche sector represents less than 1% of the nation’s total power supply.

As part of its bid to boost that figure, Chevron shared last week that it is teaming up with Swedish investment firm Baseload Capital on a geothermal project in western Nevada where the latter holds federal leases covering several thousands of acres.

Their new joint venture intends to expand to other prospective locations and will identify “next-generation” technologies that can achieve commercial scale deployment. The companies’ announcement added that oil and gas sector expertise will be leveraged through the joint venture, particularly in the areas of subsurface, well operations, drilling, and completions.

Chevron took on a $25 million equity stake in Baseload Capital in 2021. Earlier this year, the companies launched their first pilot project that uses waste heat from an oil field in California as a source of low-carbon power production.

Also last week, the US Department of Energy (DOE) said it awarded more than $15 million in grants to fund a pair of projects that aim to drive down the cost of geothermal wells by driving up the speed of drilling. This is considered a critical step toward expanding the niche sector since drilling often represents more than half the cost of a geothermal well.

Almost $9 million of the total will be used to fund a project run by Occidental Petroleum which will involve drilling two high-temperature geothermal wells in the Denver-Julesburg Basin of Colorado. Project partners include the Colorado School of Mines along with the National Renewable Energy Laboratory, both in Golden, Colorado.

Called Geothermal Limitless Approach to Drilling Efficiencies, or GLADE, a DOE release said the Occidental-led project intends “to drill to deeper and hotter depths than most existing geothermal, and at a faster rate.”

Another $6.2 million in DOE funding has been awarded to the Geysers Power Company which will similarly deploy new drilling innovations and techniques with a goal of increasing drilling penetration rates by at least 25%. This second project, billed as the Evaluation of Physics-Based Drilling and Alternative Bit Design, will take place in The Geysers Geothermal Field located in northern California which is already home to more than a dozen geothermal plants.

In September, DOE announced as part of its Energy Earthshots Initiative a separate plan to shed 90% of the cost of enhanced geothermal systems (EGS) by 2035.

The federal agency expects such a dramatic reduction would enable EGS to power the equivalent of 40 million homes in the US. EGS relies on hydraulic fracturing to improve fluid transfer in hot rock formations that would otherwise be uneconomic to develop for power generation.