April 14, 2020 Read More →

Oil price crash could spur surge in geothermal power development

OilPrice.com:

‘Geothermal is America’s untapped energy giant,’ the U.S. Department of Energy said in a report last year, highlighting in its analysis that this kind of “always-on” flexible renewable energy resource could grow 26-fold to generate 8.5 percent of U.S. electricity by 2050.

Unlike wind and solar, geothermal energy is a 24/7 energy resource, but the technologies to explore and drill for resources and build facilities make geothermal energy more expensive than other renewables.

Technology improvements and cost cuts in geothermal energy could come from what some would think is a most unexpected source—the oil industry, analysts and geothermal specialists say. The oil price crash is already hurting the oil industry, and it is set to hurt oilfield services providers even more, as U.S. exploration and production companies jammed on the brakes and announced 20-30 percent cuts in capital spending.

It could be those services companies specialized in oil and gas drilling that could help geothermal development with their expertise in drilling in the ground, according to Tim Latimer, co-founder of geothermal assets developer and operator Fervo Energy.

The geothermal supply chain significantly overlaps with oil and gas, because geothermal development initially consists of drilling wells into hot areas to produce steam, Latimer said in a Twitter thread after oil prices crashed and oil industry players began announcing cost and capex cuts en masse.

“As much as 50% of the cost of geothermal comes from drilling, so a plunge in oil prices can drop costs dramatically,” Latimer said. The oil price crash and the expected reduction of drilling costs could reduce geothermal energy costs, Fervo Energy’s Latimer argues. “The drop in oil field services costs alone may send geothermal costs lower by 20% or more,” he said.

[Tsvetana Paraskova]

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