What's going on with geothermal?

In this episode, Project InnerSpace founder and executive director Jamie Beard, who has been instrumental in influencing oil and gas personnel to move into the geothermal industry, discusses exciting recent developments in geothermal and the opportunities ahead.

(PDF transcript)

(Active transcript)

Text transcript:

David Roberts

Things are starting to come together for geothermal. Political awareness has seen an uptick. Investment is flowing in. Startups, many staffed by veterans of the oil and gas industry, are swarming to take advantage of existing geothermal opportunities and expand those opportunities. New technologies and techniques are reaching the demonstration phase.

It’s an exciting time.

At the center of it all is Jamie Beard, who for more than a decade now has served as a kind of pied piper luring people out of oil and gas and into geothermal. (Here’s her 2021 TED Talk.) A one-time energy and regulatory lawyer, Beard founded the Geothermal Entrepreneurship Organization, dedicated to educating and training oil and gas personnel to move into geothermal. (GEO recently helped launch the Texas Geothermal Institute to expand that work.)

She is also the founder and executive director of Project InnerSpace, a nonprofit dedicated to advancing the geothermal industry. It recently launched an initiative to build a Global Heat Flow Database, which would help map subsurface resources across the globe. It also plans to invest in new geothermal technology companies that are ready to launch first-of-a-kind demonstration projects.

Beard has been my go-to resource on geothermal for years, so I was thrilled to bring her on the pod to discuss the current state of the industry, the migration of personnel and expertise from oil and gas to geothermal, and the path to global scale for the industry.

All right then. Jamie Beard of Project InnerSpace. Welcome to Volts. Thank you so much for coming.

Jamie Beard

Oh, my gosh. David Roberts. Hello. It's nice to see you again.

David Roberts

Yeah, it's been a while since we talked. You know, when I was working on a piece on geothermal for Vox a few years ago, I don't know how many years ago, my family makes fun of me because everything pre pandemic is about five years ago. Yeah, I guess it was 2020. And my sense then around geothermal was that there was this sort of kind of a surge of interest, call it ten to 15 years ago, and a surge of investment. And then that kind of tailed off, kind of the air went out of that balloon a little bit lost steam.

There you go. That's the pun I was looking for. And then my sense was that as we were talking back in 2020, a bunch of strands trends were just starting to come together for a new big resurgence, a renaissance of geothermal. I want to talk about the future of geothermal, the immediate future, the near term future, the midterm future. But first, I would like to just start with a snapshot of, like, what is happening in the industry now? Is it still the case that only conventional geothermal wells are actually being dug and operating? What's the kind of snapshot of the industry?

Jamie Beard

Well, no, it's no longer just the case that conventional is being dug, which is really cool. And that's actually a difference between now and 2020. So when we talked back in the day, you're right to use renaissance, we were just about at the beginning of one, right? So it was like there's all this stuff that was very buzzy, but there wasn't really a whole lot in the ground. There were some teams that were kind of thinking about it, but nobody was really doing it yet. So there are some teams that have gotten out and done stuff in the last couple of years, and that means demonstrations, and that means that wells have been drilled, and that means that demonstrations and pilots have been done.

And that's also meant that the oil and gas industry has gotten increasingly excited and started investing. So the landscape has changed quite a bit in the last three years in terms of momentum and also investment dollars, which is really cool, I guess, to start with.

David Roberts

I should have done this at the very beginning, but I shouldn't assume that listeners read that piece on geothermal.

Jamie Beard

Well, everybody in the world has.

David Roberts

I would like to think so, but just in case there's a few out there who have it, I just want to make a very basic distinction. Geothermal to date, mostly, almost exclusively has been what's called hydrothermal, which is you go find places where there are natural riffs and reservoirs of thermal activity, and then you go down there and exploit that heat. So that's what geothermal has been from like the dawn of time up until about five minutes ago. You go find these areas where the heat already exists, that's conventional geothermal, and you stick a straw down and get the steam up and make electricity.

Then there is coming what's called advanced geothermal, whereas you go make your own reservoir, you dig down and you crack the rock to create basically an artificial or a human made fracture, which then the hot water comes, fills the cracks, then you stick a straw down, et cetera. You make your own reservoir. And then there are sort of beyond that, kind of like what you might call cutting edge. I don't know what the exact term is. Cutting edge technology research where people are trying to do things like closed loop geothermal, where instead of just having the heat be dispersed in this natural reservoir, you're just tubing water down, letting it heat up and tubing it back up.

Jamie Beard

These are very accurate terms.

David Roberts

I hope everybody's keeping up. And then there's wacky cutting edge drilling technology, like using lasers and plasma sound waves, plasma millimeter waves, god knows what else. That's the cutting edge. That's just like the landscape, just in case people don't know. So most of what's happened to date in the history of geothermal has been conventional geothermal. And as far as I know, in terms of commercial operating geothermal plants, they're still almost all conventional hydrothermal, are they not?

Jamie Beard

Yeah, that's right. There are a few commercial egs plants in the world, but they are very few. And the rest is the Iceland kind of geothermal, the geothermal that we see on the surface. So it's the traditional stuff, but even that there's not much of it in the world. Right?

David Roberts

Right.

Jamie Beard

It's still quite small, but anyway, yeah, so you caught everybody up to 2020 with your article. So everybody that's listening, go read David's article from 2020. It'll catch you up to then, and then we'll cover the last three years.

David Roberts

Now, right now what I want to know is, is there still interest in conventional hydrothermal? Are people still trying to dig those wells? Is that still like a going concern? Or is everyone turning their attention now to egs, which is enhanced geothermal systems, which is this make your own reservoir thing, scalable geothermal? Is everybody going in that direction now?

Jamie Beard

No, not everybody, and I don't think everybody should. When it comes down to it, there's a whole lot of conventional geothermal in the world that has not been developed. There a lot. Even though conventional geothermal, or hydrothermal as it's called, is geographically limited, there's still a whole lot of it out there that we could be leveraging. Right.

So if you look at the oil and gas industry and how they're engaging in geothermal, about half of the entities are going to dip their toe in to geothermal by pursuing conventional hydrothermal projects first and then the other. Half is looking and thinking, well, we'll just skip over that and go for the gold. Go for the stuff that we can scale and do anywhere. Right. And so there definitely a split in the community on that. But I think when it comes down to it, we're going to, over the next ten years or so, develop a whole lot of hydrothermal before we end up in scalable stuff.

David Roberts

My impression of hydrothermal was always that there are a couple of places where the sort of activity is intense enough to give you the heat you need to really make electricity efficiently, but there wasn't a ton of it because it couldn't compete kind of with wind and solar. Have there been developments in conventional hydrothermal geothermal that make it more attractive for investment? Like have costs come down, has permitting or siting gotten easier? What's the kind of state of play?

Jamie Beard

Sadly, that's not the case with we're going to get into that. Yeah. No, there's not been much by the way, of regulatory, unfortunately. But I think your question about costs coming down yes, a lot of that has happened because of technology transfer from the oil and gas industry over the past years that have helped revitalize, for instance, underperforming wells for hydrothermal. The heat is not usually the problem. The problem is having sufficient water naturally occurring underground in your reservoir to sustain your output. So you need to have enough water coming up out of the ground to run your power plant.

And if you don't have enough, or if your well declines, over time, which does happen with hydrothermal. Eventually you start running out of water and wells decline. There are ways to revitalize old wells, and that's being tried. There are ways to enhance the fracture network in hydrothermal systems and that's being tried, right? Yes. And quite frankly, hydrothermal is a really nice 24/7 baseload source of clean energy. And so what we're finding in terms of cost is that there are markets that will sustain a premium for baseload simply because there's so much solar and wind. Right?

David Roberts

Yeah, that's what I've been thinking about, is just that the value of dispatchability in and of itself is rising. So I thought that might be sort of affecting the economics of geothermal.

Jamie Beard

That's right.

David Roberts

Actually, let's pause here to talk about permitting and siting. You hear a lot of complaints, really from everyone about this subject, from every industry. But the geothermal people complain that it's very difficult to get a well started, even relative to oil and gas wells.

Jamie Beard

Yes.

David Roberts

So maybe just tell us quickly. These permitting and siting problems, I assume, face all kinds of geothermal, the hydrothermal and the advanced stuff. So what's the problem now? And is there any solution on the horizon?

Jamie Beard

All right, so in a nutshell, so we don't put everybody to sleep. In the United States, most of the really low hanging fruit for geothermal development exists on Bureau of Land Management land, federal land that is subject to the National Environmental Policy Act, or NEPA. And it's an extensive set of environmental regulations that require a lot of review before doing a project on federal land. And geothermal projects are subject to NEPA. What that means, essentially, is that for the multiple phases of a project, in order to get a project developed on federal land, you're looking at a permitting timeline of six or eight or even ten years to get a project off the ground, which is completely ridiculous.

You can't get projects funded under that scenario.

David Roberts

Is that also true for oil and gas well? Is that true for everything, or is there unique barriers?

Jamie Beard

So here's the thing. This is what I was just about to point that out, which is oil and gas drilling on federal land has been excluded from this process through a categorical exemption.

David Roberts

What? Isn't that nice for them?

Jamie Beard

Well, that's whether they lobbied for it. And here's the problem. Geothermal doesn't have a lobby. And so what we end up with here is a scenario where you can get an oil and gas well drilled on federal land in no time, very quick, in a geothermal well, which is clean energy. And the same process as drilling the oil and gas well is going to take you a decade. It kills projects. This kills projects, right? When you ask what's the solution, I am loathed to say politics, because who knows, right? And are we going to wait around for that?

My personal opinion is no. Let's go around it so that's why I've been focusing all my efforts on state and private land, because we're just not going to do the federal you're.

David Roberts

Just going to throw your hands up about federal land and go to other.

Jamie Beard

And that's how we go fast. And that's why most of these demonstrations are in Texas.

David Roberts

Interesting. That's hilarious. And are there state permitting and siting issues or are things generally better at the state level?

Jamie Beard

Well, look, if you focus on oil and gas states that have streamlined permitting for oil and gas and that have friendly regulatory environments to oil and gas, no, you got no problems. Right. I think the trend is going to be and quite frankly, this is the way it should happen if we're not going to sit around and wait for politics, we need to be focused on deploying pilot geothermal projects in states that are used to oil and gas permitting. Right. Those are going to be the oil and gas states. And they just so happen, many of them, to have excellent geothermal resources so we can get projects permitted in twelve months or less instead of a decade.

And we've seen that happen with one of the projects in Texas. They were off to the races in a matter of months to do their pilot. Yeah,

David Roberts

Texas.

Jamie Beard

Go go drill, baby drill.

David Roberts

Does have its merits.

Jamie Beard

Right.

David Roberts

Since you sort of brought up oil and gas, let's talk about a little bit about how in the last ten years, techniques developed and perfected by the oil and gas industry are coming to geothermal. I think people know, once again, assuming they read my article.

Jamie Beard

Read the article.

David Roberts

They know that fracking is part of that, but it's bigger than just that. So what is the sort of knowledge transfer that's been happening?

Jamie Beard

Yeah. So it's all of the learnings of the shale boom. Let's back up on the shale boom. So all of a sudden, 20 or so years ago, global geopolitics got rearranged by natural gas. And I think a lot of folks kind of skip over why that happened. Right, it happened, and we all realize it happened. But why? Why is the reason geothermal is now a thing? Because it was this gigantic flourish of technological development that came out of the oil and gas industry and 10 or 15 years of massive leapfrogs in what we can do when we're drilling and engineering the subsurface.

And that includes fracking, but it also includes a lot of other cool things.

David Roberts

When we say fracking, we mean fracturing rock to create natural gaps that are then filled, in natural gas's case by natural gas, in this case by ...

Fluid.

Hot water. But that's what we are referring to, by fracking. I just didn't want to assume people knew.

Jamie Beard

Yeah, right. So hydraulic fracturing, so the process of applying pressure to a well bore in order to enhance or create new fractures or pore space in rock. And that process can be used for more than one thing. Like right now, we use it to produce more gas than we normally could from a reservoir. But it just so happens that that technique in creating or enhancing fractures and rock is really helpful if we want to engineer the subsurface to create a geothermal reservoir. Right. So it's a really good example of kind of a bad word that comes out of the oil and gas. Really polarizing word, right?

David Roberts

Yeah.

Jamie Beard

That can kind of be repurposed into a really interesting and big opportunity for the future of clean energy.

David Roberts

Kind of a side thing. But I wanted to ask in the industry, what is the sort of state of thinking on how to tiptoe around that?

Jamie Beard

Oh my gosh.

David Roberts

Do they want to just address it full on and say it's fracking but it's different? Or do they want to just come up with a different word for it? What's the kind of state of play?

Jamie Beard

What a good question. David, I love talking to you. This is an excellent question. So it's super controversial what you just asked and nobody really wants to talk about it. Right?

So this is the way I see it going. You've got geothermal entities and the government tiptoeing around it, so they're trying to call it something else because they don't want to get mixed up with oil and gas and all that. Right.

So let's keep it nice and simple and let's call it other stuff. So they've called it things like hydro-shearing and hydro-fracking just to try to avoid the word fracking.

David Roberts

Come up with a boring enough term and everybody will just slide right past it.

Jamie Beard

Right, right. Like nobody's going to notice kind of thing. Right. The oil and gas industry, by and large, adopts the opinion, "well, that hell, we just spent the last 20 years perfecting this amazing technique that rearranged geopolitics and can revolutionize the future of geothermal. We're going to call it what it's called, damn it." Right. Then you have some entities saying, yeah, but it might be easier from a community relations standpoint to not dive right in there. So you do have some controversy in oil and gas. My personal opinion is we need to call a spade a spade. Right.

And I think there's going to be some intellectual work that we need to do as human beings to get over polarized and loaded terms. But we need to be honest with one another about what we're doing. And if we rename something that is what we are doing a technique for geothermal. It's not producing oil and gas, it's producing clean energy. That's awesome. But we are doing a technique that's called a thing.

David Roberts

Yeah, it looks a little shady when you ...

Jamie Beard

Well, it doesn't build trust. Right. If we start trying to call it something else, that's not a trust building exercise. And I think that's a lot of what we need to be doing for geothermal is trust building.

David Roberts

Well, let's briefly address here then, the kinds of concerns people might have when they hear the word "fracking". So I think people have a lot of muddled ideas in their head about what the dangers of natural gas fracking are. But tell us why this is different and why people shouldn't worry, or if they should worry a little bit, how much should they worry?

Jamie Beard

Well, okay, you're going to get the direct story from me, David. This is the no b******t answer here, which is the way hydraulic fracturing has been utilized by the geothermal industry so far has been a very simple version. It's been very low tech. So they're just trying to apply pressure and enhance existing fractures. But it's a very basic method of hydraulic fracturing that's been used. And I think when it comes down to it, when you're fracturing to enhance a reservoir to circulate water or another fluid, like, we can get to this later, but like, supercritical CO2 is the new cool trend to use as your working fluid for geothermal systems.

And it's a really cool idea, but if you are enhancing the subsurface to make that clean energy system work better, why not? As long as you're doing it safely and responsibly and leveraging the learnings of the last 20 years about how we do that safely and responsibly. I think when you start thinking about hydraulic fracturing in the oil and gas context, the types of images that come to mind are lighting your faucet on fire kind of these very polarizing and upsetting images. Right?

And I do think that that is a result of ten or 15 years of bad blood. Mistrust and bad blood between oil and gas and environmental and climate activists. And I'll just go ahead and say, just for full disclosure, I am an environmentalist and a climate activist. I am not in or from the oil and gas industry. In fact, quite the opposite. So I understand all of those sentiments. I grew up wanting to oil and gas be damned. I mean, I was going to bring them down kind of thing. So I get all that. The differences, though, between the way geothermal wells are fractured and oil and gas wells are fractured.

There are some in oil and gas. They're using a variety of chemicals to enable that process.

David Roberts

Yeah, this is what I emphasize to people, is most of what you associate with the damages of natural gas fracking have to do with the fluids being injected and leaking into the groundwater and etcetera. And geothermal just doesn't use those same fluids.

Jamie Beard

That's right. Well, right now, let's pause for a second and say, yes, there are a lot of differences in techniques and fluids used and also where natural gas is located, you oftentimes have to drill through water tables to produce and get to natural gas reservoirs. And when you have those sorts of close in geographical distance between water tables and oil and gas resources, you have the potential to have problems, particularly if you're fracturing the subsurface. Geothermal is different. Right. So because in the case of hydrothermal, you're in a hydrothermal reservoir, you're in the water table, it's a reservoir that's full of water, and your intent is producing that water to the surface.

Right. So it's a different kind of game in geothermal. Just off the bat, but I'll say part of the excitement, this is where we need to do some intellectual work, in bringing people together and not fighting about this. But but we're going to have to think about this. A lot of the benefit that we will see over the coming years, coming out of the oil and gas industry into geothermal, is actually adapting some of those more complex techniques that they use in hydraulic fracturing and oil and gas and adopting them into geothermal, applying them to make the geothermal reservoirs function properly.

Does that mean we need to transfer the chemicals and these ... no, not necessarily. But what we do want to do is transfer the really cool, cutting edge stuff like multistage fracturing, where you're actually engineering the reservoir in really specific ways to where they're parallel structures that you're fracking to connect with one another, and therefore you can predict how the fluids will flow amongst them. They're more complicated engineered subsurface reservoirs. And if we can do that like we're doing it for natural gas. Now in the geothermal context, EGS in particular, what we're saying is engineered or enhanced geothermal systems, they will work better.

And what that means is they will have better output. What that means is they will be cheaper to build. Right. So some of that transfer we do want and we should support, but I think we need to figure out how to separate the good from the bad when we think about fracking or the "f" word. So we call it.

David Roberts

And also the other question that I get constantly, I'm sure you get it several times a day, is about earthquakes. People have this real fixation on the idea that geothermal digging is going to cause earthquakes. Was there ever anything to that? Is there currently anything to that? Is that a real worry or is that kind of a myth?

Jamie Beard

No, it's a real worry. Absolutely. It's something that we should absolutely be focused on and considering. Here's the thing. The cases in the world where seismicity, or I'll back up induced seismicity, so geothermal systems have natural seismicity associated with them all the time. It just happens. What we don't want is to be causing that seismicity by our actions. So we are interfering with the subsurface in a way that causes seismicity, particularly seismicity that is detectable by humans. Right. So seismicity that is above a level that becomes noticeable. And there have been cases where geothermal systems, particularly EGS projects, where they're going in and fracking these reservoirs, have caused induced seismicity and some of them have been significant.

They not only detectable, but damage causing induced seismicity. And I will say there is kind of an obsession in media, right, about geothermal. It's like, oh, there's all this awesome stuff happening, but earthquakes, it's always this thing. It's kind of the boogeyman. And I would say in those situations where there has been induced seismicity related to an EGS project, in 100% of the cases, that was because the system lubricated an existing fault that was underneath the system. Therefore, that system should have never been located or sited where it was being developed. And there's a reason this is happening, which is the geothermal industry is so fractured and regional.

It's kind of a mom and pop shop kind of industry. You've got entities out there just kind of developing projects, but not really sharing best practices and standardization, developing protocols that everyone is following, et cetera. And in those types of situations, you'll have mistakes and some of the mistakes end up on international news, right? And that's what you have for geothermal. And that's also David, kind of, and I think this is going to be ironic to probably some of your listeners that I'll say this, but standardization and establishment of protocols and data sharing and getting things like this under control at scale, the oil and gas industry is really great at that.

David Roberts

Well, we're going to get back to that, but that's a great segue to my next question, which is tell us about what Project InnerSpace is. Project InnerSpace is nonprofit. You have to advance geothermal. The plans have two phases, which I would like to talk about in turn. The first phase, what you're trying to do now, what just got launched and is underway, is basically, as far as I can tell, an attempt to map and better understand what's beneath the surface. So just tell us a little bit about InnerSpace and what this phase one looks like.

Jamie Beard

Awesome. Thank you for asking this. We kind of forgot about that part right at the beginning. Hello, I'm Jamie Beard. I run Project InnerSpace. Project InnerSpace is a nonprofit that I founded this last May. So it's a newly launched entity. The purpose of InnerSpace is to address two major barriers that are standing in the way currently of geothermal reaching exponential scale in growth. And essentially what we're trying to do at InnerSpace is put ourselves out of business by 2030. So we're trying to run a sprint and make ourselves completely irrelevant by the end of this decade.

First is phase one, which you mentioned, which is building a global, high resolution, global map of where the geothermal resources are and how deep they are so we can understand the low hanging fruit.

David Roberts

And this doesn't exist. Imagination, like in some library somewhere that seems like that should be happening already.

Jamie Beard

You'd think, amazingly, it doesn't exist. Some places in the world have done a better job than others at estimating we have some maps of the United States that were done by Southern Methodist University in the early 2000s. We did a little poking around on that, actually, with SMU a couple of years ago to see how accurate those maps were. And it turned out the maps are a little bit inaccurate on the wrong side for geothermal. So it's actually a rosier picture for geothermal than those maps show, which could interfere. And frankly, since so many projects are on the margin economically, having maps that are even 10% off matters.

It matters, right. So we need to get this stuff right. We need to know where the resources are, how deep the resources are, and what temperature they are before we start siting projects.

David Roberts

So right now a geothermal company just wanders out into the landscape and starts digging.

Jamie Beard

That's exactly right. Yeah. I mean, they do the best they can, but there's a lot of money that goes into subsurface exploration. Oil and gas spends billions of dollars doing subsurface exploration for oil and gas.

David Roberts

I'm surprised some of that isn't transferable, they would know enough.

Jamie Beard

That's what InnerSpace phase one is. Right?

So it's like, all right, oil and gas industry, y'all have a lot of data and we would like to use that to build a really high resolution, detailed global map that's interactive and free for the world so that everybody can use it, including governments, but also startups and everybody in between.

David Roberts

So this will just save a lot of exploration costs. It will help startups skip some of that exploration stage and just know where to go.

Jamie Beard

That pre-project risk. Yeah.

David Roberts

And it will give us a better global sense of what the resource is.

Jamie Beard

That's right. So it's not going to be high resolution enough to say this is the exact spot we want to put our plant. We can't do all that. That's a little bit too much for a map of this size. But what we can say is these are the regions in the developing world where there's a lot of low hanging fruit for geothermal and there are huge population centers here and wow, this country is poised to be adding a lot of coal capacity over the coming decades. So, wow, let's just slip geothermal in here instead.

David Roberts

Is this about sort of like rationalizing and checking and ordering existing data? Or does this involve people going out into the field and I don't know what it would look like digging holes ...

Jamie Beard

Drilling a hole.

David Roberts

Drilling holes and testing.

Jamie Beard

We will not be drilling any holes in phase one. Thankfully. Phase one is a fast sprint too. So we're going to publish in 24 months. What we're doing is we're grabbing all the data that's out there that's imperfect. And most heat flow data in the world that's out there is imperfect, meaning it's not cleaned, it's not organized. It needs to be QC'd before it can be utilized and relied on. So. We're going to take all the data that's out there, clean it and get it in really good shape. Then we're going to collect as much oil and gas data as we can.

So this is data that the oil and gas industry has from the millions and millions of wells they've drilled globally. So they know ...

David Roberts

It's not proprietary, they're willing to share it?

Jamie Beard

Some of it is, but they're willing to share the pieces that we are able to clean to keep proprietary. So we can do that. So we'll have a subset of data that's never been used for the purpose of geothermal exploration before, which is going to be really helpful because it turns out when they drill for oil and gas wells, they take the temperature of the well as they drill all the way down to the bottom. And that's really helpful in predicting how hot it will be deeper and also in like formations in other places in the world. So what we'll do after we get all this data is add in some AI.

So we're going to do some predictive analytics on it, right? So we'll be able to predict more accurately than we do currently places in the world where we don't have a lot of existing data, what to expect in those formations in terms of depth and quality of the geothermal resources.

David Roberts

Interesting. And then phase two will be investing in sort of demonstration projects, first of a kind projects helping a lot of these new technologies, these new startups, establish the fact that they are possible ...

Jamie Beard

Game changers.

David Roberts

This is what I want to talk about is we discussed earlier there's Egs, which is just sort of fracking making your own reservoir, but then there's deeper and deeper and deeper stuff people are pushing towards. And that super deep stuff is where you get into really mind blowing, game changing type of stuff. We're basically like super-efficient, super-hot, always on available anywhere, this kind of stuff.

So the second phase for Project InnerSpace is investing in some of these first of a kinds. And what I am curious about is sort of of all those technologies that I wrote about and that people are passing back and forth and some of them sound quite Sci-Fi. Who is ready to go start digging. Like what are the advanced geothermal technologies that are to the point that they're ready to start producing. When you start investing in these first of a kinds, what are they going to look like? Like first of a kind, what?

Jamie Beard

So phase two is a fund. It's a billion dollar fund and it will invest in up to 20 1st-of-a-kind pilot projects in different places in the world. And phase one will help inform where we put them right. So we're going to use that data to help inform that process. But the portfolio will be broad. So geothermal is vastly underfunded in every possible way across every single concept to be honest. And so we're going to cast as broad a net as we can to have as high an impact as we can in terms of proving out scalable geothermal concepts.

And so geothermal, I don't think that we should look at geothermal as a one size fits all type of thing, where if we can just make this one kind of system work, it could be applicable anywhere in the world. That's probably not going to be the case because the subsurface in different places in the world looks really different. There's different types of rock, there's different types of heat flow, right? So different types of geothermal systems will excel in different types of subsurface reservoirs. And so I think we need to cast a really wide net on the types of concepts that we'll fund with phase two.

And so that will include EGS, but it will also include closed-loop. It will include EGS and closed-loop hybrids. So systems that mix both so they'll go down and they will directionally drill this radiator style, radiator style system into the rock, but they will also fracture around that to enhance heat flow going to that well bore, right? So that's pretty cool because what you do in a hybrid kind of system is you eliminate the risk of fracture evolution over time. You're not pressurizing the fractures and trying to circulate fluid through them and then making them change over time.

They're static, right? They're just sitting there.

David Roberts

You fracture the one time and then it does the rest of the work for you. And closed-loop is so, I mean, I'm the farthest thing from a technical person in the world, but it's intuitively appealing because it's just so much more contained. Like your fluid is exactly you know, exactly what the fluid is, exactly how much it is, how fast it's moving.

Jamie Beard

And you get out what you put in. Right? And also closed loops are really cool because you can use non-water working fluids that work better than water in closed loop. And that's where supercritical CO2 comes in. It heats up faster than water. We have a lot of CO2 laying around. Let's use it, right? It's cool. And the turbines on the surface can be redesigned to actually run directly off of supercritical CO2. So direct drive by CO2, which is very promising and very cool. So the fund is going to cast a wide net on these things, right?

We're looking at power production projects with Cogeneration of industrial heat. So looking at industrial heat decarbonization with some of the concepts, a coal plant conversion might be possible.

David Roberts

What about the lasers? What are ...

Jamie Beard

The drilling concepts? Yeah.

David Roberts

Are those real enough that they're ready to start digging?

Jamie Beard

Well, I don't imagine that we will be deploying one of these next gen drilling concepts in phase two, because we are deploying phase two starting in a year and a half or two years. So those concepts are not quite ready for commercial deployment, and these are commercial pilots. So we're going out and building power plants with this money. And we'll have 20 power plants when we're done. They're not quite ready, but that's not to say they won't be. Right.

So these cool, we're going to vaporize rock kind of concepts, they're sexy enough for venture capital and they're well funded. Right. So they're running a sprint. And we may see some of these concepts deployed in the near term, but probably not near enough term for phase two. Let's see, definitely by the end of the decade, we'll see one in the field, my guess.

David Roberts

And this is all basically different ways of bringing up heat that you use to boil water and create steam and run a turbine. Right. I mean, this is all ...

Jamie Beard

Very simply yes.

David Roberts

Just about getting heat.

Jamie Beard

That's right. We're just trying to harvest heat so we can harvest heat for heat, so we can harvest it to use in an industrial process so we don't have to burn fossil fuels to produce that heat, which I think is a no brainer for geothermal, but we can also use the heat to produce electricity. And we're focused on that as well.

David Roberts

Since you mentioned it. I wanted to ask about this, too. A lot of this is another thing that I feel like has sort of captured public interest, maybe slightly out of scale with its reality. But how big of a piece of the geothermal pie is going to be repowering fossil fuel facilities? Because people really love that idea.

Jamie Beard

You mean converting existing plants to geothermal?

David Roberts

Yes, like a coal plant. Instead of getting the heat to run the turbine from coal, you just get it from underground. But the turbine already exists. The power plant already exists. The ...

Jamie Beard

Transmission structure.

David Roberts

Transmission to and from already exists. So it's a great idea. I just wonder great idea. How big of a deal is that going to be?

Jamie Beard

Well, so there are a couple of things about geothermal right now that are really good at catching headlines because they sound so cute. Right? And that's one of them. And another one is oil and gas well reuse. You hear that one all the time, right? Yeah. Oh, let's just reuse. All right. Okay.

David Roberts

Both those I wanted to ask about. The second one I'm super skeptical about, just for obvious ...

Jamie Beard

Which one the coal plant?

David Roberts

Reusing wells.

Jamie Beard

Yeah.

David Roberts

You're drilling in different places, looking for different.

Jamie Beard

Yes, Right. And you're not looking for heat when you're drilling for oil and gas. You're looking for oil and gas. You're avoiding oftentimes. Yes, that's true. All right, so let's look at coal first. I really like the idea. In fact, InnerSpace has just funded a coal plant conversion study. Right.

So we are studying the top 20 candidates for coal plant conversion in the United States to geothermal. We're going to prioritize them by economics and subsurface characterization and we'll get a good picture of that. I like the idea. Could we go and do a megawatt to megawatt coal plant conversion today on the existing footprint of the plant with geothermal? Maybe ... Maybe in a really hot place, a hot subsurface. Hot in the subsurface, right. So say we go to Nevada, where you've got really attractive geothermal gradients and you try your very best. So we get the best in oil and gas to drill this well as cheaply as they can.

And by the way, it's not one well, it's many wells to do it. Megawatt for megawatt. We could probably technologically do it. It's feasible to do it. The problem becomes this, though. It's not economically feasible to do it. Not right now.

David Roberts

It all just comes down to how deep you can get. Right? I mean, ultimately it all just comes down to getting deeper. Getting deeper, cheaper.

Jamie Beard

Well, yes. So it depends. This is all about energy density, essentially. So if you want to look at it like energy density, the deeper you go, the more energy dense your output for geothermal. Right?

So if you're drilling to 600 degrees Celsius and you're producing at the surface 600 degrees Celsius fluids, that's awesome. I mean, that is natural gas power plant style enthalpy. And that's pretty awesome. And then you can start talking about plants that are gigawatts, right? Big plants, like coal plants. But right now, what we're calling that in geothermal land is super-hot. So super-hot rock or SHR, my favorite.

David Roberts

Finally the energy world comes up with a cool term, finally, right?

Jamie Beard

Exactly. Just add super to it and that makes it cool. Right. So those systems are theoretical right now, not super well understood. How we would fracture in, for instance, you've gone so hot that the rock is now plastic. It's not hard anymore. It's soft. So how do you fracture that and have the fractures not close

David Roberts

And have your drilling equipment not melt?

Jamie Beard

It'll melt. But that's the thing. That's why all these kind of cool new drilling methods are being researched and produced, because they are relying on materials that actually just melt and vaporize the rock instead of drilling them. There may be a situation where we can actually drill into 600 degrees Celsius semiplastic rock in the future. I think what this comes down to, though, is economic feasibility. We can probably do it now, like I was mentioning with the coal plant conversion, right? We could get the best in class to go drill those wells, and they've done it.

Like oil and gas has drilled 300 Celsius offshore, no problem. We could do it. But do we have the $500 million to do it? No, we don't. No, we don't, actually. Right. And that makes it economically infeasible right now. So the question really will become for these kind of cool, sexy, super deep systems, is can we get the cost down? Or is something so dramatic going to happen over the next decades in terms of our energy markets, that we're going to be able to afford to develop these systems. And I'm hoping yes. Right. That's my hope.

David Roberts

What you want to do just in terms of broad, big picture for the industry is get the low hanging fruit first. Build a bunch of plants, get the learning, bring the cost down.

Jamie Beard

Learning curve.

David Roberts

And it's not necessarily the case that the places the coal plants are, are where the low hanging fruit is.

Jamie Beard

Right, exactly. Though some of them are.

David Roberts

No reason to start there.

Jamie Beard

Yes. And we're going to find the ones that are, because some of them are, but not all of them are. And you are exactly right. That where we start is baby steps. And that is exactly, David, how shale happened. Right. We ended up with a little bit, a little bit, a little bit more, uhoh, this is a lot, a lot, a lot, bam. Change the world. Right. And it was just like this was about taking baby steps. And so for geothermal, it'll be the same. Right? Let's go and find the easiest stuff to do first. That's probably going to be in sedimentary basins, because they're soft, the rock is soft, and oil and gas, for instance, understands how to do it because they've been doing it for shale.

David Roberts

Well, let me ask this, because I had a pod recently on learning curves and on what kinds of technologies do and don't get on them. And a big piece of what gets on a learning curve is technologies that are more modular, more factory produced, and not so kind of bespoke to each individual location. So I'm curious sort of in the current state of play for geothermal, how bespoke is it in an individual location? How modularized is it? And what room is there to sort of modularize it in a way that will accelerate that learning?

Jamie Beard

It is the perfect example of getting on a learning curve and particularly transferrin from oil and gas to geothermal. I think, David, you saw it recently we published a report called The Future of Geothermal in Texas. And there was a chapter in that report that dealt with transferable learnings from oil and gas and learning curves. And the outcome of that report was essentially, well, hell, if we just transferred what we've already got, let's not even talk about what we need to develop or what we could. Let's just talk about what we've already got in oil and gas and let's transfer that into geothermal.

How much do we reduce cost off the top? Just transfer what they already do in oil and gas into geothermal. And yeah, modular, the way they do oil and gas, David, is called pad drilling. It's manufacturing. It is ultra-modular. I mean, they literally stamp out oil and gas wells, 200ft from one another in a line. Right. It's manufactured. Right. It's the definition of modular. But if we grabbed all of that technology and just transferred it in wholesale to geothermal. No innovations required. We've got 43% cost reduction off the top for geothermal. That's huge, right? I mean, that is not considering new stuff.

That is what we've already got. That is a huge opportunity. Huge opportunity.

David Roberts

This is another good segue then, because I want to talk about this larger sort of relationship between oil and gas and geothermal. This is of course your bailiwick, your sweet spot. This is your bag. So this is another one of these sort of like folktales about geothermal going around. Oil and gas, You can just transfer to geothermal. Same skills. It's great. It's going to cause this flow.

Jamie Beard

It's becoming a headline too. Yeah, it's another cute headline.

David Roberts

Yeah. I'm just curious, to what extent is that a reality? Number one, to what extent are the skills really transferable? And number two, to what extent is it happening? The geothermal industry is so tiny compared to oil and gas, so it's not like leakage to geothermal is going to show up in the statistics of oil and gas employment, I think, anytime soon. In a major way. I mean, tell me if I'm wrong.

Jamie Beard

But no, you're not wrong.

David Roberts

What is the nature of that? How much of that is reality and how much of that is acute headline?

Jamie Beard

So I think the headlines get it a little bit wrong, but I think we need to look at it differently. So we need to adjust what we're thinking here. So skills transfer and all that? Yes, I mean, almost 100%. It is so synergistic in terms of skill set, transferring from oil and gas to geothermal that we're talking about minimal training certificate level, let's just get you up to speed kind of thing, but otherwise go.

David Roberts

Interesting, so drilling really is just drilling then.

Jamie Beard

It is drilling. Drilling is drilling. You're either drilling for oil, you're drilling for heat, you're drilling for water. It doesn't matter, you're drilling.

David Roberts

Right.

Jamie Beard

So when it comes down to it, awesome. So you've got this highly skilled workforce of millions globally. Let's go, right? We don't have to build that for geothermal. It's there. So how do we transfer it? Right, well, this is my opinion. We transfer it not by taking people out of oil and gas and putting them in this nascent and tiny industry we call geothermal. We do that by turning the geothermal industry into oil and gas or vice versa. Right, so we get the oil and gas industry to look at geothermal as a viable and exciting future business model where they themselves, the oil and gas entities, then become massive geothermal developers and producers using their own workforce.

David Roberts

Right?

Jamie Beard

And we've started to see that already. We're starting to see the very beginning of that trend where you've got Chevron that's about to develop a geothermal project in California.

David Roberts

Is there a big major, is there an oil major with like a full fledged geothermal ...

Jamie Beard

Team!

David Roberts

Department, team, whatever.

Jamie Beard

They all have them now, all of them. And David, in 2020, when you did your article, none of them had them.

David Roberts

Interesting.

Jamie Beard

That's how fast this is happening. Every single oil major has a dedicated geothermal person. Some of them have like VP of geothermal. We've got executives in geothermal now with whole funded teams. Some of them have a portfolio of geothermal companies that they've invested in. I mean, this has all happened in the last three years. So we're talking about traction. Like, read David's article first to get a 2020, but then between 2000 and 2023, there has been so much that's happened within the oil and gas industry for geothermal.

David Roberts

And in terms of their motivations, the oil and gas majors motivations, how much of this is hedging against us being in what is possibly a dying industry and we need something else to do versus geothermal actually being like remunerative to the point that it would actually attract their attention regardless.

Jamie Beard

All right, both I think if you're an oilfield service company or a drilling contractor, so you're the one with the skilled labor and the rigs. You're looking at geothermal and thinking, okay, there's our future business, right? They need rigs, they need drillers. That's what we should do. Right? So you have some very fast movers in that space and they are leading the pack in oil and gas. So you have like Baker Hughes is out there kicking butt. They're one of the ones that has a geothermal team and they're out there really pushing another one Neighbors Drilling contractor, just really pushing hard and getting out there and making investments.

That's awesome. But you have the operators, the majors, like the Chevron, Shells, BPs of the world who are also looking at geothermal and thinking, where in the world is this most relevant for us in terms of where we own assets, where we operate assets? How can we pull geothermal in as a value add into a portfolio and eventually, maybe, build it into a massive, globally scalable opportunity where we're drilling millions of projects, right? And so you look at geothermal in terms of scale. If we were drilling at the scale of oil and gas, if we're drilling geothermal at the scale of oil and gas, we solve energy.

That's it. We solve energy by 2050. Right? And that's the opportunity for oil and gas.

David Roberts

So you genuinely think it's not a PR play for the big oil and gas?

Jamie Beard

No, I mean, you can't greenwash with geothermal, right? It's core competency. I'll be the first one to say it. You go on any majors website and they've got wind turbines splashed all over the place.

David Roberts

Algae. They used to have algae.

Jamie Beard

Yeah, algae, whatever. Solar panels. I mean, you'd think you were at a solar manufacturer or whatever. You're on oil majors website, it's all crap, right? I mean, that is greenwashing. Absolutely. If you look at the scale of their renewables investments versus the scale of their investment and their core competencies. Note, core competencies meaning subsurface. So what do we do with that? Well, we grab that core competency and we turn it to something that is future facing, right? Which is like, fine, stay subsurface experts. Awesome. Do CCUS, geothermal, and mining because we need lithium and we need clean, baseload power, right?

And we need to store a whole lot of carbon. So you all are the subsurface experts. Go. And that is really working. And I don't think you can really shake a stick at that in terms of greenwashing because it's core competency. They're doing what they know how to do.

David Roberts

And I have to believe that there are as a card carrying greeny, I have a deep and abiding hostility toward oil and gas companies. But I have to believe there are people in there who are good people and want to do good things. And this is an actual I know you share this sentiment. This whole notion that they were ever going to get into renewable energy in a big way I thought was always kind of silly. It's just a different just a completely different business.

Jamie Beard

Not the same business model.

But this, I have to believe that psychologically, there are a lot of people, oil and gas, who are gratified by this and excited by this because it's a real exit. It's a real exit out of the past into the future, not just BS hand waving.

Yeah, you are absolutely right. Over the past three years in some of the majors. The way this has happened and built into what it is is through grassroots movements in the employees. They start beating down the doors of executives and having roundtables about geothermal and all of a sudden it builds into this thing. And all of a sudden they're presenting it to the board and the C suite and then they've got a program. I mean, that's awesome. And I can absolutely attest to oil and gas as a villain industry. It's not so easy to look at an individual across the table that works in the oil and gas industry and be like, you villain.

That's not the case. Right. It's just not. I mean, these are people that love the environment and have families and are really freaking skilled at what they do. And they're humans, right? And you sit across the table from these guys and they know how to drill. Good Lord. Y'all go drill. Let's just change what you're drilling for.

David Roberts

You made a point. I heard in another interview, which I found really interesting and you sort of implied it or talked around it a little bit so far. But I want to get straight at it, which is the question of how to scale geothermal up so that it's more than a niche, kind of extra. I was looking at the new electricity capacity installed sort of graph that the EIA just came out with and I was sort of gratified that you can actually see geothermal with the naked eye now.

Jamie Beard

Oh, yeah, really? So it's like 1%.

David Roberts

Yeah, it's like a tiny little stripe at the top. You can see it, but so we all want the idea is to scale it up so that it's a big player to rival wind and solar. Your sort of argument is that the way wind and solar got to where they are was by all kinds of policy help and subsidies over the course of decades, basically. And so if we want geothermal to follow that route, it will also take decades. And we don't have decades. So your theory, how do we scale it up quickly? And you have an answer to that, so that's what I like to hear.

Jamie Beard

Yeah, I mean the answer to that is the oil and gas industry, right? So we can sit here and wait 20 years and fund startups to grow into giants and fund RnD and hope for the best. Or we can convince an incredibly capable and skilled industry that there's a market based approach here and that they can do what they know how to do and also solve energy and climate. And we're talking about the type of scale here that we start drilling for geothermal like we drill for oil and gas between 2030 and 2050. That exceeds world energy demand, I mean future world energy demand.

David Roberts

Do you mean if the scale of geothermal drilling were equal to the scale of oil and gas drilling?

Jamie Beard

Correct. In number of wells per year, yes. So we're talking about if we did that, I'm talking about with conservative estimates too. So 70,000 wells a year globally, 10 megawatts a pop, which is pretty damn low for a geothermal project. We end up at 146% of future global energy demand by 2050, and that's for heat and for electricity, 77%. Bam.

David Roberts

Interesting. I mean, that's not going to happen, is it? That's like a theoretical boundary. But how realistic do you think it is to get to that scale that quickly? Like it would be? Not many industries have ever done that.

Jamie Beard

Well, oil and gas did it with shale, let's just do it again.

David Roberts

Just do it again. Is there as much money in geothermal as there was in shale, though?

Jamie Beard

Well, so, look, I think you have to ... you can't compare geothermal to oil and gas in that way, right? Because geothermal is never going to make for oil and gas companies what oil and gas makes for oil and gas companies. But you also have these companies trying to build offshore wind farms and struggling with single digit returns. Geothermal is going to be higher than that, right? So there's going to have to be a little bit of a shift where you look at geothermal as an oil and gas entity and you say, "Ha, we're probably going to max out at about 15% return, but hell, we can drill a million of them. That sounds pretty good. Let's go." Right, so there's going to be a little shift. It's going to be a lot of wells for less returns than oil and gas. And I think if you compare geothermal with wind and solar, it looks pretty darn good to an oil and gas company.

David Roberts

Yeah. And of course, what the rate of return is, is somewhat affected by policy. So policy could get in there and at least tweak the incentives.

Jamie Beard

You can keep having hope for this, David, you keep hoping for the politics and whatever. We'll just go drill in Texas or what ... you know.

David Roberts

IRA happened. Well, let's conclude here then, and let's just talk because I'm a policy guy. And I have to ...

Jamie Beard

I know you do that. You keep doing that, David. I love it. Somebody's got to work on it.

David Roberts

So, two questions by way of wrapping up. One is, was there anything in IRA in the Inflation Reduction Act or the Infrastructure Act or CHIPS, now that I think about it, in the legislation that Democrats just passed, was there anything for geothermal? And did you feel like in all the frenzy of activity leading to that stuff, that geothermal had a voice up there in those circles? Like, does it yet have a voice? That's my first question. The second question is just what policy, if you were less cynical about policy and still had policy hopes, what would those hopes be for?

Jamie Beard

Oh, good, these are great questions. Okay, so, yes, there was lip service to geothermal in the IRA, unfortunately not well fitted. So it's ITC and PTC, they're meant to apply now across all types of renewables with a longer time frame to benefit from them. The problem, though, with geothermal, particularly on federal land, is the development and the permitting. Time frame is so darn long that you almost can't even make it even with the extended window under the IRA. Your second question was, well, did geothermal have a voice? Clearly no, because we ended up in the same spot.

Right. Where it's like, well, we're trying to fit geothermal, which is pretty darn unique, under a one size fits all policy to fit and solar and wind that are very streamlined in terms of permitting and much more predictable with very little ... no subsurface risk. Right, so it's like no, essentially no. Is it better than it was? Yes. But is it going to fix anything? No, probably not. So that's my answer there. I have hope for the future, though. I think when it comes down to geothermal, we're probably going to need to build a lot of individual state alliances that then go and build a coalition that go after federal.

Right. So it's like when we get a bunch of states and governors and state legislatures involved and motivated and feeling like that geothermal could be a really viable future economy in those states. And this is what. We're doing right now in Texas, if we can build that across other states that would really benefit from geothermal in the future, we may have a shot at getting geothermal a more impactful voice on the federal level.

David Roberts

But if that coalition came together, pressured the feds, and the feds did something, would that just be under the general heading of permitting reform, the kind of permitting reform that everybody is clamoring for now, or is there something more unique?

Jamie Beard

No that's so boring. Yeah, you told me I could pick just whatever, right? In terms of what the federal government could do, that would be really cool and impactful. And if you're going to let me have that leash, I will just take it and say, yeah, sure, fix permitting. Yes, please. But that's easy. If we want to really accelerate geothermal in a way that it catches geothermal up with other renewables, that geothermal has been substantially un