What is the potential of geothermal energy for oil and gas innovators?

Meeting climate goals will require innovation on many fronts. Shortfalls in power generation capacity, infrastructure, energy storage capacity, critical materials and funding are among the obstacles governments, utilities and businesses are working to overcome as they pledge to significantly reduce carbon emissions.

Our latest whitepaper explores the challenges and opportunities of one potentially significant contributor: Geothermal energy.

The appeal of geothermal is enormous — and so are the technical hurdles to generating that power at scale. Unlike solar and wind, thermal power drawn from beneath the earth's surface is always on, always abundant. But so far, taking advantage of that power has proven technically challenging, with geothermal energy accounting for just 0.4 percent¹ of total electric generation. Nearly half² of that capacity came online in the 1980s after a federal law authorized loans that could be canceled if potential reservoirs proved unsuitable for development.

With exploration and drilling expertise, the oil and gas industry is a natural fit to dig into geothermal. Indeed, many geothermal startups are led by former oil and gas professionals, and there have been preliminary efforts to assess how easily existing oil and gas wells could be converted to geothermal. So far, companies have generally used conventional shallow drilling techniques to tap hydrothermal resources, typically in areas near geysers or hot springs.

To scale up, companies must expand beyond limited geographies and drill at much deeper depths. That creates a new set of challenges — and opportunities — for innovators in the space.

Will geothermal gain a more substantial foothold in the industry? That will depend not only on potential technological advances in drilling, but on whether the industry can meet its net-zero emissions goals through increased carbon capture and storage. The industry is already spending far more on those carbon capture, utilization and storage efforts than on geothermal. One option for industry leaders looking to hedge their bets on the viability of large-scale carbon capture may be pursuing strategic partnerships with next-gen geothermal tech companies.

¹_{Source: U.S. Energy Information Administration, Electric Power Monthly, Tables 1.3.B and 1.16.B, April 3, 2024, preliminary data for the United States.}

²_{Source: U.S. Energy Information Administration, Form EIA-860M, Preliminary Monthly Electric Generator Inventory}