DRILLING OUTLOOK
Drilling contractors can play
important roles in supporting
scale-up of geothermal energy
Investments in and partnerships with startups
and producers can help to reduce surface,
downhole risks, improve well performance
BY STEPHEN WHITFIELD, ASSOCIATE EDITOR
In recent years, geothermal has become a
pathway for drillers to step into the world
of renewable energy while using existing
drilling equipment and expertise. In fact,
technologies and know-how from the tra-
ditional oil and gas sector has the potential
to remove current limitations to geother-
mal and help it take off on a wide scale.
Geothermal energy is ubiquitous, but not
all geothermal resources can be economi-
cally exploited. Many pockets of the hot
rock found within geothermal reservoirs
are too far below the Earth’s surface to
profitably access with current technology.
Other pockets may not be hot enough.
Current geothermal systems typically
require water heated to at least 200°C
to drive the steam turbines that produce
electricity, and there are a limited number
of shallow reservoirs with sufficient heat.
According to the US Energy Information
Administration (EIA), only six states
produced geothermal electricity in 2021
– California, Nevada, Oregon, Idaho, Utah
and New Mexico. Further, geothermal
accounted for only 0.4% of total US utility-
scale electricity generation in 2021.
Scaling geothermal will require access-
ing reservoirs at less-than-ideal tem-
peratures, said Cindy Taff, COO of Sage
Geosystems, and that will require addi-
tional technical advances. “Current tech-
nologies can only unlock geothermal in
places near volcanoes and geysers, where
the steam is already near the surface,”
Ms Taff said during a panel session at
the 2022 IADC Advanced Rig Technology
Conference in Austin, Texas, on 30 August.
“As the technologies advance for low- to
mid-temperature range, we’re going to
have geothermal in more places.”
Ms Taff was joined on the panel by Joey
Husband, Senior Advisor – Nabors Energy
Transition at Nabors Drilling; Gustavo
Perez, Chief Financial Officer at EarthBridge
Energy; and Barry Smitherman, Chairman
and President of the Texas Geothermal
Energy Alliance (TXGEA).
Investment opportunities
Nabors has made several strategic
investments into geothermal in recent
years, partnering with technology devel-
opers to help make geothermal drilling
more widely accessible. For instance, in
March it announced an $8 million invest-
ment in GA Drilling, whose plasma-based
drilling tool utilizes a chemically assisted
plasma pulse to penetrate crystalline rock
at high penetration rates and at depths
exceeding 6 miles. It also invested $10 mil-
lion in Sage Geosystems, which is develop-
ing a modeling tool that targets subsurface
designs to optimize the power generated
from geothermal systems.
Mr Husband said he believes drill-
ing contractors will play a critical role
in expanding geothermal capabilities, not
necessarily by developing new technolo-
gies themselves but through partnerships
with startups and other companies that
already have projects under way.
“We’ve invested in geothermal partner-
ships, and our role is just as support,” he
said. “These are small investments, and
we’ve been very disciplined with capital,
but when we look at our engineering, our
manufacturing, our drilling solutions and
services, that’s a pretty good platform for
a startup geothermal company or partner
to leverage, so they can accelerate that
roadmap for development. I think that’s
one role the drilling contractor can play.”
There are also a host of innovations
in the unconventional drilling space that
can help to scale geothermal, such as
integrated managed pressure drilling sys-
tems and continuous circulating systems
that can keep mud systems cool. Such
technologies can help drillers to increase
ROP at greater depths while guarding the
bottomhole assembly against the extreme
heat and challenging geology found in
geothermal formations.
“There are a lot of initiatives going on
to reduce the risk in geothermal, includ-
ing surface work on the rig and downhole
technology to handle both the BHA and the
completions. We’re helping to put all these
pieces together,” Mr Husband said.
On the commercial side, geothermal
producers are increasingly relying on
power purchase agreements (PPAs) to cre-
ate more predictability. These contracts
between power plant operators and buy-
ers, which can be either a municipal utility
or an electric cooperative, sets fixed prices
and locks them in for the duration of the
contract term.
PPAs, which typically last between
20-30 years, can be extremely beneficial to
buyers and sellers, Mr Perez said. Sellers
can more easily secure funding from lend-
ers because they can prove, through their
PPA, that they will have a steady revenue
stream for years to come, while buyers
can plan long-term operations without
worrying about price fluctuations. Such
contracts will likely serve as a backbone
for geothermal funding moving forward,
he noted. “PPAs mean a source of revenue.
When we get that signed contract, we can
go to a financial institution and ask for a
loan or ask for equity in a project. That’s
where everything starts. This is how the
market works,” Mr Perez said.
Geothermal producers are also identify-
ing ways to improve development costs
by improving well performance. Ms Taff
estimated that current geothermal tech-
nology can generate 3-4 MW of electricity
per well, meaning that a typical power
plant would require an 18- to 20-well pad to
provide 50 MW of commercial power gen-
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