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What's the deal with closed-loop geothermal?
Conventional geothermal energy is limited to specific hot spots, but “closed-loop” geothermal, by going deeper and confining water to sealed boreholes, promises to work almost anywhere; it amounts to building a giant radiator, deep underground. I’m joined by Jeanine Vany and Mark Fitzgerald of pioneering closed-loop startup Eavor to discuss their newly operational plant in Germany and the many advantages of a system that requires no fracking and consumes no water.
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David Roberts
Way back in 2020, I wrote an article for Vox that I am told served as many people’s introduction to geothermal energy, just before the latest hype cycle really got going. I went through all the levels: there’s conventional geothermal, in which water is injected into rock fractured by existing volcanic or tectonic activity; there’s enhanced geothermal (like Fervo), in which water is injected into deliberately engineered fractures; and then, a little further out on the tech development horizon, there’s advanced geothermal, which includes all sorts of wacky stuff — like what’s going on over at Quaise, a company doing geothermal with lasers, I mean microwaves.
One of the advanced technologies I cited in that original piece, and have been keeping an eye on since, is closed-loop geothermal, which is exactly what it sounds like: a system in which the injected water is confined to sealed pipes rather than filtering out into the hot rock; it’s effectively like building a giant, extremely deep underground radiator.
The company trying to pull this off is called Eavor. I told them years ago that when they built an actual plant and began producing heat and power for sale, I would have them on the show.
Well, they just flipped the switch on a plant in Germany, which will eventually put 8.2 megawatts of electricity on the regional grid and 64 MW of heat into local district heating systems. And I am a man of my word, so, with me today I have Jeanine Vany, co-founder and executive vice president, and Mark Fitzgerald, the newly minted (as of two months ago) CEO of Eavor, to discuss the technology, the business case, and the promise of closed-loop geothermal.
With no further ado — Jeanine Vany, Mark Fitzgerald, welcome to Volts. Thank you so much for coming.
Jeanine Vany
Thank you for having me.
Mark Fitzgerald
Thank you so much, David. It’s great to be here, especially after we flipped the switch, as you say.
David Roberts
It’s nice to have that in the rearview mirror, I bet.
Mark Fitzgerald
Yeah.
David Roberts
Mark, I have a bunch of questions about the business case here and the way you intend to ladder this up. I want to, if you will indulge me, start with Jeanine, and get a little nerdy upfront about this technology. I want to explore a little bit about the nuts and bolts of this technology.
Jeanine, this plant in Germany — let me describe. There is an injection well. It goes down 2.8 miles, very far, unusually far. Goes down 2.8 miles, takes a 90-degree turn and then starts going laterally, splits into four, two tubes. Those four tubes go out laterally 1.8 miles and then loop back on themselves, return back to the origin point, re-merge, and then come back up as an output well next to the injection well. I think that’s an accurate description thus far.
I have many questions about this, and one of them might be the goofiest question, but it just occurred to me, and I’m very curious about it. You’re going out 1.8 miles laterally from your drilling site. Do you have to own all that land? Do you have to own the land on top of the lateral wells? Or is there some legal arrangement where you’re allowed to dig deep enough under people’s land? How does that work? It’s hardly the most essential thing here, but I’m just curious.
Jeanine Vany
It’s a great question, but I want to zoom out again and say, when you told me that we could come on the podcast after we were commercial — challenge accepted. And you were my source of inspiration, Dave.
David Roberts
Oh yeah, being on Volts? That pulled you across?
Jeanine Vany
Yes. Thank you again for having us on. The question on the land — it’s a question we commonly get. You need to own the surface footprint, typically where you’re building your plant, and then you lease what’s called mineral rights for the zone that you want to produce out of. No, you do not have to own the surface under where you’re drilling. That’s pretty common in a lot of places.
David Roberts
My basic question here — I think this is the fundamental question engineering-wise, technically-wise. The disadvantage, one of the things traditional conventional geothermal does, is it squirts the water down into the ground and then the water fans out. It leaks out into the rock, meaning it creates a wide surface area in which it can absorb heat. Your water or your fluid — which we will get back to — your fluid is contained, sealed in these pipes, which means it has much less surface area to contact hot rock.
This is the basic disadvantage. All of the engineering choices that are made, I think, are to compensate for that. One thing is you go a lot deeper, you find rock that’s a lot hotter, and then you move your water a lot longer of a distance through that rock than conventional geothermal. Is that correct? What I’m asking is that seems like a substantial disadvantage. You must think there are compensatory advantages. Why do this? Why deny yourself all that surface area? What are you getting out of keeping the water in a tube?
Jeanine Vany
I think what you’re ultimately referring to — for hydrothermal, remember, you are sourcing water from an aquifer. There are rocks that have pores or spaces in them that hold water that you ultimately pump to the surface. You inject water down just to have some flow in the reservoir, and then you have to pump it out.
Remember the pumping piece, because pumping is very important. The mode of extracting energy in either EGS or in the hydrothermal systems is a convection-based model, which typically does have — you can produce more megawatts with fewer wells.
On our side, we have a conductive heat transfer method, which means in order to contact enough surface area, we build out these loops that you mostly described correctly — to compensate for the convective heat flow by drilling this large set of lateral wells.
You’re absolutely right, there is a reason we are doing that. We think there are many upsides to doing that. One of them is the siting flexibility that we have. We are not restricted to looking for hot rock close to the surface. Even in the fracking methodology, you still need to find hot rock to flow the fluid through. Our whole value proposition and premise is to make this technology available anywhere in average geothermal gradients. That is one of the fundamental things that we are trying to achieve.
David Roberts
I was going to ask this later, but let’s get to it now. As you say, part of what you boast here is that you’re geography agnostic. A lot of people — I threw this out on social media and a lot of people came back with the same question, which is there’s agnostic and there’s agnostic. How geography agnostic? Are we talking about literally anywhere or are there some restrictions?
Jeanine Vany
There are always going to be restrictions because you are not going to want to drill on the top of a volcano or in a critically stressed area. I would also add, we probably do not want to drill where successful hydrothermal reservoirs are because they already have a successful reservoir. Typically what we are looking for is a good regulatory framework, an area that has the demand and relatively boring geology.
I think that is something that a lot of folks don’t realize — hydrothermal reservoirs, you’re looking for faults in active areas and you’re trying to suck the water out because it’s naturally flowing up these fault zones. You’re actively seeking out that type of geology in EGS. You’re seeking just hot rock.
For us, we’re not seeking those things. We’re seeking to be in very stable areas with no faults, and we have no risks of induced seismicity at all. Also very important to talk about is that siting flexibility. Once we rule out any geohazards, we have a high social license to operate because we don’t use a lot of water. Most of our system is built underground. When we’re producing the water — it’s not really producing — but we inject down the inlet well and it goes around and comes back up the outlet well.
Most of that infrastructure is built under the ground. Because we’re not producing large volumes of water from the underground, we have nothing to treat. We have no scaling or corrosion issues. We have no future operating expenses, which is not something that people talk about enough. We have high capital expenses upfront where we have to drill and build this radiator. We’ve been very forthcoming that 80% of our costs, our capital cost, is just the drilling. You dial that in, you’ve built an asset that just operates for 100 years. No redrilling, no water.
David Roberts
This is important. Let’s talk about the water. One of the obvious advantages of closed loop is that you pump the water down and all the water comes back up because it never leaks out into the — and again, there is all — and then there is all, presumably there is some leakage.
Jeanine Vany
I’ll tell you the leakage. It’s been proven. It’s important to know that we have built and operated a pilot plant in Canada for five years. It’s a good thing we did because we have a lot of history to point to. What we had was a leak-off, which translated to 2 cubic meters a day, which is a garden hose leaking. If you want to have zero leak-off, you can inject and pump down more of our rock pipe sealant. We have five years of data that show we have almost no leak-off whatsoever.
David Roberts
Truly negligible, meaning the amount of water you start with is more or less you’re good. You have a finite amount of water and that’s all you’re ever going to need. You’re not going to need to bring in more water. That’s super interesting. One of the big questions I had as I was thinking about this — first of all, you’re building the injection well and the — what is the name for the other well? The output.
Jeanine Vany
We call it the inlet. We don’t really inject into the formation. We call it an inlet well and an outlet well.
David Roberts
Okay. The inlet well and the outlet well are going down 2.8 miles and then you’re turning and each one of these loops — we mentioned that the pipe splits into four and each of those four loops goes out and comes back gathering heat. It goes out and comes back. The pipe, as it goes out and comes back, needs to be a stable distance from itself and from the other lateral pipes.
Jeanine Vany
Yeah.
David Roberts
In other words, you’re doing fairly high-precision drilling 2.8 miles underground, where I am assuming radio signals and wi-fi — there’s no way to communicate with the drills from the surface, they must be smart somehow. How are you doing this? Talk to us about the drilling technology itself because I saw that you had been using off-the-shelf technology and have recently transitioned to using your own bespoke drill. Tell me a little bit about the drill itself.
Jeanine Vany
Sure. Would it be okay just to correct the description of the technology for your listeners, please? We do drill vertically down — two wells side by side on the same surface pad or same surface area. Once we get to the temperature we want, we turn right and drill out.
We drill 12 wells on each pad for each horizontal. Then we connect them toe to toe with magnetic ranging, and that closes the loop. Once we close the loop, we seal the loop, and then we fill the loop up with water.
Then we have a small pump on surface. We truck the water in, fill it up. It’s about the size of an Olympic swimming pool. I don’t have the gallons in my mind right now — apologies — but once we start it up, we turn that pump off and it operates under a thermosyphon. The density-driven differences from the cold water and the warm water coming out.
David Roberts
I was going to touch on this later, but I want to emphasize this because it is slightly mind-blowing. All you have to do is drop the water down the pipe and the temperature differentials underground do the pumping for you. You have no — you are not pumping water down or pumping it back up. It is doing that on its own.
Jeanine Vany
You are correct. We do have, want to be clear, a small pump on surface that we start it with because it needs something to push it down. But as I mentioned, the water heats up and then it wants to rise. It is called a thermosyphon effect.
What we just demonstrated in Germany is that we only need one degree of temperature differential and this thing just goes on its own. We are completely black start capable. If the lights turn off or there is a tornado or hurricane, if there is a military issue, it is a very bunkered, reliable, secure energy resource that stays producing. Even if you cannot power a pump, it stays producing, and I think that is a huge advantage.
David Roberts
You don’t need ongoing electricity. Once it’s going, it’s going, and you need no further additional electricity to keep it going.
Jeanine Vany
That’s very true. I know I didn’t answer your question about connecting wells downhole.
David Roberts
You mentioned connecting them at the toe with magnetic something something. How is that working?
Jeanine Vany
When we first started the company and even my own experience drilling — I am a geologist, I spent 15 years working oil and gas before starting this company — we all know of this thing called an ellipse of uncertainty, which means when you’re drilling you know where you are, but the bit can drift a little bit in this azimuthal or east–west direction.
David Roberts
I’m correct that you can’t directly communicate with it?
Jeanine Vany
No, you can.
David Roberts
You can?
Jeanine Vany
You can. I’ll get to that. A lot of people said you’ll never connect these wells. I had never connected wells before either as a geologist, but I started researching this thing called magnetic ranging and it’s an anti-collision technology that oil and gas producers use so they don’t collide wells. We just turned it on its head and took an anti-collision technology to collide wells. We did it the first try in Alberta at a mile underground. Now we’ve done it in Germany at three miles underground and we’re connecting six and a half inch wellbores that deep.
It is an amazing level of precision. How we do that is there is a spinning magnet and it spins and it emits a rare earth element. Then there is a magnet on the other side. It is picking it up. You drill a few meters and then you do what is called a check shot. You look at the math and there will be an ellipse of a bunch of different points. Then your directional guys will reorient you and then you will march another 10 meters until you connect.
That technology is what’s called wireline conveyed. It does take time for the data to come back up the wireline and things like that. But you can communicate to the surface — there’s a wire.
David Roberts
You’re communicating via a wire in the —
Jeanine Vany
We call it a wireline tool. Mark is an engineer by training and he came up through oil and gas and led a lot of the unconventional development. I’m not the only person who can speak on the technology. I’ll kick it to Mark if you want to add something about anything.
David Roberts
To add on how you connect two 6 inch wells that are — wait, let me do the math — almost four miles away from you.
Mark Fitzgerald
They’re going to be even longer as we continue to innovate and develop. I have to say I was quite enjoying listening to this podcast you and Jeanine were doing. I think it’s fantastic what Eavor has been able to create here.
Probably the simplest way for listeners to think is as you described it. At the end of a long wire is a tool that knows exactly where the other tool is. They talk to each other and they say, “I’m this distance away in this direction.” Then you continue to bring them together. It’s a little more complicated than that, but for simplicity, think of a tool at the end of the wire that says, “Here I am.” Another one at the end of a wire on another well says, “Here I am.” Then they go meet each other.
David Roberts
You can just say magnets. Magnets. I’m going to throw the word magnets at it.
Mark Fitzgerald
Magnets.
Jeanine Vany
Yeah.
Mark Fitzgerald
That’s the best way.
Jeanine Vany
I would say that our team took that technology and then elevated it even more to our own active magnetic ranging tool. You might say, “Why is it active?” Mark was talking about the older style of conveying it through wireline. We can now connect this on the bottom of the bottom-hole assembly.
Mark Fitzgerald
While drilling.
Jeanine Vany
While drilling. Normally you have to drill and then you have to pull all of your tools out — that’s two and a half miles, that takes a long time — and then go back in. What we figured out how to do is to finish drilling, and then this tool that’s sitting on the bottom hole assembly allows you just to switch into ranging mode. It’s processing all the information downhole now instead of having to send the signal back.
David Roberts
Wait, you used to have to pull your rig out, do the check, put the rig back in, and go 10 more meters. That must have taken forever prior to this.
Jeanine Vany
You didn’t have to pull the tool out, but you did have to wait to interpret the data longer. To start the tool, yes, you had to pull it out and go back in. We shaved off a lot of time.
David Roberts
They’re communicating as they go.
Jeanine Vany
Yep.
David Roberts
Now, when we say closed loop, the vertical wells, as I understand it, the inlet and the outlet are actual tubes. Yes. Plastic tubes.
Jeanine Vany
I think I know what you’re saying. How we drill these wells is similar to anyone else drilling a well. We drill it with the same drill pipe and the same tools, and then we case it according to all the environmental regulatory standards. We cement casing in there — it’s called a casing string. Then we turn the horizontal. I think what you’re getting at is what we do in the horizontal section that might be different.
David Roberts
Waterproofing the vertical wells is standard operating procedure, something that everybody does. Your innovation is how do you waterproof lateral — yeah, lateral. How do you —
Jeanine Vany
First of all, I think it’s important for the audience — if you’ve got a geothermal audience — we have to case these wells for integrity reasons, to protect, so that there could be no accidents. You’re drilling through layers and layers of sediments. What if you drill through a hydrocarbon reservoir? You don’t want to produce it, so you set the well up and you seal everything off, and that is your level of protection — that protects your operating scheme. In the horizontal section, we create our own pseudo casing by pumping down an alkali silicate molecule mud.
We pump it down and it sets into the pore space of the rock and it hardens. Then we pressure test it up and we make sure that we have an effective seal and that then acts like a steel casing would. That provides the stability of the wellbore and it also provides the, as you would call it, waterproofing.
David Roberts
It’s almost like grout.
Jeanine Vany
Yeah, it’s almost like grout, absolutely.
David Roberts
It runs along the walls of these pipes — horizontal tubes.
Jeanine Vany
Yep.
David Roberts
Sifts into them and then hardens. This waterproofing — this sealant you’re saying will hold up forever. You don’t need to go reseal — two or three years?
Jeanine Vany
You can reseal. The good thing about our technology is we could monitor it real time just using software. If you start to see any leak off, you can manage that by trucking in and pumping down and resealing it. We did that in Eavor Lite. In our technology pilot in Canada, we had, we’ll say, three cubic meters a day of leak off. Then we pumped down a sealant and then we showed to have lower leak off. We showed we can do intervention if required.
David Roberts
Should people worry about it? Is there toxic stuff in there?
Jeanine Vany
No. It’s a great question. We get that a lot and we’ve shared it. Obviously, we share it with the regulatory bodies as well, but it’s nothing at all to worry about. It’s silica and then a couple of other components.
David Roberts
The fluid that you’re pumping down, you say it’s water-based. The fluid that’s absorbing the heat, what is it?
Jeanine Vany
It is fresh water. What we add to it is corrosion inhibitors and biocides. We do that because we want to keep it clean. We don’t want it to foul or anything. But it is just fresh water and we can truck it in.
David Roberts
Looking ahead, is there any discussion of other fluids? Is that one of the areas of advance here or is water good enough?
Jeanine Vany
We get this question a lot and my engineers keep telling me, no, we’re sticking with water. The reason for that, again, is social license to operate. If you want to start putting supercritical CO2 into your wells, you have a whole other regulatory hurdle. When we’re nascent and new and trying to scale up, we want to be able to move and be able to operate. As we hone the technology and scale it up, maybe we’ll start considering ideas like that.
David Roberts
The Germany plant, 2.8 miles down, 1.8 miles out. How far down do you eventually envision going? How far out do you eventually envision going? Is there a ceiling on either of those numbers?
Jeanine Vany
In Germany we’re drilling a horizontal configuration and that works very well for the heat market in sedimentary basins. The plan long term for utility scale power production is most certainly to drill deeper, because as you drill deeper, you unlock much more thermal energy per meter drilled. I listen to Quaise’s podcasts.
David Roberts
Are you going to try to go down and get supercritical?
Jeanine Vany
No, no, no. But he did a great job of explaining that denominator too. If we can attack that thermal energy, get more energy out of the ground, we can get a better dollars per megawatt hour. He already primed you for that. That’s exactly what we’re looking to do as well. In the case of an Eavor-Loop, I have more of a sub-vertical well construction profile.
We would drill down to — standard oil and gas equipment, they have drilled down to 12 km in, I believe, Russia was the deepest borehole and it took years to do it. China just drilled another really deep hole using standard oil and gas technology. But it’s not quick to do and there are limitations. Now the thinking out there, somewhere around 8 km is where you’re maxing out with the technology that’s off the shelf.
David Roberts
Eight kilometers is —
Five miles.
Jeanine Vany
Five miles.
David Roberts
Parochial American audience here. Thank you, Mark. Five miles. That’s not a physical limitation, that’s more of a practical. That’s the sweet spot, practically speaking.
Jeanine Vany
Yeah. It depends on your thermal gradient and different regional considerations. We won’t be drilling, I said, laterally. It’s almost straight down because that’s what we want to do to get more heat.
David Roberts
Where would the loops go?
Jeanine Vany
You just build them — they look the same, but Mark explains it really well, it almost looks like the tines of a fork.
David Roberts
Instead of the vertical well doing a 90-degree turn, it does a 45-degree turn?
Jeanine Vany
Think of it it more like an 80. It’s 10 degrees or 80, however you look at it.
David Roberts
Oh, I see. Your loops are mostly extending down rather than out. One of the things I wonder is, for a given set of vertical wells, how many of these horizontal branches can you do? There are four off the well in Germany.
Jeanine Vany
No, Germany has — there are four different loops planned on the same pad, but one loop itself on average is 24 laterals. 12 off each, and they connect to turn into 12. That’s where you’re getting four from — we’re planning to skid our rig over and drill another loop and skid the rig over and drill another loop and skid the rig over and drill one more.
David Roberts
That will be 48 lateral holes all told to do the four loops. For a given set of vertical wells, how many of those loops could you do? Spatially, there is a lot of room down there.
Jeanine Vany
Yeah.
David Roberts
Is there an upper limit?
Jeanine Vany
No, it’s quite scalable. That’s one thing that’s really interesting about the technology — we’re starting with smaller. Some companies are starting with a 30 megawatt, as the sweet spot maybe for a plant. I think I heard Quaise saying “they’re around 30 megawatts.” We’re starting with about a 10 megawatt plant. The goal is to be able to scale these up, to be deploying hundreds of megawatts, if not gigawatts in one area.
David Roberts
That’s a lot of wells. A gigawatt would be a lot of wells. This is four right now to produce the — whatever it is, the 8-ish megawatts you’re producing, that is with the four correct laterals. Eight megawatts with four laterals. Laddering up to a gigawatt, you’re getting into dozens and dozens, possibly hundreds of laterals. How many of those can fit on a single vertical? Is there — I can imagine a vertical and then a Christmas tree of laterals branching off it. I don’t know if there are practical limitations to —
Jeanine Vany
There are. I think you can design it in many ways. The Geretsried footprint is about — is it acres or hectares that you like to talk in?
David Roberts
Acres are the parochial American —
Jeanine Vany
Yeah. Right now we have about an 8-acre footprint for the 8 megawatts electric. But again, if you —
David Roberts
Wait, that’s surface?
Jeanine Vany
Surface.
David Roberts
Got it.
Jeanine Vany
Surface. If you’re going to do modularized systems, then the plants can scale. You can build a power plant that could be a 30, 50 — it’s whatever your development field looks like. You probably would start with either a 10 or a 30 megawatt plant, but then you would build it out over time. You could envision a series of plants in one area, with wells tied in with several wells on a pad.
This is pretty normal in oil and gas or in geothermal. Your surface footprint is going to be much smaller for geothermal than other incumbent renewable energy sources because everything is built under the ground. You start to spread out under the ground a little bit, but the surface footprint is pretty tidy.
David Roberts
Another question I got is presumably you’re looking for areas with low seismic activity, but if there were seismic activity, this lattice work of tubes that are a precise distance from one another is pretty vulnerable and it would be like an earthquake could tear it apart. Is that something you think about at all or worry about?
Jeanine Vany
I think about it, but I don’t know that it would tear it apart. It depends on the epicenter of where the earthquake is coming from. Lots of wells have withstood earthquakes, and many of the next-gen geothermal plants that are fracking publish their seismic activity on their website. Their wells are withstanding the earthquakes that they’re generating. I think that the same method could be templated over to us.
Mark Fitzgerald
A couple of things. The drilling down deep and horizontally has been done for decades and decades across North America. The vulnerability of that to earthquakes or seismicity is very low. There has really never been a — but the counter to that is that the development that we do does not induce seismicity either.
In other words, because we are not proceeding down, changing the gradient of the pressure gradients and the geomechanics subsurface, we also do not induce seismicity, which ensures that we do not have any risk of integrity in terms of our own development either, which I think is an important thing that we continue to focus on.
David Roberts
Another question I always get a ton is for a given area that you’ve got lateral wells going through, is it possible to drain it? Exhaust the heat in some timeframe? If so, does the heat eventually regenerate? How does that all work? Is there a life cycle in those terms? Can you exhaust the heat in the earth in an area? How does that all work? Is there a life cycle in those terms? Can you exhaust the heat in the earth in an area?
Jeanine Vany
It’s a great question and a common question. The key consideration is how you design your wells. We have a fully coupled reservoir simulation, and all that means is you connect your wells — horizontal wells — to your vertical, to your plant, and there’s an energy balance. We know what rate we have to flow the wells at, we know what spacing they need to be at. We model this over a hundred-year lifetime. If you do not have prudent operation and you flow it too fast, you can cool it down. If you operate inside of your energy balance model,
This should not decline for a period of — I’ll explain it if you’ll indulge me.
David Roberts
Sure. Please.
Jeanine Vany
This is a closed loop Mythbuster. I want to do a Mythbuster if I can. That is a common question we get. As much as we have done a lot of third-party work with NLR and others — National Lab of the Rockies.
David Roberts
Whatever the hell theyre calling it now.
Jeanine Vany
It remains a common misconception that we have this fast thermal decline. We operated for five years at Eavor Lite in this technology demonstration project in Alberta. I keep going back to it because we proved it. There you have a rate, and the rate of thermal energy starts to decline almost exponentially. Then at the five-year mark, it flattens off and it stays flat for 30 years — then it declines 1% per year after that.
These truly are generational assets. How do we know that? We predicted this model in advance with our modeling, then we drilled it and produced it, and history matched it back, and we were within 2% of our predicted thermal output for five years. We do have a very predictable resource here. But you have to operate it properly. You have to space your wells,
David Roberts
You have to confine yourself to a certain rate of extraction.
Jeanine Vany
Absolutely.
David Roberts
Is that a meaningful constraint? Does that put a ceiling on the amount that a particular plant can produce at a particular time?
Jeanine Vany
No. Maybe that isn’t the best way to explain it. If you want this to be a generational asset, you operate it in a certain way and you design your wells for that. In contrast to different types of projects — the fracking projects, where you drill a set of wells, you inject water, there’s a thermal front that moves through, and once that thermal front has hit the other well, you’re done and you have to redrill a new set of wells.
That is the difference. There is an overnight capital cost to build that system and then there are ongoing full field development, planning costs that closed-loop technology just does not have. I think that is really not well known.
David Roberts
Does it — say you built one of these and you told your buyer, “This will operate at full capacity factor for 30 years. That’s what we’re guaranteeing. 30 years.” After 30 years, there’s some meaningful decline. If you left it alone, would it reheat after —
Jeanine Vany
Yes, it would.
David Roberts
30 more years.
Jeanine Vany
I think it would. Have I done the model? No, but I feel it’s another challenge. Dave, challenge accepted.
David Roberts
All right. I want to see the first revived, abandoned, and then revived geothermal. Mark, I hope you have enjoyed this technical podcast. I invited you to be an audience.
Mark Fitzgerald
I’m quite enjoying this. You two go ahead and keep going. This is great.
David Roberts
I want to ask you a few questions here and you can both chip in on this. There’s this test plant and then this — Germany was a pilot plant. I’m curious if you have any sense of the timeline that you can expect once you’re out of pilot phase and you’re commercial from prospecting, finding the spot, assessing the spot, permitting drills, financing for pre-development. I’m curious how fast one of these things could go from zero to built. Envisioning in, five years after you’ve operated for a while.
Mark Fitzgerald
Of course. You hit the nail on the head for us. As Jeanine talked about, the history of Eavor is concept — just this incredible creative mindset. Tested in Northern Alberta, discovered it worked, tested it in Germany. I’m probably the luckiest CEO in the world because all I’ve done for six weeks since I’ve been here is go party to party to party and celebration to celebration.
David Roberts
I read the white paper about the Germany project and there were troubles along the way, there were challenges, there were things that had to be overcome. You sailed in at the end of all that, when they popped the cork.
Mark Fitzgerald
It was all perfectly planned. I’ll skip all the hard stuff and I left that for Jeanine and the rest of them. The milestone that we press released a couple of weeks ago is material for the organization because we’re able to say, as Jeanine highlighted, the thermal delivery from this system is as or better than expected. It works. We can spin the turbine. We’ve generated power as anticipated, and we’ve generated the heat as anticipated. All those milestones or those concerns that were raised by people in terms of “it’s not going to work, it may not,” all that’s done. It’s all done.
David Roberts
We know it can work.
Mark Fitzgerald
We know it works. Going forward, there are two things for us and you have highlighted them. One is, where do we commercialize this? Where is the next facility? Where is the next project? Where is the next Eavor-Loop?
David Roberts
Let’s talk about that then. I want to know how you plan to ladder up. Right now, I’m guessing the electricity you’re producing is expensive and you’re in Germany. You’re heavily subsidized. This plant, we’ve got a lot of grants, first of a kind type stuff. This Germany plant is in the ideal spot. You’re going to have to branch out and ladder up from there. Where is the first rung of the ladder?
Mark Fitzgerald
The first rung for us very much is the heat market.
David Roberts
European specifically or —
Mark Fitzgerald
Absolutely. The European district heating model is one that’s natural for us. Many of your listeners in the US may not be fully cognizant of that, but think of one big heat source, one big boiler driven from coal or natural gas or biomass or otherwise, that then creates the heat that supplies a whole community. Part of the opportunity for us is for municipalities and regions in Europe that want to transition to a fully decarbonized, reliable, and efficient means of district heating. We’re there and we’re already highly competitive in that market. That will be a strong focus for us.
David Roberts
The heat that you can produce today is financially competitive with other heat sources for district heating in Europe.
Mark Fitzgerald
Absolutely.
David Roberts
You could go build a plant tomorrow and be competitive in a district heating setting.
Mark Fitzgerald
We could.
David Roberts
One other question about heat. How hot can you get? There’s this threshold — up to 100 C or whatever, you’re mostly in district heating or low-temp industrial applications. Then there’s this 100 C threshold where if you get hot enough you can start being used in more intensive industrial. How hot is what you produce?
Jeanine Vany
Remember, in the German district heating market we’re drilling horizontally in sedimentary basins and you’re typically going to be in — I need to convert from Celsius to Fahrenheit — around 300 Fahrenheit, I think is around 180 or 150 C Celsius. When you’re delivering that to the surface, you’re probably at 120 degrees Celsius, which is maybe 200 Fahrenheit.
David Roberts
You lose a few degrees in transit, presumably the 2.8 miles of transit upward.
Jeanine Vany
You lose a bit. My point is that we are not with these systems delivering what you could decarbonize steel with. We’re delivering energy so that we can plug into — plug and play — with coal-fired or natural gas-fired district heating plants. Very different from North America. There are thousands of district heating systems. We can just plug in our system. I wanted to make sure that you understood that it’s the reservoir limitation there. If we are to drill a deeper configuration, we could be looking at much higher temperatures.
I think that’s around 500, 600 Fahrenheit, where we would top out.
David Roberts
Your tech is capable of going deep enough to produce water hot enough to serve in those industrial applications. Theoretically.
Jeanine Vany
Theoretically.
Mark Fitzgerald
Theoretically, yeah. David, your point you’re after is a really important one. For Eavor, we have shown that it works, and now where’s the market? Where do we take the next step? The next step is the district heating market in Europe, where we’re already competitive. How do we do that? We are a technology company. The DNA and the expertise in Eavor is the innovation, the creativity. Everything that you’ve allowed us to brag about here on the podcast is our DNA.
There are companies across the world that are really good at executing, drilling and executing and building and developing. For us, it’s creating those partnerships in these regions that say, “We will bring our expertise, we will bring the Eavor-Loop geothermal systems, we will bring the next evolution of that. You bring your expertise in drilling and facilities development and regional markets and otherwise.” That is the model for us right now.
David Roberts
You’re going to license yourself to project developers, to begin with.
Mark Fitzgerald
We talk a lot about it would be really fun to be a developer. It was a lot of fun to do Geretsried. That’s not who we are. Our expertise is in the development of the technology and the innovation. The next step is when we look around the world, as Jeanine talked about, as we go deeper and hotter, as we become more efficient, and my background’s in unconventional resource development.
I know how that learning curve works. We will get there. As we continue to innovate, we are firm in our view that we will compete against wind and solar and modular reactors and LNG and otherwise to generate power.
David Roberts
You think you’re saying that on some time horizon, you will be able to produce electricity in America at rates competitive with solar, wind, and gas?
Mark Fitzgerald
We believe we have the pathway and the line of sight to do that. Part one is the district heating market in Europe. Part two is that same model. Think of the hyperscalers that are focused on accessing power in the United States, the companies that are focused on developing those systems, and we bring the closed-loop technology and the applications and the innovation that we have. That combination — we are quite confident over time — will become highly competitive in the US market and other markets around the world.
David Roberts
There will be enormous demand for dispatchable power for data centers. Mark, you’re an oil and gas guy, came up in oil and gas. I know that the technology here is similar in many ways. Drilling is drilling. I’m curious how much you think the business model is the same. In other words, how much of what you bring from oil and gas is going to be applicable here versus what you’re going to have to learn on the fly.
Mark Fitzgerald
It’s a great question. The fundamentals are very similar. At the end of the day, it’s about supply, heat, and power at pricing that is competitive. How we get there — there are different ways to do it, fossil fuels or etc. But at the end of the day, economics really matter. First and foremost, those fundamentals of finding the lowest cost of energy supply, lowest cost of heat supply, that is competitive in the market.
The second is, and this is what is highly attractive to me in moving from oil and gas and fossil fuels to geothermal in regions that are adopting policies — and we see this especially in Europe right now — around aggressive decarbonization, aggressive environmental law, minimization of water use, minimization of land use. Geothermal has a place there.
This is my own soapbox, if you’ll let me go on that. We talk about wind and solar as big movers in the renewable space. We often don’t talk about the necessity to access critical mineral supplies to manage those developments. We don’t often talk about disposal of the batteries and those same critical minerals on the back end of that. On a full cycle basis, as Jeanine talked about, geothermal has the ability to draw from the biggest energy source that is around us, which is the heat of the Earth.
The Eavor-Loop advancements allow us to do that with no energy input, with no emissions, with no excess water use, and a very small land footprint. That’s what’s attracted me. Again, it all comes back to energy supply around the world is just going to be a basket. Some will be coal, some will be nuclear, some will be geothermal. Geothermal will play a role there. We just need to get it to that point where it’s more visible, it’s further down the learning curve, and it’s absolutely cost-competitive.
David Roberts
Let’s talk about that then. Maybe, Jeanine, you’ll have something to say about this too. I’m curious where you see costs coming down. When I talked to Fervo, one of the things they are explicitly trying to do is modularize the process.
There are these repeatable units, and that is how you get on learning curves — with these repeatable units. I am curious where you see advances coming, where you see cost declines and technological advances coming, where you are pushing.
Mark Fitzgerald
It’ll come in two areas. The first unconventional well that I drilled 15 years ago took us over 30 days — between 30 and 35 days — as we came down the learning curve. That same well now is five to six days.
David Roberts
That’s shale. That was shale.
Mark Fitzgerald
It’s more of a, let’s call it a siltstone, but similar to a shale. There’s my geology. That’s the full extent of my geology, David.
David Roberts
I’m nodding, but I’m secretly googling.
Mark Fitzgerald
That came from a few things. It came from practice makes perfect. As you learn more and more about the rock and the mechanics of the rock and the ability to fully interrelate or correlate that subsurface knowledge, the geology, with the engineering into the well design at the end, in those last wells, there was a continuous feedback loop through artificial intelligence, machine learning, flow of information that allowed micro changes all the way through the execution of that well.
Let me bring that back to where we are. This is public knowledge, and it is the challenge of a first-of-a-kind project. It took us over 100 days to drill the first lateral.
David Roberts
I read the white paper, and it sounds some engineers had some bad weeks there.
Mark Fitzgerald
They had some bad weeks, but as happened, they put their heads together and the last one was 20 days.
David Roberts
These are the laterals?
Mark Fitzgerald
These are the laterals.
David Roberts
You’re talking about specifically. The first lateral took 100 days. The last lateral was 20 days. You think you can keep getting that? Presumably there is a physical limit somewhere, but how far down could that get?
Mark Fitzgerald
There is a physical limit. The first and foremost thing that I’ll reinforce for people is as we learn, as we optimize the drilling programs and the drilling execution, that will come down, and that has been proven across the United States and Canada.
David Roberts
Let me ask you about that. You’re far enough down — this was a confusion I had — you’re far enough down and you’re getting into hot enough conditions that it is hotter than what conventional oil and gas drilling equipment is rated for. But you have not developed any new drills. Instead, you’re doing this thing where you keep the drill cooler. Can someone explain that quickly? How are you operating at such depths and in such heat with equipment that’s not rated for that heat?
Mark Fitzgerald
Go ahead, Jeanine, and then I’ll take that one.
Jeanine Vany
Okay. The oil and gas drilling tools, which allow you to steer and directionally drill and everything, have a limitation of 180 degrees. That isn’t Fahrenheit. I should have calculated all that. The reason I bring that up is we want to be — this is where the next generation geothermal is different from hydrothermal — we want to be able to steer and do all this directional work that we have done in unconventionals. You have to adapt those tools and keep them cool to be able to do it.
We drilled a groundbreaking — pardon the pun — well in New Mexico in the fourth quarter of 2022. We drilled the world’s deepest directional geothermal well on the planet. We created some new technology, and it’s the cooling technology that we drilled there. We drilled down to 18,000 ft, 450 Fahrenheit.
We take a drill pipe and we put an insulated coating on the outside and an insulated coating on the inside. That means when the mud from the drill rig is cool at the surface and as you pump it down and it goes through the drill string, it stays cool when it comes out the end of the drill bit deep down underground.
That is what kept the tools cool while we were drilling and allowed us to steer and do all that work. Once you have built it, though, and you take your tools out, you can operate in that environment. There is no temperature restriction after that. It is just building the system where you have the restriction.
David Roberts
The initial drilling is the limitation. Rather than develop a new kind of drill, you just developed an insulated pipe to keep the drill cool while it’s working. That’s going to work all the way down to five miles or wherever you’re going.
Mark Fitzgerald
Yeah, five miles. When we talk about getting to that point where not only does an Eavor-Loop provide all the environmental and sustainability benefits we talked about, it’s also your most economic choice for power — it comes from better efficient execution. As Jeanine has highlighted, it comes from accessing deeper, hotter horizons because the cost to go down is disproportionately smaller than the gain we get. That’s really our business model — execute flawlessly.
How do we execute flawlessly? We go to organizations and companies that are known for that to allow them to do the execution. We develop and continue to innovate, which is our strength in terms of how do you access hotter, higher thermal delivery. In doing so, the combination of those two gives us a pretty good line of sight to delivery of power that is highly competitive in regions of the world.
David Roberts
Do you have any specific LCOE target or anything that you’re looking for? Aspirational price target?
Mark Fitzgerald
Yeah, of course we do. I think —
David Roberts
That you want to tell us about?
Mark Fitzgerald
I’m not going to throw this out because then the whole organization will say to me, “How did you give away our internal target?” Any of your listeners could look at what is the current cost of power through SMRs. I think that’s in that 100 range as you come down to wind and solar, LNG. That’s right where we need to target. We need to not only be able to say we give you an environmental and stable supply of power, you don’t have to pay a premium ultimately to get that. Those two together create a business model that’s highly attractive.
David Roberts
I’ve also told the SMR people, “When you build a plant and you produce some electrons in exchange for money, you can come on the pod.” You’ll note they have not been on the pod yet.
Since you brought up the price of power — one other tech question that I skipped past, the hot water that’s brought up is not run through a conventional generator. It’s run through what’s called an organic Rankine cycle power plant — ORC power plant. Is there anything of note about your ORC power plant or is it just off the shelf? Is that an area of innovation at all or is that pretty commoditized at this point?
Jeanine Vany
It’s off-the-shelf technology, but there are opportunities. A lot of companies are trying to figure out how to make — most organic Rankine cycle units are boutique in some way, shape, or form. That idea of standardizing it and even something we would like to work on is that you have a power plant and then you operate the subsurface to go with it.
That’s future goals, but this is off-the-shelf technology that everyone is using and it has its own closed loop inside of it. When you bring up your hot water, it hits a working fluid, has a higher boiling point than the water that you produce, creates a gas, that gas spins the turbine which creates the electricity.
Most, except for the Geysers and Larderello and some of these steam flash ones, most geothermal now is built with that organic binary cycle.
David Roberts
Mark, what’s the limiter on the speed of scaling? Is it funding? Is it finding partners? Is it finding utilities willing to take a risk on this, buyers? What are the constraints here for growth?
Mark Fitzgerald
There are two. The primary constraint in the US for us right now is what I would call equivalency. There are lots of conversations around where funding is available in the United States, the continued bipartisan support for geothermal, the work around acceleration of permitting and approvals. The closed-loop system needs to be included and be part of that.
First and foremost for us — Jeanine and I had a few great days in Washington last week talking about the success we have had in generating power and the opportunity for closed loop systems to begin to be part of the narrative and the conversation, in terms of geothermal development in the United States.
David Roberts
How are they classified now for the purposes of permitting? Are they in the same bucket as an oil and gas well or is there a unique category for a geothermal well or is there an even unique category for your geothermal well? Where does that stand?
Jeanine Vany
Most permitting — most states that have some form of geothermal have geothermal regulatory rules. We just permit it as geothermal well. Some states are more progressive — Colorado and Texas have included deep closed loop systems in the regs. By and large I don’t think we’re going to struggle for permits at all, other than the same struggles everybody else has with getting permits. The standard struggles, but otherwise no.
Even to the question of how fast can we go, I would say that is an advantage that geothermal has over the SMRs and other nuclear opportunities — we can be built pretty quickly if the permitting environment is good. End to end, it could be three, three and a half years to get your first module in the ground and operating.
David Roberts
Interesting. How big is the difference if you’re doing exclusively heat versus both — is sticking the power plant on top of it a big chunk of time or money? Are you saving a lot by doing heat-only systems to begin with?
Jeanine Vany
Heat only is a good opportunity because you’re not converting the energy to electricity. When you do that, you only convert and use 10%. That goes for everyone.
In our case, where we are coming down that learning curve and looking for a good market entry point, heat does make sense because you can sell all the heat you’re producing and you don’t have to build a power plant, but it’s still not that big of a cost. You save some cost on the power plant, but 80% of the cost is drilling. It’s this energy sales — you’re selling most of the energy you’re producing. It is a good beachhead market entry strategy if you want to maximize the economic opportunity.
Mark Fitzgerald
I would add to that. Back to that question, David, you asked about what are those constraints? I continue to call for policymakers around the world — Canada, the United States, and otherwise — to recognize that geothermal has a role and it is important it should be supported.
David Roberts
It seems you’re pushing on an open door. I don’t know what experience you’ve had, but it seems that word is, at least in my circles, out. Everybody’s excited. I keep talking to legislators who are excited about it. I wonder if you find that you are getting a welcome reception.
Mark Fitzgerald
I think it’s changing for sure. It’s changing and it’s improving. Probably better in the US than our home country here in Canada for sure.
David Roberts
Huh. I wonder. It’s the birthplace of drilling — Alberta. It’s drilling central.
Mark Fitzgerald
This would be a whole different podcast that could go on for hours and hours on this one. The second is the opportunity to identify these regional partners, to look at those that share the same view of how to progress the development. We’ll continue to innovate, we’ll continue to drill deeper, we’ll continue to access higher thermal output, and all those together will get us there. It takes capital, it takes time.
David Roberts
But pretty confident it also presumably takes some policies. How do you see the current policy landscape and is there a particular policy lever that would help you? Is there a particular thing you’re pushing for? It seems most of the IRA got wiped out, but it seems the geothermal bits survived in the wreckage. I’m not totally sure how that played out. What’s the policy landscape look like?
Jeanine Vany
I’d love to roll back to the IRA for a moment. Geothermal is the only renewable that got zero in the IRA. In some ways the fact that IRA got rolled back didn’t affect us because we got zero. We really got zero out of that. That was a miss, I think — maybe, I don’t know how we missed it, but it was a miss. What I think was preserved in the new one big beautiful bill is the preservation of the tech-neutral tax credits — geothermal and nuclear have the ability to have access to these investment and production tax credits, which is a good policy.
If you are more of a larger company and you have a lot of revenue and you’re building projects all over the world, it’s a bit easier to take advantage of that. When you’re a startup — I think we’re in scale-up mode now — you have capital constraints and there are other financial instruments that help companies that are at the stage that we’re at. Those grants, non-dilutive grant opportunities or milestone-based grant opportunities.
David Roberts
Wasn’t the LPO, wasn’t the Loans Programs Office supposed to be in that business? Did you have dealings with them before they — I believe — also got wiped out?
Jeanine Vany
Yeah, the LPO, they are really great. They are looking to support any project. At least when we were working with them a few years ago, you had to have a stake in the ground and build one in the US first, and then you could get access to the low-interest debt. I think that may be changing now. I think there are certainly opportunities on that side. That is a thread that we’ll absolutely continue to pull on. Of course, we’re supportive of all the permitting reform because what our investors need is certainty and a market signal that this sector is investable.
When you start seeing things like preservation of the tax credits, different low interest debt opportunities, grants — all these in conjunction send a market signal to say, for example, the hyperscalers who right now — we do have to come down this learning curve. They’re a consumer that is willing to pay. We’ve seen this with Three Mile Island coming back online, and there’s a power purchase agreement with one of the hyperscalers.
David Roberts
They are willing to pay —
Jeanine Vany
They’re willing to support that coming down the learning curve. They’re an important voice in the conversation. How can we work on a public-private partnership space that shows them that yes, there is some public interest and investment here. We’re going to have the company showing up, we’re going to have the partner showing up, but then we also have some public investment from the government. That’s how I describe it.
David Roberts
I wonder if it’s part of your strategy going forward here to target — these hyperscalers, as you say, need a lot of power and need it quickly and have a lot of money. That makes them targets for a lot of people’s interest, including yours. I wonder if there’s a Google or somebody out there who would be willing to pay more for those first few of your plants just to get it ramped up so they can use it.
Mark Fitzgerald
I’m sure, Mark, you —
Might be thinking about that.
David Roberts
Talking with people?
Mark Fitzgerald
Yeah. Everybody can put the intersection together of where the opportunities are. We will look forward to coming back at some future podcast and talk about where those opportunities landed.
David Roberts
I would love to find out. Final question, Mark. When I talked to Carlos, the CEO of Quaise, he has grand designs. He wants to talk the global oil and gas industry into doing geothermal instead of oil and gas. He has stars in his eyes.
Is the long-term goal here to get bought by an oil and gas major and start trying to change that industry from the inside out? Do you see that as a plausible route here? I’m curious about the long-term relationship between oil and gas and geothermal.
Mark Fitzgerald
I think we’re very different industries. I believe there’s room to go forward for multiple players in the mix as it relates to energy supply around the globe. I’ve had the great pleasure of leading the global upstream business for a major international oil company. Regions are different, supply basins are different, costs are different.
The way we think of Eavor is we have an opportunity to provide energy and heat, power and heat in a manner that is going to be cost competitive in many regions. Some we won’t be, and brings environmental and social benefits. I’m a big believer that the energy mix will change.
There is a role for just about every type of energy go forward, especially as global populations grow, as energy security begins to become more and more paramount, especially for example in the United States and Canada. As we see an advancement of regions around the world that live in abject poverty, they need low-cost energy to move from poverty.
I’ve never been a believer personally that solar will replace coal and geothermal will replace oil. The geothermal industry has an opportunity to contribute to that mix. The proportion of that mix that geothermal achieves will be cost-based. It will be how competitive we are economically. That’s our focus.
David Roberts
That’s a good way to wrap up. I guess we’ll have you on in a couple of years and see.
Mark Fitzgerald
A couple of years? Come on.
David Roberts
We’ll see. We’ll see what you do.
Mark Fitzgerald
I appreciate it.
David Roberts
I’ll set a new aspirational target for you and Jeanine, for you to come back on the pod. Give you something to work for.
All right, you two. Thank you so much. It’s fascinating. As I said in the intro, I’ve been waiting, wanting to do this for a long, long time. I’m glad you guys pushed through and it is working out. Thanks for coming on.
Mark Fitzgerald
Thank you for taking the time and having us.
Jeanine Vany
Thank you for having us.
David Roberts
Thank you for listening to Volts. It takes a village to make this podcast work. Shout out, especially, to my super producer, Kyle McDonald, who makes me and my guests sound smart every week. And it is all supported entirely by listeners like you. So, if you value conversations like this, please consider joining our community of paid subscribers at volts.wtf. Or, leaving a nice review, or telling a friend about Volts. Or all three. Thanks so much, and I’ll see you next time.
