Numlock Sunday: Alexander C. Kaufman on the rise of geothermal

By Walt Hickey

Welcome to the Numlock Sunday edition.

This week, I spoke to Alexander C. Kaufman, who wrote Geothermal startup’s drilling breakthrough shaves ‘tens of millions’ off costs for his newsletter FIELD NOTES. Here's what I wrote about it:

Up until recently, for geothermal energy to work, you had to drill into a hotspot where there were large underground reservoirs of hot water. However, the new class of geothermal startups is pushing drilling tech to build subterranean furnaces. Some companies like Eavor are drilling a lattice of boreholes that connect at the bottom, forming loops through which cold water can be piped in and hot water can be piped out, generating power. Simultaneously drilling two parallel holes that intersect in hot bedrock is a steering nightmare, as GPS and electromagnetic signals don’t work at that depth. A new, long-awaited in-house drilling tool with equipment that communicates through magnetic signals just came fully online as of this week. This new tech will save Eavor 120 hours per multilateral pair of holes; given the 12 multilateral pairs per loop, and four loops per pad, that cuts the price of a project by tens of millions of dollars.

We spoke about what this kind of breakthrough actually means for this kind of work, why geothermal is having a moment, and what makes it particularly promising.

Alex can be found at FIELD NOTES, Bluesky, and Farcaster.

This interview has been condensed and edited.

Thank you again for coming on. You had a really, really cool story about a geothermal company and some of the breakthroughs they’re going through. You are one of the only folks that I have seen really dive into geothermal, what it is, and where it’s at. Do you want to talk a little bit (before we start talking about the breakthrough) about what the state of the art is on geothermal? It’s been a really dynamic time. I know that you’ve got companies like Fervo, you’ve got companies like the ones that you’ve been writing about. But also, the existing strategy, can you talk a little bit about that?

Yeah, so geothermal as an energy source has been around for more than a century. The first plant actually opened in Italy around the turn of the century. Interestingly enough, the largest plant is the Geysers power plant in Northern California, which was completed in the ’60s and remains to this day the largest geothermal plant. That’s more than just a good piece of trivia; it is sort of indicative of how geothermal, as an energy source, stalled out.

Conventional geothermal energy, which is what most of the market is, relies on identifying underground reservoirs of hot water that are then brought to a high temperature by the Earth’s molten heat, typically in volcanically active areas. Iceland gets most of its electricity from geothermal, Kenya also gets at least half its electricity from geothermal and states like California generate as much as 10%. However, it’s always been very limited to these places. However, what happened recently and what made Fervo such a household name, in energy households at least, is that Fervo was able to take these innovative drilling technologies that powered the fracking boom in America and drill for geothermal heat in far more locations than ever before.

So there is this next generation of geothermal. I use that term because there are slightly different drilling technologies and well technologies: some of them call themselves enhanced geothermal, some of them call themselves advanced geothermal, and there are some other acronyms for other variants of those technologies, but it’s all next-generation geothermal. The dream of this technology — which is looking to be well within striking distance now — is that we will probably (by the next decade) be able to produce geothermal power almost anywhere in the world and be able to access the 24-hour renewable baseload heat that functions similarly to how a nuclear plant functions. I don’t think that those two technologies are per se in competition, but it really builds out the portfolio of options beyond just hooking up intermittent renewables like wind and solar to batteries.

I want to talk a little bit before we dive further; the new tech here has been the drilling, right? That’s the hard part. The rest of it is just rudimentary thermodynamics that have been understood for a while, but it’s the drilling that actually makes this stuff cool, and that tech is from fracking, right?

That’s right. There are some startups in this space that are using drilling technology that isn’t exactly the same thing as fracking. But it is all more or less the various types of drilling tools that have been designed to access unconventional oil and gas reserves in places that we haven’t been able to get them before. There is a clear parallel in that same sense, because this is an unconventional geothermal resource. There are a lot of parallels. There are some key differences, but a good way to think about it is that conventional oil was like The Beverly Hillbillies: accidentally shoot the ground and black gold starts gurgling up. Maybe you could think of conventional geothermal being the same way, say, out West, where you have the Yellowstone geysers. That is indicative of the same geological conditions that support the California geysers power plant.

In this same sense, the unconventional drilling that brought about the fracking boom (allowing us to get into this really hard, deep rock and access resources that weren’t as easy as just shooting them and capturing what gurgles up) is what these drilling technologies are doing for geothermally.

It’s very cool. I didn’t find geothermal to be interesting for a while, just because it was exactly like you said, like “Yeah, we go to the place where there are geysers or volcanoes or whatever, and that’s where it is.” But reading particularly your story this week was such an interesting engineering quandary of not only how do you drill, but also how do you control a drill that is fathoms beneath the earth or under rock, right? Do you want to talk a little bit about what some of these advancements look like?

Eavor is one of these next-generation geothermal companies. As opposed to a lot of these companies that are pursuing projects out West and are all headquartered in Houston (sort of indicative of the parallels with the oil and gas industry), this company is building its first plant in Germany. It hopes to not only produce electricity but actually tap into heat for the district heating networks that are popular in Northern and Central Europe. They sort of think of themselves as a technology developer. As opposed to Fervo, which is hoping to build power plants to sell electrons, this is a company that wants to produce, work with other developers and sell its technology for those projects.

They built these loops; their wells are in a loop fashion, and they’re circulating water through that loop, getting it really hot through those molten lava, heat-like rocks and then bringing it back up as either steam that spins a turbine and produces electricity or steam that is funneled into these district heating networks. What they found is they need to dig these two parallel wells, which then connect somewhere roughly 6 to 8 kilometers underground; that’s roughly the size of 20 Empire State buildings deep. That is a really difficult process and typically involves running these long, long pipes down there and having data that needs to be channeled back up to an operator. Then the operator can make a very precise decision about where to go next in that drilling process. It’s not just a hassle, it’s really expensive because the biggest up-front cost for these geothermal projects is all of that drilling equipment that they’re renting. That also adds hours and hours and hours onto the process, which adds millions and millions of dollars onto the cost.

So what Eavor managed to recently develop are these kinds of magnetic sensors that can communicate from drill bit to drill bit in these parallel wells that are being dug so that they can keep drilling and keep going. The machines are communicating with each other until the point at which they are destined to intersect and establish that loop. According to the company, this is shaving on average 120 drilling hours off their projects and tens of millions of dollars. So this is a pretty big breakthrough for them and really promising for the projects that they want to build.

An interesting element of this is that there are projects that require constant time and constant investment in this stuff, but it seems like this is all very upfront, and it also doesn’t run out. A well is never going to go dry with geothermal. So if you can find a way to get that initial upfront cost down, that really unlocks a fairly long-term run of this stuff.

Yeah, definitely. It’s interesting because there are different elements to consider in terms of what keeps a geothermal plant open throughout its lifespan. The available water resource and the way that certain wells wear down over time are definitely considerations. But these projects are generally predicting at least 30-year time spans. Some of the developers I’ve spoken to (I haven’t spoken to Eavor about this, but I’ve talked to developers at companies like XGS and Sage, which are operating out of Houston), both surmised when pressed that these plants could last a lot longer than just that estimate. So I think it makes it that much more exciting, as part of the future infrastructure mix that we’re looking at. You can see the merits and the benefits of it beyond things like solar plants or wind turbines that have much shorter lifespans and don’t have that 24/7 generating capacity.

Interesting. This isn’t necessarily the only consideration, but I know that you’ve written about it. One of the appeals of this and this field in general is that if you do see a lot of the next couple decades as an energy transition away from fossil fuels, this is a field that has a lot of similar levels of expertise and job requirements that could potentially absorb some of those actual workers and whatnot, right?

That’s right, and there is a lot of direct comparison already. There’s a company called Sage (a competitor to Fervo based out of Houston, using fracking technology to develop geothermal wells) that has one of its early power deals to sell electricity for Facebook’s data centers. This company was founded by a former head of Shell Oil’s fracking division who saw firsthand the potential for this type of work. She was a little frustrated that her old employer wasn’t doing enough to pursue geothermal while Shell was claiming to go green by adopting technologies that had no real parallel with their existing workforce. For example, they were building wind and solar plants, and she felt the company didn’t necessarily have a comparative advantage in doing so. And lo and behold, here she is, five years later, running one of the more promising companies in the space. So, it is a pretty direct one-to-one parallel there.

You can see a lot of these projects are based out West, partly because there is good accessible geothermal resource there. While they want to be able to produce geothermal energy anywhere eventually, it is helpful in the early days when they’re a little bit more crunched for capital to be in a place that is just easier to drill. It is also just convenient because, obviously, there are a whole lot of drilling rigs out West for tapping into the Permian Basin, and a lot of those will literally go from drilling oil and gas one week to drilling geothermal wells the next.

That’s awesome, man. It’s great. You have a really really good newsletter called Field Notes that I’m going to make sure to link up. But, I suppose, where can folks find you, and where can they find your work?

The best place to find me is at Field Notes. I always try to include all my work there, but otherwise, I’m on X, I’m on Bluesky. If you’re more crypto-minded, I’m also on Farcaster. You can find me at any of those places, or TikTok or YouTube these days, so I’m all over the place.

Heck yeah, man!

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Edited by Crystal Wang

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