Oil and Gas Companies Entering the Geothermal Energy Industry Oil and gas companies are becoming increasingly active in geothermal energy. Their involvement includes direct project development, investment in geothermal startups, drilling and well services, engineering, equipment manufacturing, subsurface studies, geothermal heating, and the conversion of abandoned or nonproductive oil and gas wells. At least 80 oil and gas companies have some form of participation in the geothermal sector. When major oil companies, national oil companies, oilfield-service providers, drilling contractors, engineering firms, geoscience companies, equipment manufacturers, investors, and technology startups are included, the number can reasonably exceed 100. This shift is one of the most important developments in the modern geothermal industry. Oil and gas companies already possess many of the skills required to develop geothermal resources, including geological interpretation, seismic imaging, reservoir m...
Alphaxioms, we talked to Chris Sladen about his involvement in geothermal both in the UK, and globally
By: Robert Buluma
Chris, please begin by explaining a little about yourself, and why you have a passion for geothermal?
I have spent over 45 years involved in energy. Following undergraduate studies in geology at Southampton University, and a PhD in sedimentology at Reading University, I joined the energy sector in Aberdeen in 1980. It was a fascinating era when it seemed like at least one giant oil & gas field was discovered offshore every month; the wealth creation for the UK was gigantic. I got to see so much geology and rocks - my true passion. I moved to China in late 1983; not today’s China, this was over 40 years ago, a country closed for decades and embarking on an open-door policy, in part to bring both investment and technology.
I became very interested in energy trends, energy politics, and new geography created by changing politics leading to opportunities for energy investment. Subsequently I lived in locations such as Mongolia, Vietnam, east Siberia, and Mexico, actively involved in energy developments, product trading and retail sales working in total on over 40 countries. I have always been an advocate for better energy solutions, ideally lower carbon, than ones we have used before. I believe geothermal is under-explored, under-utilised, and under-invested.
During Covid times, I was a co-founder of the Geothermal Energy Advancement Association (GEAA) and Chair of the Founding Members. GEAA soon became a member of the Global Geothermal Alliance . Recently at GEAA we co-organised a very successful conference on 'Geothermal in the UK - what's next?'. This was the first attempt to directly address commercialisation in the UK, and what is needed. I have included various themes from this event into this Q&A. We seek to advocate greater use of geothermal resources and collaborate with like-minded entities. The need for everyone to come together and create a louder voice to promote geothermal was very clear. I am committed to make that happen.
I am currently a non-resident fellow at the Institute of the Americas; the Institute is at the forefront of thought leadership and analysis in energy, and a strong supporter of geothermal energy. The Institute creates a refreshingly positive atmosphere and approach to doings things better. I publish extensively on energy, both research articles and op-eds; my current series ‘Energy Unwrapped!’ is published to a global audience via the UK, USA, Singapore, and Mexico.
What is the significance of World Geothermal Energy Day?
This is a global celebration of geothermal, held every October 17th. The founders of this event, Jim Scherrer and Steve Krug, deserve enormous credit for creating the concept and fostering remarkable growth in activities. I am a UK Ambassador for World Geothermal Energy Day. Celebrations involve institutions, companies, individuals, students, investors, technology start-ups, universities, school kids to name a few. It is for everyone interested in geothermal, and its fun too! The celebrations take the form of a ‘rolling wave’ around the world as people post articles, hold seminars, and put pictures on social media. Now, I think it reaches over 1 million people; whilst there is no way of knowing the exact number, it is wonderful to see the global participation grow in just a few years.
In the UK, GEAA recently introduced the concept of a UK Geothermal Day, and this is planned for June 12th each year. I am pleased that the UK National Geothermal Centre and GEAA are collaborating to make this a success. Hopefully, everyone involved in UK geothermal will actively participate, and grow nationwide interest in geothermal, celebrating this clean source for heat, power, and critical minerals.
What is the UK geothermal resource base?
Geothermal is sustainable by any human measure with 100+ years of resources. Unlike other energy resources and minerals, it is everywhere. It is proven to have negligible environmental impact. Surface facilities are typically small and unobtrusive, and in many situations, water circulated to extract heat can be contained within a closed system. Emissions are minimal. Simple messaging is needed to explain the resource opportunity - ‘low carbon heat and power exist under all our feet; we just need to use it!’
The UK has a small number of proven projects that produce low, medium, and high-grade heat. These demonstrate commercial viability. For example, projects in the counties of Cornwall, Durham, Northumberland, Yorkshire, Hampshire, and Gloucester already show how geothermal can decarbonise heating. Very soon, Cornwall is expected to add the first UK geothermal electric power production at United Downs. The challenge countrywide is to scale up activities and unleash technology, at pace.
Multiple technology solutions can be used to combat the UK’s varied geology. Technology innovation includes, for example, the repurposing of existing oil & gas wells, micro-Organic Rankin Cycle technology, the integration of deep & shallow geothermal resources with combinations of heat pumps, downhole installations, a new generation of smart heat networks, and the use of low-grade heat in thousands of flooded and abandoned coal mines. A significant improvement in drilling technology can reduce capital expenditure. AI can surely help.
How do you see geothermal contributing to the UK Net Zero aspirations?
Commercial geothermal heat and power in the UK can have a leading role in energy security and decarbonisation. By 2050, geothermal is estimated capable of supplying 10 GW of predicted heating demand, 1.5 GW of anticipated electricity demand, deliver a reduction of 10 Mt of CO2 emissions, whilst adding 50,000 direct jobs and 125,000 indirect jobs. Geothermal reinforces the UK aspiration for decarbonised heat and power by contributing a reliable resource into a Net Zero energy system that has increasing variety, resilience, and energy independence.
A rapid build-out of geothermal can offset the loss of jobs from a fast-downsizing oil & gas industry. Geothermal could create a pathway for >30,000 oil and gas professionals as it relies, in part, on broadly similar skills to drill wells and manage fluids. If UK geothermal develops quickly, this can ensure highly skilled and trained drilling and engineering staff are not lost forever.
As energy security and carbon reduction become critical priorities for governments and businesses alike, geothermal offers a scalable, reliable, and long-term solution. Geothermal energy is a significantly underutilized resource with substantial potential to contribute to both heat and power generation. Technology now allows it to be deployed anywhere as it becomes scalable for both shallow, medium, and deep projects, making it ideal for commercial buildings, industrial processes, and district energy systems seeking to lower emissions and reduce operating costs. Opportunities abound to decarbonise large buildings such as NHS hospitals, universities & large schools, new data centres, airports, prisons, warehousing and opportunities such as large-scale greenhouse horticulture. I expect a steady flow of project news in coming years as investment ramps up.
How can the UK attract more investment into geothermal compared to other renewables like wind and solar?
Widespread political support would kick-start geothermal in the UK. The challenge to communicate geothermal is enormous. We need all political parties, and all councils to solidly support and advocate geothermal projects both for energy security, creation of a diverse energy mix, and as a 24/7/365 - always available - sustainable, renewable cleaner heat & power resource, ideal for decarbonisation. It is available everywhere onshore. I don’t see geothermal as in competition with wind and solar, to me they are complementary, together with storage, creating resilience.
The biggest challenge is bringing geothermal projects to market, the commercialisation. It is about getting projects off the drawing board, and financed, be it projects using low-grade heat, medium-grade heat, or high-grade heat, for heating, cooling & power. It is about understanding the resources & markets, how they can best be developed, finding the right technology choices, and learning from others throughout the energy value chain.
More national and local government support is needed in terms of policy, regulation, and fostering closer collaboration between stakeholders. In the European Union, recent support has provided a huge boost and confidence in accelerating geothermal investment whereas the UK geothermal sector is perceived to have much less Government support, especially compared to other low-carbon sources, particularly wind, solar, tidal, hydro and nuclear. The lack of confidence in national policy direction and weak support at local government level is stymieing growth.
As an emerging industry, we need to capture public imagination and become a government imperative. At the same time, we should not oversell geothermal and create unfulfilled expectations. The geology of the UK is highly variable - both laterally & vertically - which means that a large variety of technology and engineering solutions may be required. Each location may have very different geothermal properties, and market requirements; this implies a complex picture for commercial viability.
Where do you think the focus of geothermal will be in the UK, looking ahead to 2040?
Heat networks fed by geothermal resources are an enormous opportunity. Heating and cooling accounts for 35-40% of total UK carbon emissions with the burning of fossil fuels accounting for most of these emissions. Heat networks offer low-hanging fruit to decarbonise, using shallow and medium-depth heat. UK heat networks are proven - with companies designing, building, financing and operating district heating, hot water, and cooling schemes - there are currently ~500,000 heat network customers. However, these cover only 2-3% of total heat demand, which is very low compared to several European countries e.g. Denmark 60-65% of households, and Sweden 50-55%.
In addition to heat, there are other important opportunities, such as geothermal for power generation, and the processing of geothermal waters for critical minerals. Most of this activity is currently focussed on the geology of SW England and has shown positive results in recent years. Even so, vast areas of the UK remain unexplored, or under-explored, and undeveloped. We need a change of mindset.
How will projects be funded?
Financing and funding will be critical - public financing can accelerate project delivery. The growth of UK geothermal through Government financial incentives, together with fiscal collaboration and innovation can deliver thousands of new low-carbon heat and power projects. Previous geothermal projects have had to deal with high upfront drilling costs which can exceed 40% of total costs. Long lead times and geological risks have made financing difficult. Access to geological well and seismic data is crucial for development design and derisking; data needs to be more readily available and accessible. With greater numbers of UK projects, drilling costs will decline through continuous improvement and innovation in fast drilling technologies.
Globally, early-stage public financial support has been critical to attract private capital; this often includes tax incentives to scale-up. A blended approach incorporating public finance to de-risk private investment would accelerate UK investment, including grants for exploration, concession loans and guarantees. Venture capital and project finance needs support of a heating offtake agreement, or power purchase agreement (PPA) ideally with a Contract for Difference (CfD) mechanism.
A clear, simple regulatory framework in the UK would improve investor confidence. The current regulatory framework is inadequate for geothermal, lacking specific licensing and management systems. At the current time, there is no consistent nationwide legislation. Light-touch pragmatic regulation, combined with bankable heat and power purchase agreements would be a massive boost for investor confidence, and the insurance sector.
Having an additional income stream from geothermal projects can only help the bankability. Lithium in geothermal fluids is perhaps best known but there are sometimes also base metals and rare earth elements. Here again, actions on simple regulations, policy and incentives are now needed.
What is the progress of geothermal in Europe versus the UK?
Europe’s approach is underpinned by strong EU government support and legislation. The European Commission supports geothermal energy as part of efforts to achieve renewable energy targets and is included in the European Green Deal. The European Economic and Social Committee has called for a European strategy and action plan, highlighting geothermal’s role in a green transition, whilst the Working Group actively promotes technologies. The EU overall is actively investing in geothermal to contribute to its climate goals and this is also seen in its national energy climate plans.
EU legislation includes the Renewable Energy Directive, Energy Efficiency Directive, Net-Zero Industry Act, and Critical Raw Materials Act. These introduce rules that can benefit the entire geothermal sector. The EU funds research projects through the Horizon 2020 programme, focussing on cost reductions and improved performance. Several countries have national roadmaps and ambitious targets to make investment in geothermal projects more attractive.
The services sector and supply chains are ready to meet a surge in UK geothermal projects. The supply chain currently serves projects in the UK and is scaled to meet the next few years of demand. Many UK-based suppliers are active in Europe while waiting for UK geothermal to take off. UK demand is much lower compared to Europe - Germany, Italy, Netherlands, Denmark, Croatia, Hungary, Portugal, France, Austria and Sweden are all active in geothermal, to name a few. And of course, Iceland, too.
Direct Lithium Extraction (DLE) from hot oilfield brines in Europe and the UK is an opportunity analogous to what is happening in the Smackover Trend in the USA. In Europe, Germany is most advanced in DLE; this can also be an exciting frontier for oilfield brines and aquifers in France and England.
Geothermal is poised globally to assist large data centres and the AI-driven surge in power demand and heating/cooling - the UK and Europe can be a big beneficiary if it acts now. Recent PPA deals involve Google in the USA, whilst Meta, Microsoft, and Amazon are each well advanced. Their search for a clean energy mix for energy hungry operations has identified geothermal an ideal contributor for heating, cooling, and baseload power for data centres, whilst meeting clean energy procurement targets.
How do you see the role of Academia in promoting geothermal?
Academia can do much to bring the geothermal opportunity to all - young-old, rural-urban, south-north, rich-poor in the UK. Raising public awareness and engaging local communities is essential for successful geothermal projects. Social understanding of geothermal energy opportunities is still extremely low, often non-existent. Education about geothermal is needed at all levels. For example, by a small investment in developing video gaming technologies such as Minecraft, geothermal could reach millions of younger students and children.
Some 20 UK universities are now researching or using geothermal on their estates, and I have visited many sites. Support and involvement are growing; however increased funding is desirable both for research and to develop much-needed undergraduate level geothermal courses. Funding is critical to invest in skilling, and re-skilling young workers for the future. Increased support from the UK’s University funding councils is desirable, and I believe support can come from alumni too.
Connect with us: LinkedIn,
Comments
Post a Comment