Mining the heat: How closed loop geothermal is powering the next generation of clean energy

Tom Heintzman: Welcome to The Sustainability Agenda, a podcast series focusing on the evolving complexities of the sustainability landscape. I’m your host, Tom Heintzman. Please join me as we explore today’s most pressing issues with special guests that will give you some new perspectives and help you make sense of what really matters.

John Redfern: And when it’s completed, we’ll have done 360 kilometers of drilled well bore. Four and a half kilometers below the surface. And it won’t look like much on the surface, but it’ll be producing power for the next 100 years with very little maintenance. That will start the stampede.

Tom Heintzman: Welcome to our multi-part series on the energy transition and the role of electrification. On today’s episode, we’ll explore one form of generation which doesn’t receive a lot of attention but probably should receive more, geothermal energy. Specifically, we’ll hear from one technology-based company which is creating a scalable form of clean base load or dispatchable energy for heating, cooling, and electrical power. 

I’m delighted to welcome my guest, John Redfern, President, CEO, and Co-Founder at Eavor Technologies, a leader in geothermal closed-loop technology. John has extensive expertise as an investor, advisor, and serial entrepreneur in the data analytics, oil service, and energy tech verticals. Prior to founding Eavor, John spent 13 years in China co-founding a series of startups and held executive roles at multiple international oil and oil service companies including as a director at Hess in London, president of Accumap in Calgary and president of IHS Energy in Denver. Good afternoon, John, welcome, and thank you for joining us on today’s show.

John Redfern: Good afternoon and thanks for that very kind introduction.

Tom Heintzman: So John, our audience is likely familiar with ground source heat pumps, which extract heat from the pipes buried close to the surface in order to heat buildings and do the opposite in the summer for cooling like a refrigerator. And many in our audience will be aware of the power generation in Iceland, for instance, where water and steam heated by volcanic activity far beneath the surface is used to drive turbines and generate electricity. Could you elaborate on the conventional forms of geothermal energy as well as their challenges?

John Redfern: Sure, because there’s often a lot of confusion about that. When it comes to heat pumps, it’s not actually a source of energy. It’s a way of heating and cooling using the subsurface as sort of a latent heat sink that’s more efficient than doing it with aerial cooling. But it uses up electricity to heat or cool your home. What we’re talking about doing here is actually, I’d hate to use the word mining, but we’re mining the heat, extracting net heat from the subsurface. And we’re bringing that to the surface to use either in direct heat in a spa or heating buildings or district heating, or to generate power like we would with any thermal source. It creates vapor, which pushes a turbine, which generates electricity. So both of those are interesting. What I would say that surprises most people in a place like Europe, half the energy use is heat. There’s as much of a heat market as there is a power market and that’s often overlooked.

Tom Heintzman: Interesting. Now, Eavor’s closed-loop technology is described as next-generation geothermal. Can you describe or explain for our audience how it works and what advantages it offers over traditional geothermal?

John Redfern: You know, I’m glad we’re referred to as next generation because certainly when we started out like with anything novel, we were called crazy more often than not. A good way to kill any party intro would be to say, oh, I’ve seen the future and it’s geothermal energy. And people would back away a bit. What was worse is you approach some geothermal fans and tell them that the future geothermal is closed loop and they’d back away. So early in our makeup we used to laugh that it was our barrier to entry.

But what the next generation is all about is that geothermal has some nice attributes, it’s firm, clean power. But it’s not ubiquitous. It was always going to be the next great thing. And yet today it’s, you know, a small fraction of 1% of the earth’s energy or the energy that we use comes from geothermal. And why is that? It’s because you have to find, to make it work, a very rare constellation of geological facts. Lots of water, lots of permeability, and lots of heat, all in volcanic-type heat, all in the same area. And you exploit it by drilling into that subsurface aquifer and not extracting the heat directly, but extracting the fluid, which has lots of complications, and it’s unreliable and unpredictable, and therefore difficult to finance and impossible to scale. 

We have found a way around that. And there’s in fact two ways that people have thought about cracking that nut. One is to frack, which is a preferred method down in the States, hot off the success of the shale revolution. For the rest of the world, when they don’t want to frack, we’ve got an alternative that’s actually better. And that’s, as we said, called closed loop. And what we do literally is drill a bunch of well bores, kilometers below the surface and tens of kilometers long, that creates this huge radiator effectively that we circulate water in, and it extracts heat through conduction and brings it to the surface, but not bringing any of the in situ water to the surface at the same time. 

So we can do it anywhere. It’s liberated from the underlying geology. And because we’re doing it in a manufactured sort of reservoir, there’s no water losses. There’s no reservoir unpredictability. There’s no exploration unpredictability. And all of that makes it very easy to finance, very easy to scale and very, very green.

Tom Heintzman: John, because it’s liberated from the underlying geography, it means you can do this in just about anywhere, even in very small areas and tap into a rich source of energy. But in order to do this, you had to overcome a number of technological challenges, not the least of which is drilling kilometers underground and in very hot circumstances, maybe you could explain to our listeners some of the primary technical innovations that were necessary to make Eavor a reality.

John Redfern: Well, part of it was already done for us, because like the frackers, we use a lot of existing oil and gas technology, just not fracking. For example, many of our early technical staff members or team members all came from companies like Sonoma’s or Suncor, who really cut their teeth on the oil sands. And that was great training ground for how to tackle this particular form of geothermal. Because again, what are the oil sands? It was SAG-D technology, steam assisted gravity drainage strategy. It’s all about figuring out how to get heat into the ground to soften up the oil so it’ll flow. All we’re asking our engineers to do is reverse those equations and figure out how to get heat out of the ground and away we go. And a lot of the techniques that they use to make SAG-D more efficient, we’re using too. 

For example, instead of drilling a vertical well every time we wanted a horizontal well to absorb heat in, we would do multilaterals, multiple wells, 10, 12 wells off the single vertical well. And that’s something that they got a lot of experience with in Fort McMurray, where they would do 10, 20, 30 wells off a single well bore. So the rest of the world will go, wow, that’s really unusual. But really, it’s just a standard swords in the plowshares story of taking some tech that wasn’t very green and using it as the building blocks for something that’s the ultimate green energy source. Sort of ironic.

Tom Heintzman: John, those are good examples of using or repurposing technologies from other parts of the oil and gas sector. One that at least struck me as quite innovative was your way of coating the drill holes, and I may not be using the right expression, in order to effectively use them as pipes rather than having to install pipes. Maybe you could explain that a little further for us as well.

John Redfern: Well, it was a two-step process. someone who does geothermal knows they got to case their wellbores. They got to do that so that nothing comes out of the formation that you don’t want to come out. But at the same time, when you’re producing either hydrocarbons or hot water for geothermal out of rock into a pipe, there’s a huge pressure drop between the rock and the empty well bore pipe. And that’s why you need a steel case to maintain the integrity of that well bore. In our case, you know, we instinctively started with that. But then we said, wait a sec, this casings like we can get rid of it, 50% of the overall costs. Do we really need it? And we don’t because we aren’t extracting anything out of the rock, there is no pressure difference. If anything, we’re operating with the water that’s circulating in it at a slight overpressure supporting the rock. 

Also, we’re not searching out porous or permeable rock to produce a fluid. We like nice, tight granite, ideally, or some other nonpermeable rocks. Again, we don’t need to chase it. So you looked at it that way. All we had to do was just seal whatever residual permeability was there. And we came up with this thing called rock pipe, which is a series of fluids we put down that just forms a glassy type interface between the rock. And we can actually use that to update the wells in the future too. So we realized we didn’t need the same casing and to the extent we did need to seal things up, we could do it with this invention we called the rock pipe. 

Almost all our inventions and the stuff we patented is ridiculously simple to explain, but tremendously hard to execute. The one bit of technology that I personally like, that I find that a lot of people find remarkable, is our intersecting of the wells. And this is using what started as an oil and gas technology. We’ve improved upon it and gotten new tools to do it more efficiently. But it was originally used to make sure one oil well didn’t run into another one accidentally. Whereas we use it to actually purposely do that because we want to create a loop because we’re not taking water out of the rock, we’re just circulating water through the rock. 

And what I would say is, you know, one of the things that’s the most impressive technological feats I’ve seen in the last 10 years is the SpaceX rocket landing where the two boosters split off and then landed simultaneously with each other. We do sort of the same thing, except right now in Germany, as we speak, we’ve drilled two wells, four and a half kilometers down side by side, and out another four kilometers, and we’re just in the process of intersecting them, hitting an eight inch target. And then we’re going to do that 47 more times. And our rockets don’t blow up. 

So, you know, it’s an impressive sort of feat that people go, man, that sounds difficult. But if you have enough practice and you’ve got a need for it, we can reuse these oil and gas tools to achieve the near miraculous.

Tom Heintzman: Amazing. What a great story. And as a result of these innovations, you’ve, as you mentioned, liberated the technology from the underlying geology. so as a result, it can be done almost ubiquitously. You’ve unlocked the ability to finance these projects, because they can be done in more places at scale. You’ve had some impressive investors come on board, not the least of which is the Canada Growth Fund. Perhaps you could just describe a little bit about the role of the Canada Growth Fund and some of your other investors in helping to scale this technology.

John Redfern: I will say that there is an avalanche of money out there ready for the fifth or sixth project like this. Everyone’s first in line to be fifth, as we always joke. First of a kind projects like this have never been done before and are using tools that themselves have never been used before. It’s a tremendous challenge to get that sort of fundraising. But much credit to our board of directors and our investors. For a pre-revenue startup, we’ve raised about a half a billion dollars. And that’s going into R&D, but also to help prime the pump for some project finance that’s coming along. 

So what heartens us is that a lot of our investors are truly knowledgeable investors. People like OMV, the Austrian State Oil Company, or BP. People like that who know about drilling wells and understand about learning curves. And they’re sort of throwing their lot in with us and saying, this looks like a repeatable manufacturing process that we can perfect, that we can drive down the cost of, and which we can scale. That was the reason why the oil industry never went into geothermal before, or quickly exited it back about the same time we were coming into it, is because they believed it would never scale and it would never scale in an economic manner. 

We’re in a situation where we’ve done a number of pilots, one in Alberta that showed we could use the oil and gas building blocks themselves, one in New Mexico to show we could do the same thing at high temperature and volcanic rock. And right now the first commercial project we’re doing is in a place called Geretsried in Bavaria. And it’s amazing. We started drilling last year. We’re going to continuously drill with two of the largest rigs side by side in Europe until 2026. But we’ll be producing power from the first loop that they’ll have completed by the end of next year. So people will be able to go there and see this thing taking shape, being drilled and operating at the same time. And when it’s completed, we’ll have done 360 kilometers of drilled well bore. Four and a half kilometers below the surface. And it won’t look like much on the surface, but it’ll be producing power for the next 100 years with very little maintenance. That will start the stampede.

Tom Heintzman: It’s mind-boggling. It’s almost difficult to comprehend that much distance underground and the power of this. I’m sure you’re learning a lot as you drill in your Germany project and from your other projects. Have there been any particular learnings coming into these projects that surprised you or that have helped advance the capabilities of the technology?

John Redfern: Well, I mean, I’d like to take credit for all the innovations, but really a lot of it is luck and being in the right place at the right time. It’s not like we had unique solutions. We just asked the right questions first before anyone else, because no one else had really tried to seriously do closed loop. When we started our journey, I remember looking at the patent record. And when we started for the previous five years, there had been about 20,000 solar patents from the US and China, 12,000 wind patents, the same thing, and 450 geothermal patents, none of which were about closed loop. So it was one of those things where every time we came up with a problem, there seemed to be an obvious solution, but no one had patented it yet. So we had a good run at that. 

And an example of one that we weren’t planning on at all in the start was the fact that we weren’t just firm source of energy. We were dispatchable. And we weren’t just dispatchable, we were lossless load following, which most people don’t know what that is, let alone be able to pronounce it cleanly. But what lossless load following is, is different than dispatchability. Dispatchability is basically saying you can turn it on and off. Lossless load following means you can follow demand curve pretty well any way you want. And it doesn’t affect the overall output of power. 

So let’s say if we had 10 megawatts of power or capacity, that’s 240 megawatt hours. I don’t want to, I’m supposed to do math on a podcast, but that’s 240 megawatt hours in a day. You can either produce that steady state as 10 megawatts an hour, or you could shut it in for a few hours and produce double or triple of that in the evening when the sun goes down or whenever you want it. So it become a perfect complement to wind and solar who otherwise really need battery technology and all the negatives that involves to provide the firmness that the grid needs.

Tom Heintzman: John, we usually end these podcasts with a question about the future and ask our panelists to project where their technology is going. I’m curious to hear about your high level of view on what the next 10 years could hold for geothermal and for your industry more broadly.

John Redfern: Well, it was interesting because I think the way you originally phrased the question, we talked about it. You said, how is that going to affect the market and the price people have to pay for their energy and heat? And the interesting thing is, if we do our job, probably won’t give anyone cheaper power, not than wind and solar and gas. But it’ll give them firmer, more secure, more dispatchable, more reliable, more independent. It’s greater autonomy with less of a negative footprint without creating power for petrostates or electrostates. It can lead to a freer, more stable world where everyone takes care of their own power needs rather than having to import it from somewhere else and run into some Niemianism or some geopolitics. This, doesn’t really affect the price so much of power, but it makes it a better world.

Tom Heintzman: It’s fascinating, John. Thank you so much. I feel like we just scratched the surface and that’s no pun intended on a geothermal interview. But thanks for taking the time to join the show today and thank you to the listeners for tuning in.

John Redfern: Anytime. Thanks, Tom.

Tom Heintzman: If you’d like to learn more about how electrification trends will impact your business, join us for CIBC’s Electrification Summit on June 11, 2024, in Toronto. The summit will bring together leaders in energy markets, companies in the midst of electrifying their operations, financial sponsors, lenders, and policy experts to discuss how electrification is core to achieving net zero. To register, please contact your CIBC Relationship Manager. Please join us next time as we tackle some of sustainability’s biggest questions, providing you different perspectives to help you move forward. I’m your host, Tom Heintzman, and this is The Sustainability Agenda.

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