By Emily Foxhall
March 26, 2024

Texas has become an early hot spot for geothermal energy exploration as scores of former oil industry workers and executives are taking their knowledge to a new energy source.

STARR COUNTY — In 2009, on a plot of shrub-covered cattle land about 45 miles northwest of McAllen, Shell buried and abandoned a well it drilled to look for gas. The well turned out to be a dry hole. Vegetation grew back over the site.

In 2021, a Houston-based energy company run by former Shell employees came looking for it.

This company wasn’t drilling for oil or gas, though. Its engineers were looking for a place to experiment with their technology for producing geothermal energy, created by Earth’s underground heat.

A startup called Sage Geosystems leased the site. The company installed a wellhead and brought in a diesel-powered pump. They used fluid to create cracks in the rock deep below the surface, a technique similar to fracking for oil and gas.

One day last March, the crew pumped 20,000 barrels of water into the 2-mile-deep well. Hours later, an operator opened the well from a control room. Pipes above ground shook as the pressurized water gushed back up. The water spun small turbines, generating electricity.

Sage and other companies believe geothermal power is key to replacing polluting coal- and gas-fired power plants. Even though solar and wind are proven clean energy sources, they only produce electricity when the sun shines or the wind blows. Geothermal power could provide continuous, emissions-free energy.

“Geothermal heat doesn’t have those variable conditions,” University of Texas at Austin clean energy expert Michael Webber said. “If you hit a hot spot below ground — might be thousands of feet down — the heat won’t matter based on whether it’s cloudy or whether it’s summer.”

Texas has become an early hot spot for geothermal energy exploration. At least three companies are based in Houston, and scores of former oil industry workers and executives are taking their knowledge of geology, drilling and extraction to a new energy source.

“We’ve punched over a million holes in the ground in Texas since Spindletop,” said former Texas oil and gas regulator Barry Smitherman, who has become a geothermal advocate. “So we have a lot of knowledge, and we have a lot of history and skill set.”

Heat constantly radiates out from the center of Earth as radioactive elements break down. That energy warms water that bubbles up to or escapes as steam at the surface. Humans have taken advantage of that phenomenon — an early form of geothermal power — for heating, bathing and cooking since ancient times.

For more than 100 years, engineers have used that underground hot water or steam to generate electricity. Geothermal power in 2015 fueled 27% of the electricity in Iceland, which sits on one of the world’s most active volcanic zones. In 2022, it generated about 5% of the electricity in California. The United States is the top geothermal electricity producer in the world.

Still, the total amount of geothermal electricity produced in America is tiny compared with other sources. It accounted for about 4 gigawatts last year, according to a federal analysis, or enough to power about 800,000 Texas homes.

Businesses such as Sage and government researchers say there’s a lot more geothermal power to be had by pumping fluid through hot rock where there is no natural water. With technological advances, a government analysis predicts geothermal power in the U.S. could grow to 90 gigawatts by 2050. That would have been enough to power the entire Texas grid during last summer’s highest-demand day.

Companies are racing to develop their technology and techniques to harness this energy source. They vary in how deep they want to drill (from around 7,000 feet, which oil and gas equipment can handle, to 66,000 feet, which it cannot), how they heat the water (in the well or in the rock) and how they bring the heated water back up (in the same well that sent it down or with a second one).

Like oil wildcatters, the geothermal industry must figure out the best places to drill. They’ll face the same concerns about triggering earthquakes that have dogged oil and gas fracking operations and previous geothermal efforts. In 2006, a pilot geothermal plant in Switzerland caused a magnitude 3.4 earthquake that damaged buildings and led to the plant’s closure. In 2017, a magnitude 5.5 earthquake linked to a pilot geothermal project in South Korea injured dozens.

Companies should follow existing best practices informed by research to monitor seismicity and adjust or pause operations as needed, said William Ellsworth, an emeritus professor at Stanford University. States could also mandate these protocols. “You have to pay attention to what you’re doing,” Ellsworth said.

And perhaps most importantly, the geothermal businesses will have to show they can compete with the cost of other power sources, with help from the federal government in the form of Inflation Reduction Act tax credits.

The more the technology is deployed, the more the costs might come down, Rice University Associate Professor Daniel Cohan said. Getting the price where the federal government hopes for it to be cost-competitive is “feasible,” Cohan said, “but there’s no guarantee that the industry will get there.”

The federal Department of Energy said this month that $20 billion to $25 billion needed to be invested by 2030 to move toward widespread use.

“We’re all doing something a little bit different,” Sage CEO Cindy Taff said. “One of us is going to have a breakthrough that really commercializes this stuff.”

The daughter of a geophysicist who worked for Mobil, Taff studied mechanical engineering and built a 36-year career at Shell. She worked her way up from production engineer to vice president, managing a team with an annual budget of around $1 billion.

With freckles and curly hair that falls past her shoulders, Taff said she knew the world wanted to pivot to new energy sources. Her daughter, concerned about climate change, urged her mother to get away from the “dark side” of oil and gas.

When former colleagues from Shell told Taff they were co-founding Sage and invited her to join them, she got excited.

Taff saw that Sage was a nimble company with people she considered some of the smartest in the industry. The geothermal business had a lot of growing to do, like the early days of wind or solar. Her work could have a large impact.

“It was exciting to be working with people that I knew had a sense of urgency and made a difference,” Taff said. “And then, it was exciting to be working for yourself in a way that you can push the agenda.”

So, in 2020, Taff took the leap. Her daughter joined the company too.
Building interest in geothermal

In 1989, the Exxon Valdez oil tanker spilled 11 million gallons of oil off the coast of Alaska, killing some 250,000 seabirds, 2,800 sea otters and 300 harbor seals. In Augusta, Georgia, 10-year-old Jamie Beard was riveted by the news coverage.

“I understood things enough to know that that was not something we wanted,” Beard said.

That experience pushed Beard into environmental activism, starting the next day, when she took a Kleenex box decorated like the ocean to raise money for coral reefs. She painted murals about environmental rights. In college, at Appalachian State University, she organized an Earth Day festival and tied herself to trees on a West Virginia mountaintop to protest workers scraping them away to mine for coal.

Beard went on to study environmental law at Boston University. She represented corporations, telling herself she could make change best from the inside. That proved incorrect. She joined a startup working on technology that could be applied to geothermal drilling.

That’s when her life changed.

Beard read an interview about the huge potential for geothermal power to provide electricity around the world. The interview was with Massachusetts Institute of Technology professor Jefferson Tester, who led a team that published a 372-page assessment of the resource for the federal government in 2006.

“The technology needed to advance … but it wasn’t like it had to invent a whole new area because it’s so compatible with what we do with hydrocarbon extraction,” Tester said in an interview with the Texas Tribune. “They drill holes in the ground and they pull fluids out of the ground, whether they’re gas or liquids, and they sell it. Well, that’s what you do for geothermal too.”

Beard read the report over and over.

This is my career, Beard thought.

The history of modern geothermal power went back a century: The world’s first full-scale geothermal power plant started operating in 1913 in Italy. In 1960, Pacific Gas and Electric built the first commercial geothermal power plant in the United States at a spot in Northern California known as “The Geysers.”

In the 1970s, the federal Department of Energy started researching pulling power from what was referred to as hot, dry rock. The country that decade suffered through Arab countries’ embargo on exporting oil to America, causing oil prices to skyrocket. Still, the technology didn’t get far enough for the concept to take off.

Engineers built geothermal power plants where they could find existing water resources relatively easily, maybe marked by hot springs or fumaroles, which are holes where hot gases and vapors escape from underground, said Lauren Boyd, director of the U.S. Department of Energy’s geothermal technologies office. But building new plants got riskier as prime locations got harder to find.

Beard saw opportunity. She knew the oil and gas industry could develop technology quickly. The U.S. ushered in the “shale revolution” as companies drilled horizontally and cracked open rock with hydraulic fracturing, known as fracking, to extract giant amounts of oil and gas. That technology could be used for geothermal.

Beard, 45, is the type of person who speaks with an energy that rubs off on you. Her hair is cut into an angular bob; she wears artsy glasses. She made giving a TED talk look easy.

Armed with a $1 million Department of Energy grant, Beard moved to the University of Texas at Austin around 2019 to convince people that now was the time to start a geothermal company. She argued that oil and gas experts did not have to be only the villains in the climate change story; they could also be the people who help alleviate it.

“Oil and gas people are a gigantic brain trust,” Beard said. “They are a huge asset.”

Beard had a young son. She learned he inherited a rare genetic condition that gave him a life expectancy of 10 or so years. A journalist from Wired who profiled Beard described a woman facing an existential choice: She could let the doom of his fate swallow her, or focus on changing the world.

Beard started by reaching out to industry veterans whom she suspected were retired, golfing and bored. Maybe their grandchildren were after them for being part of the fossil fuel industry that contributes to climate change.

Beard said she spent months talking with people like Lance Cook, who retired from Shell as a vice president. Beard said the reaction she usually got was “it’ll never work,” followed by a phone call a few weeks later that the person was still thinking about it. But Cook decided to jump in, and he became the chief technology officer for a new company named for Beard’s son, Sage.

Chris Anderson, the leader of TED, known for its conferences with TED talks by experts on various topics, invested $16 million through his climate investment fund. Drilling firm Nabors invested $9 million more.
Early successes

Beard wasn’t the only person who saw the potential of leveraging expertise from the oil and gas industry to develop geothermal in Texas.

Tim Latimer grew up in a city of about 1,000 residents in Central Texas, where he remembers being fascinated by the Discovery Channel show “Build It Bigger” about constructing large projects that impact many lives, such as bridges, tunnels and dams.

Latimer studied mechanical engineering at the University of Tulsa. He wanted a job back in Texas to be near family and friends, so when he graduated in 2012 he went to work on drilling sites while the shale revolution was taking off.

Latimer considered whether he should be working in fossil fuels in a world confronting climate change. But working on rapidly developing technology alongside smart people excited him. Moving into wind or solar didn’t feel right after years studying drilling.

Then came the lightbulb moment. He found the same 2006 geothermal report that inspired Beard. He realized that what he was doing, which included drilling into high-temperature rock in South Texas, presented what he called a “huge opportunity for tech transfer” into geothermal.

Latimer thought the idea was so obvious he could join a geothermal company already doing it. He found none. What if this could change how the world gets energy and no one tried it? he wondered. Like other startup founders, he’s articulate and dreams big. At a conference where some wore suits, he wore sneakers, a button-down and jeans.

Latimer went to Stanford University Graduate School of Business and met a classmate getting a PhD in geothermal research. Together they started Fervo Energy. They headquartered the business in Houston. Their first Houston-based hire had 15 years of experience working for oil and gas companies Hess and BP. Fervo now employs 80 people, about 60% of whom came from oil and gas work.

Fervo’s approach is basically to drill vertically and horizontally, then use fracking technology to create horizontal cracks in the earth. That way, operators can send water down the well, where it can flow through the small cracks in the rock to heat before coming back up another nearby well.

Two California energy providers have signed contracts to buy power from Fervo. Google also has a financial agreement with them. Oil and gas company Devon Energy Corporation invested $10 million and later invested millions more.

Last summer, Fervo ran a 30-day test in 375-degree rock in Nevada. They deemed it a success, and now the company is building a project nearby in Utah, next to where the Department of Energy has sponsored a geothermal field lab. They expect the project will put power mostly onto the California grid in 2026.
Drilling deeper

Back in Houston, in a beige set of warehouses on the south side of town, another company led by former oil and gas experts is taking a third approach.

Henry Phan left a 19-year career in product development at Schlumberger, where his work included designing drilling equipment that could steer sideways, to join a former colleague who launched Quaise Energy. The company focuses on using millimeter waves — which are higher frequency microwaves like the ones used to heat food — to create wells by vaporizing rock.

Oil and gas equipment begins to fail when temperatures below ground reach around 400 degrees. Drill bits wear down quickly against harder rock and electronics are pushed past their limits. Using millimeter waves would allow operators to “drill” deeper than oil and gas equipment can go — which means reaching hotter rock that could produce more power.

The idea interested Phan, and he thought the physics made sense. Plus, he would work on cutting-edge technology that he thought could be a “big step change for humanity.” Quaise had a lot less bureaucracy than at the giant Schlumberger, where money going into product development seemed to be diminishing. In 2020, he signed on as Quaise’s vice president of engineering. He brought more former colleagues with him.

Quaise aims to be able to drill into 300 to 500 degree rock by 2026, produce steam that can generate electricity by 2028 and go commercial after that. Their investors include Nabors, climate investors Prelude Ventures and billionaire Vinod Khosla.

In early experiments with the technology, they used millimeter waves to “drill” through an eight-foot cylinder of basalt rock, plus samples of 1- to 2-inch-thick basalt. The examples sit on display in their office.

“It’s cool to work on a new product,” Phan said, “but the fact that it can make an impact to … our life and our children’s life and their generation and their kids is monumental. So it’s rewarding from the point of view that we’re working on something that is so impactful if we can make this thing work.”

Disclosure: Google, Rice University and the University of Texas at Austin have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.