A Renewable Energy Alternative About To Reawaken
When you want to drill, there are few better than the oil and gas companies. Over the last few decades, they have perfected the idea of drilling. This is going to come in very handy for renewable energy.
That sounds a bit counterintuitive. Why would oil and gas companies want to drill for renewable energy? In fact, how do you do it since renewables are typical the sun and wind?
For those who are younger, this might seem like the case. However, a number of decades back, the talk track around renewable energy was not based upon solar or wind. Back in the late 1980s/early 1990s, geothermal was the craze. This is what everyone thought would provide our needs in the future.
It is hard to argue the logic. When you see the massive power that comes out of a volcano, it is easy to see how this could be a game changer if harnessed. Below the surface of the Earth, there is a lot of power. Just the steam alone could power entire cities.
Of course, the issue is to harness the power in a profitable way.
A few decades back, this was rather difficult. Like most drilling techniques back then, the miss rate was great. However, since that time, advancements in geology as well as newer fracking techniques have brought drilling forward.
This is where geothermal enters the picture. If we can fine tune the drilling, we will see a massive amount of power generated that usurps solar and wind. In fact, it even eclipses coal and other fossil fuels.
While heat can be found a few feet below the Earth's surface, the real "gold" is down a number of miles. At around 33,000 feet, we can see 50,000 times the amount of oil and gas that the Earth has. Talk about a game changer.
The past year saw a massive increase in spending in renewable energy. However, geothermal clocked in a paltry $675 million in capital spending. Considering half a trillions dollars was spent, this is miniscule.
It is something that is going to be changing.
But that is about to change, with struggling fossil fuel companies about to put their capital and skills to work on something that's far less degrading on the planet.
Oil and gas majors are about to make their biggest geothermal investments in more than 30 years, as geothermal economics improve while financials for the fossil fuel sector continue to pose a major challenge amid stubbornly low energy prices.
Perhaps it is a bit early to count the oil and gas companies out. The planets thirst for energy is going to keep growing. This means that it will have to come from a source that is cleaner yet more stable than what we see with solar and wind.
Geothermal might be the solution that everyone is looking for. While it was not profitable a few decades back, advancements could mean the story is a lot different this time. With their profits starting to dwindle, the oil companies are looking for other avenues of profitability.
Many believe that geothermal energy could follow a similar production path as the oil fracking shift a couple decades back. There was talk about Peak Oil meaning we were going to run out. Now, after near two decades of fracking, we see there is a glut of oil. The pact that production increased also enabled the United States to become oil independent.
Over the next decade, it is worth watching what will take place within the energy sector. There are trillions of dollars globally in play. Companies are going to embark upon a great race.
If geothermal moves similar to fracking, we could see a massive shift away from electricity generated by fossil fuel. This is already happening but geothermal would accelerate this process far beyond what solar or wind can produce.
It is going to be an interesting race to watch.
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