Texas-based geothermal start up secures funding to drill demonstration well in Texas
Texas based geothermal energy firm led by former oil and gas executives has secured climate venture funding to drill the company's Phase I demonstration well in Texas early this year. The company has the eyes on the big pivot of the oil and gas sector to geothermal.
With increasing interest by the oil and gas sector into geothermal in the last year or so, there has also been more coverage in the media on the possible pivot of the oil and gas sector into geothermal. Yet, so far news covered more the technology transfer rather than concrete investment into development. But this seems to change, as this announcement by Sage Geosystems indicates. The company, based out of Houston, Texas, was founded in 2020, so the company’s website, “by former Weatherford Global Head of R&D, Lev Ring, and former Shell Chief Scientist of Wells, Lance Cook. They reunited after working for decades together in the oil and gas industry to brainstorm new scalable geothermal energy concepts. Urged on by their families to “turn toward the green side of the force,” they got hooked on the idea of leveraging the core competencies of oil and gas to unlock this baseload and ubiquitous form of green energy, and soon after launched Sage.”
They describe targeting “heat harvesting” with a combination of single well closed loop system and a novel use of stimulation with a target to create an Advanced Geothermal System (AGS)/ Enhanced Geothermal System (EGS) hybrid geothermal system.
In its release this week, Sage Geosystems (Sage) describes itself as “a venture focused on ‘hot dry rock’ geothermal energy development.” and reports closing a Series A round of financing.
The $3 million Series A round of financing was led by Virya, LLC, a climate fund founded by TED Curator Chris Anderson. Anderson will join Sage’s Board of Directors. As part of the financing round, Sage has entered into a non-binding letter of intent for an additional $2 million investment by a subsidiary of U.S. and international driller Helmerich & Payne, Inc. (H&P), with a portion of that investment to be in the form of cash and a portion in the form of credit for drilling services and technology solutions.
The investment by Virya and proposed investment by H&P bring together an unprecedented mixture of investors and partners to pursue an accelerating bright spot for the oil and gas industry and climate change advocates alike – the prospect of globally scalable geothermal energy development. “Geothermal is a ubiquitous and truly huge global clean energy source, firmly within the core competency of the oil and gas industry,” says Sage CEO and former Weatherford executive Lev Ring. “We intend to quickly de-risk a novel approach to heat harvesting in hot sedimentary basins, unlocking terawatts of potential globally.” The Sage team believes that geothermal energy is the natural future of the oil and gas industry, and intends to help pave the way for the industry to pivot into the space. “If you think about how vast the oil and gas industry is globally, and what would happen if the industry engaged at scale in geothermal energy development, we could be developing a terawatt or more of geothermal energy each year,” says Lance Cook, CTO of Sage and former Shell Chief Scientist. “That places us in excess of world energy demand by 2050. Once we get through a successful pilot these next few months, we are off to the races.”
Sage was founded in summer of 2020 by Ring and Cook. The new venture experienced a series of fast successes, including having its models validated by an international oil company, and being selected to advance in the U.S. Department of Energy Geothermal Prize Competition, a million dollar multi-phase competition for geothermal innovation. Ring and Cook had worked on geothermal technologies from within the oil and gas industry in the early 2000s, only to be disappointed when the concept failed to launch as the shale boom took off. “Geothermal’s time has come. We are looking at the potential for exponential growth like the shale boom, but this time it’s clean energy,” said Ring.
The team credits the Geothermal Entrepreneurship Organization (GEO) at the University of Texas at Austin for reigniting their excitement for geothermal, and for lighting a fire under the oil and gas industry at large to engage. “Industry is buzzing about this right now in a big way. Every major entity has newly formed but quiet efforts in geothermal, and I expect this to snowball as entities begin to make their efforts public over the coming months,” said Cook. “H&P is really getting out and leading the way here with their engagement.”
H&P is an Oklahoma based driller and digital technology solutions provider that has played a leading role in U.S. energy development for more than a century. H&P and Sage entered into a non-binding letter of intent with preliminary deal terms to join Sage’s Series A financing as a funding and strategic partner. H&P owns and operates land rigs across North America, South America, the Middle East and offshore platform rigs in the Gulf of Mexico.
H&P views geothermal drilling with a strategic interest because of its commitment to sustainable energy and ability to leverage its core expertise of drilling technology and safety leadership. H&P is proposing to invest cash as well as provide drilling services for Sage’s Phase I pilot, which will take place in Texas in early 2021.
The potential pivot to clean geothermal energy by major hydrocarbon industry entities caught the eye of Chris Anderson, Sage’s lead investor. “Our clean energy future needs reliable baseload power, and so it’s thrilling to see the prospects for geothermal energy improving by the day. The skills and resources of the oil and gas industry can play an absolutely crucial role here,” said Anderson. “There’s potential for an industry often regarded as part of the problem to pivot and to use its drilling and fracking capabilities to unlock vast quantities of zero-carbon energy. That’s why Sage is so exciting to us. This is a space which both climate activists and oil industry executives worried about the long-term future of their businesses can follow with great hope.”
To learn more about the company check out this interesting interview with Sage’s CEO Lev Ring and CTO Lance Cook in the blog by Heatbeat.energy of the Geothermal Entrepreneurship Organization (GEO) in Austin, Texas.
Source: Company release