The oil and gas industry has been and still is very profitable. According to recent analyses, the industry has given $ 2.8 billion a day in profit for the past 50 years.[1] Moreover, the biggest crude oil producer in the world, Aramco made a net income of $ 48.4 billion in the second quarter of 2022 which was a 90% year-to-year increase in net income.[2] Despite those facts, more and more oil and gas companies decide to invest in the still largely untapped geothermal energy. A recent example is Eavor Technologies which received $ 40 million in funding from diverse venture funds, including funds by BP and Chevron.[3] This presentation identifies some of the potential advantages which geothermal energy gives to the oil and gas industry as well as points out the challenges facing companies entering the new market.
Investing in renewable sources of energy is advantageous from a financial and ecological point of view. New climate policies introduced by an increasing number of countries mean that oil and gas companies will have to pay more and more for their CO2 emissions, driving their profits down. Therefore, in the long-term it is reasonable to diversify their portfolios, coming closer to the target of net carbon zero and thus can provide partly the strongly needed private capital to geothermal investments. And among the RES, geothermal energy seems to be the most suitable one for Big Oil and Gas, since they can use their existing experience from exploration, drilling and production in a new industry.
There are also potential challenges facing Big Oil and Gas in the geothermal industry. Despite the similarities between the two industries, geothermal drilling poses a greater financial risk than a crude oil or a gas one, since the profitability in the regulated geothermal market for consumers is normally lower than in oil and gas produced for the industry and thus one mistake in drilling might make a geothermal project unprofitable. Moreover, since geothermal boreholes are usually drilled in densely populated areas, where the offtakers are, big companies must be more careful, when it comes to public acceptance and seismic risks. Nevertheless, some of those risks can be mitigated by the new technologies, such as the Enhances Geothermal Systems (EGS). As a result, the geothermal industry can be a very interesting target for the big oil and gas companies.
We plan our presentation as a small panel discussion with 2/3 experts from the field. Alex Richter will explain the way, Innargi went from oil to geothermal and Mr Menon from Baker and Hughes has been requested, a speaker from the analysis side will be invited as well. Henning von Zanthier will moderate the panel discussion. The discussion would take approx. 40/50 minutes.
[1] https://internationalfinance.com/oil-gas-what-makes-industry-profitable/, access: 26.10.2022,
[2] https://www.aramco.com/en/news-media/news/2022/aramco-announces-half-year-2022-results#, access: 26.10.2022,
[3] https://www.thinkgeoenergy.com/big-oil-waking-up-to-geothermal-invests-in-closed-loop-firm-eavor-technologies/, access: 26.10.2022.