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0:01:35 You’re trying to find places where there’s pockets of steam underground naturally occurring.
0:01:37 You just need to drill a well into it.
0:01:44 And when you find it, if you knew exactly where to drill today, it would already be the cheapest source of heat and steam on the planet.
0:01:46 Yeah, that is so tantalizing, right?
0:01:53 In fact, there are places around the world where there’s steam not that far underground.
0:01:58 And if only we knew where they were, we could have a lot of clean energy.
0:01:59 A lot.
0:02:00 But we don’t know where they are.
0:02:02 And maybe enough for all of our energy demands.
0:02:04 Just, you know, tomorrow, if you knew where to drill.
0:02:05 It’s right there.
0:02:07 We just got to figure out where.
0:02:08 And so, you know, that’s the hunt.
0:02:09 That’s the search that we’re on.
0:02:17 I’m Jacob Goldstein, and this is What’s Your Problem?
0:02:21 The show where I talk to people who are trying to make technological progress.
0:02:24 My guest today is Carl Hoyland.
0:02:28 He’s the co-founder and CEO of Zanskar, a geothermal energy company.
0:02:36 Geothermal energy has not had the kind of wild boom that wind and solar have had over the past decade or so.
0:02:41 But there’s a compelling case that geothermal could be a useful complement to wind and solar.
0:02:47 Because geothermal wells produce a constant, reliable, steady stream of energy.
0:02:51 Which is quite useful for seasons when there’s not much sun or wind.
0:02:55 And solar panels and wind turbines are not generating much power.
0:03:00 And so, recently, a few geothermal startups have gotten to work.
0:03:03 And I’ve talked with founders from a few of these companies.
0:03:06 One is bringing fracking technology to geothermal.
0:03:13 Another is trying to use a technology that comes from fusion energy to drill ultra-deep holes.
0:03:15 But Zanskar is doing something simpler.
0:03:27 They’re trying to develop new ways to identify those places on the Earth where there is hot steam, not too far underground, just waiting for somebody to dig a well.
0:03:31 Carl and his co-founder both have PhDs in geology.
0:03:36 And Carl told me his grandfather was the person who first got him into rocks.
0:03:41 My grandfather was a uranium prospector and then a gold prospector for most of his life.
0:03:44 And so, I remember as a kid going down and visiting him.
0:03:46 They lived in the high Sierras of Northern California.
0:03:51 He taught me that, look, if you take this understanding, you can go out and find resources.
0:03:55 And taught me a little bit about the economic implications of how you think about resource formation.
0:03:58 And so, just fell in love with it.
0:04:01 It was the ultimate treasure hunt to think that you could go out and find these.
0:04:05 And I wasn’t thinking about the sustainability or the climate impacts or others.
0:04:07 Just loved that you could go out and find this.
0:04:10 Did an undergraduate, a PhD degree in this.
0:04:17 And it was really during the PhD that I just started to really struggle with kind of the existential reality of, do we need more oil and gas discoveries?
0:04:19 Do we need more big open pits in the ground?
0:04:24 I mean, if you’re a geologist, the basic career path is go find oil, right?
0:04:25 For the last, whatever, 100 years.
0:04:29 If you’re a geologist and you want a job, you can definitely get a job finding oil.
0:04:31 Is that basically the story, historically?
0:04:32 That’s where a lot of the geologists go.
0:04:34 And there’s other routes as well.
0:04:37 But, you know, a lot of geologists weren’t drawn into it initially for that reason.
0:04:41 They just loved the storytelling aspect, the being outdoors, the scientific discovery process.
0:04:49 And so, for me, it was really kind of thinking about, are there other ways to apply this skill set that society actually needs a lot more of and maybe that have been underinvested in?
0:04:56 And so, it was really towards the end of our PhDs that my co-founder and I were really looking at this landscape and thinking about, you know, what could we do next?
0:04:58 What does society really need a lot more of?
0:05:04 And we just started speaking to as many people as we could in the industries and the power sector, thinking about energy.
0:05:14 And, you know, I’d say even when we brought up the topic of geothermal, most people would tell us, it’s too hard to do, it’s too small and niche, and nobody really needs baseload power anymore.
0:05:19 This was the late 2010s, and everyone was kind of thinking, well, we’ve kind of solved it with solar and battery.
0:05:35 But there were a few voices out there saying and running sophisticated models that, you know what, actually, once you get above 50% or 60, 70, 80% penetration of solar and battery, you start realizing that costs start going up unless you have a dispatchable or baseload energy source.
0:05:43 Right. So, just to be clear, it’s easy, relatively easy, to get some solar power, to displace some of the power consumption with solar.
0:05:53 But the more you get, the harder the sort of marginal unit is because the sun doesn’t shine all the time, in short, and it’s expensive to keep adding batteries.
0:06:03 That’s right. And you can start to solve the daily, the diurnal cycles, but then you deal with seasonal cycles where you start needing long-duration storage and technologies that aren’t mature yet.
0:06:10 And that’s where the models really started to point to, you’re going to need something baseload or dispatchable, and you don’t have that many options.
0:06:14 It’s nuclear, it’s hydro, which we’re not building much more of, or it’s geothermal.
0:06:20 And that’s where we started getting excited about the geothermal opportunity and saying, okay, well, what’s holding it back?
0:06:22 Why aren’t there jobs here? Why isn’t anybody building?
0:06:30 And that led us down, I think, a very deep rabbit hole of a 50-plus-year history of geothermal energy and why it’s been stagnant for decades.
0:06:38 So let’s do that 50-year rabbit hole briefly, not in real time, but, like, what is that story briefly?
0:06:43 So briefly, there was this recognition because in some places you see geothermal energy coming out of the surface.
0:06:46 Geysers, fumaroles, boiling mud pots.
0:06:48 So we knew there was this energy underground.
0:06:54 And the more we explored the planet, the more we realized in almost all locations, actually everywhere, as you go deeper, it gets hotter.
0:07:02 So there were some early experiments, even going back 100 years ago in Italy, of just putting a steam turbine at the top and getting your steam from the Earth instead of from—
0:07:05 If steam is coming out of the ground, it’s like, wait, we know what to do with steam.
0:07:07 Turn a turbine and make electricity.
0:07:07 That’s right.
0:07:13 But then over time, realizing, okay, you’re going to have to drill into these in most places to get that level of steam.
0:07:17 It took another 50 years before this started to become a more industrial-scale opportunity.
0:07:19 You start seeing a lot of this in the 60s.
0:07:30 And then, honestly, what really drove a lot of demand in the United States, which was really the leader at this time, was starting to think about the risk of relying on external sources of energy.
0:07:42 And so the energy crisis in the late 70s really catalyzed this enormous push into geothermal energy, not because it was carbon-free, not even because it was baseload, but simply because it was a domestic energy source.
0:07:45 Yeah, we didn’t—fracking hadn’t happened yet.
0:07:47 We were relying on oil from the Middle East.
0:07:49 There was the Arab oil embargo in the early 70s.
0:07:54 Yeah, and I wasn’t old enough to be there, but I’ve definitely heard these stories of the A and B days at the gas station.
0:07:57 And so thinking about, like, how can we source this domestically and have that independence?
0:08:03 And this drove many of the oil and gas majors and other large companies and investors into the space.
0:08:08 And they just started exploring all over, looking for more of these places where you could develop geothermal energy.
0:08:13 And yet we are not a geothermally powered society at this moment.
0:08:14 What happened?
0:08:14 Well, we’re wrong.
0:08:16 So these were pioneers, right?
0:08:17 They’re doing this for the first time.
0:08:22 Imagine going out and you’re drilling a well into something that could be 500, 600, maybe 700 Fahrenheit.
0:08:24 Nobody’s done this before.
0:08:26 And so they’re figuring things out as they go.
0:08:26 It’s incredible.
0:08:30 They really lay the foundation for both the engineering and the science.
0:08:37 But things start to fall apart in terms of the drivers that was motivating this is the energy crisis actually started to resolve.
0:08:38 Oil prices came down.
0:08:40 Foreign relations were better.
0:08:41 We got oil again.
0:08:42 It was like, oh, whatever.
0:08:46 And then it was like, OK, well, oil actually is cheaper at that time.
0:08:57 And so although they added gigawatts and geothermal was really the fastest growing source of energy at the time, fastest growing renewable, by the mid-80s, you see most of that really fall apart.
0:08:58 And many of those companies shut down.
0:09:01 And it’s basically just, oh, oil is cheap and abundant again.
0:09:06 And we know how to go get oil more efficiently than we know how to go get geothermal energy.
0:09:08 But luckily, a lot of those lessons stayed.
0:09:12 There was a lot of interest still in the background of maybe we’re going to need this again one day.
0:09:14 And so there’s slow progress being made in the background.
0:09:20 And it’s not until really the late 2000s that you start to have another large driver towards geothermal energy.
0:09:23 And this time, it’s because it’s carbon free.
0:09:26 Now we’re thinking about how do you decarbonize our energy systems?
0:09:30 And you have this actually relatively low cost of carbon free energy.
0:09:35 And you see a lot more activity and investment in the space, new power plants coming online again.
0:09:41 But this time, they didn’t have that same energy and exploration spirit of that first wave.
0:09:45 They’re mostly going after the low-hanging fruit, things that were already known or found.
0:09:50 And today, even, most of our plants come from those two waves of development in the U.S.
0:09:55 And half of the operating fields today had been discovered initially by accident.
0:09:57 People were like drilling for oil.
0:09:59 And they were like, wait, that’s not oil.
0:10:01 That’s water or whatever.
0:10:04 Or drilling for water on a ranch or drilling for gold.
0:10:08 And so you have this kind of trickle of discoveries coming in that were unintended, serendipitous.
0:10:13 And those are the opportunities that many of the developers in that late 2000s, early 2010s era jump at.
0:10:14 Sure.
0:10:15 Like, why not?
0:10:15 It’s right there.
0:10:20 And this is looking great because in great geothermal resources, they deliver at a good price.
0:10:20 They’re long-lived.
0:10:26 But by the mid-2010s, this is when shale gas prices really start coming down.
0:10:27 Uh-huh.
0:10:32 And now you have this steep competition from a low-cost source of carbon emitting power.
0:10:36 And it really undercuts geothermal at the same time that solar is coming down.
0:10:41 So basically, you can do, because of fracking, basically, what is popularly called fracking, right?
0:10:43 Natural gas gets really cheap.
0:10:45 And that can be the sort of complement to solar.
0:10:49 Although, of course, it has the problem of emitting carbon dioxide.
0:10:51 But economically, it’s tough to beat.
0:10:51 That’s right.
0:10:54 And so I think now we’re in this third wave.
0:10:55 Uh-huh.
0:10:58 A totally different set of economic drivers and also different technology tools that are available.
0:11:03 And it’s being driven not by any one of those, but actually all of those together.
0:11:06 We now do care about having a domestic energy source.
0:11:07 So that’s great.
0:11:11 We care about it being carbon-free because we have to arrive at that point someday.
0:11:17 But geothermal is also proving uniquely valuable because it’s a dispatchable baseload energy source.
0:11:19 Day and night, 365 days a year.
0:11:27 And so that provides incredible resilience and stability to the grid, especially in places where you have high rates of intermittent renewables on the grid.
0:11:30 So what’s the landscape more generally, right?
0:11:35 Like the big oil and gas companies, like are they geothermal curious?
0:11:36 Like where are they right now?
0:11:38 I’d say they’re geothermal curious.
0:11:43 And we’ve seen a lot of kind of starting to dip their toes, but none of them really moving in with full force.
0:11:52 And this has really left kind of a startup ecosystem that has had to rely on venture backing to go out and test new ideas, new technologies, and new markets for geothermal.
0:11:57 And a lot of that really started five plus just over five years ago.
0:12:02 And you’re now seeing those companies reach their first commercial scale pilots, first demonstrations.
0:12:06 And you’re starting to see the real kind of in-the-ground element of that work.
0:12:16 And it’s pretty incredible when you look at the amount of successes that have been had relative to how much funding has gone into it, which is actually still quite small compared to other industries.
0:12:18 So let’s talk about Zansko in particular.
0:12:20 What’s your play?
0:12:21 Where do you fit?
0:12:23 So we’re looking at this landscape.
0:12:25 There’s all this heat underground, many ways to extract it.
0:12:32 And, you know, just like oil and gas, the industry looks very similar to it 100 years ago.
0:12:34 Half the resources were found by accident.
0:12:37 The other half had obvious seeps at the surface.
0:12:40 It’s like in Pennsylvania 140 years ago.
0:12:43 And they’re like, oh, there’s oil coming out of the rock here.
0:12:44 Maybe we should put it in a barrel.
0:12:45 That’s right.
0:12:47 It was a moment when the barrels cost more than the oil.
0:12:49 It’s one of my favorite details from that era.
0:12:56 And so you see geothermal and you then realize, OK, if that’s how the industry is today, there must be much, much more underground.
0:13:01 And we’re also looking at two major tailwinds of technology.
0:13:08 One is AI and data science is allowing us to now process huge amounts of data and become more predictive in where we drill and how we drill.
0:13:17 And on the other side, we’re seeing drilling costs come down as our technologies for drilling become more sophisticated and allow us to drill deeper and deeper into these resources.
0:13:20 But it’s really this landscape of new technologies that hadn’t been applied.
0:13:24 And interestingly, some of those originated in geothermal in the first place.
0:13:25 Oh, interesting.
0:13:27 So I mentioned that big wave of development in the late 70s and 80s.
0:13:37 They recognized back then, actually, that it was hard to find these resources and that you drilled many dry wells where it was very hot, but there was no permeability or no water underground.
0:13:37 Right.
0:13:42 And so they dreamed up the idea at that time of, well, what if we fracked or stimulated this rock?
0:13:45 What if we put water into the hot rock and then brought it back out?
0:13:46 Exactly.
0:13:49 And so the early experiments are 50 plus years old.
0:13:51 And they started to identify what might be possible.
0:13:57 And it was just kind of a slow incremental gain over the years and really hits a tipping point just in the last few years.
0:14:00 On the other hand, they also recognized it was hard to find these resources.
0:14:13 And so a lot of early effort into can we develop new data methods, new ways of integrating that data to predict locations also started then, but only in the last few years hit that same tipping point of, well, we can now do it systematically in a scale.
0:14:13 Yes.
0:14:18 We’re at a time where if you have a lot of data and want to make a prediction, you’re in luck, right?
0:14:20 And it’s a good time to be in that business.
0:14:23 So let’s talk about the AI piece, right?
0:14:24 So it’s like, okay, we’re good at drilling now.
0:14:30 And presumably, at least as a species, we’re better at using data to make predictions about the world.
0:14:37 Specifically, there was a post you guys wrote, I think when you announced your Series A or something, a couple years ago.
0:14:39 And you sort of wrote, like, what are your key moves, your key angles?
0:14:44 And one of them was leveraging big data and predictive modeling to discover new resources.
0:14:49 And I noticed, by the way, that you didn’t use the term AI there.
0:14:52 And it was, I think it was just before ChatGPT came out.
0:14:53 So I was tangentially curious.
0:14:57 Was that deliberate or was it just everybody didn’t say AI then?
0:14:59 They just said predictive modeling.
0:15:00 It’s a little bit of both.
0:15:02 You know, AI can be such a buzzword.
0:15:04 Everyone’s an AI company now.
0:15:05 What does that really mean?
0:15:09 And we’ll talk in a little bit about there’s some really sophisticated stuff happening in-house here.
0:15:13 But the other part of it is that exploration, we break into two stages.
0:15:23 And the first part of discovering new resources, in some ways, can rely on more traditional data science and machine learning tools from kind of five to 15 years ago.
0:15:24 And so they’re exciting.
0:15:33 They’re cutting edge and new for the industry, but they aren’t necessarily the type of latest generation AI that you’re seeing a lot of now, which applies more to our later stage exploration work.
0:15:35 Say more about that.
0:15:37 So it’s like you have the whole earth and you say, where should we go?
0:15:43 And there’s kind of older technologies give you a big circle and then newer technologies give you a smaller circle or something?
0:15:44 Yeah.
0:15:45 I mean, that’s the simplest way to think about it.
0:15:47 And so that’s the search that we’re on.
0:16:01 And for that problem, you take all of these regional scale data sets, some from satellites, from remote sensing, drones, from ground-based sensors, dozens of data inputs, some of which might be the earth’s gravitational field, its magnetic field, the resistivity of rocks, the fault lines, the geology.
0:16:10 All of this data goes in, gets cleaned up, put into these machine learning models to then help you predict the favorability or location of a site that’s worth testing or drilling.
0:16:28 And we have taken those models and now gone out in the field and drilled many of these prospects and have been really blown away at the level of success we’ve been able to have in that, that we’ve already found more new geothermal systems than the entire industry combined had done over the last 30 years.
0:16:30 Wait, say that part again.
0:16:33 You, in how long, you found how much relative to what?
0:16:35 In just the last three years.
0:16:36 Okay.
0:16:37 And is that real?
0:16:45 Like, I don’t know the smart question to ask you to validate that claim, but, like, validate that claim.
0:16:49 Yeah, so part of this is, we already just talked about, people stopped looking.
0:16:55 So part of the problem is that, like, these models gave us the confidence to even look to go out and start testing and putting money in the ground.
0:17:01 So basically, people stopped looking and then, basically, AI, call it machine learning if you want, got way better.
0:17:05 And you’re like, oh, what if we took these new tools and went and looked again?
0:17:11 But the other side of it is we actually have built tools that are more predictive than humans, that we’ve developed cheaper methods to collect the data and test.
0:17:21 And we’ve gone out and when we drill these holes in several locations, we’ve actually hit boiling temperatures at very shallow depth, say 50 feet in some of these locations.
0:17:25 And if I were like a smart, skeptical funder, what would I ask you right now?
0:17:29 You should just come out and see these sites.
0:17:31 I know, but, like, whatever.
0:17:34 That doesn’t mean they’d work at commercial scale.
0:17:34 Exactly.
0:17:35 Is that what I would say?
0:17:36 So, yeah, we know there’s something there.
0:17:38 We know there’s a geothermal system.
0:17:39 There’s convection underground.
0:17:40 Hot water’s coming up close to the surface.
0:17:42 How do you know this is going to be a power plant one day?
0:17:44 How do you know we’re going to make money with this resource?
0:17:46 And that’s where the second stage comes in.
0:17:47 Okay.
0:17:48 Go on.
0:17:49 So we know there’s something there.
0:17:50 Where is it?
0:17:51 How do we drill into it?
0:17:53 And can we go deeper and deeper into it?
0:17:57 And that’s where some of these more next-generation forms of AI become really important.
0:18:00 Because now you enter a data-sparse space.
0:18:01 Uh-huh.
0:18:03 So you’re trying to make predictions with less data.
0:18:04 With less data.
0:18:07 And this is where you have to rely on a combination of things.
0:18:11 First principles, scientific understanding, to allow you to do simulations.
0:18:15 And so we enter into the space where you’re essentially creating digital twins of the subsurface.
0:18:16 Right.
0:18:18 Because you don’t know what’s under there.
0:18:18 You don’t know.
0:18:21 So when you say digital twin, you’re guessing.
0:18:23 Because if you knew you wouldn’t need to do the work, you’d be done.
0:18:23 Exactly.
0:18:26 But you do know physically what is possible.
0:18:28 So there are limitations on what could be down there.
0:18:29 Yeah.
0:18:34 And so by taking into account those physics and geologic principles, you can model all of
0:18:38 that possibility space, combine these into a framework by which you could say, if I drill
0:18:41 here, here’s what is possible probabilistically.
0:18:43 A whole range of possible outcomes.
0:18:48 And even though I can’t say 100% this is the outcome, I can say with confidence that if I
0:18:53 drill many of these wells with that same profile, this is going to be my portfolio-level outcome.
0:18:55 And that starts to become scalable.
0:18:58 That starts to become something you can allocate capital to.
0:19:01 Assuming your probabilistic estimates are correct, right?
0:19:04 Assuming you know the sort of error bars around your guesses.
0:19:04 That’s right.
0:19:10 But another one of the points in that post you wrote a couple years ago when you, I think
0:19:15 it was the Series A, the next one, and it seems like what we’re walking up to now, so I’ll
0:19:21 mention it, was leveraging stochastic geomodeling and decision science to optimize exploration
0:19:23 workflow for de-risking.
0:19:28 So the phrase that was interesting to me there was decision science.
0:19:31 What is decision science and how are you using it?
0:19:37 And so, again, you’re entering into this data sparse problem where you’re going to make a
0:19:38 series of decisions.
0:19:42 I might drill a well here or there, five wells or three wells in this order to this depth,
0:19:43 this type of well.
0:19:45 Or I could go collect new data.
0:19:49 I could collect gravitational data, geologic data, seismic data.
0:19:50 And there’s a trade-off, right?
0:19:55 Gathering data is costly, but not as costly as digging a dry well.
0:19:58 And so how do you weigh that?
0:20:02 I mean, is that the fundamental kind of economic or techno-economic question you’re trying to
0:20:03 answer?
0:20:04 That’s exactly right.
0:20:08 And historically, we’ve relied on geologists who are specialized and trained in this field
0:20:13 to be able to make those hard, subjective decisions under extreme uncertainty.
0:20:15 And they’ll recommend, okay, this is what we should do next.
0:20:18 But there’s a few issues with that.
0:20:21 And again, I’m a geologist, so I don’t mean this to throw shade.
0:20:24 But one, it’s not very scalable.
0:20:30 Because if you want to drill thousands or millions of these wells, there’s actually a very few,
0:20:32 very expert level geologists.
0:20:37 Only a couple of dozen globally that have drilled, say, a dozen exploration wells in their career.
0:20:41 And so you’ve very quickly run out of just the people power there.
0:20:46 But the other aspect of it is it’s inconsistent, and it inherently has human biases, right?
0:20:47 We can’t avoid that.
0:20:51 And so I almost always will recommend certain data types just because I love working with
0:20:52 those data.
0:20:53 I think they’re important.
0:20:56 But just one rock, you’re like, oh, that’s my favorite rock.
0:20:56 We got a drill here.
0:20:57 That’s true.
0:20:59 And with data types, I have my favorite data types.
0:21:03 And some of that bias comes from my past experience, the projects I’ve worked on, the sites I’ve
0:21:05 looked at, and how those were helpful or not there.
0:21:07 But not all sites are the same.
0:21:08 And the more you see, the more that shapes.
0:21:13 And that’s where AI and these advanced forms of probabilistic modeling allow us to think
0:21:18 much bigger picture and incorporate all of the known sites and even the unknown physical
0:21:20 possibilities into those decisions.
0:21:27 And so in basic terms, when you set up a geothermal power plant, how’s it work?
0:21:27 What’s going on?
0:21:32 In very basic terms, we’re drilling wells underground, just like you might do for water or oil and
0:21:33 gas.
0:21:36 But we’re tapping into pockets of very hot water.
0:21:41 And as you bring that to the surface, we can extract the heat from that water and put it
0:21:45 into a closed turbine system that’s going to flash to steam, drive a turbine.
0:21:49 And then that turbine will drive a generator that produces electricity for the grid.
0:21:54 And as our hot water cools, because we’re extracting the heat, we then re-inject that
0:21:59 cooled water back into the system where it has time to reheat before coming back up your
0:21:59 production well.
0:22:05 So these are really closed loops of circulating water underground to extract heat, and then
0:22:07 a closed loop where you’re running the turbine system.
0:22:09 And can it run forever?
0:22:10 Dumb question.
0:22:15 Every one of our utility-scale operating geothermal fields is still operating today, including the
0:22:16 ones that are 100 years old.
0:22:18 Are they colder than when they started?
0:22:22 Many of them are colder, but many of them have actually stayed relatively stable and consistent,
0:22:24 especially the deeper fields.
0:22:26 And a few have increased in temperature.
0:22:31 So you have the ability to think of these resources as potentially generational resources that could
0:22:35 last hundreds of years, maybe even thousands, if sustained and managed properly.
0:22:39 Because it is actually being recharged over time.
0:22:43 The earth is creating new heat through radioactive decay and other processes.
0:22:47 And that heat is part of what really makes geothermal a renewable resource.
0:22:48 So where are you now?
0:22:49 So let’s see.
0:22:54 We started the company about five, just over five years ago, raised our first venture capital
0:22:55 just over four years ago.
0:22:59 And at the time, it was really just two of us, my co-founder and I, thinking about this
0:23:03 big opportunity, this big need and the technologies that we were seeing and helping develop in the
0:23:05 lab and seeing a pathway to commercialize them.
0:23:10 Now, in just that time, we’ve raised 65 million in equities.
0:23:17 And we’ve also recently applied our technology to even known operating fields that had been
0:23:22 underappreciated and underutilized and have since become the eighth largest producer of geothermal
0:23:23 power in the nation.
0:23:26 Is this the New Mexico well or field?
0:23:28 That’s exactly right.
0:23:29 Tell me that story.
0:23:35 There was a well, a sort of neglected on the way site in New Mexico that you got involved in.
0:23:35 What happened there?
0:23:39 It’s a site that had been discovered by accident.
0:23:45 And it was just in the middle of a desert valley where a rancher had come out and drilled a water
0:23:49 well and at just about 100 feet hit steam.
0:23:52 And that was a long time ago.
0:23:54 It’s been known about for a while.
0:23:58 And developers came in and developed it for various purposes, including for electricity
0:24:00 about 10, 15 years ago.
0:24:02 But they never went deeper than that zone.
0:24:05 They really kind of drilled into the shallow top of the system.
0:24:08 And it was hard to go much deeper.
0:24:10 They drilled some dry wells in a few places.
0:24:13 And it really just left them saying, OK, let’s just stay here with what we know.
0:24:17 And the problem with that is when you’re producing from the very tops of these systems,
0:24:22 you can run into issues of faster temperature decline or maybe not enough pressure support.
0:24:25 And they actually ran into a lot of those issues.
0:24:30 So by the time we came and acquired the field last year, it was now significantly underperforming
0:24:34 and was at serious risk of being shut down within the coming months.
0:24:37 So you buy this little power plant.
0:24:38 It’s a little power plant, right?
0:24:38 In New Mexico.
0:24:40 And what do you do?
0:24:40 What happens?
0:24:42 So we enter in.
0:24:46 And within a few months, through a transition agreement, we take over full operations of the
0:24:47 facility.
0:24:52 And we start right away investing in, we’re going to drill this new well, and we’re going
0:24:55 to do some upgrades and improvements to the facility along the way.
0:24:57 But most importantly, we need a new source of steam.
0:25:04 And with our modeling, we’d identified a zone at depth that the data was helping confirm and
0:25:04 point to us.
0:25:11 And we engineered, permitted, and then ended up drilling and constructing a new well using
0:25:13 all the latest oil and gas drilling technologies.
0:25:16 So PDC bits, directional drilling assemblies, mud motors.
0:25:19 And we drilled directionally down to this zone.
0:25:22 And we go more than four times deeper than the prior production zone.
0:25:26 And along the way, you don’t know if you’re going to hit it yet, because these can be
0:25:28 pretty narrow, isolated pockets.
0:25:29 This is good.
0:25:30 This is good drama.
0:25:32 You’re spending a lot of money, presumably.
0:25:33 Spending a lot of money.
0:25:35 Your investors are calling you, you know, how’s it going?
0:25:35 Do we know yet?
0:25:38 Even the plant staff are asking that, right?
0:25:40 Because this is serious and very personal to them.
0:25:43 How long does it take, this drilling process?
0:25:45 So this first well took over 30 days to drill.
0:25:48 We have over 30 people on site, day and night, through that entire time.
0:25:51 And how are you getting information?
0:25:54 Like, are you, is there some dashboard you’re looking at?
0:25:55 Is somebody calling you?
0:25:58 Combination of all of the above, and then also just time on the ground.
0:26:01 You’re just standing there, looking down the hole, can’t see anything.
0:26:05 But modern oil and gas drilling really is pretty incredible with the technology that’s
0:26:06 been developed and applied to it.
0:26:09 And so you’re getting real-time data as you go, all put into, you know, modern software
0:26:10 tools to watch that.
0:26:13 You start getting early indications as your drill bit starts hitting these zones.
0:26:17 You start seeing evidence of fractures or, you know, possible reservoirs.
0:26:21 But you don’t actually know if you’ve hit what you need to repower the facility,
0:26:24 to really have a success until you test it with a flow test.
0:26:29 And so with that, you’re actually going to kick off the well, let steam come out, flow it
0:26:32 into a separator, and measure the flow rate and the temperature over a period of time.
0:26:35 And that we were on the ground for.
0:26:36 You’re standing around.
0:26:40 It’s, you know, high stakes, high nervousness.
0:26:44 And you just, you can see and feel this energy coming out of the well.
0:26:47 And you start seeing the readings, the temperature, the flow rate.
0:26:52 And at a certain point in that process, we all looked at each other and knew that it had hit.
0:26:54 And that feeling is incredible.
0:26:59 And yes, that was a, we went from, we have no idea to, we know this is it.
0:27:00 And there might be a lot more down there.
0:27:05 What happened at that moment when it was clear that it worked?
0:27:09 It’s just massive sighs of relief and excitement.
0:27:11 Not just that-
0:27:15 I don’t know if you jump in the air or like lie down on the ground at that moment, right?
0:27:16 Both of those definitely happened.
0:27:20 Some of us jumped, some of us lied down, just kind of collapsed a lot of energy and work over
0:27:21 the past month.
0:27:24 But even more exciting, I think it was not just that this plant was going to be recovered,
0:27:28 that this plant was going to have multiples to orders of magnitude, more resource potential
0:27:28 ahead of it.
0:27:33 But that the process we applied was systematic, right?
0:27:35 This is an approach that we could apply to other fields.
0:27:36 It was repeatable.
0:27:37 It was scalable.
0:27:40 And so for us, it was the two pieces of the puzzle.
0:27:44 Can you find more resources, orders of magnitude more than the industry had found historically?
0:27:48 And can you go deeper and find more resource within each of those resources?
0:27:53 And so thinking about what that means about the potential size and scale of this opportunity,
0:27:55 I think was really the most exciting part.
0:28:01 We’ll be back in just a minute.
0:28:44 Imagine that you’re on an airplane, and all of a sudden you hear this.
0:28:52 Attention passengers, the pilot is having an emergency, and we need someone, anyone, to
0:28:52 land this plane.
0:28:53 Think you could do it?
0:28:59 It turns out that nearly 50% of men think that they could land the plane with them.
0:29:01 With the help of air traffic control.
0:29:03 And they’re saying like, okay, pull this, and pull this.
0:29:04 Do this, pull that, turn this.
0:29:05 It’s just-
0:29:05 I can do it with my eyes closed.
0:29:07 I’m Manny.
0:29:07 I’m Noah.
0:29:08 This is Devin.
0:29:13 And on our new show, No Such Thing, we get to the bottom of questions like these.
0:29:17 Join us as we talk to the leading expert on overconfidence.
0:29:23 Those who lack expertise, lack the expertise they need to recognize that they lack expertise.
0:29:27 And then, as we try the whole thing out for real.
0:29:28 Wait, what?
0:29:29 Oh, that’s the run right.
0:29:31 I’m looking at this thing.
0:29:31 See?
0:29:38 Listen to No Such Thing on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.
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0:30:00 Where CEOs from Mattel, OnlyFans, ESPN, and many more will tackle the future of entertainment.
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0:30:12 What do you have cooking immediately?
0:30:13 What are you working on now?
0:30:17 We are really ramping up the deployment of these technologies at both discovery and de-risking.
0:30:24 And the best way to show this repeatability to, you know, really financial sectors that have become wary and nervous of geothermal investment.
0:30:25 Yeah.
0:30:28 Is to show not just the size and scale, but to show real proof cases.
0:30:31 So, this example in New Mexico, I think, is a great example of that.
0:30:33 Look, we can come in and do this work.
0:30:48 But now moving towards greenfield development and bringing on multiple new projects, developing them even in parallel, and showing that scalability and repeatability, we think is a critical next step for the industry to re-earn that trust from financial markets to come in and underwrite these.
0:30:49 Sure.
0:30:53 You got to just go find some bare piece of earth and build an economic geothermal power plant there.
0:30:54 I mean, that’s the broad story.
0:30:55 And that’s what we’re doing next.
0:30:57 Specifically, you got one?
0:30:58 You got financing?
0:30:59 Like, where are you?
0:31:03 So, we have the financing to start the development, and we’ve done a lot of that development work already.
0:31:08 A number of projects in the interconnection queues with resources already identified that have that potential.
0:31:08 Okay.
0:31:15 And so, really, the next stage is taking that through the rest of the development process to get it ready for bankable project finance.
0:31:18 Is there, like, a rate-limiting step?
0:31:20 Is there one that’s almost there?
0:31:21 Is there something you got to figure out?
0:31:26 The rate-limiting step now, in terms of power development, is really interconnection and permitting.
0:31:28 Historically, these are very slow.
0:31:31 But that’s just anything you’re going to build has that problem.
0:31:32 That’s not a geothermal problem.
0:31:35 That’s just the grid is a pain in the ass problem.
0:31:41 I guess it’s unsurprising, but, like, it’s uninteresting, and it makes me sad about the world.
0:31:42 But there’s been progress.
0:31:52 I mean, really, there is now, for the first time, I think, real bipartisan support for accelerating permitting of energy projects and accelerating how we can bring these projects onto the grid or, in some cases, even off the grid.
0:32:05 And as you mentioned, I think we’re in this just kind of totally different market environment than even when we started the company just a few years ago, where, look, for the last 25 years, energy demand growth has been basically flat.
0:32:12 And so when you were thinking about building renewable energy projects like geothermal, you were almost always looking at turning something else off.
0:32:13 It was zero-sum.
0:32:13 It was zero-sum.
0:32:14 Okay.
0:32:16 We’re going to turn off that Nat gas facility and turn on these renewables.
0:32:22 Right now, we’re in an environment where we’re probably going to have to rebuild the entire amount of capacity another time over.
0:32:29 I mean, if scaling with AI continues, there’s going to be a tremendous amount of demand for electric power.
0:32:29 That’s right.
0:32:35 And so from a carbon emissions point of view, the short-term downside is that you have a lot more natural gas being built than anybody expected.
0:32:48 But one of the kind of unique upsides is that you now have demand for geothermal and even nuclear and long-duration storage, these other technologies, that is no longer a, well, you’re competing against the marginal cost of something else that’s already built.
0:32:51 It’s you’re competing with new-build natural gas and coal.
0:32:52 Which is more expensive.
0:32:53 That’s good for you.
0:32:54 That’s good for us.
0:33:03 At that point, we actually compete quite well today and then have a pathway to coming down the cost curve and the learnings curves that will put geothermal into a much more competitive position even in just a few years.
0:33:08 If you don’t dig any dry wells, then it’s a great business, right?
0:33:11 It seems like that’s the key is don’t miss.
0:33:13 That’s right.
0:33:17 So let’s talk about politics for 90 seconds.
0:33:22 It’s an interesting moment politically for geothermal energy, right?
0:33:24 A bad moment politically.
0:33:24 I’ll say it.
0:33:29 You don’t have to say it for solar power and for electric vehicles and for wind power for sure.
0:33:35 But it seems not bad for geothermal energy, which is maybe a pleasant surprise.
0:33:35 I don’t know.
0:33:40 Tell me about what’s happening politically, like with the federal government and geothermal power right now.
0:33:43 This is where geothermal has been fortunate to be in this very bipartisan position.
0:33:52 On one hand, we are a small footprint, small materials impact, zero emission technology, which obviously the left loves.
0:33:55 That fits very much into how do we decarbonize the grid and achieve these goals.
0:34:00 Whereas it also is an energy industry that can rely on our existing American workforce.
0:34:03 You can transition them from oil and gas.
0:34:04 The technology is ready to go.
0:34:07 You’re not rebuilding a workforce from scratch like you have to do for offshore wind or nuclear.
0:34:10 It’s appealing because it looks and feels like oil and gas.
0:34:13 It’s drill baby drill here in America on American soil.
0:34:19 So it has all of the things that the right and the left can actually come together on and see, oh, this actually benefits all of our shared objectives.
0:34:26 But in fact, in the budget bill that just passed, the geothermal basically subsidies survived, right?
0:34:31 Whereas other subsidies for other kinds of carbon-free electricity did not.
0:34:31 That’s right.
0:34:33 What are you worried about?
0:34:35 Like, what do you think might go wrong?
0:34:42 So we worry a little bit about the small n when you’re dealing with probabilities that have these long tail distributions.
0:34:43 Basically bad luck.
0:34:47 There’s an 80 percent chance the thing will work and you hit the 20 percent loser.
0:34:48 Exactly.
0:34:51 And so what happens if you have all of the pieces in place?
0:34:52 Things should have worked.
0:34:59 You’ve built this technology and those first 10 projects or five projects just happen to fall on the low end of that distribution.
0:35:00 And the markets are like, okay, you tried.
0:35:01 We’re done.
0:35:01 Yeah, what a bummer.
0:35:05 And so that’s true in what we’re doing.
0:35:07 It’s also true in what the broader geothermal industry is doing.
0:35:14 So I mentioned what really sets Sandscar apart is this ability to unlock conventional geothermal resources that don’t require fracking or stimulation.
0:35:16 These are just naturally occurring pockets.
0:35:18 That doesn’t require any water consumption.
0:35:20 They’re low cost and they’re out there.
0:35:26 One of the other geothermal founders I talked to, I think it was Carlos Araque at Quays,
0:35:46 said that for him the measure of success for the field is when big oil and gas companies get into the geothermal business because they are the ones with the capital and the staff and the know-how who, if they want to do it, they could do it at giant scale now, essentially.
0:35:49 And in his worldview, it’s like that’s what we need.
0:35:52 That’s how you get a ton of geothermal energy really fast.
0:35:54 What do you think of that?
0:35:59 I think I agree with it other than the need aspect of it.
0:36:03 Like I do agree if they entered in, it would accelerate things significantly.
0:36:11 Nobody’s better positioned than them to deploy this type of technology, this type of workforce on these types of resources, deal with subsurface uncertainty and topside infrastructure together.
0:36:13 At scale, right?
0:36:14 Like they’re so big.
0:36:17 They’re really big companies all around the world.
0:36:19 And that is part of the problem.
0:36:27 They are so big all around the world and they have a clear proven business model and diversifying and changing out of that has been a real challenge and maintaining focus on any new business areas.
0:36:36 And so despite the progress that all of these startups have demonstrated, you’re still seeing very little actual kind of in the ground proof from them or even capital entering in.
0:36:43 And so I think that’s what has shifted for me over the last few years is a recognition that, you know what, we’re going to be able to do this with or without them.
0:36:45 And I hope they join sooner.
0:36:55 But we are finding that there are capital sources out there and there are sophisticated groups that have subsurface understanding that can really accelerate investments into these technologies.
0:37:00 And so I think there’s still a pathway to do this on the timescales that we talked about.
0:37:05 We’ll be back in a minute with the lightning round.
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0:37:49 Imagine that you’re on an airplane and all of a sudden you hear this.
0:37:57 Attention passengers, the pilot is having an emergency and we need someone, anyone, to land this plane.
0:37:58 Think you could do it?
0:38:05 It turns out that nearly 50% of men think that they could land the plane with the help of air traffic control.
0:38:08 And they’re saying like, okay, pull this, and pull this.
0:38:09 Do this, pull that, turn this.
0:38:09 It’s just…
0:38:10 I can do it with my eyes closed.
0:38:11 I’m Manny.
0:38:12 I’m Noah.
0:38:13 This is Devin.
0:38:18 And on our new show, No Such Thing, we get to the bottom of questions like these.
0:38:21 Join us as we talk to the leading expert on overconfidence.
0:38:28 Those who lack expertise, lack the expertise they need to recognize that they lack expertise.
0:38:31 And then as we try the whole thing out for real.
0:38:33 Wait, what?
0:38:34 Oh, that’s the runway.
0:38:36 I’m looking at this thing, see?
0:38:42 Listen to No Such Thing on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.
0:38:44 Barbie’s gone blockbuster.
0:38:47 OnlyFans is rewriting the rules for creators.
0:38:50 And ESPN is leading the game in sports media.
0:38:52 I’m Chris Grimes, the FT’s LA Bureau Chief.
0:38:59 And on September 17th and 18th, I’ll be hosting the Financial Times Business of Entertainment Summit in West Hollywood.
0:39:05 Where CEOs from Mattel, OnlyFans, ESPN, and many more will tackle the future of entertainment.
0:39:09 Head to ft.com slash entertainment to unlock your exclusive FT discount.
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0:39:16 Now we’re going to do the lightning round.
0:39:18 What’s your favorite rock?
0:39:26 My favorite rock is an eclogite, which is a rare rock that represents rock that was once at the surface
0:39:33 and has been brought down very deep, sometimes 100 plus miles underground, through tectonic activity.
0:39:39 Where many of the minerals and elements have changed shape into things that are more stable at high pressure and high temperature.
0:39:40 And then it was brought back to the surface.
0:39:45 And these were some of the early points of evidence for plate tectonics actually occurring.
0:39:47 What do they look like?
0:39:50 They have bright green and red minerals in them.
0:39:52 And so sometimes they’re called a Christmas tree rock.
0:39:56 What’s the most underrated geologic epoch?
0:40:05 At least for the Western United States, really the tertiary period, which is this, think of it as 20 to 40 million years ago,
0:40:11 where the entire Western U.S. underwent a transformation rather than the plate starting to, they’d been colliding for a very long time.
0:40:23 They actually start pulling apart and it’s this pulling apart that stretches the earth’s crust and leads to the formation of this huge, broad region of high elevated temperatures and geothermal activity.
0:40:33 That is really what has driven all of the activity today for geothermal energy and makes this not just the best place in the U.S. to develop geothermal, but one of the best in the world.
0:40:41 Almost no other areas had that long history of 20-plus million years of stretching and thinning to create that much geothermal heat near to the surface.
0:40:43 Best volcano?
0:40:49 You want to do worst volcano?
0:40:51 Worst volcano, I would accept.
0:40:55 No, they’re always the best and the worst because there’s this inherent danger that comes from them.
0:40:56 Yes, the best is the worst.
0:40:57 Also incredible.
0:41:07 And so actually for me, one of the best volcanoes is this volcanic region in kind of central Western Japan, a few hours west of Tokyo, in the Hida Mountains, sometimes called the Japanese Alps.
0:41:16 And it’s an area where you’ve not only had volcanic activity, but the mountains have been uplifting so fast and eroding that you’ve brought some of the geothermal heat just right to the surface.
0:41:26 And as they drill tunnels into that rock, there’s some of the highest geothermal gradients anywhere on the planet and really takes a unique combination of tectonic plate activity to drive that kind of action.
0:41:27 Have you been there?
0:41:28 I have.
0:41:30 We did a study out there a number of years ago.
0:41:31 What’s it like?
0:41:32 It’s beautiful.
0:41:37 It sort of has this tropical feel, incredible plants, but you’re hiking up in the mountains.
0:41:39 You feel like if you were here in the U.S., you’d be in the middle of nowhere.
0:41:46 And all of a sudden you look over and there’s a nice elderly couple out hiking way up this high elevation just waving to you as they go by.
0:41:50 And so it’s both, I think, beautiful but also appreciated by the people around it.
0:42:00 Carl Hoyland is the co-founder and CEO of Zanskar.
0:42:03 Please email us at problem at Pushkin.fm.
0:42:07 We are always looking for new guests for the show.
0:42:11 Today’s show was produced by Trina Menino and Gabriel Hunter-Chang.
0:42:16 It was edited by Alexander Gerriton and engineered by Sarah Bruguer.
0:42:20 I’m Jacob Goldstein and we’ll be back next week with another episode of What’s Your Problem?
0:42:31 Why are TSA rules so confusing?
0:42:33 You got a hood of yours, take it off!
0:42:34 I’m Manny.
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0:42:42 And we’re best friends and journalists with a new podcast called No Such Thing, where we get to the bottom of questions like that.
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0:42:45 I can’t expect what to do.
0:42:47 Now, if the rule was the same, go off on me.
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0:42:55 Listen to No Such Thing on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.
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0:00:22 Why are TSA rules so confusing?
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0:00:33 where we get to the bottom of questions like that.
0:00:34 Why are you screaming at me?
0:00:36 I can’t expect what to do.
0:00:39 Now, if the rule was the same, go off on me.
0:00:39 I deserve it.
0:00:40 You know, lock him up.
0:00:46 Listen to No Such Thing on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts.
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0:00:51 Barbie’s gone blockbuster.
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0:01:35 You’re trying to find places where there’s pockets of steam underground naturally occurring.
0:01:37 You just need to drill a well into it.
0:01:44 And when you find it, if you knew exactly where to drill today, it would already be the cheapest source of heat and steam on the planet.
0:01:46 Yeah, that is so tantalizing, right?
0:01:53 In fact, there are places around the world where there’s steam not that far underground.
0:01:58 And if only we knew where they were, we could have a lot of clean energy.
0:01:59 A lot.
0:02:00 But we don’t know where they are.
0:02:02 And maybe enough for all of our energy demands.
0:02:04 Just, you know, tomorrow, if you knew where to drill.
0:02:05 It’s right there.
0:02:07 We just got to figure out where.
0:02:08 And so, you know, that’s the hunt.
0:02:09 That’s the search that we’re on.
0:02:17 I’m Jacob Goldstein, and this is What’s Your Problem?
0:02:21 The show where I talk to people who are trying to make technological progress.
0:02:24 My guest today is Carl Hoyland.
0:02:28 He’s the co-founder and CEO of Zanskar, a geothermal energy company.
0:02:36 Geothermal energy has not had the kind of wild boom that wind and solar have had over the past decade or so.
0:02:41 But there’s a compelling case that geothermal could be a useful complement to wind and solar.
0:02:47 Because geothermal wells produce a constant, reliable, steady stream of energy.
0:02:51 Which is quite useful for seasons when there’s not much sun or wind.
0:02:55 And solar panels and wind turbines are not generating much power.
0:03:00 And so, recently, a few geothermal startups have gotten to work.
0:03:03 And I’ve talked with founders from a few of these companies.
0:03:06 One is bringing fracking technology to geothermal.
0:03:13 Another is trying to use a technology that comes from fusion energy to drill ultra-deep holes.
0:03:15 But Zanskar is doing something simpler.
0:03:27 They’re trying to develop new ways to identify those places on the Earth where there is hot steam, not too far underground, just waiting for somebody to dig a well.
0:03:31 Carl and his co-founder both have PhDs in geology.
0:03:36 And Carl told me his grandfather was the person who first got him into rocks.
0:03:41 My grandfather was a uranium prospector and then a gold prospector for most of his life.
0:03:44 And so, I remember as a kid going down and visiting him.
0:03:46 They lived in the high Sierras of Northern California.
0:03:51 He taught me that, look, if you take this understanding, you can go out and find resources.
0:03:55 And taught me a little bit about the economic implications of how you think about resource formation.
0:03:58 And so, just fell in love with it.
0:04:01 It was the ultimate treasure hunt to think that you could go out and find these.
0:04:05 And I wasn’t thinking about the sustainability or the climate impacts or others.
0:04:07 Just loved that you could go out and find this.
0:04:10 Did an undergraduate, a PhD degree in this.
0:04:17 And it was really during the PhD that I just started to really struggle with kind of the existential reality of, do we need more oil and gas discoveries?
0:04:19 Do we need more big open pits in the ground?
0:04:24 I mean, if you’re a geologist, the basic career path is go find oil, right?
0:04:25 For the last, whatever, 100 years.
0:04:29 If you’re a geologist and you want a job, you can definitely get a job finding oil.
0:04:31 Is that basically the story, historically?
0:04:32 That’s where a lot of the geologists go.
0:04:34 And there’s other routes as well.
0:04:37 But, you know, a lot of geologists weren’t drawn into it initially for that reason.
0:04:41 They just loved the storytelling aspect, the being outdoors, the scientific discovery process.
0:04:49 And so, for me, it was really kind of thinking about, are there other ways to apply this skill set that society actually needs a lot more of and maybe that have been underinvested in?
0:04:56 And so, it was really towards the end of our PhDs that my co-founder and I were really looking at this landscape and thinking about, you know, what could we do next?
0:04:58 What does society really need a lot more of?
0:05:04 And we just started speaking to as many people as we could in the industries and the power sector, thinking about energy.
0:05:14 And, you know, I’d say even when we brought up the topic of geothermal, most people would tell us, it’s too hard to do, it’s too small and niche, and nobody really needs baseload power anymore.
0:05:19 This was the late 2010s, and everyone was kind of thinking, well, we’ve kind of solved it with solar and battery.
0:05:35 But there were a few voices out there saying and running sophisticated models that, you know what, actually, once you get above 50% or 60, 70, 80% penetration of solar and battery, you start realizing that costs start going up unless you have a dispatchable or baseload energy source.
0:05:43 Right. So, just to be clear, it’s easy, relatively easy, to get some solar power, to displace some of the power consumption with solar.
0:05:53 But the more you get, the harder the sort of marginal unit is because the sun doesn’t shine all the time, in short, and it’s expensive to keep adding batteries.
0:06:03 That’s right. And you can start to solve the daily, the diurnal cycles, but then you deal with seasonal cycles where you start needing long-duration storage and technologies that aren’t mature yet.
0:06:10 And that’s where the models really started to point to, you’re going to need something baseload or dispatchable, and you don’t have that many options.
0:06:14 It’s nuclear, it’s hydro, which we’re not building much more of, or it’s geothermal.
0:06:20 And that’s where we started getting excited about the geothermal opportunity and saying, okay, well, what’s holding it back?
0:06:22 Why aren’t there jobs here? Why isn’t anybody building?
0:06:30 And that led us down, I think, a very deep rabbit hole of a 50-plus-year history of geothermal energy and why it’s been stagnant for decades.
0:06:38 So let’s do that 50-year rabbit hole briefly, not in real time, but, like, what is that story briefly?
0:06:43 So briefly, there was this recognition because in some places you see geothermal energy coming out of the surface.
0:06:46 Geysers, fumaroles, boiling mud pots.
0:06:48 So we knew there was this energy underground.
0:06:54 And the more we explored the planet, the more we realized in almost all locations, actually everywhere, as you go deeper, it gets hotter.
0:07:02 So there were some early experiments, even going back 100 years ago in Italy, of just putting a steam turbine at the top and getting your steam from the Earth instead of from—
0:07:05 If steam is coming out of the ground, it’s like, wait, we know what to do with steam.
0:07:07 Turn a turbine and make electricity.
0:07:07 That’s right.
0:07:13 But then over time, realizing, okay, you’re going to have to drill into these in most places to get that level of steam.
0:07:17 It took another 50 years before this started to become a more industrial-scale opportunity.
0:07:19 You start seeing a lot of this in the 60s.
0:07:30 And then, honestly, what really drove a lot of demand in the United States, which was really the leader at this time, was starting to think about the risk of relying on external sources of energy.
0:07:42 And so the energy crisis in the late 70s really catalyzed this enormous push into geothermal energy, not because it was carbon-free, not even because it was baseload, but simply because it was a domestic energy source.
0:07:45 Yeah, we didn’t—fracking hadn’t happened yet.
0:07:47 We were relying on oil from the Middle East.
0:07:49 There was the Arab oil embargo in the early 70s.
0:07:54 Yeah, and I wasn’t old enough to be there, but I’ve definitely heard these stories of the A and B days at the gas station.
0:07:57 And so thinking about, like, how can we source this domestically and have that independence?
0:08:03 And this drove many of the oil and gas majors and other large companies and investors into the space.
0:08:08 And they just started exploring all over, looking for more of these places where you could develop geothermal energy.
0:08:13 And yet we are not a geothermally powered society at this moment.
0:08:14 What happened?
0:08:14 Well, we’re wrong.
0:08:16 So these were pioneers, right?
0:08:17 They’re doing this for the first time.
0:08:22 Imagine going out and you’re drilling a well into something that could be 500, 600, maybe 700 Fahrenheit.
0:08:24 Nobody’s done this before.
0:08:26 And so they’re figuring things out as they go.
0:08:26 It’s incredible.
0:08:30 They really lay the foundation for both the engineering and the science.
0:08:37 But things start to fall apart in terms of the drivers that was motivating this is the energy crisis actually started to resolve.
0:08:38 Oil prices came down.
0:08:40 Foreign relations were better.
0:08:41 We got oil again.
0:08:42 It was like, oh, whatever.
0:08:46 And then it was like, OK, well, oil actually is cheaper at that time.
0:08:57 And so although they added gigawatts and geothermal was really the fastest growing source of energy at the time, fastest growing renewable, by the mid-80s, you see most of that really fall apart.
0:08:58 And many of those companies shut down.
0:09:01 And it’s basically just, oh, oil is cheap and abundant again.
0:09:06 And we know how to go get oil more efficiently than we know how to go get geothermal energy.
0:09:08 But luckily, a lot of those lessons stayed.
0:09:12 There was a lot of interest still in the background of maybe we’re going to need this again one day.
0:09:14 And so there’s slow progress being made in the background.
0:09:20 And it’s not until really the late 2000s that you start to have another large driver towards geothermal energy.
0:09:23 And this time, it’s because it’s carbon free.
0:09:26 Now we’re thinking about how do you decarbonize our energy systems?
0:09:30 And you have this actually relatively low cost of carbon free energy.
0:09:35 And you see a lot more activity and investment in the space, new power plants coming online again.
0:09:41 But this time, they didn’t have that same energy and exploration spirit of that first wave.
0:09:45 They’re mostly going after the low-hanging fruit, things that were already known or found.
0:09:50 And today, even, most of our plants come from those two waves of development in the U.S.
0:09:55 And half of the operating fields today had been discovered initially by accident.
0:09:57 People were like drilling for oil.
0:09:59 And they were like, wait, that’s not oil.
0:10:01 That’s water or whatever.
0:10:04 Or drilling for water on a ranch or drilling for gold.
0:10:08 And so you have this kind of trickle of discoveries coming in that were unintended, serendipitous.
0:10:13 And those are the opportunities that many of the developers in that late 2000s, early 2010s era jump at.
0:10:14 Sure.
0:10:15 Like, why not?
0:10:15 It’s right there.
0:10:20 And this is looking great because in great geothermal resources, they deliver at a good price.
0:10:20 They’re long-lived.
0:10:26 But by the mid-2010s, this is when shale gas prices really start coming down.
0:10:27 Uh-huh.
0:10:32 And now you have this steep competition from a low-cost source of carbon emitting power.
0:10:36 And it really undercuts geothermal at the same time that solar is coming down.
0:10:41 So basically, you can do, because of fracking, basically, what is popularly called fracking, right?
0:10:43 Natural gas gets really cheap.
0:10:45 And that can be the sort of complement to solar.
0:10:49 Although, of course, it has the problem of emitting carbon dioxide.
0:10:51 But economically, it’s tough to beat.
0:10:51 That’s right.
0:10:54 And so I think now we’re in this third wave.
0:10:55 Uh-huh.
0:10:58 A totally different set of economic drivers and also different technology tools that are available.
0:11:03 And it’s being driven not by any one of those, but actually all of those together.
0:11:06 We now do care about having a domestic energy source.
0:11:07 So that’s great.
0:11:11 We care about it being carbon-free because we have to arrive at that point someday.
0:11:17 But geothermal is also proving uniquely valuable because it’s a dispatchable baseload energy source.
0:11:19 Day and night, 365 days a year.
0:11:27 And so that provides incredible resilience and stability to the grid, especially in places where you have high rates of intermittent renewables on the grid.
0:11:30 So what’s the landscape more generally, right?
0:11:35 Like the big oil and gas companies, like are they geothermal curious?
0:11:36 Like where are they right now?
0:11:38 I’d say they’re geothermal curious.
0:11:43 And we’ve seen a lot of kind of starting to dip their toes, but none of them really moving in with full force.
0:11:52 And this has really left kind of a startup ecosystem that has had to rely on venture backing to go out and test new ideas, new technologies, and new markets for geothermal.
0:11:57 And a lot of that really started five plus just over five years ago.
0:12:02 And you’re now seeing those companies reach their first commercial scale pilots, first demonstrations.
0:12:06 And you’re starting to see the real kind of in-the-ground element of that work.
0:12:16 And it’s pretty incredible when you look at the amount of successes that have been had relative to how much funding has gone into it, which is actually still quite small compared to other industries.
0:12:18 So let’s talk about Zansko in particular.
0:12:20 What’s your play?
0:12:21 Where do you fit?
0:12:23 So we’re looking at this landscape.
0:12:25 There’s all this heat underground, many ways to extract it.
0:12:32 And, you know, just like oil and gas, the industry looks very similar to it 100 years ago.
0:12:34 Half the resources were found by accident.
0:12:37 The other half had obvious seeps at the surface.
0:12:40 It’s like in Pennsylvania 140 years ago.
0:12:43 And they’re like, oh, there’s oil coming out of the rock here.
0:12:44 Maybe we should put it in a barrel.
0:12:45 That’s right.
0:12:47 It was a moment when the barrels cost more than the oil.
0:12:49 It’s one of my favorite details from that era.
0:12:56 And so you see geothermal and you then realize, OK, if that’s how the industry is today, there must be much, much more underground.
0:13:01 And we’re also looking at two major tailwinds of technology.
0:13:08 One is AI and data science is allowing us to now process huge amounts of data and become more predictive in where we drill and how we drill.
0:13:17 And on the other side, we’re seeing drilling costs come down as our technologies for drilling become more sophisticated and allow us to drill deeper and deeper into these resources.
0:13:20 But it’s really this landscape of new technologies that hadn’t been applied.
0:13:24 And interestingly, some of those originated in geothermal in the first place.
0:13:25 Oh, interesting.
0:13:27 So I mentioned that big wave of development in the late 70s and 80s.
0:13:37 They recognized back then, actually, that it was hard to find these resources and that you drilled many dry wells where it was very hot, but there was no permeability or no water underground.
0:13:37 Right.
0:13:42 And so they dreamed up the idea at that time of, well, what if we fracked or stimulated this rock?
0:13:45 What if we put water into the hot rock and then brought it back out?
0:13:46 Exactly.
0:13:49 And so the early experiments are 50 plus years old.
0:13:51 And they started to identify what might be possible.
0:13:57 And it was just kind of a slow incremental gain over the years and really hits a tipping point just in the last few years.
0:14:00 On the other hand, they also recognized it was hard to find these resources.
0:14:13 And so a lot of early effort into can we develop new data methods, new ways of integrating that data to predict locations also started then, but only in the last few years hit that same tipping point of, well, we can now do it systematically in a scale.
0:14:13 Yes.
0:14:18 We’re at a time where if you have a lot of data and want to make a prediction, you’re in luck, right?
0:14:20 And it’s a good time to be in that business.
0:14:23 So let’s talk about the AI piece, right?
0:14:24 So it’s like, okay, we’re good at drilling now.
0:14:30 And presumably, at least as a species, we’re better at using data to make predictions about the world.
0:14:37 Specifically, there was a post you guys wrote, I think when you announced your Series A or something, a couple years ago.
0:14:39 And you sort of wrote, like, what are your key moves, your key angles?
0:14:44 And one of them was leveraging big data and predictive modeling to discover new resources.
0:14:49 And I noticed, by the way, that you didn’t use the term AI there.
0:14:52 And it was, I think it was just before ChatGPT came out.
0:14:53 So I was tangentially curious.
0:14:57 Was that deliberate or was it just everybody didn’t say AI then?
0:14:59 They just said predictive modeling.
0:15:00 It’s a little bit of both.
0:15:02 You know, AI can be such a buzzword.
0:15:04 Everyone’s an AI company now.
0:15:05 What does that really mean?
0:15:09 And we’ll talk in a little bit about there’s some really sophisticated stuff happening in-house here.
0:15:13 But the other part of it is that exploration, we break into two stages.
0:15:23 And the first part of discovering new resources, in some ways, can rely on more traditional data science and machine learning tools from kind of five to 15 years ago.
0:15:24 And so they’re exciting.
0:15:33 They’re cutting edge and new for the industry, but they aren’t necessarily the type of latest generation AI that you’re seeing a lot of now, which applies more to our later stage exploration work.
0:15:35 Say more about that.
0:15:37 So it’s like you have the whole earth and you say, where should we go?
0:15:43 And there’s kind of older technologies give you a big circle and then newer technologies give you a smaller circle or something?
0:15:44 Yeah.
0:15:45 I mean, that’s the simplest way to think about it.
0:15:47 And so that’s the search that we’re on.
0:16:01 And for that problem, you take all of these regional scale data sets, some from satellites, from remote sensing, drones, from ground-based sensors, dozens of data inputs, some of which might be the earth’s gravitational field, its magnetic field, the resistivity of rocks, the fault lines, the geology.
0:16:10 All of this data goes in, gets cleaned up, put into these machine learning models to then help you predict the favorability or location of a site that’s worth testing or drilling.
0:16:28 And we have taken those models and now gone out in the field and drilled many of these prospects and have been really blown away at the level of success we’ve been able to have in that, that we’ve already found more new geothermal systems than the entire industry combined had done over the last 30 years.
0:16:30 Wait, say that part again.
0:16:33 You, in how long, you found how much relative to what?
0:16:35 In just the last three years.
0:16:36 Okay.
0:16:37 And is that real?
0:16:45 Like, I don’t know the smart question to ask you to validate that claim, but, like, validate that claim.
0:16:49 Yeah, so part of this is, we already just talked about, people stopped looking.
0:16:55 So part of the problem is that, like, these models gave us the confidence to even look to go out and start testing and putting money in the ground.
0:17:01 So basically, people stopped looking and then, basically, AI, call it machine learning if you want, got way better.
0:17:05 And you’re like, oh, what if we took these new tools and went and looked again?
0:17:11 But the other side of it is we actually have built tools that are more predictive than humans, that we’ve developed cheaper methods to collect the data and test.
0:17:21 And we’ve gone out and when we drill these holes in several locations, we’ve actually hit boiling temperatures at very shallow depth, say 50 feet in some of these locations.
0:17:25 And if I were like a smart, skeptical funder, what would I ask you right now?
0:17:29 You should just come out and see these sites.
0:17:31 I know, but, like, whatever.
0:17:34 That doesn’t mean they’d work at commercial scale.
0:17:34 Exactly.
0:17:35 Is that what I would say?
0:17:36 So, yeah, we know there’s something there.
0:17:38 We know there’s a geothermal system.
0:17:39 There’s convection underground.
0:17:40 Hot water’s coming up close to the surface.
0:17:42 How do you know this is going to be a power plant one day?
0:17:44 How do you know we’re going to make money with this resource?
0:17:46 And that’s where the second stage comes in.
0:17:47 Okay.
0:17:48 Go on.
0:17:49 So we know there’s something there.
0:17:50 Where is it?
0:17:51 How do we drill into it?
0:17:53 And can we go deeper and deeper into it?
0:17:57 And that’s where some of these more next-generation forms of AI become really important.
0:18:00 Because now you enter a data-sparse space.
0:18:01 Uh-huh.
0:18:03 So you’re trying to make predictions with less data.
0:18:04 With less data.
0:18:07 And this is where you have to rely on a combination of things.
0:18:11 First principles, scientific understanding, to allow you to do simulations.
0:18:15 And so we enter into the space where you’re essentially creating digital twins of the subsurface.
0:18:16 Right.
0:18:18 Because you don’t know what’s under there.
0:18:18 You don’t know.
0:18:21 So when you say digital twin, you’re guessing.
0:18:23 Because if you knew you wouldn’t need to do the work, you’d be done.
0:18:23 Exactly.
0:18:26 But you do know physically what is possible.
0:18:28 So there are limitations on what could be down there.
0:18:29 Yeah.
0:18:34 And so by taking into account those physics and geologic principles, you can model all of
0:18:38 that possibility space, combine these into a framework by which you could say, if I drill
0:18:41 here, here’s what is possible probabilistically.
0:18:43 A whole range of possible outcomes.
0:18:48 And even though I can’t say 100% this is the outcome, I can say with confidence that if I
0:18:53 drill many of these wells with that same profile, this is going to be my portfolio-level outcome.
0:18:55 And that starts to become scalable.
0:18:58 That starts to become something you can allocate capital to.
0:19:01 Assuming your probabilistic estimates are correct, right?
0:19:04 Assuming you know the sort of error bars around your guesses.
0:19:04 That’s right.
0:19:10 But another one of the points in that post you wrote a couple years ago when you, I think
0:19:15 it was the Series A, the next one, and it seems like what we’re walking up to now, so I’ll
0:19:21 mention it, was leveraging stochastic geomodeling and decision science to optimize exploration
0:19:23 workflow for de-risking.
0:19:28 So the phrase that was interesting to me there was decision science.
0:19:31 What is decision science and how are you using it?
0:19:37 And so, again, you’re entering into this data sparse problem where you’re going to make a
0:19:38 series of decisions.
0:19:42 I might drill a well here or there, five wells or three wells in this order to this depth,
0:19:43 this type of well.
0:19:45 Or I could go collect new data.
0:19:49 I could collect gravitational data, geologic data, seismic data.
0:19:50 And there’s a trade-off, right?
0:19:55 Gathering data is costly, but not as costly as digging a dry well.
0:19:58 And so how do you weigh that?
0:20:02 I mean, is that the fundamental kind of economic or techno-economic question you’re trying to
0:20:03 answer?
0:20:04 That’s exactly right.
0:20:08 And historically, we’ve relied on geologists who are specialized and trained in this field
0:20:13 to be able to make those hard, subjective decisions under extreme uncertainty.
0:20:15 And they’ll recommend, okay, this is what we should do next.
0:20:18 But there’s a few issues with that.
0:20:21 And again, I’m a geologist, so I don’t mean this to throw shade.
0:20:24 But one, it’s not very scalable.
0:20:30 Because if you want to drill thousands or millions of these wells, there’s actually a very few,
0:20:32 very expert level geologists.
0:20:37 Only a couple of dozen globally that have drilled, say, a dozen exploration wells in their career.
0:20:41 And so you’ve very quickly run out of just the people power there.
0:20:46 But the other aspect of it is it’s inconsistent, and it inherently has human biases, right?
0:20:47 We can’t avoid that.
0:20:51 And so I almost always will recommend certain data types just because I love working with
0:20:52 those data.
0:20:53 I think they’re important.
0:20:56 But just one rock, you’re like, oh, that’s my favorite rock.
0:20:56 We got a drill here.
0:20:57 That’s true.
0:20:59 And with data types, I have my favorite data types.
0:21:03 And some of that bias comes from my past experience, the projects I’ve worked on, the sites I’ve
0:21:05 looked at, and how those were helpful or not there.
0:21:07 But not all sites are the same.
0:21:08 And the more you see, the more that shapes.
0:21:13 And that’s where AI and these advanced forms of probabilistic modeling allow us to think
0:21:18 much bigger picture and incorporate all of the known sites and even the unknown physical
0:21:20 possibilities into those decisions.
0:21:27 And so in basic terms, when you set up a geothermal power plant, how’s it work?
0:21:27 What’s going on?
0:21:32 In very basic terms, we’re drilling wells underground, just like you might do for water or oil and
0:21:33 gas.
0:21:36 But we’re tapping into pockets of very hot water.
0:21:41 And as you bring that to the surface, we can extract the heat from that water and put it
0:21:45 into a closed turbine system that’s going to flash to steam, drive a turbine.
0:21:49 And then that turbine will drive a generator that produces electricity for the grid.
0:21:54 And as our hot water cools, because we’re extracting the heat, we then re-inject that
0:21:59 cooled water back into the system where it has time to reheat before coming back up your
0:21:59 production well.
0:22:05 So these are really closed loops of circulating water underground to extract heat, and then
0:22:07 a closed loop where you’re running the turbine system.
0:22:09 And can it run forever?
0:22:10 Dumb question.
0:22:15 Every one of our utility-scale operating geothermal fields is still operating today, including the
0:22:16 ones that are 100 years old.
0:22:18 Are they colder than when they started?
0:22:22 Many of them are colder, but many of them have actually stayed relatively stable and consistent,
0:22:24 especially the deeper fields.
0:22:26 And a few have increased in temperature.
0:22:31 So you have the ability to think of these resources as potentially generational resources that could
0:22:35 last hundreds of years, maybe even thousands, if sustained and managed properly.
0:22:39 Because it is actually being recharged over time.
0:22:43 The earth is creating new heat through radioactive decay and other processes.
0:22:47 And that heat is part of what really makes geothermal a renewable resource.
0:22:48 So where are you now?
0:22:49 So let’s see.
0:22:54 We started the company about five, just over five years ago, raised our first venture capital
0:22:55 just over four years ago.
0:22:59 And at the time, it was really just two of us, my co-founder and I, thinking about this
0:23:03 big opportunity, this big need and the technologies that we were seeing and helping develop in the
0:23:05 lab and seeing a pathway to commercialize them.
0:23:10 Now, in just that time, we’ve raised 65 million in equities.
0:23:17 And we’ve also recently applied our technology to even known operating fields that had been
0:23:22 underappreciated and underutilized and have since become the eighth largest producer of geothermal
0:23:23 power in the nation.
0:23:26 Is this the New Mexico well or field?
0:23:28 That’s exactly right.
0:23:29 Tell me that story.
0:23:35 There was a well, a sort of neglected on the way site in New Mexico that you got involved in.
0:23:35 What happened there?
0:23:39 It’s a site that had been discovered by accident.
0:23:45 And it was just in the middle of a desert valley where a rancher had come out and drilled a water
0:23:49 well and at just about 100 feet hit steam.
0:23:52 And that was a long time ago.
0:23:54 It’s been known about for a while.
0:23:58 And developers came in and developed it for various purposes, including for electricity
0:24:00 about 10, 15 years ago.
0:24:02 But they never went deeper than that zone.
0:24:05 They really kind of drilled into the shallow top of the system.
0:24:08 And it was hard to go much deeper.
0:24:10 They drilled some dry wells in a few places.
0:24:13 And it really just left them saying, OK, let’s just stay here with what we know.
0:24:17 And the problem with that is when you’re producing from the very tops of these systems,
0:24:22 you can run into issues of faster temperature decline or maybe not enough pressure support.
0:24:25 And they actually ran into a lot of those issues.
0:24:30 So by the time we came and acquired the field last year, it was now significantly underperforming
0:24:34 and was at serious risk of being shut down within the coming months.
0:24:37 So you buy this little power plant.
0:24:38 It’s a little power plant, right?
0:24:38 In New Mexico.
0:24:40 And what do you do?
0:24:40 What happens?
0:24:42 So we enter in.
0:24:46 And within a few months, through a transition agreement, we take over full operations of the
0:24:47 facility.
0:24:52 And we start right away investing in, we’re going to drill this new well, and we’re going
0:24:55 to do some upgrades and improvements to the facility along the way.
0:24:57 But most importantly, we need a new source of steam.
0:25:04 And with our modeling, we’d identified a zone at depth that the data was helping confirm and
0:25:04 point to us.
0:25:11 And we engineered, permitted, and then ended up drilling and constructing a new well using
0:25:13 all the latest oil and gas drilling technologies.
0:25:16 So PDC bits, directional drilling assemblies, mud motors.
0:25:19 And we drilled directionally down to this zone.
0:25:22 And we go more than four times deeper than the prior production zone.
0:25:26 And along the way, you don’t know if you’re going to hit it yet, because these can be
0:25:28 pretty narrow, isolated pockets.
0:25:29 This is good.
0:25:30 This is good drama.
0:25:32 You’re spending a lot of money, presumably.
0:25:33 Spending a lot of money.
0:25:35 Your investors are calling you, you know, how’s it going?
0:25:35 Do we know yet?
0:25:38 Even the plant staff are asking that, right?
0:25:40 Because this is serious and very personal to them.
0:25:43 How long does it take, this drilling process?
0:25:45 So this first well took over 30 days to drill.
0:25:48 We have over 30 people on site, day and night, through that entire time.
0:25:51 And how are you getting information?
0:25:54 Like, are you, is there some dashboard you’re looking at?
0:25:55 Is somebody calling you?
0:25:58 Combination of all of the above, and then also just time on the ground.
0:26:01 You’re just standing there, looking down the hole, can’t see anything.
0:26:05 But modern oil and gas drilling really is pretty incredible with the technology that’s
0:26:06 been developed and applied to it.
0:26:09 And so you’re getting real-time data as you go, all put into, you know, modern software
0:26:10 tools to watch that.
0:26:13 You start getting early indications as your drill bit starts hitting these zones.
0:26:17 You start seeing evidence of fractures or, you know, possible reservoirs.
0:26:21 But you don’t actually know if you’ve hit what you need to repower the facility,
0:26:24 to really have a success until you test it with a flow test.
0:26:29 And so with that, you’re actually going to kick off the well, let steam come out, flow it
0:26:32 into a separator, and measure the flow rate and the temperature over a period of time.
0:26:35 And that we were on the ground for.
0:26:36 You’re standing around.
0:26:40 It’s, you know, high stakes, high nervousness.
0:26:44 And you just, you can see and feel this energy coming out of the well.
0:26:47 And you start seeing the readings, the temperature, the flow rate.
0:26:52 And at a certain point in that process, we all looked at each other and knew that it had hit.
0:26:54 And that feeling is incredible.
0:26:59 And yes, that was a, we went from, we have no idea to, we know this is it.
0:27:00 And there might be a lot more down there.
0:27:05 What happened at that moment when it was clear that it worked?
0:27:09 It’s just massive sighs of relief and excitement.
0:27:11 Not just that-
0:27:15 I don’t know if you jump in the air or like lie down on the ground at that moment, right?
0:27:16 Both of those definitely happened.
0:27:20 Some of us jumped, some of us lied down, just kind of collapsed a lot of energy and work over
0:27:21 the past month.
0:27:24 But even more exciting, I think it was not just that this plant was going to be recovered,
0:27:28 that this plant was going to have multiples to orders of magnitude, more resource potential
0:27:28 ahead of it.
0:27:33 But that the process we applied was systematic, right?
0:27:35 This is an approach that we could apply to other fields.
0:27:36 It was repeatable.
0:27:37 It was scalable.
0:27:40 And so for us, it was the two pieces of the puzzle.
0:27:44 Can you find more resources, orders of magnitude more than the industry had found historically?
0:27:48 And can you go deeper and find more resource within each of those resources?
0:27:53 And so thinking about what that means about the potential size and scale of this opportunity,
0:27:55 I think was really the most exciting part.
0:28:01 We’ll be back in just a minute.
0:28:44 Imagine that you’re on an airplane, and all of a sudden you hear this.
0:28:52 Attention passengers, the pilot is having an emergency, and we need someone, anyone, to
0:28:52 land this plane.
0:28:53 Think you could do it?
0:28:59 It turns out that nearly 50% of men think that they could land the plane with them.
0:29:01 With the help of air traffic control.
0:29:03 And they’re saying like, okay, pull this, and pull this.
0:29:04 Do this, pull that, turn this.
0:29:05 It’s just-
0:29:05 I can do it with my eyes closed.
0:29:07 I’m Manny.
0:29:07 I’m Noah.
0:29:08 This is Devin.
0:29:13 And on our new show, No Such Thing, we get to the bottom of questions like these.
0:29:17 Join us as we talk to the leading expert on overconfidence.
0:29:23 Those who lack expertise, lack the expertise they need to recognize that they lack expertise.
0:29:27 And then, as we try the whole thing out for real.
0:29:28 Wait, what?
0:29:29 Oh, that’s the run right.
0:29:31 I’m looking at this thing.
0:29:31 See?
0:29:38 Listen to No Such Thing on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.
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0:30:00 Where CEOs from Mattel, OnlyFans, ESPN, and many more will tackle the future of entertainment.
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0:30:12 What do you have cooking immediately?
0:30:13 What are you working on now?
0:30:17 We are really ramping up the deployment of these technologies at both discovery and de-risking.
0:30:24 And the best way to show this repeatability to, you know, really financial sectors that have become wary and nervous of geothermal investment.
0:30:25 Yeah.
0:30:28 Is to show not just the size and scale, but to show real proof cases.
0:30:31 So, this example in New Mexico, I think, is a great example of that.
0:30:33 Look, we can come in and do this work.
0:30:48 But now moving towards greenfield development and bringing on multiple new projects, developing them even in parallel, and showing that scalability and repeatability, we think is a critical next step for the industry to re-earn that trust from financial markets to come in and underwrite these.
0:30:49 Sure.
0:30:53 You got to just go find some bare piece of earth and build an economic geothermal power plant there.
0:30:54 I mean, that’s the broad story.
0:30:55 And that’s what we’re doing next.
0:30:57 Specifically, you got one?
0:30:58 You got financing?
0:30:59 Like, where are you?
0:31:03 So, we have the financing to start the development, and we’ve done a lot of that development work already.
0:31:08 A number of projects in the interconnection queues with resources already identified that have that potential.
0:31:08 Okay.
0:31:15 And so, really, the next stage is taking that through the rest of the development process to get it ready for bankable project finance.
0:31:18 Is there, like, a rate-limiting step?
0:31:20 Is there one that’s almost there?
0:31:21 Is there something you got to figure out?
0:31:26 The rate-limiting step now, in terms of power development, is really interconnection and permitting.
0:31:28 Historically, these are very slow.
0:31:31 But that’s just anything you’re going to build has that problem.
0:31:32 That’s not a geothermal problem.
0:31:35 That’s just the grid is a pain in the ass problem.
0:31:41 I guess it’s unsurprising, but, like, it’s uninteresting, and it makes me sad about the world.
0:31:42 But there’s been progress.
0:31:52 I mean, really, there is now, for the first time, I think, real bipartisan support for accelerating permitting of energy projects and accelerating how we can bring these projects onto the grid or, in some cases, even off the grid.
0:32:05 And as you mentioned, I think we’re in this just kind of totally different market environment than even when we started the company just a few years ago, where, look, for the last 25 years, energy demand growth has been basically flat.
0:32:12 And so when you were thinking about building renewable energy projects like geothermal, you were almost always looking at turning something else off.
0:32:13 It was zero-sum.
0:32:13 It was zero-sum.
0:32:14 Okay.
0:32:16 We’re going to turn off that Nat gas facility and turn on these renewables.
0:32:22 Right now, we’re in an environment where we’re probably going to have to rebuild the entire amount of capacity another time over.
0:32:29 I mean, if scaling with AI continues, there’s going to be a tremendous amount of demand for electric power.
0:32:29 That’s right.
0:32:35 And so from a carbon emissions point of view, the short-term downside is that you have a lot more natural gas being built than anybody expected.
0:32:48 But one of the kind of unique upsides is that you now have demand for geothermal and even nuclear and long-duration storage, these other technologies, that is no longer a, well, you’re competing against the marginal cost of something else that’s already built.
0:32:51 It’s you’re competing with new-build natural gas and coal.
0:32:52 Which is more expensive.
0:32:53 That’s good for you.
0:32:54 That’s good for us.
0:33:03 At that point, we actually compete quite well today and then have a pathway to coming down the cost curve and the learnings curves that will put geothermal into a much more competitive position even in just a few years.
0:33:08 If you don’t dig any dry wells, then it’s a great business, right?
0:33:11 It seems like that’s the key is don’t miss.
0:33:13 That’s right.
0:33:17 So let’s talk about politics for 90 seconds.
0:33:22 It’s an interesting moment politically for geothermal energy, right?
0:33:24 A bad moment politically.
0:33:24 I’ll say it.
0:33:29 You don’t have to say it for solar power and for electric vehicles and for wind power for sure.
0:33:35 But it seems not bad for geothermal energy, which is maybe a pleasant surprise.
0:33:35 I don’t know.
0:33:40 Tell me about what’s happening politically, like with the federal government and geothermal power right now.
0:33:43 This is where geothermal has been fortunate to be in this very bipartisan position.
0:33:52 On one hand, we are a small footprint, small materials impact, zero emission technology, which obviously the left loves.
0:33:55 That fits very much into how do we decarbonize the grid and achieve these goals.
0:34:00 Whereas it also is an energy industry that can rely on our existing American workforce.
0:34:03 You can transition them from oil and gas.
0:34:04 The technology is ready to go.
0:34:07 You’re not rebuilding a workforce from scratch like you have to do for offshore wind or nuclear.
0:34:10 It’s appealing because it looks and feels like oil and gas.
0:34:13 It’s drill baby drill here in America on American soil.
0:34:19 So it has all of the things that the right and the left can actually come together on and see, oh, this actually benefits all of our shared objectives.
0:34:26 But in fact, in the budget bill that just passed, the geothermal basically subsidies survived, right?
0:34:31 Whereas other subsidies for other kinds of carbon-free electricity did not.
0:34:31 That’s right.
0:34:33 What are you worried about?
0:34:35 Like, what do you think might go wrong?
0:34:42 So we worry a little bit about the small n when you’re dealing with probabilities that have these long tail distributions.
0:34:43 Basically bad luck.
0:34:47 There’s an 80 percent chance the thing will work and you hit the 20 percent loser.
0:34:48 Exactly.
0:34:51 And so what happens if you have all of the pieces in place?
0:34:52 Things should have worked.
0:34:59 You’ve built this technology and those first 10 projects or five projects just happen to fall on the low end of that distribution.
0:35:00 And the markets are like, okay, you tried.
0:35:01 We’re done.
0:35:01 Yeah, what a bummer.
0:35:05 And so that’s true in what we’re doing.
0:35:07 It’s also true in what the broader geothermal industry is doing.
0:35:14 So I mentioned what really sets Sandscar apart is this ability to unlock conventional geothermal resources that don’t require fracking or stimulation.
0:35:16 These are just naturally occurring pockets.
0:35:18 That doesn’t require any water consumption.
0:35:20 They’re low cost and they’re out there.
0:35:26 One of the other geothermal founders I talked to, I think it was Carlos Araque at Quays,
0:35:46 said that for him the measure of success for the field is when big oil and gas companies get into the geothermal business because they are the ones with the capital and the staff and the know-how who, if they want to do it, they could do it at giant scale now, essentially.
0:35:49 And in his worldview, it’s like that’s what we need.
0:35:52 That’s how you get a ton of geothermal energy really fast.
0:35:54 What do you think of that?
0:35:59 I think I agree with it other than the need aspect of it.
0:36:03 Like I do agree if they entered in, it would accelerate things significantly.
0:36:11 Nobody’s better positioned than them to deploy this type of technology, this type of workforce on these types of resources, deal with subsurface uncertainty and topside infrastructure together.
0:36:13 At scale, right?
0:36:14 Like they’re so big.
0:36:17 They’re really big companies all around the world.
0:36:19 And that is part of the problem.
0:36:27 They are so big all around the world and they have a clear proven business model and diversifying and changing out of that has been a real challenge and maintaining focus on any new business areas.
0:36:36 And so despite the progress that all of these startups have demonstrated, you’re still seeing very little actual kind of in the ground proof from them or even capital entering in.
0:36:43 And so I think that’s what has shifted for me over the last few years is a recognition that, you know what, we’re going to be able to do this with or without them.
0:36:45 And I hope they join sooner.
0:36:55 But we are finding that there are capital sources out there and there are sophisticated groups that have subsurface understanding that can really accelerate investments into these technologies.
0:37:00 And so I think there’s still a pathway to do this on the timescales that we talked about.
0:37:05 We’ll be back in a minute with the lightning round.
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0:37:49 Imagine that you’re on an airplane and all of a sudden you hear this.
0:37:57 Attention passengers, the pilot is having an emergency and we need someone, anyone, to land this plane.
0:37:58 Think you could do it?
0:38:05 It turns out that nearly 50% of men think that they could land the plane with the help of air traffic control.
0:38:08 And they’re saying like, okay, pull this, and pull this.
0:38:09 Do this, pull that, turn this.
0:38:09 It’s just…
0:38:10 I can do it with my eyes closed.
0:38:11 I’m Manny.
0:38:12 I’m Noah.
0:38:13 This is Devin.
0:38:18 And on our new show, No Such Thing, we get to the bottom of questions like these.
0:38:21 Join us as we talk to the leading expert on overconfidence.
0:38:28 Those who lack expertise, lack the expertise they need to recognize that they lack expertise.
0:38:31 And then as we try the whole thing out for real.
0:38:33 Wait, what?
0:38:34 Oh, that’s the runway.
0:38:36 I’m looking at this thing, see?
0:38:42 Listen to No Such Thing on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.
0:38:44 Barbie’s gone blockbuster.
0:38:47 OnlyFans is rewriting the rules for creators.
0:38:50 And ESPN is leading the game in sports media.
0:38:52 I’m Chris Grimes, the FT’s LA Bureau Chief.
0:38:59 And on September 17th and 18th, I’ll be hosting the Financial Times Business of Entertainment Summit in West Hollywood.
0:39:05 Where CEOs from Mattel, OnlyFans, ESPN, and many more will tackle the future of entertainment.
0:39:09 Head to ft.com slash entertainment to unlock your exclusive FT discount.
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0:39:16 Now we’re going to do the lightning round.
0:39:18 What’s your favorite rock?
0:39:26 My favorite rock is an eclogite, which is a rare rock that represents rock that was once at the surface
0:39:33 and has been brought down very deep, sometimes 100 plus miles underground, through tectonic activity.
0:39:39 Where many of the minerals and elements have changed shape into things that are more stable at high pressure and high temperature.
0:39:40 And then it was brought back to the surface.
0:39:45 And these were some of the early points of evidence for plate tectonics actually occurring.
0:39:47 What do they look like?
0:39:50 They have bright green and red minerals in them.
0:39:52 And so sometimes they’re called a Christmas tree rock.
0:39:56 What’s the most underrated geologic epoch?
0:40:05 At least for the Western United States, really the tertiary period, which is this, think of it as 20 to 40 million years ago,
0:40:11 where the entire Western U.S. underwent a transformation rather than the plate starting to, they’d been colliding for a very long time.
0:40:23 They actually start pulling apart and it’s this pulling apart that stretches the earth’s crust and leads to the formation of this huge, broad region of high elevated temperatures and geothermal activity.
0:40:33 That is really what has driven all of the activity today for geothermal energy and makes this not just the best place in the U.S. to develop geothermal, but one of the best in the world.
0:40:41 Almost no other areas had that long history of 20-plus million years of stretching and thinning to create that much geothermal heat near to the surface.
0:40:43 Best volcano?
0:40:49 You want to do worst volcano?
0:40:51 Worst volcano, I would accept.
0:40:55 No, they’re always the best and the worst because there’s this inherent danger that comes from them.
0:40:56 Yes, the best is the worst.
0:40:57 Also incredible.
0:41:07 And so actually for me, one of the best volcanoes is this volcanic region in kind of central Western Japan, a few hours west of Tokyo, in the Hida Mountains, sometimes called the Japanese Alps.
0:41:16 And it’s an area where you’ve not only had volcanic activity, but the mountains have been uplifting so fast and eroding that you’ve brought some of the geothermal heat just right to the surface.
0:41:26 And as they drill tunnels into that rock, there’s some of the highest geothermal gradients anywhere on the planet and really takes a unique combination of tectonic plate activity to drive that kind of action.
0:41:27 Have you been there?
0:41:28 I have.
0:41:30 We did a study out there a number of years ago.
0:41:31 What’s it like?
0:41:32 It’s beautiful.
0:41:37 It sort of has this tropical feel, incredible plants, but you’re hiking up in the mountains.
0:41:39 You feel like if you were here in the U.S., you’d be in the middle of nowhere.
0:41:46 And all of a sudden you look over and there’s a nice elderly couple out hiking way up this high elevation just waving to you as they go by.
0:41:50 And so it’s both, I think, beautiful but also appreciated by the people around it.
0:42:00 Carl Hoyland is the co-founder and CEO of Zanskar.
0:42:03 Please email us at problem at Pushkin.fm.
0:42:07 We are always looking for new guests for the show.
0:42:11 Today’s show was produced by Trina Menino and Gabriel Hunter-Chang.
0:42:16 It was edited by Alexander Gerriton and engineered by Sarah Bruguer.
0:42:20 I’m Jacob Goldstein and we’ll be back next week with another episode of What’s Your Problem?
0:42:31 Why are TSA rules so confusing?
0:42:33 You got a hood of yours, take it off!
0:42:34 I’m Manny.
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0:42:42 And we’re best friends and journalists with a new podcast called No Such Thing, where we get to the bottom of questions like that.
0:42:43 Why are you screaming at me?
0:42:45 I can’t expect what to do.
0:42:47 Now, if the rule was the same, go off on me.
0:42:48 I deserve it.
0:42:49 You know, lock him up.
0:42:55 Listen to No Such Thing on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.
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In many places on Earth, there’s steam just below the surface. We don’t know where those places are — but if we could figure it out, we could unlock a lot of clean energy.
Carl Hoiland is the co-founder and CEO of Zanskar, a geothermal energy company.
On today’s show, Carl makes the case for geothermal in the energy transition and explains how the company is developing new ways to identify exactly where to dig a geothermal well.
See omnystudio.com/listener for privacy information.