August 28, 2025 • 37 mins
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.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:15):
Pushkin that you're trying to find places where there's pockets
of steam underground naturally occurring. You just need to drill
well into it, 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.
Speaker 2 (00:33):
Yeah, that is so tantalizing. Right. In fact, there are
places around the world where there's steam not that far underground,
and if only we knew where they were, we could
have a lot of clean energy.
Speaker 1 (00:48):
And maybe where they are and maybe enough for all
of our energy demands just you know tomorrow, if you
knew where to.
Speaker 2 (00:53):
Drill just right there, we just got to figure out where.
Speaker 1 (00:56):
And so you know, that's the hunt. That's the search
that we're on.
Speaker 2 (01:04):
I'm Jacob Goldstein and this is What's Your Problem, the
show where I talk to people who are trying to
make technological progress. My guest today is Carl Hoyland. He's
the co founder and CEO of Zanscar, a geothermal energy company.
Geothermal energy has not had the kind of wild.
Speaker 3 (01:21):
Boom that wind and solar have had over the past
decade or so, but there's a compelling case that geothermal
could be a useful compliment to wind and solar because
geothermal wells produce a.
Speaker 4 (01:33):
Constant, reliable, steady stream of energy, which is quite useful
for seasons when there's not much sun or wind, and
solar panels and wind turbines are not generating much power.
And so recently a few geothermal startups have gotten to work,
and I've talked with founders from a few of these companies.
One is bringing fracking technology to geothermal. Another is trying
(01:57):
to use a technology that comes from fusion energy to
drill ultra deep holes. But Sandscar is doing something simpler.
They're trying to develop new ways to identify those on
the earth where there is hot steam not too far underground,
just waiting for somebody to dig a well. Carl and
(02:17):
his co founder both have PhDs in geology, and Carl
told me his grandfather was the person who first got
him into rocks.
Speaker 1 (02:26):
My grandfather was a uranium prospector and then a gold
prospector for most of his life, and so I remember
as a kid going down and visiting him. They lived
in the high Sierras of northern California. He taught me
that look, if you take this understanding you can go
out and find resources, and taught me a little bit
about the economic implications of how you think about resource formation,
and so just fell in love with it. It was the
(02:47):
ultimate treasure hunt to think that you could go out
and find these and I wasn't thinking about the sustainability
or the climate impacts or others. Just loved that you
could go out and find this. Didn't undergraduate a PhD
degree in this, 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? Do we need more big open pits in
(03:08):
the ground.
Speaker 2 (03:09):
I mean, if you're a geologist, the basic career path
is go find oil right for the last whatever one
hundred years. If you're a geologist, then you want a job.
You can definitely get a job finding oil. Is that
basically the story Historically.
Speaker 1 (03:20):
That's where a lot of the geologists go. And there's
other routes as well, But you know a lot of
geologists weren't drawn into it initially for that reason. They
just loved the storytelling aspect of being outdoors, the scientific
discovery process, 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. So it's really
towards the end of our PhDs that my co founder
(03:41):
and I were really looking at this landscape and thinking about,
you know, what could we do next, what does society
really need a lot more of? And we just started
speaking to as many people as we could in the
industries and the power sector thinking about energy. And you know,
I'd say, even when we brought up the topic of geothermal,
most people would tell us that's too hard to do,
it's too small a niche, and nobody really needs baseload
(04:02):
power anymore. This was the late twenty tens, and everyone
was kind of thinking, well, we've kind of solved it
with solar and battery, but there were a few voices
out there saying and running sophisticated models that you know what, actually,
once you get above fifty percent or sixty seventy eighty
percent penetration of solar and battery, you start realizing that
costs start going up unless you have a dispatchable or
(04:23):
baseload energy source.
Speaker 2 (04:25):
Right, So, just to be clear, it's easy relatively easy
to get some solar power to display some of the
power consumption with solar, 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.
Speaker 1 (04:42):
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. 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. It's nuclear, it's hydro,
which we're not building much more of, or it's geothermal.
(05:04):
And that's where we started getting excited about the geothermal
opportunity and saying, okay, well, what's holding it back? Why
aren't there jobs here? Why isn't anybody building? And that
let us down I think a very deep rabbit hole
of a fifty plus year history of geothermal energy and
why it's been stagnant for decades.
Speaker 2 (05:20):
So let's do that fifty year rabbit hole briefly, not
in real time, but like, what is that story briefly?
Speaker 1 (05:28):
So Briefly, there was this recognition because in some places
you see geothermal energy coming out of the surface geysers, fumaroles,
boiling mud pots. So we knew there was this energy underground,
and the more we explored the planet, the more we
realized in almost all locations, actually everywhere, as you go deeper,
it gets hotter. So there were some early experiments, even
going back one hundred years ago in Italy, of just
putting a steam turbine at the top and getting your
(05:49):
steam from the earth instead of.
Speaker 2 (05:50):
Fighting if steam is coming out of the ground, it's like, wait,
we know what to do with steam. Turn a turbine
and make electricity.
Speaker 1 (05:56):
That's right, But in an overtime realizing okay, you're gonna
have to drill into these in most places to get
that level of steam. It took another fifty years before
this started to become a more industrial scale opportunity. You
start seeing a lot of this in the sixties, 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
(06:18):
external sources of energy, and so the energy crisis in
the late seventies 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.
Speaker 2 (06:32):
We didn't fracking hadn't happened, yet, we were relying on
oil from the Middle East. There was the Arab oil
embargo in the early seventies.
Speaker 1 (06:38):
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, and so thinking about, like,
how can we source this domestically and have that independence?
And this drove many the oil and gas majors and
other large companies and investors into the space. And they
just started exploring all over looking for more of these
places where you could develop geothermal energy.
Speaker 2 (06:58):
And yet we are not a geothermally powered society at
this moment. What happened while we were wrong.
Speaker 1 (07:04):
So these were pioneers, right, they're doing this for the
first time. Imagine going out and you're drilling a well
into some that could be five hundred, six hundred, maybe
seven hundred fahrenheit. Nobody's done this before, and so they're
figuring things out as they go it's incredible. They really
lay the foundation for both the engineering and the science.
But things start to fall apart in terms of the
drivers that was motivating this is the energy crisis actually
(07:25):
started to resolve. Oil prices came down and relations were.
Speaker 2 (07:28):
Better, We got oil again.
Speaker 1 (07:30):
It was like whatever, and then it's like, okay, well,
oil actually is cheaper at that time, 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 eighties you see most of that really fall
apart and many of those companies shut down.
Speaker 2 (07:47):
And it's basically just oh, oil is cheap and abundant again,
and we know how to go get oil more efficiently
than we know how to go get geothermal energy.
Speaker 1 (07:56):
But luckily a lot of those lessons stayed. There was
a lot of interest still in the background of maybe
we're going to need this again one day, and so
there's slow progress being made in the background, and it's
not until really the late two thousands that you start
to have another large driver towards ge thermal energy, and
this time it's because it's carbon free. Now we're thinking
about how do you decarbonize our energy systems, and you
(08:16):
have this actually relatively low cost of carbon free energy,
and you see a lot more activity and investment in
the space new power plants coming online again, but this
time they didn't have that same energy and exploration a
spirit of that first wave. They're mostly going after the
low hanging fruit, things that were already known or found.
And today even most of our plants come from those
(08:38):
two waves of development. In the US, in half of
the operating fields today had been discovered initially by accident.
Speaker 2 (08:45):
People were like drilling for oil and they were like, wait,
that's not oil, that's water or whatever.
Speaker 1 (08:50):
Yea, how are drilling for water on a ranch or
drilling for gold? And so you have this kind of
trickle of discoveries coming in that were unintended, serendipitous, and
those are the opportunities that many of the developers in
that late two thousands early twenty tens era jump.
Speaker 2 (09:02):
At, sure, like why not, it's right there.
Speaker 1 (09:05):
And this is looking great because in great geothermal resources
they deliver at a good price, they're long lived. But
by the mid twenty tens, this is when shale gas
prices really start coming down, and now you have this
steep competition from a low cost source of carbon emitting power,
and it really undercuts geothermal at the same time that
solar is coming down.
Speaker 2 (09:25):
So basically you can do because of fracking, basically what
is popularly called tracking right, natural gas gets really cheap
and that can be the sort of complement to solar,
although of course it has the problem of emitting carbon dioxide,
but economically it's tough to beat.
Speaker 1 (09:40):
That's right, And so I think now we're in this
third wave, a totally different set of economic drivers and
also different technology tools that are available, and it's being
driven not by any one of those, but actually all
of those together. We now do care about having a
domestic energy source, so that's great. We care about it
being carbon free because we have to arrive at that
point someday. But geothermal is also proving uniquely valuable because
(10:04):
it's a dispatchable base load energy source day and night,
three hundred and sixty five days a year, 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.
Speaker 2 (10:18):
So what's the landscape more generally, right, like the big
oil and gas companies like are they geothermal curious? Like
what where are they right now?
Speaker 1 (10:25):
I'd say they're geothermal curious. And we've seen a lot
of kind of starting to dip their toes, but none
of them really moving in with full force. And this
is 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
and a lot of that really started five plus just
over five years ago, and you're now seeing those companies
(10:48):
reach their first commercial scale pilots, first demonstrations, and you're
starting to see the real kind of in the ground
element of that work. 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.
Speaker 2 (11:06):
So let's talk about zanscover in particular your play where
do you fit?
Speaker 1 (11:11):
So we're looking at this landscape, is all this heat underground,
many ways to extract it, and you know, just like
oil and gas, the industry looks very similar to it
one hundred years ago. Half the resources were found by accident,
the other half had obvious seeps at the surface.
Speaker 2 (11:26):
It's like in Pennsylvania one hundred and forty years ago
and they're like, oh, there's oil coming out of the
rock here, maybe we should put it in a barrel.
That's right. It was a moment when the barrels cost
more than the oil. It's one of my favorite details
from that era.
Speaker 1 (11:39):
And so you see geothermal and you then realize, Okay,
if that's how the industry is today, there must be
much much more underground. And we're also looking at two
major tail wings of technology. 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. And on the other side, we're seeing
(11:59):
drilling costs come down as our technologies for drilling become
more sophisticated and allows us to drill deeper and deeper
into these resources. Yeah, but it's really this landscape of
new technologies that hadn't been applied, and interestingly, some of
those originated in geothermal in the first place. Oh I
mentioned that big wave of development of the late seventies
and eighties. They recognized back then actually that it was
hard to find these resources, and that you drilled many
(12:21):
dry wells where it was very hot, but there was
no permeability or no water underground, right, And so they
dreamed up the idea at that time of well, what
if we fracked or stimulated this rock.
Speaker 2 (12:31):
What if we put water into the hot rock and
then brought it back out exactly?
Speaker 1 (12:35):
And so the early experiments are fifty plus years old,
and they started to identify what might be possible, 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. On the other hand, they also
recognized it was hard to find these resources, 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
(12:58):
years hit that same tipping point of well we can
now do it systematically in a scale.
Speaker 2 (13:02):
Yes, we're at a time where if you have a
lot of data and want to make a prediction, you're
in luck.
Speaker 1 (13:07):
Right, it's a good time to be that business.
Speaker 2 (13:10):
So let's talk about the aipiece.
Speaker 1 (13:11):
Right.
Speaker 2 (13:12):
So it's like, Okay, we're good at drilling now and presumably,
at least as a species, we're better at using data
to make predictions about the world. Specifically, there was a
post you guys wrote, I think when you announce your
series A or something a couple of years ago, and
you sort of wrote like, what are your key moves
your key angles, And one of them was leveraging big
data and predictive modeling to discover new resources. And I
(13:34):
noticed by the way that you didn't use the term
AI there, and it was I think it was just
before chat GPT came out, So I was tangentially curious.
Was that deliberate or was it just everybody didn't say
AI then they just said predictive modeling.
Speaker 1 (13:48):
It's a little bit of both. You know, AI can
be such a buzzword. Everyone's AI company. Now what does
that really mean? And we'll talk in a little bit
about there's some really sophisticated stuff happening in house here.
But the other part of it is that exploration. We
break into two stages, and the first part of discovering
new resources in some ways can rely on more traditional
data science machine learning tools from kind of five to
(14:11):
fifteen years ago. And so they're exciting, 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.
Speaker 2 (14:23):
Say more about that. So it's like you have the
whole Earth and you say where should we go? And
there's kind of older technologies give you a big circle
and then newer technologies give you a smaller circle or something.
Speaker 1 (14:33):
Yeah, I mean, that's the simplest way to think about it.
And so if that's the search that we're one 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, it's magnetic field, the
resistivity of rocks, the fault lines, the geology. All of
this data goes in, gets cleaned up, put into these
(14:53):
machine learning models to then help you predict the favorability
or location of a site that's worth testing or drilling.
And we've 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
(15:16):
done over the last thirty years.
Speaker 2 (15:18):
Wait say that part again. You in how long you found?
Speaker 1 (15:21):
How much relative to what in just the last three years?
Speaker 2 (15:24):
Okay? And is that real? Like if I don't know
the smart question to ask you to validate that claim,
but like validate that claim?
Speaker 1 (15:34):
Yeah? So mean. So part of this is we already
just talked about people stopped looking. 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.
Speaker 2 (15:44):
So basically people stopped looking. And then basically AI call
it machine learning if you want, got way better. And
you're like, oh, what if we took these new tools
and when looked again.
Speaker 1 (15:54):
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, 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 fifty in some of these locations.
Speaker 2 (16:10):
And if I were like a smart, skeptical funder What
would I ask you right now?
Speaker 1 (16:16):
You should just come out and see these sites.
Speaker 2 (16:18):
See this, I know, but like whatever, That doesn't mean
they'd work at commercial scale exactly That what I would say.
Speaker 1 (16:24):
So, yeah, we know there's something there. We know there's
a geothermal system, there's convection underground, hot water's coming up
close to the surface. How do you know this is
going to be a power plant one day? How do
you know what we're going to make money with this resource?
And that's where the second stage comes in.
Speaker 2 (16:35):
Okay, go on.
Speaker 1 (16:37):
So we know there's something there, Where is it? How
do we drill into it? And can we go deeper
and deeper into it? And that's where some of these
more next generation forms of AI become really important because
now you enter a data sparse space.
Speaker 2 (16:49):
Uh huh. So you're trying to make predictions with less data.
Speaker 1 (16:52):
With less data, and this is where you have to
rely on a combination of things, first principles, scientific understanding
to allow you to do simulations. And so we enter
into the space where you're essentially creating digital twins of
the subsurface.
Speaker 2 (17:05):
Right because you don't know what's under there. So when
you say digital twin your guessing, because if you know,
you wouldn't need to do the work, you'd be done exactly.
Speaker 1 (17:13):
But you do know physically what is possible, so there
are limitations on what could be down there. Yeah, and
so by taking into account those physics and geologic principles,
you can model all of that possibility space, combine these
into a framework by which you could say, if I
drill here, here's what is possible probabilistically, whole range of
possible outcomes. And even though I can't say one hundred
(17:34):
percent this is the outcome, I can say with confidence
that if I drill many of these wells with that
same profile, this is going to be my portfolio level outcome.
And that starts to become scalable. That starts to because
something you can allocate capital.
Speaker 2 (17:47):
To, assuming your probabilistic estimates are correct, right, assuming you
know the sort of AerR bars around your guesses.
Speaker 1 (17:53):
That's right.
Speaker 2 (17:54):
So another one of the points in that post you
wrote a couple of years ago when I think it
was the series A, the next one, and it seems
like what we're walking up to now, so I'll mention
it was leveraging stochastic geomodeling and decision signs to optimize
exploration workflow for de risking. So the phrase that was
interesting to me there was decision science. What is decision
(18:19):
science and how are you using it?
Speaker 1 (18:20):
And so again you're entering into this data sparse problem
where you're going to make a series of decisions. I
might drill well here or there, five wells or three
wells in this order to this depth this type of well.
Or I could go collect new data. I could collect
gravitational data, geologic data, seismic data.
Speaker 2 (18:38):
And there's a trade off, right, gathering data is costly,
but not as costly as digging a dry well. And
so how do you weigh that? I mean, it's that
the fundamental kind of economic or technoeconomic question you're trying
to answered.
Speaker 1 (18:52):
That's exactly right. And historically we've relied on geologists who
are specialized and trained in this field to be able
to make those hard, subjective decisions under extreme uncertainty, and
they'll recommend, Okay, this is what we should do next.
But there's a few issues with that. And again I'm
a geologist, so I don't mean this to shade throw shade,
but it's one is not very scalable because if you
(19:15):
want to drill thousands or millions of these wells, there's
actually a very few, very expert level geologists. Yeah, only
a couple of dozen globally that have drilled say a
dozen exploration wells in their career.
Speaker 2 (19:27):
Wow.
Speaker 1 (19:27):
And so you've very quickly run out of just the
people power there. But the other aspect of it is
it's inconsistent and it inherently has human biases, right, we
can't avoid that, And so I almost always will recommend
certain data types just because I love working with those
data I think they're important.
Speaker 2 (19:42):
But there's just one rock. You're like, oh, that's my
favorite rock. We've got a drill here.
Speaker 1 (19:46):
That's true, And with data types, I have my favorite
data types. And some of that bias comes from my
past experience, the projects I've worked on, the sites I've
looked at, and how those were helpful or not there.
But not all sites are the same, and the more
you see, the more that debt shapes. And that's where
AI in these advanced forms of probabilistic modeling allow us
to think much bigger picture and incorporate all of the
known sites and even the unknown physical possibilities into those decisions.
Speaker 2 (20:10):
And so, in basic terms, when you set up a
geothermal power plant, how does it work? What's going on?
Speaker 1 (20:17):
In very basic terms, we're drilling wells underground, just like
you might do for water or oil and gas, but
we're tapping into pockets of very hot water. And as
you bring that to the surface, we can extract the
heat from that water and put it into a closed
turbine system that's going to flash to steam drive a turbine,
and then that turbine will drive a generator that produces
electricity for the grid. And as our hot water cools
(20:40):
because we're extracting the heat, we then reinject that cooled
water back into the system where it has time to
reheat before coming back up your production. Well, so these
are really closed loops of circulating water underground to extract heat,
and then a closed loop where you're running the turbine system.
Speaker 2 (20:57):
I can of run forever. Dumb question.
Speaker 1 (20:59):
Every one of our utility scale operating geothermal fields is
still operating today, including the ones that aree hundred years old.
Speaker 2 (21:05):
Are they colder than when they started?
Speaker 1 (21:07):
Many of them are colder, but many of them have
actually stayed relatively stable and consistent, especially the deeper fields,
and a few have increased in temperature, so you have
the ability to think of these resources as potentially generational
resources that could last hundreds of years, maybe even thousands,
if sustained and managed properly, because it is actually being
recharged over time. The Earth is creating new heat through
(21:30):
radioactive decay and other processes, and that heat is part
of what really makes geothermal renewable resource.
Speaker 2 (21:37):
So where are you now?
Speaker 1 (21:38):
So let's see. We started the company about five just
over five years ago, raised our first venture capital just
over four years ago, and at the time it was
really just two of us, my co founder and I
thinking about this big opportunity, this big need, and the
technologies that we were seeing and helping develop in the
lab and seeing a pathway to commercialize them. Now and
just that time, we've raised sixty five million inequities, and
(22:01):
we've also recently applied our technology to even known operating
fields that had been underappreciated and underutilized and have since
become the eighth largest producer of gethermal power in the nation.
Speaker 2 (22:13):
Is this the new Mexico well or field?
Speaker 1 (22:16):
That's exactly right?
Speaker 2 (22:17):
Tell me that story. There was a well sort of
neglected on the Wayne site in New Mexico that you
got involved in what happened there.
Speaker 1 (22:25):
It's a site that had been discovered by accident and
it was just in the middle of a desert valley
where a rancher had come out and drilled a water
well and it just about one hundred feet hit steam.
And that was a long time ago, and so I'd
been known about for a while and developers came in
and developed it for various purposes, including for electricity, about
(22:48):
ten fifteen years ago. But they never went deeper than
that zone. They really kind of drilled into the shallow
top of the system and it was hard to go
much deeper. They drilled some dry wells in a few places,
and it really just left them saying, Okay, let's just
stay here with what we know. And the problem with
that is when you're producing from the very tops of
these systems, you can run into issues temperature decline or
(23:10):
maybe not in a pressure support. And they actually ran
into a lot of those issues. So by the time
we came and acquired the field last year, it was
now significantly underperforming and was at serious risk of being
shut down within the coming months.
Speaker 2 (23:23):
So you buy this little power plant. It's a little
power plant right in New Mexico, and what do you do?
What happens?
Speaker 1 (23:30):
So we enter in and within a few months, through
a transition agreement, we take over full operations of the
facility and we start right away investing in. We're going
to drill this new well, and we're going to do
some upgrades and improvements to the facility along the way,
But most importantly, we need a new source of steam.
And with our modeling, we'd identified as zone at depth
(23:51):
that the data was helping confirm and point to us,
and we engineered, permitted, and then ended up drilling and
constructing a new well using all the latest oil and
gas drilling technologies, so PDC bits, directional drilling assemblies, mud motors,
and we drilled directionally down to this zone and we
go more than four times deeper than the prior production zone.
(24:12):
And along the way, you don't know if you're going
to hit it yet because these can be pretty narrow,
isolated pockets.
Speaker 2 (24:17):
This is good, this is good drama. You're spending a
lot of money, presumably.
Speaker 1 (24:21):
Spending a lot of money. Your investors are calling you,
You know, how's it going? We know yet even the
plant staff are asking that, right because this is this
is serious and very personal to them.
Speaker 2 (24:30):
How long does it take this drilling process?
Speaker 1 (24:32):
So this first we all took over thirty days to drill.
We have over thirty people on site day and night
through that entire time.
Speaker 2 (24:38):
And how are you getting information? Like are you is
there some dashboard you look at it is somebody calling you.
Speaker 1 (24:44):
Combination of all the above and then also just time
on the ground, you're.
Speaker 2 (24:47):
Just standing there looking down the hole. You can't say anything.
Speaker 1 (24:50):
But modern oil and gas drilling really is pretty incredible
with the technology that's been developed and applied to it,
and so you're getting real time data as you go,
all put into modern software tools to watch that. You
start getting early indications as your drill bit starts hitting
these zones, you start seeing evidence of fractures or you know,
possible reservoirs, but you don't actually know if you've hit
what you need to repower the facility to really have
a success until you test it with a flow test.
(25:14):
And so with that you're actually going to kick off
the well, let steam come out, flow it into a
separator and measure the flow rate and the temperature over
a period of time, and that we were on the
ground floor. You're standing around, it's you know, high stakes,
I nervousness, and you just you can see and feel
this energy coming out of the well and you start
(25:34):
seeing the readings the temperature, the flow rate, and at
a certain point in that process, we all looked at
each other knew that it had hit and that feeling
is incredible, and yes, that was a We went from
we have no idea to we know, this is it
and there might be a lot more down there.
Speaker 2 (25:50):
What happened at that moment when it was clear that it.
Speaker 1 (25:53):
Worked, just massive size of relief and excitement, not just
that I don't.
Speaker 2 (26:00):
Know if you jump in the air, like lie down
on the.
Speaker 1 (26:02):
Ground, that both of those definitely happened. Some of us jump,
some of us lie down, just kind of collapsed. A
lot of enter and work over the past month. But
even more exciting, I think it was not just that
this plant was going to be recovered, that this plant
was going to have multiples to orders of magnitude more
resource potential ahead of it, but that the process we
applied was systematic. Right, this is an approach that we
(26:23):
could apply to other fields. It was repeatable, it was scalable,
and so for us it was the two pieces of
the puzzle. Can you find more resources orders of magnitude
more than the industry had found historically, and can you
go deeper and find more resource within each of those resources,
And so thinking about what that means about the potential
size and scale of this opportunity, I think was really
(26:43):
the most exciting part.
Speaker 5 (26:48):
We'll be back in just a minute. What do you
have cooking immediately?
Speaker 2 (27:02):
What are you working on now?
Speaker 1 (27:04):
We are really ramping up the deployment of these technologies
at both discovery and de risking. And the best way
to show this repeatability to really financial sectors that have
become wary and nervous of geothermal investment is to show
not just the size and scale, but to show real
proof cases. So this example in New Mexico, I think
is a great example of that. Look, we can come
in and do this work, but now moving towards greenfield
(27:26):
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.
Speaker 2 (27:39):
Sure, you got to just go find some bare piece
of earth and build an economic geothermal power plant there.
I mean, that's the broad.
Speaker 1 (27:44):
Step, and that's what we're doing next.
Speaker 2 (27:46):
Specifically, you got one, you got financing, like where are you?
Speaker 1 (27:49):
So we have the financing to start the development and
we've done a lot of that development work already, a
number of projects in the interconnection cueues with resources already
identified that have that potential, and so really the next
stage is taking that through the rest of the development
process to get it ready for bankable project finance.
Speaker 2 (28:06):
Is there like a rate limiting step? Is there one
that's almost there? Is there something you got to figure out?
Speaker 1 (28:12):
The rate limiting step now in terms of power development
is really interconnection and permitting. Historically these are very slow, but.
Speaker 2 (28:19):
That's just anything you're going to build has that problem.
That's not a geothermal problem. That's just the grid is
a pain in the ass problem. I guess it's unsurprising,
but like it's uninteresting and it makes me sad about
the world.
Speaker 1 (28:32):
But there's been progress. I mean really there is now
for the first time I think real by partisan 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. 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 twenty five years,
(28:53):
energy demand growth has been basically flat, and so when
you were thinking about building renewable energy projects like geothermal,
you were almost always looking at turning something else off.
Speaker 2 (29:02):
It was zero sum zerio.
Speaker 1 (29:04):
Okay, we're going to turn off that net gas facility
and turn on these renewables. Right now, we're in an
environment where we're probably gonna have to rebuild the entire
amount of capacity another time over.
Speaker 2 (29:13):
Right, there's going to I mean, if scaling with AI continues,
there's going to be a tremendous amount of demand for
electric power.
Speaker 1 (29:19):
That's right. 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. But one
of the kind of unique upsides is that you now
have demand for geothermal and even nuclear and long duration shorts,
these other technologies that is no longer well you're competing
against the marginal cost of something else that's already built.
It's you're competing with new build natural gas and coal.
Speaker 2 (29:41):
Which is more expensive. That's good for you.
Speaker 1 (29:43):
That's good for us. 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.
Speaker 2 (29:54):
If you don't dig any dry wells, then it's a
great business, right. It seems like that's the key is
don't miss that's right. So let's talk about politics for
ninety seconds. It's an interesting moment politically for geothermal energy. Right,
it's a bad moment politically, I'll say it. You don't
(30:15):
have to say it for solar power and for electric
vehicles and for wind power for sure, But it seems
not bad for geothermal energy, which is maybe a pleasant surprise,
I don't know. Tell me about what's happening politically, like
with the federal government and geothermal power right now.
Speaker 1 (30:30):
This is where geothermal has been fortunate to be in
this very bipartisan position. On one hand, we are a
small footprint, you know, small materials impact, zero emission technology,
which obviously the left loves right. That fits very much
into how do we decarnaize the grid and achieve these goals?
Whereas it also is an energy industry that can rely
on our existing American workforce. You can transition them from
(30:52):
oil and gas. The technology is ready to go. You're
not rebuilding a workforce from scratch like you have to
do for offshore wind.
Speaker 2 (30:57):
Or it's appealing because it looks and feels like oil
and gas.
Speaker 1 (31:00):
It's drill, baby, drill here in America on American soil.
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.
Speaker 2 (31:10):
And in fact, in the budget bill that just passed,
the geothermal basically subsidies survived, right, whereas other subsidies for
other kinds of carbon free electricity did not.
Speaker 1 (31:21):
That's right.
Speaker 2 (31:22):
What are you worried about? Like, what do you think
might go wrong?
Speaker 1 (31:27):
So we worry a little bit about the small n
when you're dealing with probabilities that have these long tail distributions.
Speaker 2 (31:32):
Basically bad luck. There's the eighty percent chance the thing
will work, and you hit the twenty percent.
Speaker 1 (31:37):
Loser exactly and so what happens if you have all
of the pieces in place, things should have worked, You've
built this technology, and those first ten projects or five
projects just happen to fall on the low end of
that distribution. In the markets are like, Okay, you tried,
We're done.
Speaker 2 (31:51):
Yeah, what a bummer.
Speaker 1 (31:53):
And so that's true in what we're doing. It's also
true in what the broader geothermal industry is doing. So
I mentioned what really sets Sandscar part is this ability
to unlock conventional geothermal resources that don't require fracking or stimulation.
These are just naturally occurring pockets that doesn't require any
water consumption, that they're low and they're out there.
Speaker 2 (32:10):
One of the other geothermal founders I talked to, I
think it was Carlos Arake at Quays 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,
(32:32):
they could do it at giant scale now essentially, and
in his worldview, it's like that's what we need, that's
how you get a ton of geothermal energy really fast.
What do you think of that.
Speaker 1 (32:46):
I think I agree with it other than the need
aspect of Okay, like I do agree if they entered in,
it would accelerate things significantly. Nobody's better positioned than them
to deploy this type of technology, this type of workforce,
on these types of resources deals, subservice uncertainty, and top
side infrastructure together at scale.
Speaker 2 (33:03):
Right, Like, they're so big, they're really big companies all
around the world.
Speaker 1 (33:08):
In that is part of the problem. 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. And so despite the progress that all
of these startups have demonstrated, you're still seeing very little
actual kind of in the groundproof from them or even
capital entering in. And so I think that's what has
(33:28):
shifted from you over the last few years as a
recognition that you know what, we're going to be able
to do this with or without them, And I hope
they joined sooner. But we are finding that there are
capital sources out there, and there are sophisticated groups that
have subservice understanding that can really accelerate investments into these technologies,
and so I think there's still a pathway to do
(33:49):
this on the time skills that we talked about.
Speaker 2 (33:53):
We'll be back in a minute with the lightning round.
Now we're going to do the lightning round. What's your
favorite rock?
Speaker 1 (34:11):
My favorite rock is an eclogite, which is a rare
rock that represents rock that was once at the surface
and has been brought down very deep, sometimes one hundred
plus miles underground through tectonic activity, where many of the
minerals and elements have changed shape into things that are
more stable a high pressure and high temperature, and then
it was brought back to the surface. And these were
(34:33):
some of the early points of evidence for plate tectonics
actually occurring.
Speaker 2 (34:38):
What do they look like?
Speaker 1 (34:39):
They have bright green and red minerals in them, and
so sometimes they're called a Christmas tree rock.
Speaker 2 (34:44):
What's the most underrated geologic epoch.
Speaker 1 (34:48):
At least for the Western United States really the Tertiary period,
which is this I think it was twenty to forty
million years ago where the entire western Us underwinter transformation.
Rather than the plates starting they'd been colliding for a
very long time, they actually start polling apart, and it's
this pulling apart that stretches the Earth's crust and leads
(35:09):
to the formation of this huge, broad region of high
elevated temperatures and geothermal activity. That is really what has
driven all of the activity today for geothermal energy and
makes this not just the best place in the US
to develop geothermal but one of the best in the world.
Almost no other areas had that long history of twenty
plus million years of stretching and thinning to create that
(35:31):
much geothermal heat near to the surface.
Speaker 2 (35:34):
Best volcano you want to do, worst volcano, worst volcano,
I would accept.
Speaker 1 (35:43):
No, they're always the best and the worst, because there's
this age that comes from the also incredible and so
actually for me, one of the best volcanoes is this
volcanic region in kind of central western Japan, few hours
west of Tokyo, in the heat of Mountains, sometimes called
the Japanese Alps, and it's an area where you've not
only had volcanic activity, but the mountains have been uplifting
(36:03):
so fast and eroding that you've brought some of the
geothermal heat just right to the surface. And as they
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.
Have you been there?
Speaker 2 (36:19):
I have.
Speaker 1 (36:20):
We did a study out there a number of years ago.
Speaker 2 (36:22):
What's it like?
Speaker 1 (36:23):
It's beautiful, you know, sort of has this tropical feel,
incredible plants. But you're hiking up in the mountains. You
feel like, if you're here in the US, you'd be
in the middle of nowhere. 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, And so it's it's both I think,
beautiful but also appreciated by the people around it.
Speaker 2 (36:49):
Carl Hoyland is the co founder and CEO of Zanscar.
Please email us at problem at pushkin dot fm. We
are always looking for new guests for the show. Today's
show was produced by Trinamnino and Gabriel Hunter Chang. It
was edited by Alexander Garreton and engineered by Sarah Briguerra.
I'm Jacob gold Stein and we'll be back next week
(37:10):
with another episode of What's Your Problem?
Speaker 5 (37:19):
MHM
Pushkin that you're trying to find places where there's pockets
of steam underground naturally occurring. You just need to drill
well into it, 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.
Speaker 2 (00:33):
Yeah, that is so tantalizing. Right. In fact, there are
places around the world where there's steam not that far underground,
and if only we knew where they were, we could
have a lot of clean energy.
Speaker 1 (00:48):
And maybe where they are and maybe enough for all
of our energy demands just you know tomorrow, if you
knew where to.
Speaker 2 (00:53):
Drill just right there, we just got to figure out where.
Speaker 1 (00:56):
And so you know, that's the hunt. That's the search
that we're on.
Speaker 2 (01:04):
I'm Jacob Goldstein and this is What's Your Problem, the
show where I talk to people who are trying to
make technological progress. My guest today is Carl Hoyland. He's
the co founder and CEO of Zanscar, a geothermal energy company.
Geothermal energy has not had the kind of wild.
Speaker 3 (01:21):
Boom that wind and solar have had over the past
decade or so, but there's a compelling case that geothermal
could be a useful compliment to wind and solar because
geothermal wells produce a.
Speaker 4 (01:33):
Constant, reliable, steady stream of energy, which is quite useful
for seasons when there's not much sun or wind, and
solar panels and wind turbines are not generating much power.
And so recently a few geothermal startups have gotten to work,
and I've talked with founders from a few of these companies.
One is bringing fracking technology to geothermal. Another is trying
(01:57):
to use a technology that comes from fusion energy to
drill ultra deep holes. But Sandscar is doing something simpler.
They're trying to develop new ways to identify those on
the earth where there is hot steam not too far underground,
just waiting for somebody to dig a well. Carl and
(02:17):
his co founder both have PhDs in geology, and Carl
told me his grandfather was the person who first got
him into rocks.
Speaker 1 (02:26):
My grandfather was a uranium prospector and then a gold
prospector for most of his life, and so I remember
as a kid going down and visiting him. They lived
in the high Sierras of northern California. He taught me
that look, if you take this understanding you can go
out and find resources, and taught me a little bit
about the economic implications of how you think about resource formation,
and so just fell in love with it. It was the
(02:47):
ultimate treasure hunt to think that you could go out
and find these and I wasn't thinking about the sustainability
or the climate impacts or others. Just loved that you
could go out and find this. Didn't undergraduate a PhD
degree in this, 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? Do we need more big open pits in
(03:08):
the ground.
Speaker 2 (03:09):
I mean, if you're a geologist, the basic career path
is go find oil right for the last whatever one
hundred years. If you're a geologist, then you want a job.
You can definitely get a job finding oil. Is that
basically the story Historically.
Speaker 1 (03:20):
That's where a lot of the geologists go. And there's
other routes as well, But you know a lot of
geologists weren't drawn into it initially for that reason. They
just loved the storytelling aspect of being outdoors, the scientific
discovery process, 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. So it's really
towards the end of our PhDs that my co founder
(03:41):
and I were really looking at this landscape and thinking about,
you know, what could we do next, what does society
really need a lot more of? And we just started
speaking to as many people as we could in the
industries and the power sector thinking about energy. And you know,
I'd say, even when we brought up the topic of geothermal,
most people would tell us that's too hard to do,
it's too small a niche, and nobody really needs baseload
(04:02):
power anymore. This was the late twenty tens, and everyone
was kind of thinking, well, we've kind of solved it
with solar and battery, but there were a few voices
out there saying and running sophisticated models that you know what, actually,
once you get above fifty percent or sixty seventy eighty
percent penetration of solar and battery, you start realizing that
costs start going up unless you have a dispatchable or
(04:23):
baseload energy source.
Speaker 2 (04:25):
Right, So, just to be clear, it's easy relatively easy
to get some solar power to display some of the
power consumption with solar, 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.
Speaker 1 (04:42):
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. 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. It's nuclear, it's hydro,
which we're not building much more of, or it's geothermal.
(05:04):
And that's where we started getting excited about the geothermal
opportunity and saying, okay, well, what's holding it back? Why
aren't there jobs here? Why isn't anybody building? And that
let us down I think a very deep rabbit hole
of a fifty plus year history of geothermal energy and
why it's been stagnant for decades.
Speaker 2 (05:20):
So let's do that fifty year rabbit hole briefly, not
in real time, but like, what is that story briefly?
Speaker 1 (05:28):
So Briefly, there was this recognition because in some places
you see geothermal energy coming out of the surface geysers, fumaroles,
boiling mud pots. So we knew there was this energy underground,
and the more we explored the planet, the more we
realized in almost all locations, actually everywhere, as you go deeper,
it gets hotter. So there were some early experiments, even
going back one hundred years ago in Italy, of just
putting a steam turbine at the top and getting your
(05:49):
steam from the earth instead of.
Speaker 2 (05:50):
Fighting if steam is coming out of the ground, it's like, wait,
we know what to do with steam. Turn a turbine
and make electricity.
Speaker 1 (05:56):
That's right, But in an overtime realizing okay, you're gonna
have to drill into these in most places to get
that level of steam. It took another fifty years before
this started to become a more industrial scale opportunity. You
start seeing a lot of this in the sixties, 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
(06:18):
external sources of energy, and so the energy crisis in
the late seventies 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.
Speaker 2 (06:32):
We didn't fracking hadn't happened, yet, we were relying on
oil from the Middle East. There was the Arab oil
embargo in the early seventies.
Speaker 1 (06:38):
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, and so thinking about, like,
how can we source this domestically and have that independence?
And this drove many the oil and gas majors and
other large companies and investors into the space. And they
just started exploring all over looking for more of these
places where you could develop geothermal energy.
Speaker 2 (06:58):
And yet we are not a geothermally powered society at
this moment. What happened while we were wrong.
Speaker 1 (07:04):
So these were pioneers, right, they're doing this for the
first time. Imagine going out and you're drilling a well
into some that could be five hundred, six hundred, maybe
seven hundred fahrenheit. Nobody's done this before, and so they're
figuring things out as they go it's incredible. They really
lay the foundation for both the engineering and the science.
But things start to fall apart in terms of the
drivers that was motivating this is the energy crisis actually
(07:25):
started to resolve. Oil prices came down and relations were.
Speaker 2 (07:28):
Better, We got oil again.
Speaker 1 (07:30):
It was like whatever, and then it's like, okay, well,
oil actually is cheaper at that time, 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 eighties you see most of that really fall
apart and many of those companies shut down.
Speaker 2 (07:47):
And it's basically just oh, oil is cheap and abundant again,
and we know how to go get oil more efficiently
than we know how to go get geothermal energy.
Speaker 1 (07:56):
But luckily a lot of those lessons stayed. There was
a lot of interest still in the background of maybe
we're going to need this again one day, and so
there's slow progress being made in the background, and it's
not until really the late two thousands that you start
to have another large driver towards ge thermal energy, and
this time it's because it's carbon free. Now we're thinking
about how do you decarbonize our energy systems, and you
(08:16):
have this actually relatively low cost of carbon free energy,
and you see a lot more activity and investment in
the space new power plants coming online again, but this
time they didn't have that same energy and exploration a
spirit of that first wave. They're mostly going after the
low hanging fruit, things that were already known or found.
And today even most of our plants come from those
(08:38):
two waves of development. In the US, in half of
the operating fields today had been discovered initially by accident.
Speaker 2 (08:45):
People were like drilling for oil and they were like, wait,
that's not oil, that's water or whatever.
Speaker 1 (08:50):
Yea, how are drilling for water on a ranch or
drilling for gold? And so you have this kind of
trickle of discoveries coming in that were unintended, serendipitous, and
those are the opportunities that many of the developers in
that late two thousands early twenty tens era jump.
Speaker 2 (09:02):
At, sure, like why not, it's right there.
Speaker 1 (09:05):
And this is looking great because in great geothermal resources
they deliver at a good price, they're long lived. But
by the mid twenty tens, this is when shale gas
prices really start coming down, and now you have this
steep competition from a low cost source of carbon emitting power,
and it really undercuts geothermal at the same time that
solar is coming down.
Speaker 2 (09:25):
So basically you can do because of fracking, basically what
is popularly called tracking right, natural gas gets really cheap
and that can be the sort of complement to solar,
although of course it has the problem of emitting carbon dioxide,
but economically it's tough to beat.
Speaker 1 (09:40):
That's right, And so I think now we're in this
third wave, a totally different set of economic drivers and
also different technology tools that are available, and it's being
driven not by any one of those, but actually all
of those together. We now do care about having a
domestic energy source, so that's great. We care about it
being carbon free because we have to arrive at that
point someday. But geothermal is also proving uniquely valuable because
(10:04):
it's a dispatchable base load energy source day and night,
three hundred and sixty five days a year, 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.
Speaker 2 (10:18):
So what's the landscape more generally, right, like the big
oil and gas companies like are they geothermal curious? Like
what where are they right now?
Speaker 1 (10:25):
I'd say they're geothermal curious. And we've seen a lot
of kind of starting to dip their toes, but none
of them really moving in with full force. And this
is 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
and a lot of that really started five plus just
over five years ago, and you're now seeing those companies
(10:48):
reach their first commercial scale pilots, first demonstrations, and you're
starting to see the real kind of in the ground
element of that work. 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.
Speaker 2 (11:06):
So let's talk about zanscover in particular your play where
do you fit?
Speaker 1 (11:11):
So we're looking at this landscape, is all this heat underground,
many ways to extract it, and you know, just like
oil and gas, the industry looks very similar to it
one hundred years ago. Half the resources were found by accident,
the other half had obvious seeps at the surface.
Speaker 2 (11:26):
It's like in Pennsylvania one hundred and forty years ago
and they're like, oh, there's oil coming out of the
rock here, maybe we should put it in a barrel.
That's right. It was a moment when the barrels cost
more than the oil. It's one of my favorite details
from that era.
Speaker 1 (11:39):
And so you see geothermal and you then realize, Okay,
if that's how the industry is today, there must be
much much more underground. And we're also looking at two
major tail wings of technology. 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. And on the other side, we're seeing
(11:59):
drilling costs come down as our technologies for drilling become
more sophisticated and allows us to drill deeper and deeper
into these resources. Yeah, but it's really this landscape of
new technologies that hadn't been applied, and interestingly, some of
those originated in geothermal in the first place. Oh I
mentioned that big wave of development of the late seventies
and eighties. They recognized back then actually that it was
hard to find these resources, and that you drilled many
(12:21):
dry wells where it was very hot, but there was
no permeability or no water underground, right, And so they
dreamed up the idea at that time of well, what
if we fracked or stimulated this rock.
Speaker 2 (12:31):
What if we put water into the hot rock and
then brought it back out exactly?
Speaker 1 (12:35):
And so the early experiments are fifty plus years old,
and they started to identify what might be possible, 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. On the other hand, they also
recognized it was hard to find these resources, 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
(12:58):
years hit that same tipping point of well we can
now do it systematically in a scale.
Speaker 2 (13:02):
Yes, we're at a time where if you have a
lot of data and want to make a prediction, you're
in luck.
Speaker 1 (13:07):
Right, it's a good time to be that business.
Speaker 2 (13:10):
So let's talk about the aipiece.
Speaker 1 (13:11):
Right.
Speaker 2 (13:12):
So it's like, Okay, we're good at drilling now and presumably,
at least as a species, we're better at using data
to make predictions about the world. Specifically, there was a
post you guys wrote, I think when you announce your
series A or something a couple of years ago, and
you sort of wrote like, what are your key moves
your key angles, And one of them was leveraging big
data and predictive modeling to discover new resources. And I
(13:34):
noticed by the way that you didn't use the term
AI there, and it was I think it was just
before chat GPT came out, So I was tangentially curious.
Was that deliberate or was it just everybody didn't say
AI then they just said predictive modeling.
Speaker 1 (13:48):
It's a little bit of both. You know, AI can
be such a buzzword. Everyone's AI company. Now what does
that really mean? And we'll talk in a little bit
about there's some really sophisticated stuff happening in house here.
But the other part of it is that exploration. We
break into two stages, and the first part of discovering
new resources in some ways can rely on more traditional
data science machine learning tools from kind of five to
(14:11):
fifteen years ago. And so they're exciting, 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.
Speaker 2 (14:23):
Say more about that. So it's like you have the
whole Earth and you say where should we go? And
there's kind of older technologies give you a big circle
and then newer technologies give you a smaller circle or something.
Speaker 1 (14:33):
Yeah, I mean, that's the simplest way to think about it.
And so if that's the search that we're one 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, it's magnetic field, the
resistivity of rocks, the fault lines, the geology. All of
this data goes in, gets cleaned up, put into these
(14:53):
machine learning models to then help you predict the favorability
or location of a site that's worth testing or drilling.
And we've 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
(15:16):
done over the last thirty years.
Speaker 2 (15:18):
Wait say that part again. You in how long you found?
Speaker 1 (15:21):
How much relative to what in just the last three years?
Speaker 2 (15:24):
Okay? And is that real? Like if I don't know
the smart question to ask you to validate that claim,
but like validate that claim?
Speaker 1 (15:34):
Yeah? So mean. So part of this is we already
just talked about people stopped looking. 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.
Speaker 2 (15:44):
So basically people stopped looking. And then basically AI call
it machine learning if you want, got way better. And
you're like, oh, what if we took these new tools
and when looked again.
Speaker 1 (15:54):
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, 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 fifty in some of these locations.
Speaker 2 (16:10):
And if I were like a smart, skeptical funder What
would I ask you right now?
Speaker 1 (16:16):
You should just come out and see these sites.
Speaker 2 (16:18):
See this, I know, but like whatever, That doesn't mean
they'd work at commercial scale exactly That what I would say.
Speaker 1 (16:24):
So, yeah, we know there's something there. We know there's
a geothermal system, there's convection underground, hot water's coming up
close to the surface. How do you know this is
going to be a power plant one day? How do
you know what we're going to make money with this resource?
And that's where the second stage comes in.
Speaker 2 (16:35):
Okay, go on.
Speaker 1 (16:37):
So we know there's something there, Where is it? How
do we drill into it? And can we go deeper
and deeper into it? And that's where some of these
more next generation forms of AI become really important because
now you enter a data sparse space.
Speaker 2 (16:49):
Uh huh. So you're trying to make predictions with less data.
Speaker 1 (16:52):
With less data, and this is where you have to
rely on a combination of things, first principles, scientific understanding
to allow you to do simulations. And so we enter
into the space where you're essentially creating digital twins of
the subsurface.
Speaker 2 (17:05):
Right because you don't know what's under there. So when
you say digital twin your guessing, because if you know,
you wouldn't need to do the work, you'd be done exactly.
Speaker 1 (17:13):
But you do know physically what is possible, so there
are limitations on what could be down there. Yeah, and
so by taking into account those physics and geologic principles,
you can model all of that possibility space, combine these
into a framework by which you could say, if I
drill here, here's what is possible probabilistically, whole range of
possible outcomes. And even though I can't say one hundred
(17:34):
percent this is the outcome, I can say with confidence
that if I drill many of these wells with that
same profile, this is going to be my portfolio level outcome.
And that starts to become scalable. That starts to because
something you can allocate capital.
Speaker 2 (17:47):
To, assuming your probabilistic estimates are correct, right, assuming you
know the sort of AerR bars around your guesses.
Speaker 1 (17:53):
That's right.
Speaker 2 (17:54):
So another one of the points in that post you
wrote a couple of years ago when I think it
was the series A, the next one, and it seems
like what we're walking up to now, so I'll mention
it was leveraging stochastic geomodeling and decision signs to optimize
exploration workflow for de risking. So the phrase that was
interesting to me there was decision science. What is decision
(18:19):
science and how are you using it?
Speaker 1 (18:20):
And so again you're entering into this data sparse problem
where you're going to make a series of decisions. I
might drill well here or there, five wells or three
wells in this order to this depth this type of well.
Or I could go collect new data. I could collect
gravitational data, geologic data, seismic data.
Speaker 2 (18:38):
And there's a trade off, right, gathering data is costly,
but not as costly as digging a dry well. And
so how do you weigh that? I mean, it's that
the fundamental kind of economic or technoeconomic question you're trying
to answered.
Speaker 1 (18:52):
That's exactly right. And historically we've relied on geologists who
are specialized and trained in this field to be able
to make those hard, subjective decisions under extreme uncertainty, and
they'll recommend, Okay, this is what we should do next.
But there's a few issues with that. And again I'm
a geologist, so I don't mean this to shade throw shade,
but it's one is not very scalable because if you
(19:15):
want to drill thousands or millions of these wells, there's
actually a very few, very expert level geologists. Yeah, only
a couple of dozen globally that have drilled say a
dozen exploration wells in their career.
Speaker 2 (19:27):
Wow.
Speaker 1 (19:27):
And so you've very quickly run out of just the
people power there. But the other aspect of it is
it's inconsistent and it inherently has human biases, right, we
can't avoid that, And so I almost always will recommend
certain data types just because I love working with those
data I think they're important.
Speaker 2 (19:42):
But there's just one rock. You're like, oh, that's my
favorite rock. We've got a drill here.
Speaker 1 (19:46):
That's true, And with data types, I have my favorite
data types. And some of that bias comes from my
past experience, the projects I've worked on, the sites I've
looked at, and how those were helpful or not there.
But not all sites are the same, and the more
you see, the more that debt shapes. And that's where
AI in these advanced forms of probabilistic modeling allow us
to think much bigger picture and incorporate all of the
known sites and even the unknown physical possibilities into those decisions.
Speaker 2 (20:10):
And so, in basic terms, when you set up a
geothermal power plant, how does it work? What's going on?
Speaker 1 (20:17):
In very basic terms, we're drilling wells underground, just like
you might do for water or oil and gas, but
we're tapping into pockets of very hot water. And as
you bring that to the surface, we can extract the
heat from that water and put it into a closed
turbine system that's going to flash to steam drive a turbine,
and then that turbine will drive a generator that produces
electricity for the grid. And as our hot water cools
(20:40):
because we're extracting the heat, we then reinject that cooled
water back into the system where it has time to
reheat before coming back up your production. Well, so these
are really closed loops of circulating water underground to extract heat,
and then a closed loop where you're running the turbine system.
Speaker 2 (20:57):
I can of run forever. Dumb question.
Speaker 1 (20:59):
Every one of our utility scale operating geothermal fields is
still operating today, including the ones that aree hundred years old.
Speaker 2 (21:05):
Are they colder than when they started?
Speaker 1 (21:07):
Many of them are colder, but many of them have
actually stayed relatively stable and consistent, especially the deeper fields,
and a few have increased in temperature, so you have
the ability to think of these resources as potentially generational
resources that could last hundreds of years, maybe even thousands,
if sustained and managed properly, because it is actually being
recharged over time. The Earth is creating new heat through
(21:30):
radioactive decay and other processes, and that heat is part
of what really makes geothermal renewable resource.
Speaker 2 (21:37):
So where are you now?
Speaker 1 (21:38):
So let's see. We started the company about five just
over five years ago, raised our first venture capital just
over four years ago, and at the time it was
really just two of us, my co founder and I
thinking about this big opportunity, this big need, and the
technologies that we were seeing and helping develop in the
lab and seeing a pathway to commercialize them. Now and
just that time, we've raised sixty five million inequities, and
(22:01):
we've also recently applied our technology to even known operating
fields that had been underappreciated and underutilized and have since
become the eighth largest producer of gethermal power in the nation.
Speaker 2 (22:13):
Is this the new Mexico well or field?
Speaker 1 (22:16):
That's exactly right?
Speaker 2 (22:17):
Tell me that story. There was a well sort of
neglected on the Wayne site in New Mexico that you
got involved in what happened there.
Speaker 1 (22:25):
It's a site that had been discovered by accident and
it was just in the middle of a desert valley
where a rancher had come out and drilled a water
well and it just about one hundred feet hit steam.
And that was a long time ago, and so I'd
been known about for a while and developers came in
and developed it for various purposes, including for electricity, about
(22:48):
ten fifteen years ago. But they never went deeper than
that zone. They really kind of drilled into the shallow
top of the system and it was hard to go
much deeper. They drilled some dry wells in a few places,
and it really just left them saying, Okay, let's just
stay here with what we know. And the problem with
that is when you're producing from the very tops of
these systems, you can run into issues temperature decline or
(23:10):
maybe not in a pressure support. And they actually ran
into a lot of those issues. So by the time
we came and acquired the field last year, it was
now significantly underperforming and was at serious risk of being
shut down within the coming months.
Speaker 2 (23:23):
So you buy this little power plant. It's a little
power plant right in New Mexico, and what do you do?
What happens?
Speaker 1 (23:30):
So we enter in and within a few months, through
a transition agreement, we take over full operations of the
facility and we start right away investing in. We're going
to drill this new well, and we're going to do
some upgrades and improvements to the facility along the way,
But most importantly, we need a new source of steam.
And with our modeling, we'd identified as zone at depth
(23:51):
that the data was helping confirm and point to us,
and we engineered, permitted, and then ended up drilling and
constructing a new well using all the latest oil and
gas drilling technologies, so PDC bits, directional drilling assemblies, mud motors,
and we drilled directionally down to this zone and we
go more than four times deeper than the prior production zone.
(24:12):
And along the way, you don't know if you're going
to hit it yet because these can be pretty narrow,
isolated pockets.
Speaker 2 (24:17):
This is good, this is good drama. You're spending a
lot of money, presumably.
Speaker 1 (24:21):
Spending a lot of money. Your investors are calling you,
You know, how's it going? We know yet even the
plant staff are asking that, right because this is this
is serious and very personal to them.
Speaker 2 (24:30):
How long does it take this drilling process?
Speaker 1 (24:32):
So this first we all took over thirty days to drill.
We have over thirty people on site day and night
through that entire time.
Speaker 2 (24:38):
And how are you getting information? Like are you is
there some dashboard you look at it is somebody calling you.
Speaker 1 (24:44):
Combination of all the above and then also just time
on the ground, you're.
Speaker 2 (24:47):
Just standing there looking down the hole. You can't say anything.
Speaker 1 (24:50):
But modern oil and gas drilling really is pretty incredible
with the technology that's been developed and applied to it,
and so you're getting real time data as you go,
all put into modern software tools to watch that. You
start getting early indications as your drill bit starts hitting
these zones, you start seeing evidence of fractures or you know,
possible reservoirs, but you don't actually know if you've hit
what you need to repower the facility to really have
a success until you test it with a flow test.
(25:14):
And so with that you're actually going to kick off
the well, let steam come out, flow it into a
separator and measure the flow rate and the temperature over
a period of time, and that we were on the
ground floor. You're standing around, it's you know, high stakes,
I nervousness, and you just you can see and feel
this energy coming out of the well and you start
(25:34):
seeing the readings the temperature, the flow rate, and at
a certain point in that process, we all looked at
each other knew that it had hit and that feeling
is incredible, and yes, that was a We went from
we have no idea to we know, this is it
and there might be a lot more down there.
Speaker 2 (25:50):
What happened at that moment when it was clear that it.
Speaker 1 (25:53):
Worked, just massive size of relief and excitement, not just
that I don't.
Speaker 2 (26:00):
Know if you jump in the air, like lie down
on the.
Speaker 1 (26:02):
Ground, that both of those definitely happened. Some of us jump,
some of us lie down, just kind of collapsed. A
lot of enter and work over the past month. But
even more exciting, I think it was not just that
this plant was going to be recovered, that this plant
was going to have multiples to orders of magnitude more
resource potential ahead of it, but that the process we
applied was systematic. Right, this is an approach that we
(26:23):
could apply to other fields. It was repeatable, it was scalable,
and so for us it was the two pieces of
the puzzle. Can you find more resources orders of magnitude
more than the industry had found historically, and can you
go deeper and find more resource within each of those resources,
And so thinking about what that means about the potential
size and scale of this opportunity, I think was really
(26:43):
the most exciting part.
Speaker 5 (26:48):
We'll be back in just a minute. What do you
have cooking immediately?
Speaker 2 (27:02):
What are you working on now?
Speaker 1 (27:04):
We are really ramping up the deployment of these technologies
at both discovery and de risking. And the best way
to show this repeatability to really financial sectors that have
become wary and nervous of geothermal investment is to show
not just the size and scale, but to show real
proof cases. So this example in New Mexico, I think
is a great example of that. Look, we can come
in and do this work, but now moving towards greenfield
(27:26):
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.
Speaker 2 (27:39):
Sure, you got to just go find some bare piece
of earth and build an economic geothermal power plant there.
I mean, that's the broad.
Speaker 1 (27:44):
Step, and that's what we're doing next.
Speaker 2 (27:46):
Specifically, you got one, you got financing, like where are you?
Speaker 1 (27:49):
So we have the financing to start the development and
we've done a lot of that development work already, a
number of projects in the interconnection cueues with resources already
identified that have that potential, and so really the next
stage is taking that through the rest of the development
process to get it ready for bankable project finance.
Speaker 2 (28:06):
Is there like a rate limiting step? Is there one
that's almost there? Is there something you got to figure out?
Speaker 1 (28:12):
The rate limiting step now in terms of power development
is really interconnection and permitting. Historically these are very slow, but.
Speaker 2 (28:19):
That's just anything you're going to build has that problem.
That's not a geothermal problem. That's just the grid is
a pain in the ass problem. I guess it's unsurprising,
but like it's uninteresting and it makes me sad about
the world.
Speaker 1 (28:32):
But there's been progress. I mean really there is now
for the first time I think real by partisan 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. 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 twenty five years,
(28:53):
energy demand growth has been basically flat, and so when
you were thinking about building renewable energy projects like geothermal,
you were almost always looking at turning something else off.
Speaker 2 (29:02):
It was zero sum zerio.
Speaker 1 (29:04):
Okay, we're going to turn off that net gas facility
and turn on these renewables. Right now, we're in an
environment where we're probably gonna have to rebuild the entire
amount of capacity another time over.
Speaker 2 (29:13):
Right, there's going to I mean, if scaling with AI continues,
there's going to be a tremendous amount of demand for
electric power.
Speaker 1 (29:19):
That's right. 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. But one
of the kind of unique upsides is that you now
have demand for geothermal and even nuclear and long duration shorts,
these other technologies that is no longer well you're competing
against the marginal cost of something else that's already built.
It's you're competing with new build natural gas and coal.
Speaker 2 (29:41):
Which is more expensive. That's good for you.
Speaker 1 (29:43):
That's good for us. 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.
Speaker 2 (29:54):
If you don't dig any dry wells, then it's a
great business, right. It seems like that's the key is
don't miss that's right. So let's talk about politics for
ninety seconds. It's an interesting moment politically for geothermal energy. Right,
it's a bad moment politically, I'll say it. You don't
(30:15):
have to say it for solar power and for electric
vehicles and for wind power for sure, But it seems
not bad for geothermal energy, which is maybe a pleasant surprise,
I don't know. Tell me about what's happening politically, like
with the federal government and geothermal power right now.
Speaker 1 (30:30):
This is where geothermal has been fortunate to be in
this very bipartisan position. On one hand, we are a
small footprint, you know, small materials impact, zero emission technology,
which obviously the left loves right. That fits very much
into how do we decarnaize the grid and achieve these goals?
Whereas it also is an energy industry that can rely
on our existing American workforce. You can transition them from
(30:52):
oil and gas. The technology is ready to go. You're
not rebuilding a workforce from scratch like you have to
do for offshore wind.
Speaker 2 (30:57):
Or it's appealing because it looks and feels like oil
and gas.
Speaker 1 (31:00):
It's drill, baby, drill here in America on American soil.
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.
Speaker 2 (31:10):
And in fact, in the budget bill that just passed,
the geothermal basically subsidies survived, right, whereas other subsidies for
other kinds of carbon free electricity did not.
Speaker 1 (31:21):
That's right.
Speaker 2 (31:22):
What are you worried about? Like, what do you think
might go wrong?
Speaker 1 (31:27):
So we worry a little bit about the small n
when you're dealing with probabilities that have these long tail distributions.
Speaker 2 (31:32):
Basically bad luck. There's the eighty percent chance the thing
will work, and you hit the twenty percent.
Speaker 1 (31:37):
Loser exactly and so what happens if you have all
of the pieces in place, things should have worked, You've
built this technology, and those first ten projects or five
projects just happen to fall on the low end of
that distribution. In the markets are like, Okay, you tried,
We're done.
Speaker 2 (31:51):
Yeah, what a bummer.
Speaker 1 (31:53):
And so that's true in what we're doing. It's also
true in what the broader geothermal industry is doing. So
I mentioned what really sets Sandscar part is this ability
to unlock conventional geothermal resources that don't require fracking or stimulation.
These are just naturally occurring pockets that doesn't require any
water consumption, that they're low and they're out there.
Speaker 2 (32:10):
One of the other geothermal founders I talked to, I
think it was Carlos Arake at Quays 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,
(32:32):
they could do it at giant scale now essentially, and
in his worldview, it's like that's what we need, that's
how you get a ton of geothermal energy really fast.
What do you think of that.
Speaker 1 (32:46):
I think I agree with it other than the need
aspect of Okay, like I do agree if they entered in,
it would accelerate things significantly. Nobody's better positioned than them
to deploy this type of technology, this type of workforce,
on these types of resources deals, subservice uncertainty, and top
side infrastructure together at scale.
Speaker 2 (33:03):
Right, Like, they're so big, they're really big companies all
around the world.
Speaker 1 (33:08):
In that is part of the problem. 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. And so despite the progress that all
of these startups have demonstrated, you're still seeing very little
actual kind of in the groundproof from them or even
capital entering in. And so I think that's what has
(33:28):
shifted from you over the last few years as a
recognition that you know what, we're going to be able
to do this with or without them, And I hope
they joined sooner. But we are finding that there are
capital sources out there, and there are sophisticated groups that
have subservice understanding that can really accelerate investments into these technologies,
and so I think there's still a pathway to do
(33:49):
this on the time skills that we talked about.
Speaker 2 (33:53):
We'll be back in a minute with the lightning round.
Now we're going to do the lightning round. What's your
favorite rock?
Speaker 1 (34:11):
My favorite rock is an eclogite, which is a rare
rock that represents rock that was once at the surface
and has been brought down very deep, sometimes one hundred
plus miles underground through tectonic activity, where many of the
minerals and elements have changed shape into things that are
more stable a high pressure and high temperature, and then
it was brought back to the surface. And these were
(34:33):
some of the early points of evidence for plate tectonics
actually occurring.
Speaker 2 (34:38):
What do they look like?
Speaker 1 (34:39):
They have bright green and red minerals in them, and
so sometimes they're called a Christmas tree rock.
Speaker 2 (34:44):
What's the most underrated geologic epoch.
Speaker 1 (34:48):
At least for the Western United States really the Tertiary period,
which is this I think it was twenty to forty
million years ago where the entire western Us underwinter transformation.
Rather than the plates starting they'd been colliding for a
very long time, they actually start polling apart, and it's
this pulling apart that stretches the Earth's crust and leads
(35:09):
to the formation of this huge, broad region of high
elevated temperatures and geothermal activity. That is really what has
driven all of the activity today for geothermal energy and
makes this not just the best place in the US
to develop geothermal but one of the best in the world.
Almost no other areas had that long history of twenty
plus million years of stretching and thinning to create that
(35:31):
much geothermal heat near to the surface.
Speaker 2 (35:34):
Best volcano you want to do, worst volcano, worst volcano,
I would accept.
Speaker 1 (35:43):
No, they're always the best and the worst, because there's
this age that comes from the also incredible and so
actually for me, one of the best volcanoes is this
volcanic region in kind of central western Japan, few hours
west of Tokyo, in the heat of Mountains, sometimes called
the Japanese Alps, and it's an area where you've not
only had volcanic activity, but the mountains have been uplifting
(36:03):
so fast and eroding that you've brought some of the
geothermal heat just right to the surface. And as they
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.
Have you been there?
Speaker 2 (36:19):
I have.
Speaker 1 (36:20):
We did a study out there a number of years ago.
Speaker 2 (36:22):
What's it like?
Speaker 1 (36:23):
It's beautiful, you know, sort of has this tropical feel,
incredible plants. But you're hiking up in the mountains. You
feel like, if you're here in the US, you'd be
in the middle of nowhere. 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, And so it's it's both I think,
beautiful but also appreciated by the people around it.
Speaker 2 (36:49):
Carl Hoyland is the co founder and CEO of Zanscar.
Please email us at problem at pushkin dot fm. We
are always looking for new guests for the show. Today's
show was produced by Trinamnino and Gabriel Hunter Chang. It
was edited by Alexander Garreton and engineered by Sarah Briguerra.
I'm Jacob gold Stein and we'll be back next week
(37:10):
with another episode of What's Your Problem?
Speaker 5 (37:19):
MHM
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