A drilling rig stands at the Farbo Energy geothermal site under construction near Milford, Utah, on November 26, 2023.
Ellen Schmidt AP
MILFORD, Utah — Deep in the Utah desert, a few miles down a gravel road from the big city. furbo energy At a time when U.S. electricity demand is increasing significantly for the first time in decades, it’s betting that heat from the Earth’s core could be economically harnessed for electricity, potentially producing tens of gigawatts of baseload, emissions-free power.
Geothermal power generation is not new. Traditionally, it required specific geological formations, severely limiting its possibilities. Now, Fervo aims to prove that what is known as enhanced geothermal energy can become a significant source of electricity for the United States by leveraging the same drilling and hydraulic fracturing techniques developed by the oil and gas industry.
The company’s Cape Station project in Milford is scheduled to send power to the grid next month, making it the first enhanced geothermal system in the United States to reach commercial operation. After an initial public offering in May and a new offtake deal with Google, Fervo needs to prove it can cost-competitively deliver enhanced geothermal energy at scale.
Changes in electricity demand
The company’s roots predate the data center power boom. CEO Tim Latimer started his career as a drilling engineer in South Texas and founded the company in 2017 with Chief Technology Officer Jack Norbeck. As Latimer says, when they first tried to raise venture capital funding, a common reaction was, “Why invest in a power generation company? The grid isn’t growing.”
Oil and gas companies also rejected Furbo. There was a general belief that the type of drilling the company was trying to do – hot wells through harder granite – wouldn’t work. Now, less than a decade later, that narrative has reversed.
“It’s a complete change from 10 years ago, when people were questioning the need for even more new power,” Latimer told CNBC. “This is a once-in-a-generation boom moment, and hyperscalers, utilities and other customers need[power]now. Our power is going to be a critical part of the power grid.”
Early on in Farbo, Mr. Latimer recognized the importance of prime land and began acquiring geothermal rights to land throughout the western United States, building a portfolio of nearly 600,000 acres. The company acquired the rights at an average price of $4 per acre, a move that now seems prescient, as the same land could sell for more than $400 per acre.
Furbo’s land grab includes land throughout Beaver County, Utah, where the Department of Energy has begun to make the case for geothermal enhancement through the Geothermal Energy Research Frontier Observatory (Forge), which collects data aimed at helping private companies commercialize enhanced geothermal system technology. Fervo’s flagship project, Cape Station, is adjacent to Forge.
Emission-free electricity goal
During a tour of Cape Station, Latimer pointed out much of the same stuff seen in the Permian Basin, right down to the drilling rig provided by Helmerich & Payne. The difference is that Utah is targeting emissions-free electricity.
While traditional geothermal projects require specific reservoirs, enhanced geothermal systems allow companies to create their own reservoirs.
Fervo is drilling two wells more than two miles deep, including a lateral well that can extend horizontally for more than a mile. It creates cracks in the surrounding rock and then pumps the water into injection wells, where it is heated to temperatures of more than 400 degrees Fahrenheit. The water then returns to the surface via another production well before passing through a heat exchanger to ultimately generate electricity. The geothermal brine is then cooled by a bank of industrial fans atop Fervo’s power plant before being reinjected into the ground in a closed-loop system. It takes just a few minutes from the moment non-potable water reaches the surface until it is reinjected into the ground.
Latimer said Ferbo drilling is a step beyond traditional shale drilling methods due to three challenges: harder rock, higher temperatures and longer well life. As a result, the company has developed innovative technologies in drill motors, bit designs (the company uses polycrystalline diamond compact drill bits), and drilling fluids. These innovations led to what he called a “step change in the performance of geothermal drilling.”
Latimer said Furbo’s mission from the beginning has been to advance the cutting edge of science and technology. In his view, the latter is lagging behind in the traditional geothermal industry. Longer drilling times result in higher costs, so the company is constantly collecting data to optimize operations. In the driller’s cabin on top of the rig, screens display real-time readings sent back from underground sensors. These data are simultaneously monitored from our headquarters in Houston. Field geologists analyze the changing properties of the granite as it emerges from the ground, with the aim of maximizing optimal drilling conditions.
cost reduction
Farbo cut costs by drilling more oil wells. But geothermal power remains more expensive than other sources of electricity, even after taking into account the federal tax credits reserved for geothermal power under President Donald Trump’s One Big Beautiful Bill Act.
The company’s first well at a pilot facility in Nevada took 70 days to drill to a measured depth of 11,220 feet. For Cape Station Phase I, the average dropped to 21 days and a measured depth of 14,483 feet, at a cost of approximately $7,000 per kW. Cape Station Phase II is currently targeted at $5,500 per kW, and its deepest well to date is 19,448 feet. In the process, temperatures rose and pipes grew larger, both of which increased the power produced by each well.
Still, costs need to come down further for geothermal power to be competitive with other forms of electricity generation. In the long run, Latimer said, the company could produce for $3,000 per kW. “(B) Being able to consistently drill … has removed much of the uncertainty and exploration risk that has plagued geothermal for many years,” he said. “[We]introduced geothermal to the kind of learning curve that has resulted in dramatic cost savings in other industries…We expect dramatic cost savings on both the drilling and power plant sides of the business through its modularity and standardization.”
Furbo’s costs are being shared between the underground drilling and the power plant adjacent to the well, reducing costs. The components for the first power plant (33 MW) were delivered separately. The second stage plant has standardized components and design, will have a capacity of 50 MW, and is on track to reduce construction time by more than 30%.
Fervo’s long-term goal is to be able to install these plants anywhere, including behind the meter in data centers. Behind the meter refers to the installation of energy production and storage systems on the customer’s premises. “We are developing a model to pursue transmission and grid-connection projects in appropriate locations, as well as customers who want faster delivery, where behind-the-meter is a huge opportunity,” Latimer said.
Working towards a sustainable power grid
The agreement with Google brings Fervo’s total contracted capacity to approximately 1GW, and Latimer said the company is in commercial negotiations with several potential buyers. Southern California Edison, Shell Energy and NV Energy also plan to buy the company’s power.
The company did not disclose the terms of its power purchase agreement, but hyperscalers are willing to pay above-market prices for electricity, in part because of their climate-fighting goals. Fervo also said its rapid timeline sets it apart from other power generation sources. Although the company relies on existing supply chains established by the oil and gas industry, the organic Rankine cycle turbines it uses in its power plants do not face the backlog seen in the gas turbine market. GE Vernova It is said to be sold out for years to come.
Furbo went public in May in a long-awaited IPO, raising nearly $2 billion in an oversubscribed offering. The stock hit an all-time high on May 15, but has since fallen about 57%.
Furbo said it plans to use the proceeds from the IPO to expand its business.
“We have project sites across the Western United States. We now have the capital to advance them, and we want to iterate on these geoblocks across the West and even around the world until we have a more reliable, affordable and sustainable power grid,” Latimer said.
