Harnessing the Heat Deep Beneath Our Feet

Pushkin. Here's the standard story of the energy transition. To get to our post carbon future. We just need some combination of wind and solar power plus energy storage plus nuclear power. Those together ought to do it. That's a story I've told on this show. It's a story lots

I think it goes back to much before I quit. I quit in twenty seventeen, and I think I can remember as far back as twenty ten, when I started to become very familiar with the oil industry, the amount of energy we use as a civilization, how it's growing over time, when I started thinking about what it would take to transition away from fossil fuels.

So like, in a way, working in the fossil fuel industry, it gave you an appreciation for how hard it will be to transition away from fossil fuels.

Very much so, very much.

So.

It's just the sheer numbers how much energy it takes to power humanity today. It's just an awakening moment to say, Okay, there's no way we're going to be able to do this with wings, solar batteries, hydro nuclear, etcetera, etcetera. So

And when was that?

When was it that you left? So I think I was living in Norway at the time. I was working for somebody in Norway, and that's when I started thinking about these things, mostly seeing, you know, reflecting on a country like Norway, how prosperous it is, and where that prosperity comes from. Oil, which is.

Oil oil and good institutions. Right, they have a lot of oil and they have like very robust civil institutions. A rare combination.

Oh yeah, it's a very blessed combination, you know. So that got me thinking about those things, you know, and living in there, not not just working, but living living in the country, being a direct beneficiary of that way of doing things. What's the beginning of that? You know? And that country's pristine, is so beautifully pristina. I said, Okay, these guys are doing something really, really right. What's behind that. So that's the beginning of that search of how much energy?

Because like, you had a good job, you p absume you were paid well, you could work there your whole life.

Absolutely, it's I have nothing bad to say about my years there. It's nothing but good experiences, good colleagues, good problems, never boring. So it really came from a very deep conviction of trying to you know, I call it using the second part of my career to actually push in what I think needs to be the direction that the world needs to go into. And don't get me wrong, I don't think fossil fueler girt is a beer anytime soon. But we need to start pushing in a new direction.

So you go and work at the venture capital fund of MIT, your alma mater, in your in your search, right, you're you're now you're on your quest. When you get there, I mean, are you sort of in your mind explicitly or implicitly be like, Okay, I'm gonna go try and find it. I'm gonna go try and find some solution to our energy problem. Is that?

Is that what's happening? I think it is? It is like that. Indeed, I quitch lanu Ja without having a job. You know, on principle I said, look, I'm just I need to get out of here to reinvent myself. Is too comfortable to stay in that job. Yeah, so you

And what year ish is this?

When did you say twenty seventeen?

So by twenty seventeen solar powers is already getting much cheaper with the Mayan batteries are still expensive, but they're starting to get cheaper. Like people are very excited about those technologies at that time, like, what's your what's your view on them?

So I think they will play a part in the solution, but I think they will play a very small part in the solution.

And if you take solar and wind and nuclear, to take the three sort of classic modern classic renewables, like those seem pretty compelling plus storage as a package. To me, you're clearly less compelled by those as a package.

Why so it has to do with the premiums we incur in transitioning a unit of fossil energy to a unit of clean energy from either one of those sources.

So when you say premium, do you mean cost? By different definitions of the word cost, What does premium mean when you use it that way?

Yeah, I define premium as multiple things. So land use per unit of energy, that's one mineral U per unit of energy, that's two and man hours labor use per unit of energy. And I frame it like that simply because these are the resources we have available to us. You know, think about it. We have time, space, and stuff. Basically, actually, I say four things. There's time, there's place, there's natural resources,

It's like land, labor, capital, and ideas. Right, it's like kind of econ one oh one ish.

That's right. That's right. So you cannot pretend that you can replace twenty five trillion juice per second, which is what it takes to power humanity, if in doing so you're incurring a one hundred x to one thousand x on any of those things. You know, a unit of fossil energy takes a certain amount of space, land, a certain amount of minerals, a certain amount of labor to pull together, to bring together, and if you try to do it with solar, that multiplies by about one hundred in.

Terms of the space in particular.

Yes, it takes one hundred times more land, it takes one hundred times to a thousand times more minerals, depending on a mineral, and it takes one hundred to a thousand times more man hours.

To install and versus installing and recovering fossils.

All things consider and implicitly, and there is cost, But cost is deceptive because you can always make up economic models and capital cost models to actually bring those casts down. We can talk about cost in a second, but the bring it more fundamentally, that is that realization. That and the same applies for wind, and the same applies for

Like even though it's so much cheaper to make solar panels now there sort of will be land use. Just in practical political terms, people won't let us put all the solar panels we need to generate the energy. I mean, is it that kind of problem.

Yeah, we won't be able to afford the land use for that. I mean, forget about people letting it be that that's going to happen, but we just won't have the land budget to do it. Because we also need to use land for other things like preserving environmental forests, right to like feeding ourselves, you know, and people always say like, oh, we can put this stuff in the Sahara. Sure you can, but it's still intermittent and the energy

I mean people are trying to solve that. I know that adds costs, right, but like by some come actually building building wires.

That is the cost. That is the cost. So people say WIN and SOT are cheap. Lie, the collection of those resources is cheap. But building those into and the fixed costs required to bring that energy everywhere all the time, these where the true cost takes. You know, the cost is not in collecting the energy. The cost is in moving it and storing it. And it's massive, massive, massive.

What about nuclear power.

Or nuclear can totally do it? Absolutely? Nuclear does not incur those premiums. But nuclear has a different problem. From Colombia. We have oil. We barely have a refinery in the country. Why is that because of value change them because of geopolitics. So don't tell me that we will be happy to ship radioactive fuel, refine radioactive fuel, and ship back radioactive ways on a global scale. We can barely do that with oil and gas.

In particular, you're saying the raw material, the uranium say that you need to make nuclear power doesn't exist in lots of places, and the notion that there will be some kind of globe supply chains shipping uranium around the world is implausible' that's the core argument you're making.

Yeah, and that's just the raw material. The raw matill is a simpler problem. It's just the problem of carrying a lot of things from point to point B. I'm more concerned actually about the refined form of that shipping and rich radioactive materials fuel grade not weapon grade fuel greade radioactive material to fuel the power plant. You know, worldwide, into economies that cannot even control themselves, into very very trouble geopolitical systems that cannot even govern themselves. This is

The G twenty, the twenty basically richest countries in.

The world essentially, that's right. That is correct.

Okay, so you've you've set You've set the table. This is what you're thinking about When you leave Schlumberge and you're going out looking for the solution that nobody has found. You go to mi T good place to look what happens when you get there.

So I got there because I heard about a new venture fund being launched by MIT timing. Just I didn't plan it that way, It just happened that way. Som T was telling the world, Look, the big problems of the world are not being solved because capitalism is distracted with the near term and little opportunities. So they created a fund, the Engine, they called it, to incentivize the transition of bold ideas from lab to a commercial life. So I went into that environment and I started pitching

They're not in that business. They're not in that business.

Christians and innovator's dilemma like why would they do that? Yes, their capital cause their opportunity costs doesn't allow them to. So that was my conclusion. Venture capital might do these, especially of the kind the Engine was proposing. MIT was proposed, not any venture capital, because a lot of it is very short temper sure, So okay, So that was the

The skeptic, the person saying, why should we give you money?

Yes, yes, yes, speitch me.

Why so who are these people?

Paul is a career long research engineer at MIT, particularly the Plasma Science Fusion Center.

Fusion as in everybody's favorite dream for how to get nuclear energy. If we could ever figure it out, it would be amazing. But nobody still that fusion.

That fusion which is also a solution. But I can give you a few pointers why I don't think that's going to do anything in our lifetimes. But that's another conversation. So that's that's Paul was. Then Aaron Mandale is a serial entrepreneur. He likes to start companies. He's a good scout, and he was looking for solutions in the geothermal space and he had concluded that drilling deeper and harder was a really, really, really important part of the equation.

So there's an entrepreneur who has the idea of drilling deeper for geothermal energy. What's he doing with a guy who studies fusion, Like, what's going on there?

Paul had been since two thousand and seven, been playing with very many of the technologies that are used in fusion, but to drill, you know, he was playing with gyrotrons and wave guides and energy beams. But that's still two years before they I even met them as the investor on the other side of the table.

So okay, so these guys have been working together. They walk into the room, your brand new what's their pitch?

Their page is very much about drilling hotter and deeper with energy to unlog geodermal energy at a very large scale. They wanted money to form that company. They wanted money to start that journey. And I was listening on the other side and saying, Okay, this makes sense, sounds far fetched. I need to become familiar with these technologies which are not using oil and gas. And I was saying, you know, but if it works, it really changes everything. But you're

On a really basic level. Like you're saying hotter and deeper, but like what is the very basic idea about hotter and deeper? Like what is sort of status quo geothermal energy? And then how is this idea different?

Yeah, so geothermal energy is relatively shallow. It's no more than half a mile maybe a mile into the earth. And to put that into perspective, oil and gas routinely goes beyond that. They go to two miles maybe three miles down.

So, in addition to the fact that geothermal energy as it exists now, not only when you're being pitched, but still today, right, it's it's not that deep, and also it's fairly limited in where people can do it right by the nature of what exists a mile or less under the earth.

That is correct, it's very geographically constrained. But funny enough, if you look at those places they do amazing things with geothermal, like Iceland and Kenya, they power themselves. They're almost you know, Kenny is like fifty percent electricity from geothermal, Iceland is like thirty percent electricity, like eighty percent heat.

And in those places, like at least in Iceland, the heat is coming up out of the ground itself almost right, Like. I mean, I'm sure they're clever engineers and doing lots of work, but when the heat is literally like bubbling out of the ground, it seems a lot easier to cap.

It's a lot easier, it's technologically possible, and it's economically feasible. So that's why they exist there. Yeah, So that's the status school of geothermal today.

And what happens if you go deeper just on a basic geological.

Level, so it's very simple. You just access that same heat no matter where you are in the world. If you go deeper, you can move away from Iceland and you can access the same energy source, which happens to be everywhere but at different depths.

So everywhere is Iceland if you go deep enough.

Everywhere is Iceland if you from a geothermal point of view, if you go deep enough, indeed, uh huh.

And so I mean in the world now, I mean Iceland is kind of the classic, and Kenya is pretty well known overall. What's the Where is geothermal with current technology economically feasible?

It's very small because of the geographical limitation. To give you a sense, not even point five percent of energy zero point five one half of one percent of global energy comes from geothermal. And that's because it's geographically constrained.

Huh. Basically in most places you have to go too far down to get to the to get to the kind of heat you need.

That is correct. That is correct. So that's why it's constrained.

Why can't you just keep drilling, like, why can't you just do what they're doing in places where they do it and just go farther down.

You can, and people have. It's just very expensive. The drilling operation takes over the economics of anything.

Is it nonlinear in some way? Like? Is it that very much deeper you go, the more expensive each marginal meter is?

Yes, So you start at hundreds of dollars per meter, and you could very well end up in tens of thousands of dollars per meter. Why one hundred x because your drill bits where and you have to replace them, and if you're very deep down there, it takes a lot more time to replace the drill bit.

To pull it up. Time you got to pull it up.

Pull it out, change the drill bit, pull it back, and push it back in and then drill for that is such an amazingly simple but seemingly impossible to solve problem because that rog and that temperature kills the drill bits in hours in hours, not even days in hours.

So the farther down you as it gets hotter, the drill bit wears out faster, and the farther down you want to get hotter. So it's sort of a problem.

That's right. There's another problem is that at some point you can't even get the energy down to the drill bit. Like you're on the surface rotating the drill string and all of that energy is lost on the way there, so the drill bit is barely scratching the surface at some point.

So this is the status quo when these guys walk into the room, just in basic terms, like what is their idea?

The idea is we can use energy and nothing but energy, no drill to do the work that the drill bit does. No drill bits, and not only that, no electronics, no cables, no switches, no nothing that breaks. We're just going to shoot a beam of energy down there, and it's just going to open up a hole indefinitely. And the beam doesn't care if the rock is harder or harder or more brace it doesn't matter. And the beam doesn't care if it's ten kilometers or fifteen or twenty kilometers because

So it's pulverizing the rock, right, it's turning the rock into powder basically, like how do you get it back up the tube?

You blow it out of the hole, very much like the Sahara blows across the ocean because the particles are so tiny that blowing them with a gas stream lifts them up and pushes them out of the hole. So that's it. You're basically pumping a gas and the gas is taking those particulates out of the hole.

So this is the idea. They walk into the room with, yes, and you say what?

I say many many things, but I say, Okay, how do you build a company out of this? How do you test? What are the key ideas here that you need to test for I was trying to come up to speed with ten years. You got to realize they had been working this for tis a lot of information that I need to pick up, and that I did pick up along the way. But I was just basically saying, Okay, what are the steps? How do you the risk this? How do you make a company? How do you get

Still to come on the show. Why getting the oil and gas industry interested in what Carlos is doing is key to his plans and really to the whole energy transition. So where are you now?

So we are six years in, We've raised more than one hundred million dollars. We are transitioning the technology from the lab to the field. So we have now built full scale systems that are now going to the field to show the world. So we're taking the technogy from the lab to the field. And what that means is

So specifically, when you say you're taking it from the lab to the field, what exactly are you doing, Like, where are you doing it and physically what is happening.

It's in Texas. It all happens in Texas. We have two embodiments of the machine of the drilling machine. We call it a millimeter wave drill rig. One is small, it looks like a mi drilling system. It doesn't look like an oil and gas drilling system. We made it small on purpose to move faster, to prove things faster.

When you say it's small, I don't know what a mining drilling system looks like. What's it look like?

It looks like like the caterpillars. I mean probably that's the most familiar thing to most people, the caterpillars as you see at construction sites. Yeah, you know, the excavators, the things working around a construction building, that kind of size of machinery. Okay, we've bought one of the shell and we gave it milliontersway in capabilities. We gave it super powers, so to speak.

We're a caterpillar, like some kind of construction vehicle that can blast the hole in the earth.

Yes, but that's the first version. We put it on a system that can go out there and get it done. And we're doing that in Austin. Tases. We're taking from Houston to Austin near Austin in acquiry, a granite firy to actually show that we can drill through very very hard granite without a drill bit.

So you basically are shooting a microwave beam out of this construction vehicle. Into the rock.

We're shooting down into the rock and we're drilling a hole through the rock for hundreds of meters, for tens to hundreds of meters. So yes, it's imminent. It's going to happen within the next ninety days. The second embodiment is not small, it's big. It looks just like a drilling rig. You look at it and you say, okay, that's a drilling rig for oil and gas. And that's also in Houston. We're using Neighbors Industries as a partner and we've given superpowers to their drilling rig for the

When you're going to make a hole with the big one.

Oh, it's already happening, but it's happening at a small scale in a yard underneath the rig, in a well. We're we're gonna show it off at Sarah Week in Houston in March. But I think the real question is when can I go to the field and see it in action. When is it drilling a hole that no drill big can drill. And that's in twenty twenty six and twenty seven as part of these commercial projects.

So there's a till you've made that's public with a gold mine in Nevada? Is that right? Tell me about that.

So this is a mining operation. Is I think it's the third largest gold mine in the world, and it's in Nevada. And they have their own, their very own coal fired power plant. It's a two hundred and fifty megawa coal firepower plant that they use as part of the electricity require for the operation. And they want to decarbonize that. And they've looked and looked and looked, and they've tried solar and they've tried batters, and they said, no,

And that's the only one that's public.

You have several projects, but that's the only one that's public. That's right, that's right. So there are five projects in the works, one of which is public, but the other four are of a similar nature, not all not not for gold mines, but for multiple industrial use cases. There's probably one that's going to be a data center one I can say as much. There's some that are going to be industrial heat, because that's also another value proposition.

They need a dedicated power plant that is always producing power for just their data center or whatever.

Yeah, that's a good way to put it. These are the big, big users that are having a hard time finding solutions to the carbonized.

So how much deeper do you have to go for these initial projects than sort of standard or even kind of standard modern geothermal companies would go.

So three to five kilometers down, that's about two to three miles is the beginning of that journey. And these initial projects are that that depth. The first and the second are that. The third one than Nevada. If that comes third, it's a little bit deeper than that. So the journey starts at two to three miles down, and that's good. That's important because you can get the job done without having to go crazy deep. But it progresses towards twelve miles. We think twelve miles is the final number.

I mean, twelve miles is an order of magnitude farther than people go. Now right, it's a lot farther. It's not margin.

Yeah, twelve miles is twenty kilometers on the average is about two kilometers. So yes, it's a ten x it's a TENNX improvement in depth. But at that point you're talking about humanity having access to industrial grade geothermal, you know, and that's a journey.

That humanity meaning it'll work if you can go that deep. You can do geothermal everywhere, basically.

Not just that you can do industrial great heat from geothermal, which is quite different. You can do geothermal in many, many places. That's just for bats or agriculture. We're talking about fossil true fossil replacements.

Like the kind of crazy heat that lots of industrial processes require that now you have to burn fossil fuels.

For that's right, and you can do it everywhere. That's really what we're talking about. Hot and deep, not just hot and not just deep both. So just tell me what it looks like when you make one of these. I went to see it and it existed in the world, your geothermal plant.

What would I see? What would it look like?

You wouldn't be able to tell it's anything special. It looks like a power plant.

How big around is the hole? What's the diameter of the whole?

Eight inch diameter of basketball size?

A basketball size, so you could you could drop a volleyball down the hole, but not a basketball basketball Betoien.

Yeah, it's about an eight and a half inch diameter four two hundred megawats of thermal energy.

And if if you drill the twelve mile hole of your dreams and I dropped a penny down the hole, how long would it take to hit the bottom.

Oh, a free fall of twelve miles twenty kilometers, it would take I don't know, three minutes, two to three minutes. Yeah, it's like jumping. It's like jumping from an airplane. I mean an airplane flies half.

That more, right, it's twice as long as deep as an airplane is high.

Yeah, the twelve mile version. Yet we remember we don't start with twelve miles. But yes, you're right, it takes it takes that long to fall.

Yeah.

Now it's full of water, so it sings rather than fall, so it probably would take longer.

Oh right, a slow water. So right, so you don't just drill one hole, right, you drill a hole to get down to the heat and then and.

Then what Yeah, so you do? They coming in pairs, always in pairs. One for the weight down. We call that an injector, and one for the weight up. We call that a producer. The pair is eight inch eight and a half inch in diameter each, and they go down to the source rock down below at the temperature we want it to be, and that pair produces as much energy as an oil whale pair injector producer. That's a key concept.

And so injector producer is like, what you're injecting is water, and what's coming back up is steam.

That is correct. In fact, you keep it under high pressure. So what comes up is superheated liquid which can flash into steam or supercritical water. And that's what you fit into the power plant, not directly but through heat exchangers for many reasons. But that's really what's that's the engine, that's the fuel source.

There any like weird unintended consequences like earthquakes.

Those are possible, right every time you pump into the earth, that's a possibility, especially if you go into fault faulty songs. But remember what I told you. We don't pump, we don't ramp pressure into the earth. We just fill a hole with cold water and nature does the rest. In fact, we're replicating a process that happens in nature at scale. That's how every mind in the world gets formed. So will there be earth bakes? I think if you do this in the wrong place in a big fall, there

Like that, any other weird geological activity.

That that could happen as a as a consequence, I don't think so. I mean, you cool the rock ten degrees twenty degrees over the lifetime of the asset, and then you move on. So that's a very small cool down out. We are pricking. It's like a needle, tiny needle prick in the skin to mine a little bit of it of that, you know, but this is regulated. So I'm not gonna say that there's zero risk. There's

What do you do with the dust that you blow back up?

It's wonderfully useful for many, many things, and you cannot just discharge that. You know, that's particulate matter, So you treat it, you separate it, and some of it will find value streams in industry, and you think the value the value of it will sort of offset the cost of treating it enough that it's not gonna mess up your economics for some for some things, not for everything. Some things you just you just leave them in an inert neutral state, like cuttings in a in a drill rig.

So when you're modeling it, you assume that that's just a pure cost, and even even at that estimation, you think you can correct.

Yeah, it's it's the business is the business of energy. That is the techn economic model. How much does it cost to get to the energy, to produce it, to operate it, and how much does itself for That is the business model.

So give me the like, like, give me the long view.

We've been talking about little things. I've been asking about this detail in that detail, like what's the big picture, the five year picture of the tenure picture. So in the five years, we're doing the first five projects or achieving bank ability. So that's still in the details, that's in the weeds. The company is really trying to break

It's interesting to have the sort of oil and gas industry centric view of the energy transition, Like, why do you say that?

Ever since you and I have been alive, the oil industry, the workforce, the capital, the regulation, the infrastructure, has been putting into the world two terra watts of new capacity simply to keep up with not growing but stable demand. Let me say that again, oil feels decline in production. Just to keep up with the amount of energy that we humans consume, they need to bring online new capacity that adds up to about two terrawats per year. There's

We'll be back in a minute with the lightning round. Okay, we're gonna finish with the lightning round. It's gonna be much more random. What one thing you did when you served in the Colombian Army after high school?

I trained to be a soldier, so I very much went through weaponrytraining, military approaches and assaults, and I actually went into operations totally, not into a war zone, but that was my military training. I was a soldier for a year before coming to m T.

Yeah, so what's that like. You grew up in Medigan, you were a soldier, and then you went to M I t like what was what was one surprising thing to you when you got there?

Life changing? So I think I fell at home at MIT in many many ways. I was always very curious about physics, engineering. I would do many things by myself, and I would never feel quite at home in Columbia. I would never find the groups or the university for the classes that would satisfy me. MIT, for the first time ever in my life, gave me that what's one thing I should do if I go to Medagan, Oh, my god, one thing impossible. We have to do one

What's one thing I should eat?

But they have AISA, but you should share that because it's probably five thousand calories at least.

What is it?

Combination of rice, beans, meat, pork, rins, plantains, avocado, and arib which is a corn patty.

Very basically it's everything. It's basically everything.

Oh maybe a Friday too, So yes, it's everything. It's very large, very satisfying, very delicious, not to be eaten every day.

What was the second best idea you heard when you were working as a venture capitalist at.

AH It must have been the approach to fusion. I was in the room with Bob Momtguard first approached the engine to say, hey, we have these tape to make a stronger magnet. And I say, oh, this is a very very good idea, because that's a very good approach to actually get going with fusion single handedly. If I were not doing ways, that's where I would probably be putting my life forcings.

I mean, it's maybe even more of a long shot, but even bigger if it works.

Right, Oh, I think so that is the ultimate energy source. Ultimate We didn't talk about it. Why not fusion? Well, yes, fusion is the way to do it, But why not fusion has to do simply with building the infrastructure, the human capital. Everything needs to be built. It doesn't exist. The industry needs hasn't been born, the humans haven't been born at skill to do it. And I think geo politics will play a very strong role. These are devices, These are machines. To me, they are like an F

Like whatever country figures it out is going to say, we're not giving this to anybody, We're keeping it. We're only going to give it to our friends, something like that.

It's the ultimate company of advantage, the ultimate company.

Free unlimited energy.

Yeah, yes, yes, forget about everything else. That's it. You've done it.

What pun are you most tired of hearing related to Quays to your work?

The funds make themselves in geotheraphone, Yeah right, I enjoy them all.

But what's your favorite? Then?

My favor is we we gotta keep digging deeper to solve energy transition.

Carlos Arake is the co founder and CEO of Quays And. Today's show was produced by Gabriel Hunter Cheng. It was edited by Lyddy Jean Kott and engineered by Sarah Bruger. You can email us at problem at Pushkin dot Fm. I'm Jacob Goldstein and we'll be back next week with another episode of What's Your Problem.