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20 January 2021

Strada Global: Why we only bill what we drill

‘As we move toward clean energy, one of the guiding principles going forward is a diversity of renewables’. David Hochschild, California Energy Commission. We couldn’t agree more. Which is why here at Strada Global, we are focused on challenging the status quo of historic geothermal mindsets with new, innovative drilling technology and approaches that make geothermal power accessible and affordable, everywhere.

 

The known geothermal map was created based on the range of existing technologies to specify where geothermal can be accessed. Strada Global’s forte is expanding this map. Our unique, patented drilling system reduces drilling costs by up to 70% and is able to unlock the earth’s heat by making geothermal viable to access, not just in volcanic areas, but anywhere.

 

We can empower change and switch to clean renewable power, simply by tapping into the energy beneath our feet.


In their recent feature on geothermal, Quartz reported: ‘Creating new geothermal fields, it turns out, requires just the right amount of rock and heat. Luckily, those conditions exist almost everywhere – if you’re willing to drill. For every kilometre down into the Earth’s crust, temperatures rise about 25 C. ‘If you can figure out a way to tap that, you can get a phenomenal amount of energy,’ says Will Fleckenstein, an engineering professor studying unconventional drilling at the Colorado School of Minds. ‘It’s essentially everywhere.’ ‘
Geothermal is the electricity combating climate change’, December 20, 2020


We feel that there’s a huge opportunity for companies like ours who can demonstrate technological innovation when it comes to geothermal projects. It’s clear that the existing drilling mentality that was applied to oil and gas projects isn’t capable of pivoting to hard-rock geothermal. Drilling costs for these projects were established on the basis that once you reached oil or a hydrocarbon resource, they became irrelevant. But at a utility style return, with a 50 year, 30 year or 20 year payback, drilling costs make the world of difference for whether a project is viable or not.

 

“As the National Renewable Energy Laboratory’s (NREL’s) Kate Young explained to the Senate Committee on Energy and Natural Resources last year, the cost of geothermal development is split 50% on the surface (such as for power plants and piping) and 50% below ground. “Many of the below-ground costs are borne at the front end of the project development, which can make project financing challenging,” she said. “And though drilling and well construction activities are present in many industries, time and costs are significantly higher for geothermal.” ‘Is Geothermal Power on a brink of a boom?’, Powermag, May 2020.

 

That’s why at Strada Global we drill at a per metre rate instead of a per day rate. Or, to put it more succinctly, we only bill what we drill. We believe it’s important to challenge the existing model of charging per day, as to us, it slows down the development of the industry as a whole. For example, a drilling company using mud rotary techniques who hits a hard granite section, or any sort of hard rock, will slow down significantly. If you’re billing a day rate, and it takes months to get through this section, the costs of the drilling project skyrocket. Using the existing day rate model, drilling companies are rewarded for going slowly. We don’t think that’s right.

 

Our aim is to challenge the incumbent, historic thinking within the industry space that risks slowing the development of geothermal energy. We believe that billing what you actually achieve for a project, the metres that you drill, is the only way forward. It’s certainly the only way for us, as our drilling technology is simply too quick to make a day rate commercial. 


At Strada Global, we partner with forward thinking drilling companies who want to make a transition to faster and more cost-effective geothermal drilling, and our technology can make that possible. Our deployment strategy is to partner with a drilling contractor and handle the tendering process to ensure we can tailor the drilling program to the best method for the project. We’re able to rally our trusted suppliers and bring our technology to the field, avoiding the potential cost blow outs for geothermal projects and coaching companies through the process from site design right through to execution.

 

To accelerate the transition to geothermal energy, it will take companies with a progressive mindset, working together to adopt and deliver the right technology for each project.


If we can keep projects on time and on budget, there’s no reason why we can’t start accessing geothermal energy quickly and efficiently in far more locations.  


As Quartz reports, when it comes to clean energy, “geothermal is actually the cheapest when you add the externalities in’. The Quartz article goes on to explain: ‘Historically geothermal looked like the expensive option. Geothermal power can cost about $140 per megawatt-hour, double the price of offshore wind, and nearly five times more than solar, according to the California Energy Commission. But that calculus ignored something critical: Wind and solar can’t provide baseload energy. A better way to calculate the cost to utilities is to measure the price of adding a particular megawatt to the grid. Electrons that can be turned on or off are worth more than those that can’t. Using this approach, the US Energy Information Administration says, new geothermal capacity in 2025 should cost just $37 per megawatt/hour, cheaper than almost every source besides solar photovoltaic ($36 per MWh). 


It’s certainly attracting the attention of investors who have ramped up private investment for geothermal in anticipation. Quartz adds: ‘In the first half of 2020, global geothermal investments exceeded $675 million, six times more than the year prior, according to Bloomberg New Energy Finance, whereas renewables investment overall rose only 5% during that time. Within five years, global geothermal production capacity is predicted to rise from 16 GW to 24 GW according to Rystad Energy.’


For companies like Strada Global who believe that the solution to our planet’s energy needs lies below our feet, this only adds to the determination to make our technology more widely available and accessible. 


To find out how our patented drilling technology can bring efficiencies to your project, or for more information on partnering with us, get in touch. It’s only by working together that we can achieve our goal – a decarbonised future for all of us.