Fervo Energy Phase II Drilling On Track

I did a couple recent articles on enhanced geothermal systems (EGS) technology and Fervo Energy (FRVO) awhile back. The Fervo article got the most likes of any article I’ve ever done.

The alternative energy theme is my favorite theme because of the clear secular trend toward clean energy.

Fervo Energy (FRVO) had a really good development recently. In early July, Fervo Energy finished well number nine in the Phase II at Cape Station. They set a new drilling pace record, reaching a 19,448 feet depth with a 7,500-foot lateral in 21 days!

This latest 9th well in Phase II well reached 19,448 feet, and is almost 75% deeper than that original 11,220-foot benchmark, yet it was drilled just as fast.

The biggest potential hurdle for enhanced geothermal systems (EGS) is the economics due to the extreme depths of the wells and hard rock. They drill through hard crystalline basement rock like granite and hard metasedimentary/igneous rock.

This new well demonstrates the costs are on-track to hit their cost target of $5,500 per kilowatt, with a longer-term goal of $3,000/kW. This would make geothermal much more cost-competitive against other baseload power.

Drilling rates have now increased 143% since the first Cape Station well. So far, the learning curve effect is still playing out for the economics.

Operators are trying to prove drilling can scale like shale drilling did. It needs to be repeatable, fast and cheaper with each well, which is the key variable that will determine whether geothermal becomes cost-competitive at grid scale. So far so good for Fervo.

I went into a lot of detail on EGS in that earlier article. These are just a few other Fervo and EGS main selling points to me given the current public mainstream view on data centers,

• Equal cost comparison to nuclear and even cheaper on a levelized basis.
  

• Far less water use than traditional data centers, as EGS can provide mostly air-cooled option using continuous saline water from the deep ground. In the Fervo literature, they say “zero gallons of fresh water usage.”
  

• The geothermal heat itself, not evaporative water loss, performs the thermal work. The closed underground loop is an air-cooled surface design at the data center.
  

• They are building in the rural, sparsely populated Southwest. EGS resources require specific geology found mostly in remote, low-density regions.
  

• The rural locations reduce local opposition compared to how communities often react to nearby data centers.

About two weeks ago, Fervo announced a partnership with NVIDIA, and Pacific Northwest National Laboratory to develop a next‑generation digital twin platform EGS-Twin for Enhanced Geothermal Systems (EGS) technology.

“EGS‑Twin is designed to deliver real‑time insight into subsurface behavior and operational performance through the integration of high‑resolution field data with physics‑based modeling and AI‑driven forecasting.

PNNL will use Fervo’s industry expertise and field data to train scalable AI models on NVIDIA AI infrastructure and integrate the trained models into NVIDIA Omniverse libraries, so operators can more quickly identify and respond to subsurface changes, optimize power generation, and strengthen the scalability of enhanced geothermal systems.

PNNL will develop the workflows and data pipelines, leveraging high-performance computing, including U.S. Department of Energy supercomputing resources, to run large-scale simulations.” -Fervo press release

This will potentially improve costs and operations in many ways, including fewer bad wells / better targeting, better design before spud, faster learning curve across wells and lower risk per well for faster deployment.

This is exactly the kind of technology development I was hoping for. I see the newest tech continuing to improve drilling and making EGS cost competitive.

Full Disclosure: I am long FRVO stock