Fossil fuels built Houston into an energy capital. Can it lead the clean energy transition?
Fossil fuels built Houston into an energy capital. Can it lead the clean energy transition?
When liquid gold gushed from the Spindletop oil field in east Texas in 1901, giving rise to the first Texas oil boom, Houston began its ascent to the status of energy capital of the world.
While the city boasts dozens of publicly traded oil and natural gas companies, thousands of energy-related firms and a resilient economy, it has also faced a barrage of devastating weather events, including floods, cold snaps, drought and record heat. They’ve become more common in the era of climate change.
Amid pressure to decarbonize the global economy and historic public investment in environmental progress, Houston has a lot at stake, said Bobby Tudor, CEO of investment firm Artemis Energy Partners.
“In a changing energy world, we’re very focused here in Houston on making sure that 10 years from now and 20 years from now and 40 years from now, Houston continues to be the energy capital of the world,” he said.
To move away from fossil fuels, Tudor said, Houston will need buy-in from oil and gas companies.
“The incumbent industry itself has become more aware and more committed to that notion, which is that they need to play a leadership role in this transition,” he said.
With the aid of workers, technology and investment from that industry, a new generation of energy companies offers a glimpse of what the city’s clean energy ecosystem could look like.
One promising young company in this shifting landscape is Fervo Energy, which has leveraged techniques honed by the oil and gas industry in the shale revolution to make geothermal energy a more viable source of renewable electricity. Geothermal makes up less than 0.5% of utility-scale power generation in the U.S. today.
For instance, instead of using hydraulic fracturing, or “fracking,” to drill for oil, the company is drilling and fracturing rock underground and pumping water through the cracks to produce steam that can spin turbines and create electricity.
“We’re using technology that allows us to create that steam in completely new locations by accessing hot rock and pumping water through that hot rock and bringing it back to the surface,” said Gabe Malek, Fervo’s chief of staff.
In traditional geothermal, he said, only certain parts of the world have the right kind of permeable rock and heat that can make enough steam for successful production.
But, according to Malek, Fervo’s use of fracking technology in “enhanced geothermal” minimizes some of the historic downsides of the energy source — like location restrictions and high costs — making it a more feasible form of energy in more places around the world.
“It also allows us to tap into learning curves that come when you stay in the same location,” he said. “We can stay in southwest Utah for the next five years, drill over 100 wells that look identical and it becomes a manufacturing process where you hit those economies of scale that bring down costs, like in solar and wind.”
Scalable, cost-efficient geothermal provides an enormous opportunity as “firm clean power,” or renewable energy that is continuously available and not dependent on the weather, according to Sarah Jewett, vice president of strategy at Fervo Energy.
“The market for firm clean came, and not only did it come, it really exploded,” Jewett said. “It’s a massive market.”
Fervo has started construction on a 400-megawatt project in southwest Utah, with more on the horizon. In July, the company completed a well test at a pilot project in Nevada, which Fervo’s press release called the “most productive enhanced geothermal system in history.”
“At this point in time, [we] feel like we can’t build fast enough to meet the demand. So there are a lot of projects beyond this one,” Jewett said.
Fervo is just one dog in this race.
According to the Greater Houston Partnership, Houston-based energy transition firms secured $6.1 billion in private market investments in 2022 — up 62% year on year.
Artemis Energy’s Bobby Tudor said he’s particularly interested in Houston’s role in storing and delivering clean hydrogen. This year, a group of energy companies and organizations called HyVelocity Hub applied for a federal grant to spur clean hydrogen development on the Gulf Coast.
“Sixty percent of the nation’s dedicated hydrogen pipelines are in Greater Houston,” he said. “We have fantastic infrastructure.”
Yet the pressure to transition to clean energy comes as Texas struggles to meet energy demand during the hottest parts of the day, while extreme temperatures and a growing population strain the electric grid.
Although it’s clear that the increasing number of wind, solar and battery projects have helped keep the air conditioning blowing in Texas this summer, Tudor said that as demand for electricity grows, the state will also be building natural gas power plants and continue to rely on fossil fuels.
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