DoE Lays Out New Rules for Geothermal Drilling

Deb wrote in the fall about VC-backed geothermal project companies, including concerns that their drilling efforts could cause earthquakes or other losses of terra firma (see here and here). She specifically focused on AltaRock, which had been drilling in Northern California geysers.

AltaRock suspended and then abandoned drilling in the geysers due to “physical difficulties,” but the Department of Energy nonetheless opted to complete its review (in part because it gave AltaRock and others grant money for alternate drilling projects). The result were several new requirements for any company engaged in geothermal drilling, with or without government funding. These include stress test and simulation requirements and an expert review of those tests by a DoE panel. (Download the letter here)

Not yet sure how much this will cost companies like AltaRock, or if it changes the VC ROI profiles for such deals. Also makes me wonder a bit about original due diligence by all involved (company, investors, DoE). I called both AltaRock and its board members on Tuesday, but haven’t yet heard back.