Speaker 1: Pushkin. Here's the standard story of the energy transition. To
Speaker 1: get to our post carbon future. We just need some
Speaker 1: combination of wind and solar power plus energy storage plus
Speaker 1: nuclear power. Those together ought to do it. That's a
Speaker 1: story I've told on this show. It's a story lots
Speaker 1: of people have told on lots of shows. But I
Speaker 1: recently talked to a guy named Carlos Arake who made
Speaker 1: a compelling case that this story is not true, that
Speaker 1: it's not going to work for a variety of reasons, technical, economic, political,
Speaker 1: Wind and solar plus storage plus nuclear are just going
Speaker 1: to be too slow to build, too inefficient, too politically
Speaker 1: complex to deliver all the carbon free energy that the
Speaker 1: world needs. Or Carlos has another idea. It's kind of
Speaker 1: out there, but he's raised a lot of money to
Speaker 1: do it. His idea is this, shoot a high energy
Speaker 1: beam down into the ground until we've dug a hole
Speaker 1: eight inches wide and twelve miles deep. Basically, he wants
Speaker 1: to reinvent geothermal energy. He wants to harvest the heat
Speaker 1: energy that's just sitting down there all over the world
Speaker 1: waiting for us to get it. He says, if he
Speaker 1: can figure out how to do that, you know, cheaply, efficiently,
Speaker 1: at scale, our energy problems will be solved. But nobody
Speaker 1: has ever dug a hole nearly this deep. Carlos's own
Speaker 1: company hasn't started drilling deep wells yet, and so the
Speaker 1: whole project is, you know, at this point something of
Speaker 1: a long shot. Still, Carlos and his colleagues have raised
Speaker 1: somewhere around one hundred million dollars, and if they succeed
Speaker 1: in what they're trying to do, it will infect be
Speaker 1: this incredible new source of clean energy. I'm Jacob Goldstein,
Speaker 1: and this is What's Your Problem? The show where I
Speaker 1: talk to people who are trying to make technological progress.
Speaker 1: My guest today is Carlos Arake. He's the co founder
Speaker 1: and CEO of Quay's Energy. Carlos's problem is this, how
Speaker 1: do you make drilling for geothermal energy as routine and
Speaker 1: widespread and profitable as drilling for oil or natural gas.
Speaker 1: Carlos knows in great detail how routine and widespread and
Speaker 1: profitable drilling for oil and gas is because he spent
Speaker 1: the first fifteen years of his career working at Schlumberge,
Speaker 1: a giant firm that provides services to oil and gas
Speaker 1: companies and to start. I asked Carlos how he made
Speaker 1: the leap from working at this one hundred year old
Speaker 1: company in the fossil fuel business to starting a company
Speaker 1: that's trying to move the world off of fossil fuel.
Speaker 2: I think it goes back to much before I quit.
Speaker 2: I quit in twenty seventeen, and I think I can
Speaker 2: remember as far back as twenty ten, when I started
Speaker 2: to become very familiar with the oil industry, the amount
Speaker 2: of energy we use as a civilization, how it's growing
Speaker 2: over time, when I started thinking about what it would
Speaker 2: take to transition away from fossil fuels.
Speaker 1: So like, in a way, working in the fossil fuel industry,
Speaker 1: it gave you an appreciation for how hard it will
Speaker 1: be to transition away from fossil fuels.
Speaker 2: Very much so, very much.
Speaker 1: So.
Speaker 2: It's just the sheer numbers how much energy it takes
Speaker 2: to power humanity today. It's just an awakening moment to say, Okay,
Speaker 2: there's no way we're going to be able to do
Speaker 2: this with wings, solar batteries, hydro nuclear, etcetera, etcetera. So
Speaker 2: that's when the search started. It had to be something
Speaker 2: at the scale of oil and gas, and it had
Speaker 2: to be something that solved for the environmental challenge, but
Speaker 2: also other challenges geopolitical, socio economic and environmental emissions, land use,
Speaker 2: mineral use, all of those things need to be sold for.
Speaker 2: And I wasn't seeing anything on the landscape at all.
Speaker 2: So that's the beginning of that inkling.
Speaker 1: And when was that?
Speaker 2: When was it that you left? So I think I
Speaker 2: was living in Norway at the time. I was working
Speaker 2: for somebody in Norway, and that's when I started thinking
Speaker 2: about these things, mostly seeing, you know, reflecting on a
Speaker 2: country like Norway, how prosperous it is, and where that
Speaker 2: prosperity comes from. Oil, which is.
Speaker 1: Oil oil and good institutions. Right, they have a lot
Speaker 1: of oil and they have like very robust civil institutions.
Speaker 1: A rare combination.
Speaker 2: Oh yeah, it's a very blessed combination, you know. So
Speaker 2: that got me thinking about those things, you know, and
Speaker 2: living in there, not not just working, but living living
Speaker 2: in the country, being a direct beneficiary of that way
Speaker 2: of doing things. What's the beginning of that? You know?
Speaker 2: And that country's pristine, is so beautifully pristina. I said, Okay,
Speaker 2: these guys are doing something really, really right. What's behind that.
Speaker 2: So that's the beginning of that search of how much energy?
Speaker 2: How do we do it? It's not just about emissions,
Speaker 2: it's about many other things. But it took seven years
Speaker 2: to develop the deep conviction and to get my families,
Speaker 2: you know, complicity in quitting Stormagy.
Speaker 1: Because like, you had a good job, you p absume
Speaker 1: you were paid well, you could work there your whole life.
Speaker 2: Absolutely, it's I have nothing bad to say about my
Speaker 2: years there. It's nothing but good experiences, good colleagues, good problems,
Speaker 2: never boring. So it really came from a very deep
Speaker 2: conviction of trying to you know, I call it using
Speaker 2: the second part of my career to actually push in
Speaker 2: what I think needs to be the direction that the
Speaker 2: world needs to go into. And don't get me wrong,
Speaker 2: I don't think fossil fueler girt is a beer anytime soon.
Speaker 2: But we need to start pushing in a new direction.
Speaker 2: And I wasn't seeing anything able to do that.
Speaker 1: So you go and work at the venture capital fund
Speaker 1: of MIT, your alma mater, in your in your search, right,
Speaker 1: you're you're now you're on your quest. When you get there,
Speaker 1: I mean, are you sort of in your mind explicitly
Speaker 1: or implicitly be like, Okay, I'm gonna go try and
Speaker 1: find it. I'm gonna go try and find some solution
Speaker 1: to our energy problem. Is that?
Speaker 2: Is that what's happening? I think it is? It is
Speaker 2: like that. Indeed, I quitch lanu Ja without having a job.
Speaker 2: You know, on principle I said, look, I'm just I
Speaker 2: need to get out of here to reinvent myself. Is
Speaker 2: too comfortable to stay in that job. Yeah, so you
Speaker 2: will always postpone it. So we came back. We were living
Speaker 2: in England as a family, my wife and three kids,
Speaker 2: and I decided that I had already decided that energy
Speaker 2: transition was a technological problem first, and if successful, if bridged,
Speaker 2: could become in a socio economical, geopolitical and all of
Speaker 2: the other things. Regulatory problem, but technological problem first, we
Speaker 2: don't have the technologies to transition away from fossil fuels.
Speaker 1: And what year ish is this?
Speaker 2: When did you say twenty seventeen?
Speaker 1: So by twenty seventeen solar powers is already getting much
Speaker 1: cheaper with the Mayan batteries are still expensive, but they're
Speaker 1: starting to get cheaper. Like people are very excited about
Speaker 1: those technologies at that time, like, what's your what's your
Speaker 1: view on them?
Speaker 2: So I think they will play a part in the solution,
Speaker 2: but I think they will play a very small part
Speaker 2: in the solution.
Speaker 1: And if you take solar and wind and nuclear, to
Speaker 1: take the three sort of classic modern classic renewables, like
Speaker 1: those seem pretty compelling plus storage as a package. To me,
Speaker 1: you're clearly less compelled by those as a package.
Speaker 2: Why so it has to do with the premiums we
Speaker 2: incur in transitioning a unit of fossil energy to a
Speaker 2: unit of clean energy from either one of those sources.
Speaker 1: So when you say premium, do you mean cost? By
Speaker 1: different definitions of the word cost, What does premium mean
Speaker 1: when you use it that way?
Speaker 2: Yeah, I define premium as multiple things. So land use
Speaker 2: per unit of energy, that's one mineral U per unit
Speaker 2: of energy, that's two and man hours labor use per
Speaker 2: unit of energy. And I frame it like that simply
Speaker 2: because these are the resources we have available to us.
Speaker 2: You know, think about it. We have time, space, and stuff. Basically, actually,
Speaker 2: I say four things. There's time, there's place, there's natural resources,
Speaker 2: and there's nohow that's it. Those are the resources everything
Speaker 2: else derives from that.
Speaker 1: It's like land, labor, capital, and ideas. Right, it's like
Speaker 1: kind of econ one oh one ish.
Speaker 2: That's right. That's right. So you cannot pretend that you
Speaker 2: can replace twenty five trillion juice per second, which is
Speaker 2: what it takes to power humanity, if in doing so
Speaker 2: you're incurring a one hundred x to one thousand x
Speaker 2: on any of those things. You know, a unit of
Speaker 2: fossil energy takes a certain amount of space, land, a
Speaker 2: certain amount of minerals, a certain amount of labor to
Speaker 2: pull together, to bring together, and if you try to
Speaker 2: do it with solar, that multiplies by about one hundred in.
Speaker 1: Terms of the space in particular.
Speaker 2: Yes, it takes one hundred times more land, it takes
Speaker 2: one hundred times to a thousand times more minerals, depending
Speaker 2: on a mineral, and it takes one hundred to a
Speaker 2: thousand times more man hours.
Speaker 1: To install and versus installing and recovering fossils.
Speaker 2: All things consider and implicitly, and there is cost, But
Speaker 2: cost is deceptive because you can always make up economic
Speaker 2: models and capital cost models to actually bring those casts down.
Speaker 2: We can talk about cost in a second, but the
Speaker 2: bring it more fundamentally, that is that realization. That and
Speaker 2: the same applies for wind, and the same applies for
Speaker 2: pretty much everything that's renewable, diffuse and intermittent. We cannot
Speaker 2: move a jewel or a what of fossil energy to
Speaker 2: the clean space to the emission space, you know, bonus
Speaker 2: points for lower emissions by incurring one hundred to one
Speaker 2: thousand eggs more costs on land use, mineral use, on
Speaker 2: labor use per unit of energy. That's not scalable. The
Speaker 2: externalities will stop it on its tracks. Uh huh.
Speaker 1: Like even though it's so much cheaper to make solar
Speaker 1: panels now there sort of will be land use. Just
Speaker 1: in practical political terms, people won't let us put all
Speaker 1: the solar panels we need to generate the energy. I mean,
Speaker 1: is it that kind of problem.
Speaker 2: Yeah, we won't be able to afford the land use
Speaker 2: for that. I mean, forget about people letting it be
Speaker 2: that that's going to happen, but we just won't have
Speaker 2: the land budget to do it. Because we also need
Speaker 2: to use land for other things like preserving environmental forests,
Speaker 2: right to like feeding ourselves, you know, and people always
Speaker 2: say like, oh, we can put this stuff in the Sahara.
Speaker 2: Sure you can, but it's still intermittent and the energy
Speaker 2: is they're not here. Yeah, So there's this fallacy that
Speaker 2: because you can take energy from somewhere, sometimes you can
Speaker 2: put it everywhere all the time. That is the biggest fallacy.
Speaker 1: I mean people are trying to solve that. I know
Speaker 1: that adds costs, right, but like by some come actually
Speaker 1: building building wires.
Speaker 2: That is the cost. That is the cost. So people
Speaker 2: say WIN and SOT are cheap. Lie, the collection of
Speaker 2: those resources is cheap. But building those into and the
Speaker 2: fixed costs required to bring that energy everywhere all the time,
Speaker 2: these where the true cost takes. You know, the cost
Speaker 2: is not in collecting the energy. The cost is in
Speaker 2: moving it and storing it. And it's massive, massive, massive.
Speaker 2: I mean, so if you're as an engineer think about
Speaker 2: those and you say, look, this is this is not
Speaker 2: going to get us anywhere close to where we need
Speaker 2: to be. Fine, they'll play a solution, there's markets for that.
Speaker 2: People will money, capitalism will play its role. But at
Speaker 2: some point those externalities will smack you in the face
Speaker 2: and it's happening. It's happening. You can see it already
Speaker 2: happening in some places with the penetration. So I don't
Speaker 2: believe and this is not faith. This is not believe
Speaker 2: us in faith. This is believe us in quantitative rigors
Speaker 2: engineering analysis that those things will actually get us to
Speaker 2: where we need to go.
Speaker 1: What about nuclear power.
Speaker 2: Or nuclear can totally do it? Absolutely? Nuclear does not
Speaker 2: incur those premiums. But nuclear has a different problem. From Colombia.
Speaker 2: We have oil. We barely have a refinery in the country.
Speaker 2: Why is that because of value change them because of geopolitics.
Speaker 2: So don't tell me that we will be happy to
Speaker 2: ship radioactive fuel, refine radioactive fuel, and ship back radioactive
Speaker 2: ways on a global scale. We can barely do that
Speaker 2: with oil and gas.
Speaker 1: In particular, you're saying the raw material, the uranium say
Speaker 1: that you need to make nuclear power doesn't exist in
Speaker 1: lots of places, and the notion that there will be
Speaker 1: some kind of globe supply chains shipping uranium around the
Speaker 1: world is implausible' that's the core argument you're making.
Speaker 2: Yeah, and that's just the raw material. The raw matill
Speaker 2: is a simpler problem. It's just the problem of carrying
Speaker 2: a lot of things from point to point B. I'm
Speaker 2: more concerned actually about the refined form of that shipping
Speaker 2: and rich radioactive materials fuel grade not weapon grade fuel
Speaker 2: greade radioactive material to fuel the power plant. You know, worldwide,
Speaker 2: into economies that cannot even control themselves, into very very
Speaker 2: trouble geopolitical systems that cannot even govern themselves. This is
Speaker 2: not going to happen at scale. I think nuclear is
Speaker 2: a solution for the G twenty, but not much beyond
Speaker 2: that because of the geopolitics, not because of the technological
Speaker 2: arguments I made about win and solar.
Speaker 1: The G twenty, the twenty basically richest countries in.
Speaker 2: The world essentially, that's right. That is correct.
Speaker 1: Okay, so you've you've set You've set the table. This
Speaker 1: is what you're thinking about When you leave Schlumberge and
Speaker 1: you're going out looking for the solution that nobody has found.
Speaker 1: You go to mi T good place to look what
Speaker 1: happens when you get there.
Speaker 2: So I got there because I heard about a new
Speaker 2: venture fund being launched by MIT timing. Just I didn't
Speaker 2: plan it that way, It just happened that way. Som
Speaker 2: T was telling the world, Look, the big problems of
Speaker 2: the world are not being solved because capitalism is distracted
Speaker 2: with the near term and little opportunities. So they created
Speaker 2: a fund, the Engine, they called it, to incentivize the
Speaker 2: transition of bold ideas from lab to a commercial life.
Speaker 2: So I went into that environment and I started pitching
Speaker 2: the engine. You know, you know, I let me be
Speaker 2: part of these I want to I want to work
Speaker 2: here because I want to learn venture capital. And the
Speaker 2: reason I did that is because if it's a technological solution,
Speaker 2: only venture capital of that kind is going to allow
Speaker 2: it to flourish outside of the confines and politics of
Speaker 2: large corporations like SMOG. I was amiliar with that. You
Speaker 2: saw the limits, you saw the limits of what legacy
Speaker 2: companies could or would. That's right. The opportunity cost is
Speaker 2: too hire for them to encourage. Their stakeholders don't allow it.
Speaker 2: They do research and development, but not of the kind
Speaker 2: required to bring forth.
Speaker 1: They're not in that business. They're not in that business.
Speaker 2: Christians and innovator's dilemma like why would they do that? Yes,
Speaker 2: their capital cause their opportunity costs doesn't allow them to.
Speaker 2: So that was my conclusion. Venture capital might do these,
Speaker 2: especially of the kind the Engine was proposing. MIT was proposed,
Speaker 2: not any venture capital, because a lot of it is
Speaker 2: very short temper sure, So okay, So that was the
Speaker 2: journey there. I said, okay, let me be here. I
Speaker 2: want to learn venture capital, not because I want to
Speaker 2: be an investor, but because I want to see how
Speaker 2: that game is played, how you pitch an investor in
Speaker 2: venture capital, and in return, I can help you with
Speaker 2: these companies that are coming out of the labs to
Speaker 2: figure out commercialization pathways and I can do diligence. We
Speaker 2: did that for a year to the day. So that
Speaker 2: was that transition, and then one day you meet a guy.
Speaker 2: The first week there by the way, the first week there,
Speaker 2: it's funny. So I joined in July first, twenty seventeen,
Speaker 2: and I think that week, that very week or the
Speaker 2: week after, Paul Oskov walked in with Aaron Mandel saying, Hey,
Speaker 2: here's this idea. We need to pitch the engine. And
Speaker 2: I was the investor representing the investor on the other
Speaker 2: side of that conversation.
Speaker 1: The skeptic, the person saying, why should we give you money?
Speaker 2: Yes, yes, yes, speitch me.
Speaker 1: Why so who are these people?
Speaker 2: Paul is a career long research engineer at MIT, particularly
Speaker 2: the Plasma Science Fusion Center.
Speaker 1: Fusion as in everybody's favorite dream for how to get
Speaker 1: nuclear energy. If we could ever figure it out, it
Speaker 1: would be amazing. But nobody still that fusion.
Speaker 2: That fusion which is also a solution. But I can
Speaker 2: give you a few pointers why I don't think that's
Speaker 2: going to do anything in our lifetimes. But that's another conversation.
Speaker 2: So that's that's Paul was. Then Aaron Mandale is a
Speaker 2: serial entrepreneur. He likes to start companies. He's a good scout,
Speaker 2: and he was looking for solutions in the geothermal space
Speaker 2: and he had concluded that drilling deeper and harder was
Speaker 2: a really, really, really important part of the equation.
Speaker 1: So there's an entrepreneur who has the idea of drilling
Speaker 1: deeper for geothermal energy. What's he doing with a guy
Speaker 1: who studies fusion, Like, what's going on there?
Speaker 2: Paul had been since two thousand and seven, been playing
Speaker 2: with very many of the technologies that are used in fusion,
Speaker 2: but to drill, you know, he was playing with gyrotrons
Speaker 2: and wave guides and energy beams. But that's still two
Speaker 2: years before they I even met them as the investor
Speaker 2: on the other side of the table.
Speaker 1: So okay, so these guys have been working together. They
Speaker 1: walk into the room, your brand new what's their pitch?
Speaker 2: Their page is very much about drilling hotter and deeper
Speaker 2: with energy to unlog geodermal energy at a very large scale.
Speaker 2: They wanted money to form that company. They wanted money
Speaker 2: to start that journey. And I was listening on the
Speaker 2: other side and saying, Okay, this makes sense, sounds far fetched.
Speaker 2: I need to become familiar with these technologies which are
Speaker 2: not using oil and gas. And I was saying, you know,
Speaker 2: but if it works, it really changes everything. But you're
Speaker 2: not pitching me a company. You're pitching me a research project.
Speaker 2: You're pitching me a continuation of the ten years of
Speaker 2: academic work. And this is a venture capital fund. We
Speaker 2: need to see a company, and we need to see
Speaker 2: a founding team.
Speaker 1: On a really basic level. Like you're saying hotter and deeper,
Speaker 1: but like what is the very basic idea about hotter
Speaker 1: and deeper? Like what is sort of status quo geothermal energy?
Speaker 1: And then how is this idea different?
Speaker 2: Yeah, so geothermal energy is relatively shallow. It's no more
Speaker 2: than half a mile maybe a mile into the earth.
Speaker 2: And to put that into perspective, oil and gas routinely
Speaker 2: goes beyond that. They go to two miles maybe three
Speaker 2: miles down.
Speaker 1: So, in addition to the fact that geothermal energy as
Speaker 1: it exists now, not only when you're being pitched, but
Speaker 1: still today, right, it's it's not that deep, and also
Speaker 1: it's fairly limited in where people can do it right
Speaker 1: by the nature of what exists a mile or less
Speaker 1: under the earth.
Speaker 2: That is correct, it's very geographically constrained. But funny enough,
Speaker 2: if you look at those places they do amazing things
Speaker 2: with geothermal, like Iceland and Kenya, they power themselves. They're
Speaker 2: almost you know, Kenny is like fifty percent electricity from geothermal,
Speaker 2: Iceland is like thirty percent electricity, like eighty percent heat.
Speaker 1: And in those places, like at least in Iceland, the
Speaker 1: heat is coming up out of the ground itself almost right, Like.
Speaker 1: I mean, I'm sure they're clever engineers and doing lots
Speaker 1: of work, but when the heat is literally like bubbling
Speaker 1: out of the ground, it seems a lot easier to cap.
Speaker 2: It's a lot easier, it's technologically possible, and it's economically feasible.
Speaker 2: So that's why they exist there. Yeah, So that's the
Speaker 2: status school of geothermal today.
Speaker 1: And what happens if you go deeper just on a
Speaker 1: basic geological.
Speaker 2: Level, so it's very simple. You just access that same
Speaker 2: heat no matter where you are in the world. If
Speaker 2: you go deeper, you can move away from Iceland and
Speaker 2: you can access the same energy source, which happens to
Speaker 2: be everywhere but at different depths.
Speaker 1: So everywhere is Iceland if you go deep enough.
Speaker 2: Everywhere is Iceland if you from a geothermal point of view,
Speaker 2: if you go deep enough, indeed, uh huh.
Speaker 1: And so I mean in the world now, I mean
Speaker 1: Iceland is kind of the classic, and Kenya is pretty
Speaker 1: well known overall. What's the Where is geothermal with current
Speaker 1: technology economically feasible?
Speaker 2: It's very small because of the geographical limitation. To give
Speaker 2: you a sense, not even point five percent of energy
Speaker 2: zero point five one half of one percent of global
Speaker 2: energy comes from geothermal. And that's because it's geographically constrained.
Speaker 1: Huh. Basically in most places you have to go too
Speaker 1: far down to get to the to get to the
Speaker 1: kind of heat you need.
Speaker 2: That is correct. That is correct. So that's why it's constrained.
Speaker 1: Why can't you just keep drilling, like, why can't you
Speaker 1: just do what they're doing in places where they do
Speaker 1: it and just go farther down.
Speaker 2: You can, and people have. It's just very expensive. The
Speaker 2: drilling operation takes over the economics of anything.
Speaker 1: Is it nonlinear in some way? Like? Is it that
Speaker 1: very much deeper you go, the more expensive each marginal
Speaker 1: meter is?
Speaker 2: Yes, So you start at hundreds of dollars per meter,
Speaker 2: and you could very well end up in tens of
Speaker 2: thousands of dollars per meter. Why one hundred x because
Speaker 2: your drill bits where and you have to replace them,
Speaker 2: and if you're very deep down there, it takes a
Speaker 2: lot more time to replace the drill bit.
Speaker 1: To pull it up. Time you got to pull it up.
Speaker 2: Pull it out, change the drill bit, pull it back,
Speaker 2: and push it back in and then drill for that
Speaker 2: is such an amazingly simple but seemingly impossible to solve
Speaker 2: problem because that rog and that temperature kills the drill
Speaker 2: bits in hours in hours, not even days in hours.
Speaker 1: So the farther down you as it gets hotter, the
Speaker 1: drill bit wears out faster, and the farther down you
Speaker 1: want to get hotter. So it's sort of a problem.
Speaker 2: That's right. There's another problem is that at some point
Speaker 2: you can't even get the energy down to the drill bit.
Speaker 2: Like you're on the surface rotating the drill string and
Speaker 2: all of that energy is lost on the way there,
Speaker 2: so the drill bit is barely scratching the surface at
Speaker 2: some point.
Speaker 1: So this is the status quo when these guys walk
Speaker 1: into the room, just in basic terms, like what is
Speaker 1: their idea?
Speaker 2: The idea is we can use energy and nothing but energy,
Speaker 2: no drill to do the work that the drill bit does.
Speaker 2: No drill bits, and not only that, no electronics, no cables,
Speaker 2: no switches, no nothing that breaks. We're just going to
Speaker 2: shoot a beam of energy down there, and it's just
Speaker 2: going to open up a hole indefinitely. And the beam
Speaker 2: doesn't care if the rock is harder or harder or
Speaker 2: more brace it doesn't matter. And the beam doesn't care
Speaker 2: if it's ten kilometers or fifteen or twenty kilometers because
Speaker 2: it loses very little energy. So that's the big idea.
Speaker 2: The physics are radically different.
Speaker 1: So it's pulverizing the rock, right, it's turning the rock
Speaker 1: into powder basically, like how do you get it back
Speaker 1: up the tube?
Speaker 2: You blow it out of the hole, very much like
Speaker 2: the Sahara blows across the ocean because the particles are
Speaker 2: so tiny that blowing them with a gas stream lifts
Speaker 2: them up and pushes them out of the hole. So
Speaker 2: that's it. You're basically pumping a gas and the gas
Speaker 2: is taking those particulates out of the hole.
Speaker 1: So this is the idea. They walk into the room with, yes,
Speaker 1: and you say what?
Speaker 2: I say many many things, but I say, Okay, how
Speaker 2: do you build a company out of this? How do
Speaker 2: you test? What are the key ideas here that you
Speaker 2: need to test for I was trying to come up
Speaker 2: to speed with ten years. You got to realize they
Speaker 2: had been working this for tis a lot of information
Speaker 2: that I need to pick up, and that I did
Speaker 2: pick up along the way. But I was just basically saying, Okay,
Speaker 2: what are the steps? How do you the risk this?
Speaker 2: How do you make a company? How do you get
Speaker 2: to market, how you make revenue? All of the things
Speaker 2: that it to go beyond an experiment into forming a
Speaker 2: company that has to survive by selling products or services.
Speaker 2: I also was asking about the team, typical of venture
Speaker 2: capital question, who is your team? Who is the interrepreneur
Speaker 2: who is going to do nothing? Twenty four to seven.
Speaker 2: But these all of those things are super important when
Speaker 2: you make an investment, and they didn't have good answers
Speaker 2: to that. They were just pitching a research project. But
Speaker 2: that helped Aaron, who is a serial entrepreneur, to see
Speaker 2: me as a person that was very well qualified to
Speaker 2: potentially lead this. He pitched me the next day. He
Speaker 2: invited me to breakfast and say, Carlos, why don't you
Speaker 2: just jump in here and I'll be the CEO. You'll
Speaker 2: be the CTO. You are cut for this, And I said, well,
Speaker 2: I just got here, Aaron, Hold on a second. But
Speaker 2: that's the beginning of that journey. But as I approached
Speaker 2: my one year anniversary at the Engine, and I knew
Speaker 2: that I didn't want to be an investor because I'm
Speaker 2: an near first that's when I started to think seriously
Speaker 2: about what it would take to actually build a company.
Speaker 2: So I took I took five months of four months
Speaker 2: of July of September October doing nothing. I went back home,
Speaker 2: did nothing, just kind of retired for four months and
Speaker 2: thinking about nothing but this. So that was that art,
Speaker 2: and that's when the company was officially born October of
Speaker 2: twenty eighteen. That's the beginning of the commercial journey.
Speaker 1: Still to come on the show. Why getting the oil
Speaker 1: and gas industry interested in what Carlos is doing is
Speaker 1: key to his plans and really to the whole energy transition.
Speaker 1: So where are you now?
Speaker 2: So we are six years in, We've raised more than
Speaker 2: one hundred million dollars. We are transitioning the technology from
Speaker 2: the lab to the field. So we have now built
Speaker 2: full scale systems that are now going to the field
Speaker 2: to show the world. So we're taking the technogy from
Speaker 2: the lab to the field. And what that means is
Speaker 2: we it's no longer inside a controlling environment. It's out
Speaker 2: there under the open sky in an embodiment that is
Speaker 2: commercially relevant doing a technology demonstration that will hopefully unlock
Speaker 2: the Neess round of capital going forward.
Speaker 1: So specifically, when you say you're taking it from the
Speaker 1: lab to the field, what exactly are you doing, Like,
Speaker 1: where are you doing it and physically what is happening.
Speaker 2: It's in Texas. It all happens in Texas. We have
Speaker 2: two embodiments of the machine of the drilling machine. We
Speaker 2: call it a millimeter wave drill rig. One is small,
Speaker 2: it looks like a mi drilling system. It doesn't look
Speaker 2: like an oil and gas drilling system. We made it
Speaker 2: small on purpose to move faster, to prove things faster.
Speaker 1: When you say it's small, I don't know what a
Speaker 1: mining drilling system looks like. What's it look like?
Speaker 2: It looks like like the caterpillars. I mean probably that's
Speaker 2: the most familiar thing to most people, the caterpillars as
Speaker 2: you see at construction sites. Yeah, you know, the excavators,
Speaker 2: the things working around a construction building, that kind of
Speaker 2: size of machinery. Okay, we've bought one of the shell
Speaker 2: and we gave it milliontersway in capabilities. We gave it
Speaker 2: super powers, so to speak.
Speaker 1: We're a caterpillar, like some kind of construction vehicle that
Speaker 1: can blast the hole in the earth.
Speaker 2: Yes, but that's the first version. We put it on
Speaker 2: a system that can go out there and get it done.
Speaker 2: And we're doing that in Austin. Tases. We're taking from
Speaker 2: Houston to Austin near Austin in acquiry, a granite firy
Speaker 2: to actually show that we can drill through very very
Speaker 2: hard granite without a drill bit.
Speaker 1: So you basically are shooting a microwave beam out of
Speaker 1: this construction vehicle. Into the rock.
Speaker 2: We're shooting down into the rock and we're drilling a
Speaker 2: hole through the rock for hundreds of meters, for tens
Speaker 2: to hundreds of meters. So yes, it's imminent. It's going
Speaker 2: to happen within the next ninety days. The second embodiment
Speaker 2: is not small, it's big. It looks just like a
Speaker 2: drilling rig. You look at it and you say, okay,
Speaker 2: that's a drilling rig for oil and gas. And that's
Speaker 2: also in Houston. We're using Neighbors Industries as a partner
Speaker 2: and we've given superpowers to their drilling rig for the
Speaker 2: same purposes. But because it's bigger, you can go thousands
Speaker 2: of meters and you can drill bigger holes with more pipe.
Speaker 2: That is what gets us into commercial relevance for geothermal.
Speaker 2: The little one doesn't do that. It's just for show,
Speaker 2: But the big one does that.
Speaker 1: When you're going to make a hole with the big one.
Speaker 2: Oh, it's already happening, but it's happening at a small
Speaker 2: scale in a yard underneath the rig, in a well.
Speaker 2: We're we're gonna show it off at Sarah Week in
Speaker 2: Houston in March. But I think the real question is
Speaker 2: when can I go to the field and see it
Speaker 2: in action. When is it drilling a hole that no
Speaker 2: drill big can drill. And that's in twenty twenty six
Speaker 2: and twenty seven as part of these commercial projects.
Speaker 1: So there's a till you've made that's public with a
Speaker 1: gold mine in Nevada? Is that right? Tell me about that.
Speaker 2: So this is a mining operation. Is I think it's
Speaker 2: the third largest gold mine in the world, and it's
Speaker 2: in Nevada. And they have their own, their very own
Speaker 2: coal fired power plant. It's a two hundred and fifty
Speaker 2: megawa coal firepower plant that they use as part of
Speaker 2: the electricity require for the operation. And they want to
Speaker 2: decarbonize that. And they've looked and looked and looked, and
Speaker 2: they've tried solar and they've tried batters, and they said, no,
Speaker 2: nothing can do it. We're not convinced by anything. Not
Speaker 2: even the other geo thermal companies that are out there,
Speaker 2: you know, growing and making it happen. They're not good
Speaker 2: enough for that level of power required. So they looked
Speaker 2: at us and said, Okay, your stuff can repower a
Speaker 2: power plant because it's that hot, that powerful. So that's
Speaker 2: the nature of that conversation. With them. We can repower
Speaker 2: their power plant by retiring the cold and replacing it
Speaker 2: with the geodermal hit.
Speaker 1: And that's the only one that's public.
Speaker 2: You have several projects, but that's the only one that's public.
Speaker 2: That's right, that's right. So there are five projects in
Speaker 2: the works, one of which is public, but the other
Speaker 2: four are of a similar nature, not all not not
Speaker 2: for gold mines, but for multiple industrial use cases. There's
Speaker 2: probably one that's going to be a data center one
Speaker 2: I can say as much. There's some that are going
Speaker 2: to be industrial heat, because that's also another value proposition.
Speaker 2: But all of them share one characteristic. They're large. There
Speaker 2: are hundreds of megawads. They're coal fire or gas fire,
Speaker 2: and we're going to retire that. And they need firm,
Speaker 2: clean energy. They cannot do with intermittency, they cannot make
Speaker 2: with transmission cues. They really need a power.
Speaker 1: They need a dedicated power plant that is always producing
Speaker 1: power for just their data center or whatever.
Speaker 2: Yeah, that's a good way to put it. These are
Speaker 2: the big, big users that are having a hard time
Speaker 2: finding solutions to the carbonized.
Speaker 1: So how much deeper do you have to go for
Speaker 1: these initial projects than sort of standard or even kind
Speaker 1: of standard modern geothermal companies would go.
Speaker 2: So three to five kilometers down, that's about two to
Speaker 2: three miles is the beginning of that journey. And these
Speaker 2: initial projects are that that depth. The first and the
Speaker 2: second are that. The third one than Nevada. If that
Speaker 2: comes third, it's a little bit deeper than that. So
Speaker 2: the journey starts at two to three miles down, and
Speaker 2: that's good. That's important because you can get the job
Speaker 2: done without having to go crazy deep. But it progresses
Speaker 2: towards twelve miles. We think twelve miles is the final number.
Speaker 2: We don't need to go beyond that.
Speaker 1: I mean, twelve miles is an order of magnitude farther
Speaker 1: than people go. Now right, it's a lot farther. It's
Speaker 1: not margin.
Speaker 2: Yeah, twelve miles is twenty kilometers on the average is
Speaker 2: about two kilometers. So yes, it's a ten x it's
Speaker 2: a TENNX improvement in depth. But at that point you're
Speaker 2: talking about humanity having access to industrial grade geothermal, you know,
Speaker 2: and that's a journey.
Speaker 1: That humanity meaning it'll work if you can go that deep.
Speaker 1: You can do geothermal everywhere, basically.
Speaker 2: Not just that you can do industrial great heat from geothermal,
Speaker 2: which is quite different. You can do geothermal in many,
Speaker 2: many places. That's just for bats or agriculture. We're talking
Speaker 2: about fossil true fossil replacements.
Speaker 1: Like the kind of crazy heat that lots of industrial
Speaker 1: processes require that now you have to burn fossil fuels.
Speaker 2: For that's right, and you can do it everywhere. That's
Speaker 2: really what we're talking about. Hot and deep, not just
Speaker 2: hot and not just deep both. So just tell me
Speaker 2: what it looks like when you make one of these.
Speaker 2: I went to see it and it existed in the world,
Speaker 2: your geothermal plant.
Speaker 1: What would I see? What would it look like?
Speaker 2: You wouldn't be able to tell it's anything special. It
Speaker 2: looks like a power plant.
Speaker 1: How big around is the hole? What's the diameter of
Speaker 1: the whole?
Speaker 2: Eight inch diameter of basketball size?
Speaker 1: A basketball size, so you could you could drop a
Speaker 1: volleyball down the hole, but not a basketball basketball Betoien.
Speaker 2: Yeah, it's about an eight and a half inch diameter
Speaker 2: four two hundred megawats of thermal energy.
Speaker 1: And if if you drill the twelve mile hole of
Speaker 1: your dreams and I dropped a penny down the hole,
Speaker 1: how long would it take to hit the bottom.
Speaker 2: Oh, a free fall of twelve miles twenty kilometers, it
Speaker 2: would take I don't know, three minutes, two to three minutes. Yeah,
Speaker 2: it's like jumping. It's like jumping from an airplane. I
Speaker 2: mean an airplane flies half.
Speaker 1: That more, right, it's twice as long as deep as
Speaker 1: an airplane is high.
Speaker 2: Yeah, the twelve mile version. Yet we remember we don't
Speaker 2: start with twelve miles. But yes, you're right, it takes
Speaker 2: it takes that long to fall.
Speaker 1: Yeah.
Speaker 2: Now it's full of water, so it sings rather than fall,
Speaker 2: so it probably would take longer.
Speaker 1: Oh right, a slow water. So right, so you don't
Speaker 1: just drill one hole, right, you drill a hole to
Speaker 1: get down to the heat and then and.
Speaker 2: Then what Yeah, so you do? They coming in pairs,
Speaker 2: always in pairs. One for the weight down. We call
Speaker 2: that an injector, and one for the weight up. We
Speaker 2: call that a producer. The pair is eight inch eight
Speaker 2: and a half inch in diameter each, and they go
Speaker 2: down to the source rock down below at the temperature
Speaker 2: we want it to be, and that pair produces as
Speaker 2: much energy as an oil whale pair injector producer. That's
Speaker 2: a key concept.
Speaker 1: And so injector producer is like, what you're injecting is water,
Speaker 1: and what's coming back up is steam.
Speaker 2: That is correct. In fact, you keep it under high pressure.
Speaker 2: So what comes up is superheated liquid which can flash
Speaker 2: into steam or supercritical water. And that's what you fit
Speaker 2: into the power plant, not directly but through heat exchangers
Speaker 2: for many reasons. But that's really what's that's the engine,
Speaker 2: that's the fuel source.
Speaker 1: There any like weird unintended consequences like earthquakes.
Speaker 2: Those are possible, right every time you pump into the earth,
Speaker 2: that's a possibility, especially if you go into fault faulty songs.
Speaker 2: But remember what I told you. We don't pump, we
Speaker 2: don't ramp pressure into the earth. We just fill a
Speaker 2: hole with cold water and nature does the rest. In fact,
Speaker 2: we're replicating a process that happens in nature at scale.
Speaker 2: That's how every mind in the world gets formed. So
Speaker 2: will there be earth bakes? I think if you do
Speaker 2: this in the wrong place in a big fall, there
Speaker 2: is a risk for that. But if you did do
Speaker 2: this in most places in the world, there's no faults
Speaker 2: of the kind of mentioning here, there shouldn't be a
Speaker 2: reason for that, So anything else.
Speaker 1: Like that, any other weird geological activity.
Speaker 2: That that could happen as a as a consequence, I
Speaker 2: don't think so. I mean, you cool the rock ten
Speaker 2: degrees twenty degrees over the lifetime of the asset, and
Speaker 2: then you move on. So that's a very small cool
Speaker 2: down out. We are pricking. It's like a needle, tiny
Speaker 2: needle prick in the skin to mine a little bit
Speaker 2: of it of that, you know, but this is regulated.
Speaker 2: So I'm not gonna say that there's zero risk. There's
Speaker 2: always risk. But the earthquakes that are associated with geothermal
Speaker 2: are of a very different kind and are usually because
Speaker 2: you're crambing pressure with pumping trucks into the earth. We're
Speaker 2: not doing that.
Speaker 1: What do you do with the dust that you blow
Speaker 1: back up?
Speaker 2: It's wonderfully useful for many, many things, and you cannot
Speaker 2: just discharge that. You know, that's particulate matter, So you
Speaker 2: treat it, you separate it, and some of it will
Speaker 2: find value streams in industry, and you think the value
Speaker 2: the value of it will sort of offset the cost
Speaker 2: of treating it enough that it's not gonna mess up
Speaker 2: your economics for some for some things, not for everything.
Speaker 2: Some things you just you just leave them in an
Speaker 2: inert neutral state, like cuttings in a in a drill rig.
Speaker 2: You know what do you do with the cuttings. You
Speaker 2: don't just dump them overboard in off short breaks. You
Speaker 2: treat them. There's regulation about that, and you dispose of
Speaker 2: them properly. You make them inert. Some will be valuable,
Speaker 2: but you know, we don't put that into the techn economics.
Speaker 2: But we know that these things will be valid.
Speaker 1: So when you're modeling it, you assume that that's just
Speaker 1: a pure cost, and even even at that estimation, you
Speaker 1: think you can correct.
Speaker 2: Yeah, it's it's the business is the business of energy.
Speaker 2: That is the techn economic model. How much does it
Speaker 2: cost to get to the energy, to produce it, to
Speaker 2: operate it, and how much does itself for That is
Speaker 2: the business model.
Speaker 1: So give me the like, like, give me the long view.
Speaker 2: We've been talking about little things. I've been asking about
Speaker 2: this detail in that detail, like what's the big picture,
Speaker 2: the five year picture of the tenure picture. So in
Speaker 2: the five years, we're doing the first five projects or
Speaker 2: achieving bank ability. So that's still in the details, that's
Speaker 2: in the weeds. The company is really trying to break
Speaker 2: through into true commercial scale. But the big view of
Speaker 2: the reason I do this is because the day the
Speaker 2: oil industry looks at a geothermal project with the same
Speaker 2: eyes that they look at an oil and gas project,
Speaker 2: you've won. Huh, that's the beginning of the end.
Speaker 1: It's interesting to have the sort of oil and gas
Speaker 1: industry centric view of the energy transition, Like, why do
Speaker 1: you say that?
Speaker 2: Ever since you and I have been alive, the oil industry,
Speaker 2: the workforce, the capital, the regulation, the infrastructure, has been
Speaker 2: putting into the world two terra watts of new capacity
Speaker 2: simply to keep up with not growing but stable demand.
Speaker 2: Let me say that again, oil feels decline in production.
Speaker 2: Just to keep up with the amount of energy that
Speaker 2: we humans consume, they need to bring online new capacity
Speaker 2: that adds up to about two terrawats per year. There's
Speaker 2: nothing like it, not even by orders. Manage the closeness
Speaker 2: to it. If it doesn't involve the oil industry, it
Speaker 2: won't happen in this generation. It will take longer, and
Speaker 2: the oil industry is not going to do the job
Speaker 2: if it implies a compromise for them. Geothermal is a compromise.
Speaker 2: It's like okay, yeah, I'm going to encouras much cost
Speaker 2: and as much risk, and I'm going to get a
Speaker 2: fraction of the profit back. Why would I do geothermal
Speaker 2: when I can do oil and gas. So that is
Speaker 2: the game I need to play with them. The minute
Speaker 2: they look at geo thermal the same way, the same
Speaker 2: profit margin, is the same skill, the same business opportunity
Speaker 2: as they do oil on gus, You've won because at
Speaker 2: that point they will take it over and do it
Speaker 2: at the tutor awatskill plus and then you transition energy
Speaker 2: until then we're playing another manitude out of the league
Speaker 2: that we need to be playing at.
Speaker 1: We'll be back in a minute with the lightning round. Okay,
Speaker 1: we're gonna finish with the lightning round. It's gonna be
Speaker 1: much more random. What one thing you did when you
Speaker 1: served in the Colombian Army after high school?
Speaker 2: I trained to be a soldier, so I very much
Speaker 2: went through weaponrytraining, military approaches and assaults, and I actually
Speaker 2: went into operations totally, not into a war zone, but
Speaker 2: that was my military training. I was a soldier for
Speaker 2: a year before coming to m T.
Speaker 1: Yeah, so what's that like. You grew up in Medigan,
Speaker 1: you were a soldier, and then you went to M
Speaker 1: I t like what was what was one surprising thing
Speaker 1: to you when you got there?
Speaker 2: Life changing? So I think I fell at home at
Speaker 2: MIT in many many ways. I was always very curious
Speaker 2: about physics, engineering. I would do many things by myself,
Speaker 2: and I would never feel quite at home in Columbia.
Speaker 2: I would never find the groups or the university for
Speaker 2: the classes that would satisfy me. MIT, for the first
Speaker 2: time ever in my life, gave me that what's one
Speaker 2: thing I should do if I go to Medagan, Oh,
Speaker 2: my god, one thing impossible. We have to do one
Speaker 2: hundred things. You should go and get into the rich
Speaker 2: songs of the city, the bosons of the city, and
Speaker 2: just so giddling. Then you should also eat because there's food,
Speaker 2: good food everywhere.
Speaker 1: What's one thing I should eat?
Speaker 2: But they have AISA, but you should share that because
Speaker 2: it's probably five thousand calories at least.
Speaker 1: What is it?
Speaker 2: Combination of rice, beans, meat, pork, rins, plantains, avocado, and
Speaker 2: arib which is a corn patty.
Speaker 1: Very basically it's everything. It's basically everything.
Speaker 2: Oh maybe a Friday too, So yes, it's everything. It's
Speaker 2: very large, very satisfying, very delicious, not to be eaten
Speaker 2: every day.
Speaker 1: What was the second best idea you heard when you
Speaker 1: were working as a venture capitalist at.
Speaker 2: AH It must have been the approach to fusion. I
Speaker 2: was in the room with Bob Momtguard first approached the
Speaker 2: engine to say, hey, we have these tape to make
Speaker 2: a stronger magnet. And I say, oh, this is a
Speaker 2: very very good idea, because that's a very good approach
Speaker 2: to actually get going with fusion single handedly. If I
Speaker 2: were not doing ways, that's where I would probably be
Speaker 2: putting my life forcings.
Speaker 1: I mean, it's maybe even more of a long shot,
Speaker 1: but even bigger if it works.
Speaker 2: Right, Oh, I think so that is the ultimate energy source.
Speaker 2: Ultimate We didn't talk about it. Why not fusion? Well, yes,
Speaker 2: fusion is the way to do it, But why not
Speaker 2: fusion has to do simply with building the infrastructure, the
Speaker 2: human capital. Everything needs to be built. It doesn't exist.
Speaker 2: The industry needs hasn't been born, the humans haven't been
Speaker 2: born at skill to do it. And I think geo
Speaker 2: politics will play a very strong role. These are devices,
Speaker 2: These are machines. To me, they are like an F
Speaker 2: twenty two and F thirty five. These are things that
Speaker 2: you don't give to everybody or seldom. They're not for sale. Yeah,
Speaker 2: they're not for sale, and yes, but we'll probably agree
Speaker 2: with I mean, you can make them go for sale,
Speaker 2: but think about it. You sell airplanes to other nations,
Speaker 2: but you don't sell f thirty fives. You know, these
Speaker 2: are so differentiated that they become geopolitically sensitive.
Speaker 1: Like whatever country figures it out is going to say,
Speaker 1: we're not giving this to anybody, We're keeping it. We're
Speaker 1: only going to give it to our friends, something like that.
Speaker 2: It's the ultimate company of advantage, the ultimate company.
Speaker 1: Free unlimited energy.
Speaker 2: Yeah, yes, yes, forget about everything else. That's it. You've
Speaker 2: done it.
Speaker 1: What pun are you most tired of hearing related to
Speaker 1: Quays to your work?
Speaker 2: The funds make themselves in geotheraphone, Yeah right, I enjoy
Speaker 2: them all.
Speaker 1: But what's your favorite? Then?
Speaker 2: My favor is we we gotta keep digging deeper to
Speaker 2: solve energy transition.
Speaker 1: Carlos Arake is the co founder and CEO of Quays And.
Speaker 1: Today's show was produced by Gabriel Hunter Cheng. It was
Speaker 1: edited by Lyddy Jean Kott and engineered by Sarah Bruger.
Speaker 1: You can email us at problem at Pushkin dot Fm.
Speaker 1: I'm Jacob Goldstein and we'll be back next week with
Speaker 1: another episode of What's Your Problem.