Harnessing the Heat Deep Beneath Our Feet
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To get to our post-carbon future, we just need some combination of wind and solar power plus energy storage plus nuclear power. Those together ought to do it. That's the story I've told on this show. It's a story lots of people have told on lots of shows. But I recently talked to a guy named Carlos Araque, who made a compelling case that this story is not true, that it's not going to work.

For a variety of reasons, technical, economic, political, wind and solar plus storage plus nuclear are just going to be too slow to build, too inefficient, too politically complex to deliver all the carbon-free energy that the world needs urgently. Carlos has another idea. It's kind of out there, but he's raised a lot of money to do it. His idea is this. Shoot a high-energy beam down into the ground

until we've dug a hole 8 inches wide and 12 miles deep. Basically, he wants to reinvent geothermal energy. He wants to harvest the heat energy that's just sitting down there all over the world waiting for us to get it. He says if he can figure out how to do that, you know, cheaply, efficiently, at scale, our energy problems will be solved. But nobody has ever dug a hole nearly this deep.

Carlos' own company hasn't started drilling deep wells yet. And so the whole project is, you know, at this point, something of a long shot. Still, Carlos and his colleagues have raised somewhere around $100 million. And if they succeed in what they're trying to do, it will, in fact, be this incredible new source of clean energy. I'm Jacob Goldstein, and this is What's Your Problem? The show where I talk to people who are trying to make technological progress.

My guest today is Carlos Araque. He's the co-founder and CEO of Quaze Energy. Carlos' problem is this:

Carlos knows in great detail how routine and widespread and profitable drilling for oil and gas is because he spent the first 15 years of his career working at Schlumberger, a giant firm that provides services to oil and gas companies.

And to start, I asked Carlos how he made the leap from working at this 100-year-old company in the fossil fuel business to starting a company that's trying to move the world off of fossil fuel. I think it goes back to much before I quit. I quit in 2017, and I think I can remember as far back as 2010 when I started to become very familiar with the oil industry, the amount of energy we use as a civilization, how it's growing over time.

When I started thinking about what it would take to transition away from fossil fuels. So like in a way working in the fossil fuel industry gave you an appreciation for how hard it will be to transition away from fossil fuels? Very much so. Very much so. It's just the sheer numbers, how much energy it takes to power humanity today. Yeah. It's just...

an awakening moment to say, okay, there's no way we're going to be able to do this with wind, solar batteries, hydro, nuclear, et cetera, et cetera. So that's when the surge started. It had to be something at the scale of oil and gas, and it had to be something that solved for the environmental challenge, but also other challenges, geopolitical, socioeconomic challenges.

And environmental emissions, land use, mineral use, all of those things need to be solved for. And I wasn't seeing anything on the landscape at all. So that's the beginning of that inkling. And when was that? When was it that you left?

I think I was living in Norway at the time. I was working for Schlumberger in Norway. And that's when I started thinking about these things, mostly seeing, you know, reflecting on a country like Norway, how prosperous it is and where that prosperity comes from. Oil. Which is oil. And good institutions, right? They have a lot of oil and they have like very robust civil institutions. A rare combination.

Oh, yeah. It's a very blessed combination, you know? So that got me thinking about those things, you know, and living in there, not just working, but living, living in the country, being a direct beneficiary of that way of doing things was the beginning of that, you know? And that country is pristine. It's so beautifully pristine. I said, okay, these guys are doing something really, really right.

What's behind that? So that's the beginning of that search of how much energy, how do we do it? It's not just about emissions. It's about many other things. But it took seven years to develop the deep conviction and to get my family's complicity in quitting storage. Because you had a good job. I assume you were paid well. You could work there your whole life.

Absolutely. I have nothing bad to say about my years there. It's nothing but good experiences, good colleagues, good problems, never boring. So it really came from a very deep conviction of trying to, you know, I call it using the second part of my career to actually...

push in what I think needs to be the direction that the world needs to go into. And don't get me wrong. I don't think fossil fuels are going to disappear anytime soon, but we need to start pushing in a new direction. And I wasn't seeing anything able to do that. So you go and work at the Venture Capital Fund of MIT, your alma mater in your search, right? Now you're on your quest. Yeah.

When you get there, I mean, are you sort of in your mind explicitly or implicitly be like, okay, I'm going to go try and find it. I'm going to go try and find some solution to our energy problem. Is that what's happening? I think it is like that indeed. I quit Schlumberger without having a job, you know, on principle. I said, look, I need to get out of here.

to reinvent myself. It's too comfortable to stay in that job. So you will always postpone it. So we came back, we were living in England as a family, you know, my wife and three kids. And I decided that, I had already decided that energy transition was

was a technological problem first. And if successful, if bridged, could become then a socio-economical, geopolitical, and all of the other things, regulatory problem, but technological problem first. We don't have the technologies to transition away from fossil fuels. And what year-ish is this? When did you leave? It's 2017. So by 2017, solar power is already getting...

Much cheaper. Lithium-ion batteries are still expensive, but they're starting to get cheaper. Like, people are very excited about those technologies at that time. Like, what's your view on them? So, I think...

They will play a part in the solution, but I think they will play a very small part in the solution. And if you take solar and wind and nuclear to take the three sort of classic, modern classic renewables, like those seem pretty compelling, plus storage as a package to me. You're clearly less compelled by those as a package. Why? So it has to do with the premiums we incur, right?

in transitioning a unit of fossil energy to a unit of clean energy from either one of those sources. So when you say premium, do you mean cost by different definitions of the word cost? What does premium mean when you use it that way? Yeah, I define premium as multiple things. So land use per unit of energy, that's one. Mineral use per unit of energy, that's two. And man hours, labor hours.

use per unit of energy. And I frame it like that simply because these are the resources we have available to us. Think about it. We have time, space, and stuff, basically. Actually, I say four things. There's time, there's space, there's natural resources, and there's know-how. That's it. Those are the resources. Everything else derives from that.

Yeah, it's like land, labor, capital, and ideas, right? It's like kind of Econ 101-ish. That's right, that's right. So you cannot pretend that you can replace 25 trillion joules per second, which is what it takes to power humanity, if in doing so you're incurring a 100x to a 1,000x on any of those things, you know? A unit of fossil energy takes...

a certain amount of space, land, a certain amount of minerals, a certain amount of labor to pull together, to bring together. And if you try to do it with solar, that multiplies by about 100. In terms of the space in particular? Yes, it takes 100 times more land. Yeah.

It takes 100 times to 1,000 times more minerals, depending on the mineral. And it takes 100 to 1,000 times more man hours. To install versus installing and recovering fossil fuels. All things considered. And implicitly in there is cost, but cost is deceptive because you can always make up economic models and...

capital cost models to actually bring those costs down. We can talk about cost in a second, but let's bring it more fundamentally. It's that realization that, and the same applies for wind, and the same applies for pretty much everything that's renewable, diffuse, and intermittent. We cannot move

a joule or a watt of fossil energy to the clean space, to the emission space, you know, bonus points for lower emissions, by incurring 100 to 1,000x more cost on land use, mineral use, and labor use per unit of energy. That's not scalable. The externalities will stop it on its tracks. Uh-huh. Like, even though it's so much cheaper to make solar panels now, there sort of will be land use, just in practical political terms, people won't

let us put all the solar panels we need to generate the energy? I mean, is it that kind of problem? Yeah, we won't be able to afford the land use for that. I mean, forget about people letting it be. That's going to happen, but we just won't have the land budget to do it.

Because we also need to use land for other things, like preserving environmental forests, right? Like feeding ourselves, you know? And people always say like, oh, we can put this stuff in the Sahara. Sure, you can, but it's still intermittent and the energy is there, not here. So there's this fallacy that because you can take energy from somewhere sometimes, you can put it everywhere all the time.

That is the biggest fallacy. I mean, people are trying to solve that. I know that adds costs, right? But like by some combination of building wires is the... That is the cost. That is the cost. So people say wind and solar are cheap. Lie.

The collection of those resources is cheap, but building those into the, and the fixed cost required to bring that energy everywhere all the time is where the true cost is. You know, the cost is not in collecting the energy. The cost is in moving it and storing it. And it's massive, massive, massive. I mean, so if you're an engineer, think about those things. You say, look, this is, this is not going to get us anywhere close to

to where we need to be. Fine, they'll play a solution. There's markets for that. People will money. Capitalism will play its role. But at some point, those externalities will smack you in the face and it's happening. It's happening. You can see it already happening in some places with deep penetration. So I don't believe...

And this is not faith. This is not a belief as in faith. This is belief as in quantitative rigorous engineering analysis. Yeah. That those things will actually get us to where we need to go. What about nuclear power? Oh, nuclear can totally do it. Absolutely. Nuclear does not incur those premiums. But nuclear has a different problem. I'm from Colombia. We have oil. We barely have a refinery in the country. Why is that?

because of value chains and because of geopolitics. So don't tell me that we will be happy to ship radioactive fuel, refine radioactive fuel and ship back radioactive waste on a global scale. We can barely do that with oil and gas. In particular, you're saying the...

The raw material, the uranium, say, that you need to make nuclear power doesn't exist in lots of places. And the notion that there will be some kind of global supply chains shipping uranium around the world is implausible. That's the core argument you're making. Yeah, and that's just the raw material. The raw material is a simpler problem. It's just a problem of carrying a lot of things from point A to point B. I'm more concerned, actually, about the refined form of

of that, shipping and rich radioactive materials, fuel grade, not weapon grade, fuel grade radioactive material to fuel the power plant, you know, worldwide into economies that cannot even control themselves into very, very troubled geopolitical systems that cannot even govern themselves. This is not going to happen at scale. I think nuclear is a solution for the G20.

but not much beyond that because of the geopolitics, not because of the technological arguments I made about wind and solar. The G20, the 20 basically richest countries in the world, essentially. That's right. That is correct. Okay. So you've set the table. This is what you're thinking about when you leave Schlumberger and you're going out looking for the solution that nobody has found. You go to MIT. Good place to look. What happens when you get there?

So I got there because I heard about a new venture fund being launched by MIT. Timing. I didn't plan it that way. It just happened that way. So MIT was telling the world, look, the big problems of the world are not being solved because capitalism is distracted with the near term and little opportunities. So they created a fund, the engine, they called it.

to incentivize the transition of bold ideas from lab to a commercial life. So I went into that environment and I started pitching the engine, you know, let me be part of this. I want to work here because I want to learn venture capital. And the reason I did that is because if it's a technological solution, only venture capital of that kind is going to allow it to flourish outside of the

confines and politics of large corporations like Schlumberger. I was familiar with that. You saw the limits of what legacy companies could or would do. That's right. The opportunity cost is too high for them to incur it. Their stakeholders don't allow it. They do research and development, but not of the kind required to bring forth

They're not in that business. They're not in that business. It's a Clay Christensen innovator's dilemma. Like, why would they do that? Yes. Their capital cost, their opportunity cost doesn't allow them to. So that was my conclusion. Venture capital might do this, especially of the kind the engine was proposing, MIT was proposing. Not any venture capital because a lot of it is very short-tempered. Sure.

So, okay, so that was the journey there. I said, okay, let me be here. I want to learn venture capital, not because I want to be an investor, but because I want to see how that game is played, how you pitch an investor in venture capital. And in return, I can help you with these companies that are coming out of the labs to figure out commercialization pathways, and I can do diligence. We did that for a year to the day. So that was that transition. And then one day you meet a guy who,

The first week there, by the way, the first week there. It's funny. So I joined in July 1st, 2017. And I think that week, that very week or the week after, Paul Wasco walked in with Aaron Mandel saying, hey, here's this idea. We need to pitch the engine. And I was the investor, representing the investor on the other side of that conversation. The skeptic, the person saying, why should we give you money? Yes. Yeah. Yes.

Yes. Pitch me why. So who are these people? Paul Wascoff is a career-long research engineer at MIT, particularly the Plasma Science Fusion Center. Fusion as in everybody's favorite dream for how to get nuclear energy. If we could ever figure it out, it would be amazing. But nobody's figured it out. That fusion. Absolutely.

That fusion, which is also a solution, but I can give you a few pointers why I don't think that's going to do anything in our lifetimes. But that's another conversation. So that's Paul Voskhov. Then Aaron Mandel is a serial entrepreneur. He likes to start companies. He's a good scout. And he was looking for solutions in the geothermal space. And he had concluded...

that drilling deeper and hotter was a really, really, really important part of the equation. Okay. So there's an entrepreneur who has the idea of drilling deeper for geothermal energy. What's he doing with a guy who studies fusion? Like, what's going on there? Paul had been, since 2007, been playing with very many of the technologies that are used in fusion, right?

but to drill. You know, he was playing with charatrons and waveguides and energy beams. But that's still two years before I even met them as the investor on the other side of the table. So, okay, so these guys have been working together. They walk into the room. You're brand new. What's their pitch? Their pitch is very much about drilling hotter and deeper with energy to unlock geothermal energy at a very large scale.

They wanted money to form that company. They wanted money to start that journey. And I was listening on the other side and saying, okay, this makes sense, sounds far-fetched. I need to become familiar with these technologies, which are not using oil and gas. And I was saying, you know, but if it works, it really changes everything.

But you're not pitching me a company. You're pitching me a research project. You're pitching me a continuation of the 10 years of academic work. And this is a venture capital fund. We need to see a company and we need to see a founding team. On a really basic level, like you're saying hotter and deeper, but like what is the very basic idea about hotter and deeper? Like what is sort of status quo geothermal energy? And then how is this idea different? Yeah, so...

Geothermal energy is relatively shallow. It's no more than half a mile, maybe a mile into the earth. And to put that into perspective, oil and gas routinely goes beyond that. They go to two miles, maybe three miles down. So in addition to the fact that geothermal energy as it exists now, not only when you're being pitched, but still today, right? It's...

It's not that deep. And also, it's fairly limited in where people can do it, right? Yes. By the nature of what exists a mile or less under the earth. That is correct. It's very geographically constrained. But funny enough, if you look at those places, they do amazing things with geothermal, like Iceland and Kenya. They power themselves. They're almost...

you know, Kenya is like 50% electricity from geothermal. Iceland is like 30% electricity, like 80% heat. And in those places, like at least in Iceland, the heat is coming up out of the ground itself almost, right? Like, I mean, I'm sure there are clever engineers and doing lots of work, but...

When the heat is literally like bubbling out of the ground, it seems a lot easier to capture. It is a lot easier. It's technologically possible and it's economically feasible. So that's why they exist there. So that's the status quo of geothermal today. And what happens if you go deeper, just on a basic geological level? So it's very simple. You just access that same heat no matter where you are in the world. If you go deeper...

you can move away from Iceland and you can access the same energy source, which happens to be everywhere, but at different depths. So everywhere is Iceland if you go deep enough. Everywhere is Iceland from a geothermal point of view if you go deep enough, indeed. And so, I mean, in the world now, I mean, Iceland is kind of the classic and Kenya is pretty well known. Overall, what's the...

Where is geothermal with current technology economically feasible? It's very small because of that geographical limitation. To give you a sense, not even 0.5% of energy, 0.5, one half of 1% of global energy comes from geothermal. And that's because it's geographically constrained. Basically, in most places, you have to go too far down to...

to get to the kind of heat you need. That is correct. That is correct. So that's why it's constrained. Why can't you just keep drilling? Like, why can't you just do what they're doing in places where they do it and just go farther down? You can, and people have. It's just very expensive. The drilling operation...

takes over the economics of anything. Is it nonlinear in some way? Like, is it that the deeper you go, the more expensive each marginal meter is? Yes. So you start at hundreds of dollars per meter and you could very well end up in tens of thousands of dollars per meter. Why? A hundred X. Because your drill bits wear and you have to replace them. And if you're very deep down there,

it takes a lot more time to replace the drill bit. Pulling it up. You got to pull it up. Pull it out. Change the drill bit. Pull it back and push it back in. And then drill for... That is such an amazingly simple...

But seemingly impossible to solve problem. Because that rug and that temperature kills the drill bits. Uh-huh. In hours, in hours, not even days, in hours. So the farther down you get, as it gets hotter, the drill bit wears out faster. And the farther down, you want to get hotter. So it's sort of a problem. That's right. There's another problem is that at some point you can't even get the energy down to the drill bit. Like you're on the surface rotating the drill string and...

all of that energy is lost on the way there. So the drill bit is barely scratching the surface at some point. So this is the status quo. When these guys walk into the room, just in basic terms, like what is their idea?

Their idea is we can use energy and nothing but energy. No drill bits. To do the work that the drill bit does. No drill bits. And not only that, no electronics, no cables, no switches, no nothing that breaks. We're just going to shoot a beam of energy down there and it's just going to open up a hole indefinitely. And the beam doesn't care if the rock is harder

or hotter, or more abrasive, it doesn't matter. And the beam doesn't care if it's 10 kilometers or 15 or 20 kilometers because it loses very little energy. So that's the big idea. The physics are radically different. Yeah. So it's pulverizing the rock, right? It's turning the rock into powder, basically. Like, how do you get it back up the tube, back up the hole? You blow it out of the hole

Very much like the Sahara blows across the ocean because the particles are so tiny that blowing them with a gas stream lifts them up and pushes them out of the hole. So that's it. You're basically pumping a gas and the gas is taking those particulates out of the hole. So this is the idea they walk into the room with? Yes. And you say what? I say...

Many, many things. But I say, okay, how do you build a company out of this? How do you test? What are the key ideas here that you need to test for? I was trying to come up to speed with 10 years. You got to realize they had been working on this for 10 years. There's a lot of information that I need to pick up and that I did pick up along the way. But I was just basically saying, okay,

What are the steps? How do you de-risk this? How do you make a company? How do you get to market? How do you make revenue? All of the things that it takes to go beyond an experiment into forming a company that has to survive by selling products or services. I also was asking about the team, typical venture capital question. Who is your team? Who is the entrepreneur? Who is going to do nothing 24-7 but these? All of those things are super important when you make an investment.

And they didn't have good answers to that. They were just pitching a research project. But that helped Aaron, who is a serial entrepreneur, to see me as a person that was very well qualified to potentially lead this. He pitched me the next day. He invited me to breakfast and said, Carlos, why don't you just jump in here and I'll be the CEO, you'll be the CTO. You are cut for this. And I said, well, I just got here, Aaron. Hold on a second. But that's the beginning of that journey. But

So as I approached my one year anniversary at the engine and I knew that I didn't want to be an investor because I'm an engineer first, that's when I started to think seriously about what it would take to actually build a company. So I took five months of three, four months of July, August, September, October doing nothing. I went back home, did nothing, just kind of retired for four months.

I'm thinking about nothing but this. So that was that arc. And that's when the company was officially born, October of 2018. That's the beginning of the commercial journey. Still to come on the show, why getting the oil and gas industry interested in what Carlos is doing is key to his plans and really to the whole energy transition. This message is a paid partnership with Apple Card.

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We are transitioning the technology from the lab to the field. So we have now built full-scale systems that are now going to the field to show the world. So we're taking the technology from the lab to the field. And what that means is it's no longer inside a controlled environment. It's out there under the open sky in an embodiment that is commercially relevant.

doing a technology demonstration that will hopefully unlock the next round of capital going forward. So specifically, when you say you're taking it from the lab to the field, what exactly are you doing? Like, where are you doing it? And physically, what is happening? It's in Texas. It all happens in Texas. We have two embodiments of the machine, of the drilling machine. We call it a millimeter-wave drill rig. One is small.

It looks like a mining drilling system. It doesn't look like an oil and gas drilling system. We made it small on purpose to move faster, to prove things faster. When you say it's small, I don't know what a mining drilling system looks like. What's it look like? It looks like...

Like the caterpillars, I mean, probably that's the most familiar thing to most people. The caterpillars, as you see at construction sites, you know, the excavators, the things working around a construction building, that kind of size of machinery. Okay, okay. We've bought one of the Shell and we gave it millimeter wave bearing capabilities. We gave it superpowers, so to speak. A caterpillar, like some kind of construction vehicle that can blast the hole in the earth?

Yes, but that's the first version. We put it on a system that can go out there and get it done. And we're doing that in Austin, Texas. We're taking from Houston to Austin, near Austin, in a quarry, a granite quarry, to actually show that we can drill through very, very hard granite without a drill bit. So you basically are shooting a microwave beam out of this construction vehicle into the rock? That's right. We're shooting down into the rock and we're drilling a hole through the rock.

for hundreds of meters, for tens to hundreds of meters. So yes, it's imminent. It's going to happen within the next 90 days. The second embodiment is not small. It's big. It looks just like a drilling rig. You look at it and you say, okay, that's a drilling rig for oil and gas. And that's also in Houston. We're using Neighbors Industries as a partner, and we've given superpowers to their drilling rigs

for the same purposes. But because it's bigger, you can go thousands of meters and you can drill bigger holes with more pipe. That is what gets us into commercial relevance for geothermal. The little one doesn't do that. It's just for show. But the big one does that. When are you going to make a hole with the big one? Oh, it's already happening, but it's happening at a small scale in a yard underneath the rig in a well.

We're going to show it off at CERA Week in Houston in March. But I think the real question is, when can I go to the field and see it in action? When is it drilling a hole that no drill bit can drill? And that's in 2026 and 2027 as part of these commercial projects. So there's a deal you've made that's public with a gold mine in Nevada. Is that right? Tell me about that. So this is a mining operation. I think it's the third largest gold mine in the world. And it's in Nevada.

And they have their own, their very own coal-fired power plant. It's a 250 megawatt coal-fired power plant that they use as part of the electricity required for the operation. And they want to decarbonize that. And they've looked and looked and looked and they've tried solar and they've tried batteries. And they say, no, nothing can do it. We're not convinced by anything. Not even the other geothermal companies that are out there, you know, growing and making it happen.

They're not good enough for that level of power required. So they looked at us and said, okay, your stuff can repower a power plant because it's that hot, that powerful. So that's the nature of that conversation with them. We can repower their power plant by retiring the coal and replacing it with the geothermal heat.

And that's the only one that's public. You have several projects, but that's the only one that's public. That's right. That's right. So there are five projects in the works, one of which is public, but the other four are of a similar nature. Not for gold mines, but for multiple industrial use cases. There's probably one that's going to be a data center one. I can't say as much.

There's some that are going to be industrial heat because that's also another value proposition. But all of them share one characteristic. They're large. They're hundreds of megawatts. They're coal-fired or gas-fired, and we're going to retire that. And they need firm, clean energy. They cannot do with intermittency. They cannot make with transmission queues.

They really need a power. They need a dedicated power plant that is always producing power for just their data center or whatever. Yeah, that's a good way to put it. These are the big, big users that are having a hard time finding solutions to decarbonize. So how much deeper do you have to go for these initial projects than sort of standard or even kind of standard modern geothermal companies would go? So...

Three to five kilometers down, that's about two to three miles, is the beginning of that journey. And these initial projects are that depth? The first and the second are that. The third one, the Nevada, if that comes third, it's a little bit deeper than that. Okay. So the journey starts at two to three miles down, and that's good. That's important because you can get the job done without having to go crazy deep. Yeah.

But it progresses towards 12 miles. We think 12 miles is the final number. We don't need to go beyond that. I mean, 12 miles is an order of magnitude farther than people go now, right? It's a lot farther. It's not marginally. Yeah, 12 miles is 20 kilometers. On the average, it's about 2 kilometers. So yes, it's a 10x. It's a 10x improvement in depth. But at that point, you're talking about humanity having access to industrial-grade geothermal.

You know, and that's a journey. Humanity, meaning it'll work. If you can go that deep, you can do geothermal everywhere, basically. Not just that. You can do industrial-grade heat from geothermal, which is quite different. You can do geothermal in many, many places. That's just for bats or agriculture. We're talking about fossil, true fossil replacement. Like the kind of crazy heat that lots of industrial processes require that now you have to burn fossil fuels for. That's right. Yeah.

And you can do it everywhere. That's really what we're talking about. Hot and deep. Not just hot and not just deep. Both. So just tell me what it looks like. When you make one of these, if I went to see it and it existed in the world, your geothermal plant, what would I see? What would it look like? You wouldn't be able to tell it's anything special. It looks like a power plant. How big around is the hole? What's the diameter of the hole?

Eight-inch diameter, a basketball size. A basketball size. So you could drop a volleyball down the hole, but not a basketball. Basketball would be tight. Yeah. It's about an eight-and-a-half-inch diameter for 200 megawatts of thermal energy. And if you drill the 12-mile hole of your dreams and I dropped a penny down the hole, how long would it take to hit the bottom? Oh, a free fall of 12 miles, 20 kilometers, right?

It would take, I don't know, three minutes, two to three minutes. It's like jumping from an airplane. I mean, an airplane flies half that high. More, right? It's twice as deep as an airplane is high. Yeah, the 12-mile version, yes. But remember, we don't start with 12 miles. But yes, you're right. It takes that long to fall. Yeah. Yeah.

Now, it's full of water, so it sinks rather than falls, so it probably will take longer. Oh, right. It's full of water. So, right. So, you don't just drill one hole, right? You drill a hole to get down to the heat, and then what? Yeah. So, they come in pairs, always in pairs. Okay. One for the weight down. We call that an injector. Okay. And one for the weight up. We call that a producer. Uh-huh.

The pair is eight inch, eight and a half inch in diameter each. And they go down to the source rock down below at the temperature we want it to be. And those, that pair produces as much energy as an oil well pair, injector producer. That's a key concept. And so injector producer is like what you're injecting is water and what's coming back up is steam?

That is correct. In fact, you keep it under high pressure. So what comes up is a superheated liquid, which can flash into steam or supercritical water. And that's what you fit into the power plant, not directly, but through heat exchangers for many reasons. But that's really what's, that's the engine. That's the fuel source. Are there any like weird unintended consequences like earthquakes?

Those are possible, right? Every time you pump into the earth, that's a possibility, especially if you go into fault, faulty zones. But remember what I told you, we don't pump, we don't cramp pressure into the earth. We just fill a hole with cold water and nature does the rest. In fact, we're replicating a process that happens in nature at scale. That's how every mine in the world gets formed. So...

Will there be earthquakes? I think if you do this in the wrong place, in a big fall, there is a risk for that. But if you do this in most places in the world, there's no falls of the kind I'm mentioning here. There shouldn't be a reason for that. Anything else like that? Any other weird geological activity that could happen as a consequence? I don't think so. I mean, you cool the rock 10 degrees, 20 degrees over the lifetime of the asset.

And then you move on. So that's a very small cool down. We are pricking, it's like a needle, tiny needle prick in the skin to mine a little bit of heat of that. But this is regulated. So I'm not going to say that there's zero risk. There's always risk. But the earthquakes that are associated with geothermal are of a very different kind and are usually because you're cramming pressure with pumping trucks into the earth. We're not doing that. What do you do with the dust that you blow back up?

It's wonderfully useful for many, many things. And you cannot just discharge that. You know, that's particulate matter. So you treat it, you separate it, and some of it will find value streams in industry. And you think the value of it will sort of offset the cost of treating it enough that it's not going to mess up your economics? For some, for some things, not for everything. Some things you just leave them in an inert, neutral state.

Like cuttings in a drill rig. What do you do with the cuttings? You don't just dump them overboard in offshore rigs. You treat them. There's regulation about that, and you dispose of them properly. You make them inert. Some will be valuable, but we don't put that into the techno-economics. But we know that these things will be valuable. So when you're modeling it, you assume that that's just a pure cost, and even at that estimation, you think you can...

Correct. Yeah. The business is the business of energy. That is the techno-economic model. How much does it cost to get to the energy, to produce it, to operate it, and how much does it sell for? That is the business model. So give me the long view. We've been talking about little things. I've been asking about this detail and that detail. What's the big picture, the five-year picture, the 10-year picture? So...

In the five years we're doing the first five projects, you know, achieving bankability. So that's still in the details. That's in the weeds. The company is really trying to break through into true commercial scale. But the big view, the reason I do this is because the day the oil industry looks at a geothermal project with the same eyes that they look at an oil and gas project,

you've won. That's the beginning of the end. It's interesting to have the sort of oil and gas industry-centric view of the energy transition. Like, why do you say that? Ever since you and I have been alive, the oil industry, the workforce, the capital, the regulation, the infrastructure has been putting into the world two terawatts of new capacity simply to keep up with, not growing, but

trains stable demand. Let me say that again. Oil fields decline in production just to keep up with the amount of energy that we humans consume. They need to bring online new capacity. That adds up to about two terawatts per year. There's nothing like it, not even by orders of magnitude closeness to it. If it doesn't involve the oil industry,

It won't happen in this generation. It will take longer. And the oil industry is not going to do the job if it implies a compromise. For them, geothermal is a compromise. It's like, okay, yeah, I'm going to incur as much cost and as much risk, and I'm going to get a fraction of the profit back. Why would I do geothermal when I can do oil and gas? So that is the game I need to play with them. The minute they look at geothermal,

The same way, the same profit margins, the same scalability, the same business opportunity as they do oil and gas, you've won. Because at that point, they will take it over and do it at the two terawatt scale plus and then you transition energy. Until then, we're playing an order of magnitude out of the league that we need to be playing at. We'll be back in a minute with the lightning round.

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like Pampers, Dove, Band-Aid, Playtex, and Premier Protein. Offer ends March 25th. Promotions may vary. Restrictions apply. Visit Safeway.com for more details. Okay, we're going to finish with the lightning round. It's going to be much more random. What's one thing you did when you served in the Colombian Army after high school? I trained to be a soldier, so I very much went through weapon retraining.

military approaches and assaults. And I actually went into operations, luckily not into a war zone. But that was my military training. I was a soldier for a year before coming to MIT. Yes. So what's that like? You grew up in Medellin, you were a soldier, and then you went to MIT. Like, what was one surprising thing to you when you got there?

Life-changing. So I think I fell at home at MIT in many, many ways. I was always very curious about physics, engineering. I would do many things by myself. And I would never feel quite at home in Colombia. I would never find the groups or the universities or the classes that would satisfy me. MIT, for the first time ever in my life, gave me that. What's one thing I should do if I go to Medellín?

Oh my God. One thing. Impossible. You have to do a hundred things. You should go and get into the rich zones of the city, the poor zones of the city, and just soak it all in. Then you should also eat because there's food, good food everywhere. What's one thing I should eat? Bandeja paisa. But you should share that because it's probably 5,000 calories at least. What is it?

Combination of rice, beans, meat, pork rinses, plantains, avocado, and arepa, which is a corn patty. Amazing. Very complete dish. Basically, it's everything. It's basically everything. Oh, maybe a fried egg, too. Yes, it's everything. It's very large, very satisfying, very delicious. Not to be eaten every day. What was the second best idea you heard when you were working as a venture capitalist at MIT?

It must have been the approach to fusion. I was in the room with Bob Mumgaard, first approached the engine to say, hey, we have this tape to make a stronger magnet. I said, oh, this is a very, very good idea because that's a very good approach to actually get going with fusion. Single-handedly, if I were not doing quays, that's where I would probably be putting my life force into. I mean...

It's maybe even more of a long shot, but even bigger if it works, right?

Oh, I think so. That is the ultimate energy source. Ultimate. We didn't talk about it. Why not fusion? Well, yes, fusion is the way to do it. But why not fusion has to do simply with building the infrastructure, the human capital. Everything needs to be built. It doesn't exist. The industry hasn't been born. The humans haven't been born at scale to do it. And I think geopolitics will play a very strong role. These are devices. These are machines.

To me, they are like an F-22, an F-35. These are things that you don't give to everybody or sell them. They're not for sale. Yeah, yeah. They're not for sale. And yes, Bob will probably disagree with me. You can make them go for sale, but think about it. You sell airplanes to other nations, but you don't sell F-35s. These are so differentiated that they become geopolitically sensitive. Right.

Like whatever country figures it out is going to say, we're not giving this to anybody. We're keeping it. We're only going to give it to our friends, something like that. It's the ultimate competitive advantage. The ultimate competitive advantage. Free unlimited energy. Yeah. Yes. Yes. Forget about everything else. That's it. You've done it. What pun are you most tired of hearing related to Quaze, to your work?

The plants make themselves in geothermal. Yeah, right? I enjoy them all, but... What's your favorite then? My favorite is we got to keep digging deeper to solve energy transition. Carlos Araque is the co-founder and CEO of Quaze Energy. Today's show was produced by Gabriel Hunter-Cheng. It was edited by Lydia Jean Cott and engineered by Sarah Bruguier. You can email us at problem at pushkin.fm.

I'm Jacob Goldstein, and we'll be back next week with another episode of What's Your Problem?

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