Altarock Halts Drilling at First Geothermal Well

Last Updated Sep 3, 2009 6:36 PM EDT

Altarock Energy can't catch a break. After running into local opposition earlier in the summer, when the New York Times published a story suggesting the geothermal energy company could cause earthquakes, it has now run into a tough rock formation at its first site, forcing it to stop drilling and move on.

The company is the darling of the geothermal industry, which is split between other startups and older, larger companies like Raser Technologies. Altarock, along with some other small companies, is pursuing enhanced geothermal, which involves deep drilling, often several miles beneath the surface, to reach a layer of hot rock that can produce steam.

It's not clear exactly what stopped Altarock's drilling, which began in an old well that reached over 3,000 feet down. The company made it only another 800 feet or so before giving up due to what a company official vaguely told the NYTimes were "physical difficulties".

The failure has likely cost Altarock several million dollars, no small setback for a startup. Worse, it has given another nasty surprise to a form of renewable energy that seemed, until recently, relatively straightforward.

Another company, Geodynamics, succeeded in drilling about 2.6 miles into the ground and installing a steam injection and capture system in Australia. Then in February, the well experienced a blowout that ultimately resulted in the company having to plug it closed. Several years before, the company had also experienced problems drilling.

Deep drilling is always costly, so it has been a challenge to attract investors who have more predictable places to put their money. As the difficulties mount, enhanced geothermal companies may find it even harder to attract investment.