With Hollywood seed funding, startup is testing abandoned oil and gas wells as grid-scale energy storage solution for wind and solar generation
“Our goal is to get to a cost point that’s potentially lower by a factor of about ten times than the batteries that you read about in the popular media, especially from companies like Tesla,” Aaron Mandell, Quidnet founder
Fossil fuels may consist of the majority of global energy consumption, but every year green energy continues to grow its footprint.
In BP plc’s (ticker: BP) 2015 Statistical Review of World Energy, green energy–renewables–accounted for about 33% of the increase in primary energy use. The form of energy has more than tripled in popularity in the last decade and now accounts for about 3% of energy consumption worldwide.
The Energy Information Administration believes domestic energy demand will grow at an annual rate of 0.3% through the year 2040. Scientists, geologists and inventors worldwide are continuously testing methods to generate new forms of energy to meet the rising demand with sources that are low carbon generating.
Hydropower Innovator Wants to Store Wind and Solar Energy in Depleted and Orphan Oil Wells
One of the minds behind the alternative energy curtain is Aaron Mandell, an entrepreneur who has founded four different organizations focused on hydropower and thermal power.
Mandell’s latest venture is Quidnet – a hydropower-based idea that is now being actively tested on a dry well in the Barnett Shale of Texas. The technology is being tested for Quidnet by Howard Schmidt of Saudi Aramco.
The basic idea is to store wind and solar generated energy in the ground by pumping water under pressure into rock formations where oil and gas are no longer trapped. To re-access the energy, Quidnet will feed the pressurized water from the well into turbines that will re-create the electricity when it is needed.
Early cash infusion from Hollywood
The seed money for the demonstration is mostly in place, courtesy of Boston’s PRIME Coalition which facilitated philanthropic capital infusions from Hollywood icons like Will Smith (The Will and Jada Smith Foundation).
According to a recent article in Inside Philanthropy: “Quidnet’s support from the Will and Jada Smith Foundation and other funders was unveiled recently by the Obama Administration as part of the president’s call to action to encourage more funding of technologies that fight climate change. Initially announced in February, the Clean Energy Investment Initiative plans to gather $4 billion for the funding of tech startups that are on a mission to help the planet with better energy resources.”
Quidnet plans to raise additional capital via private equity in the fall in order to develop its first commercial scale facility.
Quidnet founder Aaron Mandell spoke with Oil & Gas 360® about the Quidnet venture in this exclusive interview.
OAG360: Can you explain to our readers how the system works, from start to finish?
MANDELL: Yes, absolutely. You probably gathered that we’re in the business of energy storage, so our focus really is on getting to very large scale, large capacity storage systems that would be appropriate for power plants or large generators of that nature.
Our goal is to get to a cost point that’s potentially lower by a factor of about ten times than the batteries that you read about in the popular media, especially from companies like Tesla. So we’re basically trying to get away from expensive battery chemistry and do storage in a way that’s not really all that new. Hydropower, which is what we’re mimicking, has been around for ages and today represents the largest form of energy storage globally.
What we’re trying to do is create hydropower in a different way and eliminate the geographic restrictions that have prevented it from expanding further, namely the requirements to have two very large water reservoirs where you can pump water back and forth. We’re basically taking all that surface infrastructure and putting it underground initially by starting with abandoned oil and gas wells.
We go into reservoir formations where the oil and gas operations have either exceeded their useful life (meaning depleted the oil and gas resource or there really wasn’t much hydrocarbon there to begin with) and inject water into the well.
We’re essentially using the water to compress the rock, which in turn makes the well act like we’re putting weight on a very large spring. And when we open the well, the spring wants to move back in place so it forces the water out of the well and through a turbine, much like you would see at the bottom of a dam. In that way, we’re able to charge the reservoir by taking electricity and using it to pump pressurized water, and we’re able to discharge power in the form of hydro-power by releasing that pressurized water and spinning a hydro turbine.
The attractiveness of this method is that the cost structure for hydropower is very inexpensive because it’s all mature equipment and we’re using oil and gas techniques that are very well known. Oil and gas companies have gotten very good at manipulating reservoirs, controlling permeability, controlling fractures and so what we’re doing is basically using those same techniques but in a very different way.
An analogy I would use is when you fracture a hydrocarbon resource, you end up pumping in a proppant, a sand material that holds the fracture open. This particular storage technology came about because people observed that if you don’t have a proppant, the fracture closes very quickly. We’re just eliminating the use of a proppant by allowing the fracture to actually open and close as it would normally want to do and that’s how we get energy storage.
OAG360: Where is your first test well located, and what was the reasoning behind your decision?
MANDELL: We’re starting in central Texas because we found a resource that we think will work really well and Texas is a good place for energy storage. Broadly speaking, we think this type of storage technology will be pretty widely applicable to anywhere where you have oil and gas production. Therefore, this won’t be limited to just Texas – it will most likely be as widely applicable to all geologic formations associated with oil and gas exploration.
OAG360: Do your operations include fracturing the rock?
MANDELL: We do, except we don’t use any of the typical additives that are associated with hydraulic fracturing. Obviously the biggest difference is we’re not mobilizing hydrocarbons because we’re in an environment that’s depleted of oil and gas. Second, we’re not using a proppant or any of the associated chemicals that are required to mobilize and pump the proppant. Really all we’re doing is pumping fresh water into a fracture. We also don’t have any disposal fluid.
So, there’s no produced water because it’s a closed water loop. We’re cycling fresh water in, we’re cycling it out, we produce power and the same water goes back into the reservoir. So there’s no net production of produced water that would need to be disposed of or treated.
OAG360: Can the water remain in the well for an extended period of time or is there a timetable for when it should be replaced?
MANDELL: The formations that we operate in, by definition, have very low permeability. That’s kind of the opposite of what you look for with oil and gas, since high permeability causes hydrocarbons to flow out of the resource.
In our case we want extremely low permeability because we don’t want to lose any of our water. Lost water represents lost energy. We can actually store the water for long periods of time in the reservoir but for energy storage, we’re going to be operating on a pretty daily cycle. We’ll be storing energy during the day, most likely, when wind and solar is producing in excess and then when the sun goes down we’ll be able to discharge it on a daily cycle.
OAG360: How many gallons are required for these wells?
MANDELL: The depth for a typical energy storage well ranges from about 1,500 to 5,000 feet, and will store about 50,000 barrels of water (about 2.1 million gallons).
OAG360: Do you see any pushback from environmental groups?
MANDELL: No, I don’t think we’re going to get a lot of pushback for two reasons. One is, as I said before, we’re not actually consuming water. We’re using it to charge the reservoir, but after that there’s not really any net consumption of water and is therefore a pretty low water requirement. Second of all, we can use non-fresh water resources such as produced water or other impaired water that’s not good for fresh water resources.
OAG360: Can you explain the permitting process?
MANDELL: We had to go through the Texas Railroad Commission to get approval to take over what was classified as an orphan well, so it was abandoned by the original operator. But in terms of the permitting process, it looks a lot more like wind or solar than it does oil and gas because we’re not extracting any minerals from the ground. All we’re looking to do is get surface rights from a landowner and be permitted to do injection of water.
OAG360: Do you believe this business can eventually yield high returns?
MANDELL: We definitely see it turning into an attractive business even though it started out as very experimental. No one had ever used a rock fracture to do energy storage so it definitely started out as a technologically risky project. As a result, it was very hard for us to show investors how it would generate revenue in the very near term because we were more focused on demonstrating the content. But now that we’ve moved past that stage and will be completing our demo project over the next few months we do see a path to building a pretty good business because we can do energy storage at a much lower cost point and we can get a much larger capacity than what you can do today with batteries.
For example, if we have a field of 20 of these storage wells we can get up to 500 megawatt hours of storage which is a very, very large battery and we can do it at much lower cost point. So we do see a big market for this and as more solar and wind comes online there’s going to be a huge need to actually store that energy so that we can smooth out the curve.