Politics aside, are there any projected ROI comparisons of deepwater drilling and geothermal?

First, I’m a free-market proponent, not a tree-hugger. Second: These wells can *start* at more than 2 miles under water and have already reached over 35,000 feet (nearly 7 miles) total depth.

Geothermal requires drilling, too, but never runs out of energy and has few of the risks associated with petrol drills.

Any cost/benefit or ROI projections out there to realistically compare the two?

http://www.deepwater.com/fw/main/IDeepwater-Horizon-i-Drills-Worlds-Deepest-Oil-and-Gas-Well-419C151.html

http://www.offshoresource.com/offshore-e-newsletter/news-archives/oil-and-gas-news/256-chevron-deploys-second-ultra-deepwater-drillship
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http://hydrogeology.suite101.com/article.cfm/studying-fluid-flow-in-geothermal-systems

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N: Excellent and informative answer, as always! Thanks!

BTW, I’d planned to post this question in the Politics section as the spill is a hot-button political issue. But I chose Investing instead & forgot to delete the intro.

I’d hoped ultra-deepwater tech had resulted from cheaper drilling methods that would apply to geotherm. But a /bbl break-even suggests otherwise.

I allowed myself license to compare crude to geo on assumption of amenable costs of conversion to liquid fuel per Dr. Olah’s "Methanol Economy" —

http://tinyurl.com/Econ-MeOH

— which I’ve so far only had time to skim. (Hope to read thoroughly a.s.a.p.)

Again, a stellar answer and very sincerely appreciated!

To: All Serious Y!A people: N- is THE answer guy for questions of this sort!

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One Response to “Politics aside, are there any projected ROI comparisons of deepwater drilling and geothermal?”

  1. N - Lothringer Bur Says:

    First, your introduction is not necessary, macro-economic analysis does not care about partisan issues or only in the US.

    The two cannot be easily be compared… why?
    – deep water drilling provides mostly liquid fuels for vehicles
    – geothermal wells provide steam for power generation

    For a comparison you would have to compare geothermal power stations with oil-fired power plants…

    But again what matters is the marginal production, so the production you add to face the demand
    1) the deeper you go, the higher the oil floor price. For such a well, consider perhaps $20 to $30 per barrel, while Saudis get their oil out of the ground for as little as $2…
    Interestingly, by bringing in more deep water wells, you anchor oil prices higher as the demand will continue to increase… this means windfall profits for existing wells as operated by Saudis
    2) most cost-effective geothermal wells are already exploited and additional ones can only be built at a higher cost as more cost-effective sites have already been developped. You will have probably to go over $15ct per kWh

    The comparison only makes sense if you replace oil by geothermal, for ex. by shutting down oil-fired plants.

    I am afraid Geothermal will be more expensive. There are plenty of options to lower oil consumption for cheaper… so far most renewable energy acts are state initiative and most comprehensive energy bills have been blocked in the Senate.