Drilling risk; Geothermal and mineral resource rights

This week in Industries and Applications, another difference between the geothermal and oil industries. In the world of geothermal heat pumps, some home builders are keeping mineral and geothermal rights for themselves.

How Does the Oil Industry Cover Drilling Risk?
Home Builders Keeping Mineral and Geothermal Rights

This week in Industries and Applications, the geothermal industry is faced with drilling risk as one of its upfront issues. How does the oil industry handle this? Also, homeowners are cautioned to know whether their builders or developers are keeping geothermal and mining rights.

Thinkgeoenergy.com responded to a recent podcast (Greentech) that named drilling risk as a key hangup for the geothermal industry. “[T]he probably most interesting thing I heard in the show was the notion of how the oil industry is covering risk,” according to the article. “They are able to use losses in wells in tax write offs from profits. Which – having heard before – sounds good in theory, but essentially the geothermal companies active in the market are likely too small for this to work.”

An article on Reuters says: “homebuilders and developers have been increasingly – and quietly – hanging on to the mineral rights underneath their projects, pushing aside homeowners’ interests to set themselves up for financial gain when energy companies come calling.” A copy of a sales contract reviewed by Reuters staff had a clause giving D.R. Horton, the biggest U.S. homebuilder, “all geothermal energy and resources” located “on, in or under the Lot.”

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