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Abandoned Oil Wells Geothermal Retrofit 2027: $2.5B Market Opportunity

Updated: January 17, 2026 Geothermal Energy 14 min read

Executive Summary

Globally, 3.2 million abandoned oil and gas wells represent a $300-500 billion environmental liability—and a 23 GW geothermal opportunity. Wells with temperatures >90°C at <3,000m depth can be retrofitted for electricity generation (binary cycle) or direct-use heating at $15-35/MWh LCOE, competitive with solar/wind plus storage.

The US alone has 2.1 million documented abandoned wells, with 120,000-150,000 suitable for geothermal conversion (temperatures >120°C). Retrofit costs: $500k-2M per well. Policy drivers: IRA 48(a) ITC (30-50%), state orphaned well remediation funds ($4.7B federal allocation), and oil industry workforce transition.

Market Forecast: $2.5B investment by 2027, 500 MW installed capacity by 2030, scaling to 5-8 GW by 2040 as technology costs decline 30-40%.

1. Global Well Inventory & Geothermal Potential

Region Abandoned Wells Geothermal Candidates Potential Capacity Avg. Depth
United States 2,100,000 120,000-150,000 12-15 GW 1,800-3,200m
Canada 370,000 18,000-25,000 2.5-3.5 GW 2,000-3,500m
Russia 180,000 12,000-18,000 1.8-2.5 GW 1,500-2,800m
Middle East 95,000 8,000-12,000 1.2-1.8 GW 2,200-4,000m
China 85,000 6,000-9,000 0.9-1.3 GW
Other 370,000 25,000-35,000 3.5-5.0 GW -
Global Total 3,200,000 189,000-249,000 22-29 GW -

Selection Criteria: Temperature >90°C (electricity) or >60°C (heating), depth <3,500m, flow rate>20 L/s, well integrity (casing condition).

2. Retrofit Technologies & Economics

2.1 Binary Cycle Power Generation

Low-temperature (<150°C) geothermal uses organic Rankine cycle (ORC) with low-boiling working fluids (R-245fa, isobutane). Efficiency: 8-12%. Capacity: 200-500 kW per well.

Parameter Value Notes
Retrofit Cost $1.5-2.5M Includes workover, heat exchanger, ORC turbine
Installed Cost $3,000-5,000/kW vs $1,000-1,500/kW for solar PV
Capacity Factor 85-95% Baseload vs 25% solar, 35% wind
LCOE $15-35/MWh Competitive with solar+storage ($25-45/MWh)
Payback Period 6-10 years With ITC: 4-7 years

2.2 Direct-Use Heating

Lower-temperature wells (60-90°C) suitable for district heating, greenhouses, aquaculture. Higher economic viability due to lower conversion losses.

Application Temp Required Cost ($/kW-thermal) LCOE ($/MWh-thermal)
District Heating 70-90°C $1,200-1,800 $8-15
Greenhouse Heating 60-80°C $800-1,200 $5-10
Industrial Process Heat 80-120°C $1,000-1,500 $7-12
Aquaculture 25-35°C $500-800 $3-6

3. Policy Landscape & Incentives (2027)

3.1 United States

3.2 Canada

4. Case Studies & Pilot Projects

Abandoned Well Geothermal Projects (2024-2027)

Project Location Capacity Status Cost
Eavor-Lite™ Alberta, Canada 2.5 MW-thermal Operational (2024) $8M
Bakken Geothermal North Dakota, US 400 kW-electric Pilot (2025) $2.2M
Permian Basin Direct-Use Texas, US 5 MW-thermal Construction (2026) $6.5M
Appalachian Heat Network Pennsylvania, US 12 MW-thermal Development (2027) $18M

5. Frequently Asked Questions

How many abandoned oil wells exist globally?
Globally, 3.2 million documented abandoned/orphaned oil and gas wells exist, with 2.1 million in the US alone. An estimated 1-2 million additional undocumented wells exist. Total remediation liability: $300-500 billion.
What is the geothermal potential of abandoned wells?
Abandoned wells with temperatures >90°C at <3,000m depth represent 23 GW of potential geothermal capacity globally. US potential: 12-15 GW. Economic viability requires temperatures>120°C for electricity generation or >60°C for direct-use heating.
What is the cost to retrofit an oil well for geothermal?
Retrofit costs range from $500k-2M per well depending on depth, condition, and application. Electricity generation (binary cycle): $3,000-5,000/kW installed. Direct heating: $800-1,500/kW thermal. LCOE: $15-35/MWh for electricity, $5-15/MWh-thermal for heating.

Data Sources