Cuadrilla, Geothermal Firm Eye Renewable Heat From Oil, Gas Wells

Britain's Geothermal Engineering Ltd (GEL) has signed an agreement with shale gas firm Cuadrilla Resources to explore the feasibility of producing geothermal renewable heat from used oil and gas wells, the firm said on Friday.

The two companies have signed a memorandum of understanding to develop technology to show that geothermal heat can be delivered from deep wells that were originally drilled for other purposes such as oil and gas extraction, Geothermal Engineering said in a statement.

The project will initially focus on the technical design of the system before considering a potential field trial, using one of Cuadrilla's exploration well sites.

By using existing wells, deep geothermal energy costs will be reduced by up to 80 percent and local communities could benefit from low-cost heat energy from existing wells drilled in their area, Geothermal Engineering said.

The British government's Department of Energy and Climate Change has provided 55,000 pounds ($82,000) for development of the technology through its Energy Entrepreneurs' Fund.

The government has eyed the potential of geothermal heat generation but the cost of drilling coupled with the risk of not succeeding have proved to be barriers.

"The successful trial last summer of our equipment in an existing deep geothermal well demonstrated how the technology could contribute to the UK's energy portfolio," said Ryan Law, managing director of Geothermal Engineering Ltd.

"The possibility of using existing wells enables us to not only deliver renewable geothermal heat at a much lower cost but also to recycle wells that would otherwise be wasted," he added.

Reporting by Nina Chestney