AltaRock suspends drilling at DOE-backed project

Sausalito, Calif.-based enhanced geothermal developer AltaRock Energy said today it has suspended drilling at its engineered geothermal systems demonstration project in Northern California, blaming "geologic abnormalities particular to the formation underlying this well location."

The startup said it encountered a number of physical difficulties at the site while drilling its first well. The company released a statement that said it's evaluating alternative well locations, both at the Geysers, a site north of San Francisco, and elsewhere (see AltaRock, Weyerhaeuser in geothermal exploration deal).

The news comes as a blow to AltaRock's demonstration project, which is backed by $6.24 million in funds from the U.S. Department of Energy, with the possibility of $2.76 million more.

In 2008, AltaRock raised $26.25 million from Kleiner Perkins Caufield & Byers, Khosla Ventures, Advanced Technology Ventures, and Vulcan Capital. The round included $6.25 million from Google.org, the philanthropic arm of Mountain View, Calif.-based Google (Nasdaq:GOOG) (see Google pushes for enhanced geothermal). Yesterday, Khosla Ventures confirmed reports that it raised two new funds totaling $1.1 billion to invest in cleantech and IT (see Khosla closes $1B in new funds aimed at cleantech).

AltaRock said it was committed to developing its engineered geothermal technology, for which it has filed 20 patents.

Today's problem isn't the first controversy to stem from the project. In June, The New York Times raised questions about the Geysers project, comparing it to an effort in Basel, Switzerland, that some scientists say caused a large earthquake, followed by thousands of small quakes. Both projects aimed to fracture rock deep underground to generate steam, but AltaRock disputes the similarities of the projects.

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