For most professionals in the mechanical and HVAC industry, the term “geothermal” brings to mind residential heat pumps or commercial variable refrigerant flow systems: reliable, efficient and increasingly common. What if the same fundamental principles could be applied to one of the largest, most challenging and overlooked sectors in our economy? What if the solution to a billion-gallon-a-day water problem was sitting right under our feet?

There is a colossal market hiding in plain sight: industrial process cooling. Specifically, the oil and gas refinery sector, an industry that underpins our modern world, is facing a dual crisis of heat and water that it is ill-equipped to handle. For the forward-thinking mechanical contractor, this crisis represents an unprecedented opportunity to deploy our industry’s expertise on a transformative scale.

The twin liabilities: Heat and water

To understand the opportunity, we must first grasp the sheer scale of the problem. A typical refinery is a massive heat engine, constantly generating an enormous surplus of thermal energy — often estimated at more than a billion BTUs per hour. This isn’t useful, low-grade heat; it’s a massive liability that must be continuously rejected to maintain stable operations.

For decades, the default solution has been the wet cooling tower. These colossal structures use the principle of evaporative cooling to dissipate heat. In doing so, they consume staggering volumes of water. According to industry data, more than 70% of the water pulled into a refinery’s cooling system is lost to the atmosphere as steam. This can amount to millions of gallons of water per day for a single facility.

For years, this was considered a simple cost of doing business. However, in an era of increasing water scarcity, tightening regulations and rising utility costs, that view is becoming dangerously obsolete. Water is no longer just a consumable; it’s a strategic liability. A drought or a new water rights regulation could cripple a refinery’s operations overnight. 

This is where geothermal exchange transitions from a green technology to a critical tool for industrial resiliency and financial stability.

Applying a familiar solution to an industrial giant

At its core, geothermal exchange is simply about using the earth as a massive, stable thermal battery. As HVAC professionals know, the earth maintains a nearly constant temperature only a few feet below the surface year-round. This provides a perfect heat sink — a place to reject unwanted heat — that is vastly more efficient and reliable than the fluctuating ambient air.

Instead of evaporating millions of gallons of water, a geothermal system rejects a facility’s waste heat into the ground through a closed loop of buried pipes or a series of wells. The concept is identical to the commercial geothermal systems we install every day, only engineered for a much larger thermal load.

The advantages of this approach are immediate and profound:

• Drastic water reduction. By eliminating the need for evaporative cooling, geothermal exchange can reduce a refinery’s cooling water consumption by more than 90%. This directly addresses the core risk of water scarcity, insulating the facility from drought and regulatory pressure.

• Enhanced resiliency. Geothermal infrastructure is buried and protected. It isn’t vulnerable to hurricanes, winter storms or other extreme weather events that can damage or disable cooling towers, leading to costly shutdowns.

• Improved efficiency. Geothermal systems operate with unparalleled efficiency, significantly reducing the parasitic energy load required for cooling and lowering the facility’s overall peak electricity demand.

• Public health and safety. It eliminates the chemical treatments required for cooling tower water and removes the risk of Legionnaire’s disease associated with aerosolized water drift.

The financial tipping point: The IRA changes everything

While the technical and operational benefits are clear, the financial case has been transformed by the Inflation Reduction Act. This legislation has significantly reduced the risk associated with capital investment for industrial-scale geothermal projects.

The key mechanism is the Investment Tax Credit. For geothermal projects meeting standard prevailing wage and apprenticeship requirements, the IRA provides a 30% tax credit as a starting point. However, the real power is in the “stackable” bonuses. A 10% bonus is available for projects located in designated “energy communities” — a definition covering most refinery locations. Another 10% bonus can be added for using domestic iron, steel and manufactured components.

Suddenly, a project can qualify for a tax credit covering 50% or more of its total upfront cost.

Furthermore, the IRA’s “transferability” provision allows a facility to sell its tax credits to an unrelated entity for cash. This creates a liquid market for the credits, meaning the project owner can monetize the incentive immediately to help finance the construction, rather than waiting years to apply it against future tax liability. The economics have never been more favorable.

The future vision: From liability to community asset

The vision extends beyond simply solving a problem within the refinery’s fence line. By capturing the facility’s massive waste heat, rather than rejecting it, a refinery can transform itself from a thermal polluter into a valuable community energy anchor.

This is the concept behind thermal energy networks. The recovered waste heat from the refinery can be piped to a shared thermal loop, providing low-cost, carbon-free heating for nearby buildings, data centers, industrial parks or even greenhouses. The refinery not only saves money on water and energy, it creates an entirely new revenue stream by selling its waste heat.

This symbiotic relationship is already being explored. Imagine a hyperscale data center — another facility with a massive cooling demand — colocating next to a refinery. The data center can draw on the refinery’s geothermal cooling loop, while the refinery can use its waste heat to power absorption chillers, creating a virtuous cycle of efficiency and shared infrastructure.

For the mechanical and HVAC industry, this is more than a new application; it’s a call to lead a fundamental shift in how we think about energy. We have the technical expertise in heat pumps, hydronics and large-scale system integration. We are the ones who can design, build and maintain these transformative systems. 

The oil and gas industry is facing a challenge it cannot solve with its traditional toolkit. It’s time for us to demonstrate that the solution is, and always has been, right beneath its feet.