Geothermal energy company XGS Energy has been chosen by the US Department of Energy (DoE) for federal funding aimed at supporting the drilling of a deep vertical appraisal well in New Mexico.
The announcement is part of more than $99m in grants to speed up geothermal energy development across the US. The government is looking to geothermal as a source of continuous, reliable power to address increased electricity needs.
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The funding will allow XGS Energy to advance its efforts to deliver geothermal power that does not require water consumption.
This approach could address a key limiting factor in New Mexico, a region where geothermal heat is abundant, but water is under strain.
Working alongside Baker Hughes, Sandia National Laboratories and New Mexico Tech, XGS Energy plans to generate essential subsurface data through the project.
The company aims to reduce uncertainty around geothermal resource development and move closer to supplying uninterrupted power to New Mexico’s electricity grid.
XGS Energy chief commercial officer Lucy Darago said: “New Mexico sits on a substantial and exciting geothermal resource, and we are grateful to the Department of Energy for investing in the subsurface data needed to transform our nation’s abundant geothermal resources into affordable, reliable American energy.”
The project will involve drilling a deep vertical appraisal well to gather temperature, core, logging and continuous drilling data.
This information will help XGS Energy better understand New Mexico’s subsurface conditions, refine commercial project designs and reduce risks during future development stages.
XGS Energy has formed a team with New Mexico Tech, Baker Hughes and Sandia National Laboratories, bringing together expertise in drilling, formation evaluation, subsurface analysis and workforce development.
The collaboration is expected to support a more effective transition from appraisal activities to wider commercial power generation using geothermal sources.
Baker Hughes climate technology solutions vice-president Ahmed Eldemerdash said: “This selection gives XGS Energy and Baker Hughes an opportunity to build on our existing collaboration in New Mexico, leveraging subsurface, surface and industrial expertise to generate the data needed for the next stage of development.
“Together, we are working to bring reliable, always-on geothermal energy to market faster, with greater certainty, at scale.”
In April 2026, XGS Energy and CC Power signed an agreement to develop 115MW of geothermal energy in California, US.
