The oil industry’s search for carbon-free alternatives to fossil fuels has led to many interesting investment decisions over the years. Somewhere high on that list is nuclear fusion, the energy that powers the sun, which has drawn investment from at least three major oil companies.

Chevron became the most recent player to show an interest in the technology when it pumped an undisclosed amount of cash into Seattle-based Zap Energy in August.

“We see fusion technology as a promising, low-carbon future energy source,” Barbara Burger, president of Chevron Technology Ventures, said in a statement. “Our Future Energy Fund investment in Zap Energy adds to Chevron’s portfolio of companies we believe are likely to have a role in the energy transition.”

Chevron follows in the steps of Italy’s Eni, which bought an equity stake in Massachusetts Institute of Technology spinout Commonwealth Fusion Systems (CFS) in 2018, and the Norwegian state-owned energy company Equinor, which joined Eni as a CFS investor in May of this year.

“We are investing in fusion and CFS because we believe in the technology and the company, and we remain committed to providing energy to the world, now and in a low-carbon future,” Equinor’s chief technology officer Sophie Hildebrand said in a statement at the time.

Unlike fission, which splits atoms to release energy, fusion reactors would work by fusing hydrogen isotopes in a process similar to that which powers the stars. Fusion would have low radioactivity, massive generation capacity and practically unlimited fuel. But it’s not easy.

Obvious areas of crossover for oil companies

Betting on fusion looks like a long shot for oil and gas companies, which are increasingly focused on here-today energy plays such as offshore wind and longer-term bets like green hydrogen.

But oil and fusion may have more in common than meets the eye, said CFS CEO and co-founder Bob Mumgaard. “A fusion system is a power-dense energy source that makes heat,” he told GTM in an interview. “When you build one, you’re not pulling down watts or kilowatts or megawatts.You’re pulling down hundreds of megawatts." 

"The types of skills [are the same] you would see if you were building a refinery. It’s project management and EPC [engineering, procurement and construction]-like functions, supply chain procurement and operations.”

Benj Conway, president and co-founder of Zap Energy, claims “the key ingredients” of the two energy disciplines are potentially very similar.

“Energy markets are complex, global, very material, capital-intensive, technology-driven, involve long-term commitments and require enduring marketing, regulatory and governmental agreements,” Conway said in an email. “This applies to oil [and] gas as well as prospectively fusion-derived electricity.”

The overlap between oil and fusion is neatly illustrated by Zap’s board, which features former fossil-fuel executives alongside nuclear research and plasma experts.

Small bets, big potential payoff?

Beyond potential industry synergies, there are other reasons why oil and gas companies might be eyeing an endeavor that has hitherto been the domain of major multinational cooperation projects such as the International Thermonuclear Experimental Reactor tokamak in France.

Although the prospect of commercial fusion energy is still a long way off, the ability to harness practically limitless carbon-free power would ensure oil companies’ dominance in the energy sector for the foreseeable future. And right now, the price of entry is trifling.

When Equinor bought into CFS, for example, it joined lead investor Temasek plus Devonshire Investors and a group of previous backers in providing a combined $84 million — almost a rounding error in oil sector terms.

Plus, there is a growing sense that fusion research could be on the verge of a breakthrough. Mumgaard said there are now at least 26 private companies developing fusion reactor designs.

“There’s actually more capital in private fusion companies than there is in advanced metering companies,” Mumgaard claimed.

Despite this, fusion energy is still unlikely to be a commercial proposition in the next decade. Mumgaard said CFS hopes to see fusion reactors plugging into the grid “within the early 2030s.”

The key stumbling block for fusion startups is that nobody quite knows which of the many proposed reactor designs will work. Even a tiny error in a design could render it worthless. “You’ve got to handle plasma physics,” said Mumgaard. “It’s super, super nonlinear.”

Nevertheless, some of the biggest energy companies on the planet clearly think the effort is worth it.

“Yes, fusion investments should be considered long-term,” said Conway at Zap Energy. “Not because commercial fusion is decades away, but because fusion energy has the potential to be the energy sector for the coming centuries.”