The pilot project is designed to show that it's possible to generate geothermal electricity from the boiling water that comes out of the wells.
The concept is something Alison Thompson, managing director of the Canadian Geothermal Energy Association, has long been calling for in Canada's oilpatch.
"We've been advocating for many years to do what we'll call the hot sedimentary-style geothermal, which is really no more than taking what the oil and gas companies are already producing and running it through a little turbine right at their site."
Canada produces huge amounts of geothermal power, but so far none of it is being used to generate electricity, Thompson said.
"We just actually bring up all that potential to the surface and then do nothing with it. It's actually treated as a waste or a cost to the company."
She equates the waste to the gas flaring that was common across Alberta until stricter regulations came in to curb the practice in 2000. She says either higher carbon pricing or more regulation would encourage companies to try the technology, but there isn't enough incentive now.
Will Gosnold, a researcher at the University of North Dakota who is leading the pilot project, said that during the shale boom in recent years no one was interested in fiddling with extra equipment, but with oil prices low, companies are looking at any way to save money.
"Now things have slowed down due to the price decrease and they're looking at ways to cut costs, and this is one way they could cut their electrical power cost by generating their own electricity."
The pilot project in North Dakota, which is being developed with energy company Continental Resources Inc., cost about US$3.5 million and includes several years of research and development. Gosnold said if the pilot project is successful, new geothermal units could be constructed at a cost of US$250,000 each.
The two generators on site have a combined 250 kilowatt hour capacity, which Gosnold estimates could mean about US$150,000 in annual energy cost savings in total. At 250 kwh, the generators would produce enough power to meet the annual needs of about 300 homes.
Gosnold hopes that once the pilot plant starts operating, other companies will see the economic and environmental benefits.
"We're trying to get their attention, and we're really hoping our demo project will do that," said Gosnold.
Interest in the technology is picking up in Alberta since the NDP were elected, said Craig Dunn, chief geologist at Calgary-based Borealis Geopower.
"There's more and more interest, especially when we're talking about in Alberta the NDP government, opportunities for a new carbon regime — that's driving a lot of people to ask these questions."
Borealis Geopower tried to develop a similar project a few years ago but with a water temperature of 85 degrees Celsius, the project didn't end up working, Dunn said.
He said while that initiative failed, there are many other oil wells in Western Canada that run hotter than 120 C, meaning they would have a better chance of succeeding.
"That is a geothermal resource development opportunity for power," said Dunn.