The two firms have signed a Memorandum of Understanding and the feasibility study is being backed by the Department of Energy and Climate Change.
The project will initially focus on the technical design of the system before a potential field trial is considered.
The site of any trials will also depend on whether Cuadrilla is granted planning permission to drill for shale gas at two sites in Lancashire – Preston New Road at Little Plumpton and Roseacre Wood near Elswick.
Lancashire County Council is set to make a decision in the coming weeks.
Both companies have stressed it is very early days – but if it goes ahead the extracting of geothermal heat will go some way to pacifying green activists calling for renewable energy sources to be used instead of fossil fuels.
The project follows on the success of GEL’s field trials of an innovative deep geothermal single well that were carried out in Cornwall in 2014.
Geothermal energy is power extracted from heat that is stored naturally in the earth. GEL says it is a significant, clean, renewable energy resource.
The project aims to show that geothermal renewable heat can be sustainably delivered from deep wells that were originally drilled for other purposes such as oil and gas extraction.
Francis Egan, chief executive of Cuadrilla said: “We are delighted to support GEL in looking at the feasibility of using one of our exploration well sites to conduct a pilot of a geothermal heat exchange system.”
Dr Ryan Law, Managing Director of Geothermal Engineering Ltd said: “The successful trial last summer of our equipment in an existing deep geothermal well demonstrated how the technology could contribute to the UK’s energy portfolio.
“The possibility of using existing wells enables us to not only deliver renewable geothermal heat at a much lower cost but also to recycle wells that would otherwise be wasted.”