SolarTraditional power meets alternative energy and Big Oil meets Silicon Valley in Chevron Corp.’s new project to use solar power to produce oil at a field in California.

Using solar energy to produce oil might sound odd, but it makes a lot of sense in places like California, where much of the oil is especially viscous in quality and flows better when warm. The common practice is to use natural gas – often straight from the producing field – to heat the oil wells, but producers often regret having to consume so much fuel in the production process. When fuel prices are high, it can seem especially wasteful. Sunny California is the ideal setting for a solar solution.

Chevron’s solar-powered oil field in Coalinga, Calif. comes through a partnership with Brightsource Energy, an Oakland, Calif. company that develops solar power plants and has raised substantial funding as many investors moved their money out of high-tech and into alternative energy.

Clearly, a lot of investors these days are interested in alternative energy; a persistent challenge, however, has been demonstrating that these power sources can execute on a large scale and can be applied to all sorts of traditional industries that run on traditional fuel.

Think oil production is traditional enough? As news reports of the story suggest, the Chevron deal offers BrightSource an opportunity to deploy its technology on a grand scale.

Other solar companies have also awakened to the potential of operating on oil fields. Ausra, a Mountain View, Calif. maker of solar energy systems, recently broke ground on a plant near oil-rich Bakersfield, Calif. The project has been described as the company’s own proof of concept that solar power has widespread industrial applications.

Since it does on occasion rain in California, Chevron says it doesn’t expect the solar project to eliminate its need for natural gas to heat its oil wells. But adding solar to the mix could significantly improve its efficiency. Like the ageing oil fields of California, where extracting oil can be like scraping peanut butter off the bottom of a jar, many other fields around the world use steam to optimize production. Producing that steam at a lower cost could even make production in particularly expensive fields more economically feasible.

If the Chevron/BrightSource deal is a case of old meeting new, and the dreamers meeting the skeptics, they seem to be coming together on some very practical territory right in the middle.