Ann: Geothermal Drilling Fund Announced, Merit Cr, page-4

re: Ann: Geothermal Drilling Fund Announced, ... Hot rocks projects get funding boost

Tuesday, 21 April 2009
Marija Zivkovic

GEOTHERMAL explorers Petratherm and Panax Geothermal have each secured $7 million in federal government funding for their hot rocks projects in South Australia.



An example of the LeTourneau "Lightning" rig that Petratherm will use at Paralana

However, Torrens Energy – which also applied for funding under the government’s Geothermal Drilling Program – was unsuccessful in its application as it did not meet the merit criteria.

Torrens executive director John Canaris told PetroleumNews.net that project timing played a significant part in the grant not being awarded.

“What’s obvious from the successful applicants and the short response we’ve had from the GDP is that it’s certainly not the quality of the project that precluded us from being successful, but quite simply the stage of development of our project,” he said.

“The projects that were successful are more advanced than ours in terms of their deep drill-ready status, so it hasn’t deterred us at all, it just means we need to continue on with planned work to ensure that we’re more ready for round two applications.”

According to Canaris, Torrens will continue to work on its promising new grid locations in South Australia and is confident the company’s current plans to advance its geothermal projects will give it a stronger chance of meeting the eligibility criteria for round two.

“If you consider the total amount awarded to date is $14 million, they’re drawing out of a $50 million pool, there is plenty of room for us in round two to be successful,” he said.

Meanwhile, Petratherm – which was a successful applicant – said the grant would contribute to the costs associated with drilling of the Paralana-2 deep well in mid-June.

The well will be drilled with a 2000hp Lightning rig, which is being brought into Australia specifically for geothermal exploration.

The Paralana project is being developed by partners Petratherm, Beach Petroleum and TRUenergy, and is considered the most commercial geothermal energy project in Australia.

The project is about 130km east of Leigh Creek in the northern Flinders Ranges and 11km from Heathgate Resources’ Beverley uranium mine.

Over in the Otway Basin, successful applicant Panax said it would use the grant for the drilling of a production well at its Penola project.

The company has secured a contract drilling rig and expects to spud the Salamander-1 production well in September.

Salamander-1 will be drilled to a depth of about 4000m and is expected to lead to the establishment of geothermal reserves ready for development.

In a recent shareholder update, managing director Bertus de Graaf said once the well was completed, a grid-connected demonstration plant could be in operation by the second half of 2011.

The Penola project – which covers an area of 493 cubic kilometres – is located near the national transmission grid and is close to an existing gas-fired power station as well as the township of Penola.

According to Panax, the proximity to the grid will save millions of dollars in connection costs and shorten development time.

The grants were awarded under the first round of the GDP as part of the $500 million renewable energy fund. Round two applications are expected to open in mid-2009.