Geothermal is getting warmer

Archived News, Posted on 20 Jul 2011

Giles Parkinson

It’s been some time coming, but the Australian geothermal industry has finally got some good news it can call its own.

The aspiring geothermal energy company Petratherm, after experiencing months of delays caused by unseasonal rains, has just completed fracture stimulation tests that indicate its resource in the north of South Australia is deeper, wider and hotter than it previously thought.

Over the past two years, that is a conclusion that could rarely be reached by the small band of geothermal explorers that have managed to secure the funds to drill wells. Results have delivered either a lack of heat or a lack of porosity, or in the case of Geodynamics, a nasty reaction with the chemicals lying deep beneath the surface. It forced the anticipated timetable for the rollout of geothermal energy - seen by many as potentially the most effective replacement for fossil fuels - to be set back, and questions to be raised if it could ever fill its expected role.

For Petratherm and its partners Beach Energy and TRUenergy, however, the fracture stimulation test undertaken by the US giant Halliburton over the past week at the Paralana 2 well, have been overwhelmingly positive.

The testing, which involves injecting millions of litres down a well at high pressure, setting off thousands of "micro-earthquakes", indicated micro-fracturing occurred as far as 900 metres to the east of the well – far beyond the 500m hoped for – and at depth of 3,500m to 4,000m. And it found considerable heat, from 176C at 3,750m to estimates of 190C at 4,000m.

“We’re very excited about this,” said Petratherm CEO Terry Kallis. “We’ve got the best of all three worlds – width, depth and heat. Now we have to have a look at the data and consider the best way of proceeding.”

What makes Petratherm’s resource particularly interesting is that it features both natural fractures and the ability to create man-made ones. That in effect gives it a choice between regarding it as a more conventional geothermal resource where companies can simply exploit the natural flows and pressure to extract the heat, or to use artificial means such as stimulation. It may do both.

“It’s between two ends of the spectrum,” Kallis says. “We have got natural fractures that exist at the right depth, and we know its over-pressured, so we’d expect flow.” This gives Petratherm the possibility of being able to have three production wells rather than two for every injector well – effectively an increase in productivity and a lowering of costs. Kallis says it represents a potentially significant de-risking of the project.

The next step is to consider the data and decide on the placement of the Paralana 3 production well, to be drilled later this year. When that is completed, along with circulation tests next year, then a 3.75MW pilot plant could be installed by the end of 2012 – a critical stepping stone before a planned 30MW plant that it hopes could supply energy to the nearby Beverley uranium mine, and potentially the giant Olympic Dam project nearly.

Petratherm has been allocated a $63 million grant from the Federal Government to develop the demonstration plant, although it has yet to access those funds and will not until its circulation test is completed. It has previously estimated that a geothermal plant built at scale could deliver emissions-free baseload power to Olympic Dam for less than $100/MWh - considerably cheaper than many alternatives.

The other major project is the 25MW demonstration plant planned by Geodynamics at Innamincka, for which it has been allocated a grant of $90 million, although delays caused by a blowout at its well nearly two years ago means that it has only accessed $1 million of those funds. It hopes to have a 1MW pilot plant in place in 2012 at Innamincka.

The plans of other geothermal aspirants have been put on hold because of an inability to access funds. The federal government is still reviewing what to do with $35 million of drilling grants that were made but not accessed because the recipients could not obtain matching funding, effectively bringing drilling programs to a halt.

“This is a significant result for the company and for the industry,” Kallis says. “What we hope it does it that gets a few people back on board, we see that as the real opportunity here. The industry has been in need of good news and we are happy to be part of that.”