Paralana
Paralana, South Australia
The Paralana Engineered Geothermal System (EGS) Project is located 600 kilometres north of the city of Adelaide in South Australia. High temperatures in excess of 200ºC occur at drillable depths due to favourable combination of anomalously high heat production granites and metasedimentary rocks providng a local heat engine and thick 3 to 5 kilometre insulating sedimentary layers of younger Mesozoic to NeoProterozoic age strata overlying the heat producing rocks. In September 2005, temperature readings from shallow evaluation drilling (Paralana 1) to around 500m, recorded a geothermal gradient of 76ºC per kilometre, which is believed to be among the highest reported shallow temperature gradients in Australia (Figure 1). In June 2006, Petratherm deepened the Paralana well (Paralana 1B) to 1807 metres to assess the temperature gradients and insulating properties (thermal conductivity) of the deeper geological strata. A bottom-hole temperature of 109ºC was recorded. The HEWI Model (Figure 1) contends that significant cost and risk reductions can be achieved by creating the requisite underground heat exchanger within the naturally permeable and porous insulating rock above the granite heat source.Paralana - Introduction
Petratherm Ltd, in a joint venture with Beach Petroleum Ltd and TRUenergy Geothermal Pty Ltd are seeking to develop Australia's first large scale (260 MW+), base load, zero emission commercial EGS power plant. The first deep production grade drilling to approximately 4 kilometres depth is scheduled to commence in July 2009. An innovative strategy for development of the EGS reservoir is planned, involving massive hydraulic stimulation of multiple target zones within the sedimentary overburden.
An independent statement of estimated inferred resources, in accordance with the Australian Geothermal Reporting Code, has been completed with the total inferred geothermal resources calculated to be 230,000 ± 40,000 Peta Joules (PJ). Petratherm has a long term development plan to deliver a minimum of 260 MW of base load power into the National Electricity Grid from the Paralana site. The minimum thermal energy required to run a 260 MW power plant over a 30 year period is 2,273 PJ or just 1% of the total median inferred resource.
Paralana - History
The Paralana site was identified utilizing Petratherm's innovative exploration methodologies to identify potential hot spots. The exploration methodology applies crustal heat flow and thermal conductivity measurements, in combination with state of the art 3D geological and geophysical modeling to build predictive heat models of the near surface crust, thereby generating geothermal exploration targets in greenfield enviornments.
Measurement of insulating properties and thermal gradients within the deeper strata allowed calculation of the heat flow at the Paralana site. This information, along with seismic survey data acquired in October 2007, allows for accurate prediction of temperatures at greater depths. The data indicates a temperature of 200ºC will occur at approximately 3.6 kilometres depth, which is an approximate benchmark temperature Petratherm has been targeting for potentially commercially viable EGS operation under current Australian electricity market conditions.
Paralana - Subsurface Development Strategy - The HEWI Model
The aim of the HEWI model is to achieve optimal energy exploitation (extraction) through shallow (lower cost) drilling, controlled rock fracture and obtaining appropriate fluid flows and circulation. Confirming the validity and applicability of the HEWI model will form the next major stage of development work at Paralana.
Figure 1 - schematic diagram demonstrating the basic concept of an Engineered Geothermal System using the HEWI (Heat Exchanger within Insulator) model.
Existing technical difficulities in achieving a robust sub-surface heat exchanger generally relate to the practice of developing the sub-surface heat exchanger (also termed the reservoir or fluid circulation cell) within the heat producing granite rock. Granite is by nature an impermeable and mechanically strong rock. As a result it is inherently difficult for fluid to flow through granite, or to mechanically fracture the rock to develop an effective reservoir artificially. Once established, a granite reservoir is also susceptible to chemical reactions (i.e. alteration) which clob fluid pathways and diminish the efficiency of the heat exchanger.
By comparison, the rocks which make up the overlying insulating sediments tend to have greater naturally occurring porosity and permeability, are mechanically weaker, and more susceptible to induced chemical and mechanical stimulation if enhancement of the reservoir is required. The behaviour of sedimentary reservoir rocks is better understood than that of granites and a range of techniques exist to control reactions and remove products of alteration from sedimentary reservoirs. Thus the long term utility of a heat exchanger within the insulating sediments is likely to be greater and less costly than an equivalent granite heat exchanger and more closely approximates the systems successfully used in petroleum reservoirs and conventional geothermal projects.
Extensive research and development undertaken by Petratherm suggests that clear technical advantages are afforded by developing the sub-surface heat exchanger within the overlying insulating sediments, rather than using the current practice of establishing the heat exchanger within the granite (Figure 1). Petratherm refers to this concept as the HEWI model (Heat Exchanger within Insulator).
HEWI provides a unique approach to the problem of engineering a robust sub-surface heat exchanger, through creative adaptation of proven techniques and tools from the petroleum and conventional geothermal industries to this new application.
In February 2007 Petratherm was awarded a $5 million Federal Government REDI grant to prove its HEWI model because it offers the prospect of reducing cost and risk and thus bringing forward the development of geothermal energy across Australia.
The next phase of major works at Paralana involves the drilling of an injector and a producer well in the Poontana Basin (Figure 2) and the subsequent development of a fluid circulation cell (the sub-surface heat exchanger) between the two wells.
The drilling and circulation work will be a precursor to constructing an electricity generation plant (of around 7.5 MW) to meet local power needs at the neighbouring Beverley Uranium Mine.
The first (injector) well will be drilled to between 3.5 and 4 kilometres in depth where bottom-hole temperatures are expected to exceed 200ºC. The program will then move to characterizing fluid circulation systems within the underground heat exchanger.
Depending on these findings, mechanical or chemical enhancement of the sub-surface fluid circulation cell may need to be undertaken prior to drilling of the second (producer) well and completion of the circulation system.
Figure 2 - Summary of Geological Cross-Section of the Poontana Basin
Evaluation of the proposed well location was primarily based on interpretation of the Poontana reflection seismic and magneto-telluric surveys carried out in October 2007.
The complex nature of the basin focused the appraisal of the Paralana 2 site to areas of greater geological confidence, and as a result, to areas close to Paralana 1B. The seismic data revealed that Paralana 1B is located between two normal faults in a NNW-SSE trending graben (basinal depression), and thus Paralana 2 is to be drilled within the same graben, approximately 1.5 kilometres to the east.
The locality chosen for Paralana 2 is geologically 'well contrained' from existing information and the graben wide enough to facilitiate development of a large scale geothermal project (Figure 3).
In preparation for drilling, the well site and development zone was cleared by the Adnyamathanha people during a heritage survey performed in July 2008.
Figure 3 - Paralana project area showing future development zone and location of Paralana 2
In response to the siting of Paralana 2, a passive seismic array has been deployed around the well site. The array consists of one deep station deployed to a depth of 1,400 metres, four shallow posthole stations and four surface stations at increasing distances from Paralana 2.
Currently the array is monitoring background seismic activity, creating a database of events which will be used to construct a velocity model of the basin geology.
Prior to fracture stimulation of the reservoir, the array will be upgraded to a greater density array around the injection site at Paralana 2. During fracture stimulation the array will detect micro-earthquakes, which results from the shear failure of the reservoir rock. These micro-earthquakes, when plotted, will map the sub surface network of fractures through which the geothermal fluid will flow.
The Paralana Project is considered uniquely positioned to enable commercial viability at small scale (7.5 MW building over time to 30 MW), an important factor in the development, expansion and subsequent 'bedding down process' of any new technology. This is a direct result of the close proximity of the Beverley Uranium Mine and their current 'off-grid' prices.
Large-scale development of the Paralana site - following the development and 'bedding down process' - also provides the Paralana Project with flexibility and significant cost benefits associated with potential large-scale transmission network soltuions to competitively access the NEM at Port Augusta and/or Olympic Dam (Figure 4).
Figure 4 - Petratherm's geothermal license areas and possible transmission connection routes for the Paralana Geothermal Energy Project site
The planned delivery of large-scale power (up to 520 MW) has taken into account the capacity of the market to digest large increments of generation competition from other geothermal and indeed traditional sources of power generation and the cost of delivery (transmission network) of electricity to the 'on-grid' market (NEM).
Petratherm's two basic network solutions include:
A double circuit 275 kV transmission line from Paralana to Port Augusta capable of delivery 520 MW into the NEM at Port Augusta ('radial network solution').
A single circuit 275 kV transmission line from Paralana to Port Augusta and a single circuit 275 kV transmission line from Paralana to Olympic Dam, each capable of delivering 260 MW to those entry points ('meshed network solution').
The latter network arrangement would create a 'meshed' transmission network in the north of the State and provide a backbone of electricity infrastructure for the remote community, but in particular to the State's growing resources sector. Importantly, the 'meshed' network solution has the potential for the inclusion of a proportion of assets (and costs) into the regulated asset base of a registered asset base of a registered transmission owner under the Australian National Electricity Rules (NER). Accordingly, there is a unique opportunity for substantially reducing the overall project network connection costs.
Similar opportunities exist for the radial network connection where the prime cost reduction occurs through the utilization of a single electricity tower carrying both 275 kV electricity circuits.
The Beach Petroleum joint venture announced in January 2007 enables Beach to earn up to 36% of the Paralana Project for an investment of $30 million (plus their equity share of project costs) over time, in line with achievement of specific milestones.
The terms of the Beach JV are:
Proof of HEWI Concept Stage - Beach may earn a 21% equity interest by contributing $10 million as follows:
• $5 million for drilling and stimulating the first well, and
• $5 million for drilling and stimulating the second well and circulation tests between the wells.
Beach may withdraw without earning equity after the completion of the first well.
Beyond HEWI Stage - Beach has an option to earn a further 15% equity by contributing $20 million towards the development of the pilot plant stage and future demonstration stages that would be capable of providing power to the Beverley Uranium Mine - just 11 kilometres away.
TRUenergy may earn up to 30% of the Paralana Project for an investment of $57 million (plus their equity share of project costs) over time, in line with the achievement of specific project milestones.
The terms of the TRUenergy Farm-In are compatible with the Beach JV and are as follows:
Proof of HEWI Concept Stage - TRUenergy may earn a 10% equity interest by contributing $6 million as follows:
TRUenergy may withdraw without earning equity after the completion of the first well.
7.5 MW Pilot Plant Stage - TRUenergy has an option to earn a further 5% equity by contributing $7 million towards the development of the pilot plant stage.
30 MW Demonstration Plant Stage - TRUenergy has an option to earn a further 15% equity by contributing $44 million towards the development of the 30MW demonstration plant stage capable of meeting the growing needs of the Beverley Uranium Mine and the proposed mine development at the nearby Four Mile deposit.
In addition to the JV funding arrangements, Petratherm has been successful in winning a $5 million Renewable Energy Development Initiative grant from the Australian Federal Government. Grant monies are to be applied to the Stage 1 of the project - Proof of HEWI Concept Stage - to assist in funding the two well program of work.
The first $10.5 million of funding toward each well will be provided by Beach Petroleum ($ million), TRUenergy ($3 million) and REDI Grant ($2.5 million). Additional funding would be met by the JV partners on an equity share basis - Petratherm 69%, Beach 21% and TRUenergy 10%.
Petratherm on behalf of the Paralana JV Project lodged on 23 December, an application under the Commonwealth Government's $50 million Geothermal Drilling Program (GDP) for a maximum grant amount of $7 million.
The Paralana JV Project has been advised that its application has met all eligibility criteria for funding under the GDP and if successful funds would be received prior to the commencement of drilling the Paralana 2 deep well in May 2009.
The GDP provides for an upfront payment to successful candidates of 60% (or $4.2 million maximum) of the funding prior to deep drilling with the balance provided subject to achievement of agreed milestones and prior to the drilling of the second deep well of the "proof of concept" project.
TRUenergy provide a wealth of experience in energy industry capabilities, in particular developing and operating generation, and marketing of power to business and residential customers in the National Electricity Market. These capabilities complement the specialist subsurface expertise of Beach Petroleum and the geological expertise of Petratherm. This combination of capabilities considerably enhances the commercialization prospects of the Paralana Geothermal Energy JV Project in both the short and long terms.
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