Paralana
Paralana, South Australia
The Paralana Engineered Geothermal System (EGS) Project is located 600 kilometres north of the city of Adelaide in South Australia. There deep below the red sand of the Frome Plains, are hot rocks capable of providing enough clean energy to significantly reduce Australia's reliance on fossil fuels. In September 2005, temperature readings from shallow evaluation drilling (Paralana 1) to around 500m, recorded a geothermal gradient of 76ºC per kilometre, which is 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) postulates 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 and our joint venture partners Beach Energy and TRUenergy Geothermal, have begun the process of tapping into this vast renewable energy resource to create Australia's first base load, commercial geothermal energy plant.
The first injector well has been drilled and cased to 3725m. Temperatures will now be measured and a program developed to fracture the rocks at depth to create the required underground reservoir. A second deep well will then be drilled late in 2010 so that circulation testing can be conducted for proof of concept.
Studies to date indicate that high temperatures of about 200ºC occur at drillable depth at the site. This is due to a favourable combination of anomalously high heat production granites and metasedimentary rocks providing 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.
An independent Statement of Geothermal Resources was announced to the ASX on 3 February 2009, in accordance with the Australian Geothermal Reporting Code (2008), with the total Inferred Geothermal Resource estimated to be 230,000 ± 40,000 petrajoules (PJ). Petratherm has a long-term development plan to deliver a minimum of 260 MW (footnote 1) 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 (footnote 2), or just 1% of the estmated median Inferred Resource.
The Paralana joint venture partners were last year awarded $62.8 million under the Federal Government's Renewable Energy Demonstration Program to support the project.
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 more accurate prediction of temperatures at greater depths. The data indicates a temperature of 200ºC will occur at the target depths, which is within the range of temperatures which Petratherm has been modeling for 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 obtain the required fluid flows through shallower drilling and controlled rock fracture. 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 to generate fluid flow through granite, or to develop an effective reservoir articially by mechanically fracturing the rock. Once established, a granite reservoir is also susceptible to chemical reactions (i.e. alteration) which clog 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.
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 thus bringing forward the development of geothermal energy across Australia.
Petratherm and our joint venture partners used the Weatherford 2000HP Lightning Rig to drill the first injector well in the informally termed Poontana Basin (Figure 2). The subsequent development of a fluid circulation cell (the sub-surface heat exchanger) around the well is the next phase.
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.
The drilling and circulation work will be a precursor to constructing a pilot electricity generation plant to meet local power needs at the neighbouring Beverley Uranium Mine.
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 constrained' 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
A Passive Seismic Array continues to monitor the background seismicity at the Paralana site ahead of the proposed fracture stimulaton to create the geothermal reservoir at Paralana 2. Prior to the stimulation program all seismic stations will be linked to a central monitoring site via radio telemetry allowing the real-time monitoring of the micro-seismic events. The recorded and analyzed events will aid in the determination of the size and location of the stimulated reservoir.
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 significant cost benefits associated with large-scale transmission network solutions to access the National Electricity Market (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 delivering 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 South Australia 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 transmissin 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 Energy (formerly Beach Petroleum) joint venture announced in January 2007 enables Beach - an Adelaide-based oil and gas company - 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 is a wholly-owned subsidiary of CLP, one of the largest publicly listed power businesses in the Asia Pacific. 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.
Footnote 1 - MW refers to Megawatts of electric energy unless otherwise indicated.
Footnote 2 - Assumes 13.6% heat-electricity conversion efficiency, and 20% parasitic power loss.
The information in this document that relates to Geothermal Resources is based upon a report compiled by Dr Graeme Beardsmore, an employee of Hot Dry Rocks Pty Ltd. Dr Beardsmore has over 15 years experience in the determination of crustal temperatures relevant to the style of geothermal play under consideration, is a member of the Australian Society of Exploration Geophysicists and abides by the Code of Ethics of that organisation. Dr Beardsmore is a Competent Person as defned by the Australian Code of Reporting for Exploration Results, Geothermal Resources and Geothermal Reserves (2008 edition). Dr Beardsmore has consented in writing to the public release of this document in the form and context in which it appears.
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