Geothermal deal steams ahead

Age
Tuesday 5/8/2008 Page: 2

TRUENERGY has joined local rivals by entering the burgeoning geothermal energy market, announcing a $57 million joint venture with Petratherm. Under the partnership, TRUEnergy acquires up to 30% of Petratherm's Paralana project in the Flinders Ranges in South Australia.

TRUEnergy managing director Richard Mclndoe said the investment, combined with almost $1 billion of committed capital into clean-energy projects, meant the company was on track to achieve its 60% reduction in carbon emissions by 2050. Australia's energy giants have been rushing to grab a slice of the country's geothermal prospects.

Origin Energy has committed $150 million to GeoDynamics' Habanero hot rock project in the Cooper Basin in South Australia. AGL has paid $2.2 million for a 10% stake in Torrens Energy, which is also looking at geothermal projects in South Australia.

geothermal energy is achieved by drilling deep wells into the earth. Water is then poured down the wells, spilling over "hot rocks." The water then returns to the surface in the form of steam and is converted into electricity. Mr Mclndoe said the attraction of geothermal was its abundance, its zero emissions and its potential to produce base-load power.

Under the Petratherm deal, TRUEnergy can:
*Earn 10% equity for $6 million to be spent drilling the first and second wells.
*Earn a further 5% equity for $7 million to be spent establishing a 7.5-megawatt pilot plant in Paralana.
*Add a final 15% stake worth $44 million to develop the 30-megawatt demonstration plant.

Petratherm managing director Terry Kallis said while the project was 280 kilometres away from the national electricity grid, the project had a customer off-grid 10 kilometres away who was prepared to buy the output.

He said the energy could start feeding into the national electricity market by 2011, with 260 megawatts expected to be commercially available to Port Augusta by 2020. "I think over the next two to five years you are going to see a huge amount of development in the geothermal sector," he said. Petratherm's share price rose almost 30% after the announcement, finishing the day up 8C, or 12%. at 73¢.
Gunning