As far as neighbourhoods go, Innamincka is quiet. The tiny settlement, which consists of a general store and a pub, services the vast Innamincka cattle station and seasonal tourists who visit for the camping and fishing in the Cooper Creek. It is a small oasis in danger of being swallowed up by Australia’s vast interior. But, despite its isolation, Innamincka, pitched more than 1000 km northeast of Adelaide in South Australia, is fast becoming the centre of the world for the fledgling geothermal energy industry.
Geodyamics Limited, the largest of 18 companies to hold Geothermal Energy Licences in Australia, has discovered that just eight km south of Innamincka, at depths of up to five km below the gibber plane desert of the Cooper Basin, lie the hottest rocks in the world outside volcanic regions. The challenge is to harness all that potential to meet the world’s growing appetite for energy, projected to almost double by 2020.
Geodynamics’ find is being hailed as the best opportunity to prove that “hot rock” geothermal energy can deliver commercial quantities of emission-free, baseload power. Jefferson Tester, professor of Chemical Engineering at the Massachusetts Institute of Technology, is among those to have described Australia as the world’s laboratory for the development of geothermal energy.
“Australia has some of the world’s best geothermal resources and the country is amassing technical expertise that leads the world,” Prof Tester said. “In fact, Australia is likely to be the first country in the world to harness geothermal energy in commercial quantities.”
Colossal energy reserves
Drilling by Geodynamics of its tenements, spanning 2500 km² in the corner where the borders of South Australia, New South Wales (NSW) and Queensland meet, has identified a resource of 390 000 petajoules (PJ) with the potential for an additional 300 000 PJ. For the sake of comparison, Australia’s total proven and probable gas reserves amount to 140 000 PJ.
The interim chief executive of Geodynamics, Dr Adrian Williams, is confident his company can deliver a quarter of Australia’s new generating capacity. More than that, hot rock geothermal (also known as hot fractured rock or HFR) is almost unique for its potential to replace fossil fuels, rather than just augment them, as is the case for most other renewable energy sources. In principle, there is sufficient energy to meet the total electricity requirements of Australia for hundreds of years to come.
“The world is already well aware of the problems with greenhouse gas emissions from fossil fuels, which makes the development of clean, sustainable power from sources such as geothermal energy all the more important” Williams said. “However alternative energy sources must deliver on three fronts; they must cut emissions by a material amount, offer a cost competitive option and be brought to bear in a timely and efficient manner, without leaving any dangerous legacies.”
There are few sources of energy that fit the bill: nuclear power is considered by many to be socially unacceptable, solar and wind power are limited, intermittent and unreliable, and large-scale hydroelectric schemes are frowned on for environmental reasons.
Taking up the slack from fossil fuels
Williams explained that hot fractured rock (HFR) geothermal energy, which is produced by extracting the heat trapped in underground rocks, is the only known source of renewable energy capable of carrying large baseloads 24 hours a day. He said Geodynamics has estimated it can produce at least 10 000 MW of electricity from its resources at a cost of only $45 per MWh. “The world is facing an energy dilemma and HFR is the only option that gets a tick on all counts,” said Williams.
One of the main advantages of HFR is its low impact on the environment, because the energy is derived from converting heat extracted from hot rocks there are no gas emissions. Unlike burning fossil fuels, no carbon dioxide is released into the atmosphere. The process does not produce any waste dumps and there is relatively low noise pollution. The construction of a HFR geothermal power plant leaves only a small environmental footprint. Site disturbance is limited to drill holes and pipelines, and a building to house the power plant.
For a new industry, HFR is relatively straightforward. Most of its principles and technology are based upon those already widely in use in the broader resources industry, such as drilling and hydraulic fracturing techniques established by the oil and gas sector.
In fact, Geodynamics’ drilling operations manager Bruce Richardson, the man responsible for what will be the company’s first commercial-scale production well, comes to hot rocks after a distinguished career with oil and gas major Woodside Petroleum, where he held a range of positions including senior drilling engineer. At the same time, Geodynamics directors Dr Doone Wyborn and Dr Prame Chopra have developed renowned levels of expertise in hot rocks over 15 years as research scientists in the technology.
Realising the potential
At a basic level, HFR heat is generated by special, super hot granites some three to five kilometers below ground. The heat inside the granites is trapped by overlying rocks, which act as an insulating blanket. Energy is produced by extracting heat from the granites by circulating waters through an engineered, artificial reservoir or underground heat exchanger. Standard geothermal power stations convert the extracted heat into electricity.
Geoydynamics’ steam production test at the Habanero wells in the Cooper Basin
HFR has been classified as renewable by national and international authorities including the International Energy Agency. HFR geothermal projects are currently underway in France, Switzerland, Germany, the USA and Japan.
However, while Australia has recognized potential for the development of HFR geothermal energy, economic viability has to be proven through the construction of a demonstration plant. That’s next, according to Williams.
In a clear sign that Geodynamics is about to take the leap from concept to commercial production, the company recently announced the appointment of Gerry Grove-White as managing director and chief executive officer. Grove-White has a background as an operator and manager of large-scale power projects.
After graduating in the early 1970s as a mechanical engineer, Grove-White first worked in the nuclear power industry before joining UK-based PowerGen, which he helped establish in India. A posting in Europe followed, then in 2001 Grove-White returned to Australia as managing director of Eraring Energy, the NSW government-owned power generation company. Most recently he was chief operating officer of Tata Power, the largest private power company in India. He will take up his new role at Geodynamics towards the end of August.
“Gerry brings with him three decades of knowledge and operational experience in the power industry as well as proven management and leadership skills” said Geodynamics chairman, Martin Albrecht. “He is the ideal appointment to steer Geodynamics through the next exciting phase of the company’s development where we will move from concept to production.”
Williams will remain with Geodynamics to help steer the company through Phase One of its business plan, which involves drilling of a production well and proving the output of an underground heat exchanger through circulation. This stage should be completed in late 2007. Williams will continue to offer valuable support and will remain a member of the Board’s technical sub-committee.
Growing support for hot rocks
At the same time, there is growing financial support for the industry. Geodynamics secured a federal government grant of A$6.5 million ($5.7 million) and successfully raised A$11.5 million via an Initial Public Offering in 2002, as well as further funds totaling A$78.6 million for the four years to June 2006. Investors too are reflecting the optimism and rewarding the company for its progress.
Geodynamics recently raised almost A$50 million through a rights issue, in large part to purchase the Le Tourneau ‘Lightening Rig’, an advanced 3000 HP rig with great mobility and the capacity to operate at extreme depths – in this case up to 6000 m. On the Australian Securities Exchange, investors recently pushed Geodynamics shares to a near all-time high of A$2 and a 250 per cent gain in the past six months.
Hot fractured rock cellar and conductor pipe ready for the Habanero 3 project
To date, the company has successfully drilled two wells: Habanero 1 and 2. Its geothermal exploration licences have been shown to contain 390 000 PJ of high grade thermal energy:
- The size of the resource is clear – the large bodies of granite have been well delineated and proven to exist through drilling
- The quality and potential of the resource is proven – temperatures have been measured up to 250 ºC
- The world’s largest enhanced underground heat exchanger has been developed and initial flow tests have produced the first hot fluids to the surface.
The new rig will be in place in August to begin drilling the first commercial-scale production well, Habanero 3. This new well will enable production testing, leading to the first formal proving of geothermal reserves, and thus proving the concept and completing stage one of the company’s plans. In the meantime, design work is proceeding on a power station with Geodynamics currently working with recognised power station engineers Parsons Brinckerhoff.
Bringing the new breed to market
Delivery of power to the grid will also require transmission lines and power purchase agreements. Work here is underway. The resource position, together with completion of stage one by the end of this year, will provide the basis for a 40 MW plant delivering power into the grid by the end of 2010, and then for 2015, Geodynamics is targeting production of 500 MW. Eventually output will reach 10 000 MW – the equivalent of ten to 15 coal fired power stations.
Rig 100 doghouse containing the driller’s cabin
Some observers have cast doubt on the economics of the project, for its remoteness in the Cooper Basin, but Williams is not unduly concerned. He has said in the past distance has not hindered development of other natural resources, whether in Australia or around the globe – think the North West Shelf oil and gas fields or the Three Gorges hydroelectric river dam in China.
“At the moment the Cooper Basin is a long way from the infrastructure that will carry the energy,” he said. “But there are many examples in Australia and overseas where infrastructure has connected important resources in remote areas with the market.
“The Habanero 3 well will be Australia’s first commercial geothermal well and will take us a great step towards harnessing a large and sustainable source of clean, renewable energy sufficient to meet the country’s needs for decades to come and serve as a model for the development of the industry worldwide,” Williams said.
The new Geodynamics boss, Mr Grove-White, will have plenty on his plate when he takes up his position in late August. But you can bet that he won’t be too busy to pay a visit to a little place called Innamincka.