Panax Geothermal (ASX: PAX) is a pure geothermal company with access to some of the world's most promising geothermal assets. As climate change projections worsen, Panax Geothermal is well positioned to commercialise sustainable sources of base-load energy, powered from the Earth.
The long term vision of Panax is to become a major participant in the geothermal industry, both nationally and internationally. The scope of its geothermal interests will be broad, including both conventional geothermal resources (volcanic related) as well as enhanced geothermal systems (EGS) such as hot fractured rock (HFR) geothermal systems.
Panax Geothermal aims to become first grid connected geothermal power producer in Australia
Panax Geothermal's (ASX:PAX) total Geothermal Resources of the Limestone coast project have been assessed at 332,000 peta joules (PJ). This represents a large amount of thermal energy, the bulk of which is classified as an Inferred Geothermal Resource. To date, part of this Inferred Resource, or 11,000 PJ has been classified as a Measured Geothermal Resource. It is this Measured Geothermal Resource which sets Panax apart from all other geothermal companies in Australia.
A Measured Geothermal Resource indicates a high degree of confidence regarding the existence of a viable geothermal reservoir. The portion classified as a Measured Geothermal Resource has been subject to previous gas exploration, with many deep wells having intersected the target hot sedimentary aquifer (HSA), providing direct data on temperature as well as on reservoir quality. This area has been selected for development and has been named the Penola Project.
Hot Sedimentary Aquifer – Conventional Geothermal Energy
The Penola Project targets a hot sedimentary aquifer (HSA) in sandstones some 3,500m below the surface. A HSA project relies on heat stored in water in an existing reservoir, enabling fast development using commercially proven technology. This is in contrast to geothermal energy associated with Hot Fractured Rocks (HFR), which requires the development of an underground reservoir. This carries more risks and has a much longer development time.
Penola Project – Pre-Feasibility Study
As the key inputs for commercial development, such as temperature and the reservoir qualities, are well recorded, Panax has carried out a pre-feasibility study to determine the costs of future power generation. The study took account of all capital costs, including all drilling, plant development and operating costs. The results were encouraging, indicating that power could be generated at a total cost of AUD$63 per MWh (net). These cost estimates have been independently reviewed by GeothermEx, recognised as the world’s foremost geothermal consultancy group, who concluded that “the Penola Project represents a commercially attractive development proposition”.
The close proximity of this project to the national grid is an added economic advantage. It is envisaged that a commercial, grid connected Commercial Demonstration Plant could be in operation by the end of 2011.
Penola Project – Next Steps
Panax is now fully engaged in preparing to spud the first production well – Salamander-1. This well will be drilled to a maximum depth of 4,000m, only 500m deeper than previous gas wells. The cost of this well is estimated at AUD$12 million. A drilling rig has been contracted by means of a AUD$0.5 million down payment, followed by another down payment to secure the ontime delivery of long lead items.
Summary
Panax Geothermal's Penola Project has a unique position within the Australian Geothermal Energy Sector. It is one of only two projects with wells in the target geothermal reservoir. It is the only HSA project with a Measured Geothermal Resource. An independently reviewed Pre-Feasibility Study shows that this project could generate low cost, clean base load power. Following the completion of our first well, a grid connected Demonstration Plant could be in operation by the second half of 2011.
Other Geothermal Companies:
Ormat Technologies Inc. (NYSE:ORA) owns geothermal power plants that are operating in the US and worldwide, designed for outdoor installation and remote control unattended operation. Ormat has successfully supplied approximately 1100 MW of geothermal power plants, based on its proprietary technology, logging millions of hours of operating experience.
Calpine Corporation (NYSE:CPN) is one of North America's leading geothermal power producers. At The Geysers, about 100 miles northeast of San Francisco, Calpine harnesses naturally heated steam from the earth to create electrical power. This renewable "green" power is available to consumers throughout California.
