The theory is that water can be injected into fractured hot rock and then recovered as steam to drive turbines to produce electricity power into the national grid.

If it works, the hot rocks in Geodynamics's 985 sq.km of leases hold heat equivalent to 50 billion barrels of oil - almost 20 times Australia's remaining oil reserves, according to Geodynamics founder and managing director, Bertus de Graaf.

The Habanero-1 well is expected to take 10 to 12 weeks to get to the target of 4900 metres. De Graaf says it will be the deepest and hottest well ever drilled on mainland Australia.

Another six weeks will be required to pump high-pressure water down the well to open up the cracks in the granite, creating the heat-exchanger.

Geodynamics expects to complete a second well towards the end of 2003 about 500m from the first, which will complete the circuit.

Woodside, which acquired a stake in Geodynamics via its renewable investment vehicle Metasource, is helping by providing full access to its specialised software for deep drilling.