The company is yet to complete Stage 1 of its business plan: the demonstration of economically extracting heat from hot fractured rocks, to provide heat for a binary cycle pilot power plant scheduled for Stage 2.
Although Geodynamics had hoped to complete Stage 1 during the reporting period, its plans became stuck when a dropped bridge plug at the completion of drilling – at a depth of around 5km – prevented access to the hot reservoir below.
The company’s attempts to resolve its issues with the Habanero-2 well required a share placement in April 2006, raising a further $17 million at $1.45 per share, although attempts to sidetrack the blockage were ultimately suspended in June 2006.
The company now says it plans to proceed with the drilling of a new well, Habanero-3, to complete Stage 1 and will soon release details of a new share placement to fund the project.
Despite the delays with completing Stage 1, the company said its planning for Stage 2 (constructing and proving the pilot plant) remains on track with government funding secured; expectations are that Stage 3 – the development of commercial baseload power plants supplying 280 megawatts into the national grid – will not be “unduly delayed” from the planned starting date in the last quarter of 2011.
The company expressed its thanks for the continued support of major shareholders Origin Energy and Woodside Petroleum, experienced drilling and energy businesses able to appreciate the technical challenges of developing new energy solutions.
Geodynamics said its current cash reserves were sufficient to fund operations for a further 12 months from today.
“The directors foresee that the 2007 financial year will be spent in implementing the learnings from the previous drilling campaign and then planning, designing and drilling the new well/sidetrack to enable the completion of the circulation of the company’s reservoir testing programme and therefore the completion of Stage 1 of the company’s business model,” the annual report stated.
“Successful economic circulation will open up the full potential of the world-class, high-grade HFR geothermal resource in the Cooper Basin.”
