Since taking over Beach, managing director Reg Nelson has steadily expanded the company’s asset base to include a wide range of prospects.
Notable examples include the innovative Anzon-operated Basker-Manta-Gummy offshore oil and gas project, Queensland coal seam methane and high-impact New Zealand offshore frontier gas-condensate targets.
But this is by far the most radical of his moves towards diversification. Even though Paralana will draw on Beach's drilling and fraccing expertise, it is by no means a petroleum project.
Nelson said the Paralana investment and partnership was a logical and strategic expansion for the company.
“The farm-in is based upon Beach’s view that future growth in the petroleum sector is likely to increasingly require a portfolio, which includes both conventional and alternative energy projects,” Nelson said.
Petratherm said today that the joint venture agreement “significantly underpins” the commercial development of its Paralana hot rock energy project.
“This could see Paralana producing Australia’s first large-scale commercial geothermal electricity supplies by the end of 2009, with potential to expand to base load supply,” Petratherm said.
Paralana, currently 100% owned by Petratherm, has already achieved one of the country’s highest “hot rock” temperature indicators in its first two development stages.
Petratherm said Stage 3 will involve two new wells close to the Paralana test well, thermal resource definition, circulation tests and the establishment of an underground heat exchanger.
Under the farm-in, Beach will earn a 21% stake in the project by contributing $5 million to drill to about 4km and to stimulate the first well. Drilling is scheduled to begin in the second half of this year, subject to rig availability, according to Petratherm.
Beach will also pay a further $5 million towards drilling and stimulating the second well. This will be followed by developing an underground heat exchanger by circulating water through rock fractures between the two wells to demonstrate a commercial “hot rock” energy resource.
Petratherm said subject to the success of the heat exchanger stage, Beach can earn a further 15% for a total project interest of 36%, by contributing a further $20 million.
This would contribute to the cost of installing the initial surface-based electricity generation plant of 7.5MW capacity at Paralana.
But Beach also has the option of withdrawing without equity after the completion of the first well.
The Paralana project aims to initially provide electricity to the Beverley Uranium Mine, where demand is expected to grow from around 7.5MW to as much as 30MW, Petratherm said.
The company then plans to expand to around 520MW and supply the national electricity market via two entry points – Port Augusta and Olympic Dam.
The two companies are also investigating the possibility of extending their relationship to other hot rock projects in Australia.
“Beach Petroleum brings to the Paralana Project a wealth of experience and expertise in drilling operations and fracture stimulation,” Petratherm said.
“This will be invaluable to the success of the next stage of work on the Paralana Project and is consistent with Petratherm’s continuous drive to reduce cost and risk wherever possible.”
Petratherm estimates the Paralana geothermal resource has the potential to yield 13,000MW of power, more than eight times South Australia’s average daily capacity need.
