The project involves drilling two production wells into an underground heat source at depths of 3.5-4km. Circulating water will extract heat from hot rock strata to power an initial 7.5MW electricity-generating plant.

In a statement yesterday, Petratherm said the joint venture, in which Beach is earning a 36% interest, has contracted Australian Drilling Associates to undertake the well design and rig selection process.

This work is due for completion in about two months, after which a project works timetable will be prepared.

Subject to rig availability, Petratherm said it expected to start the two-well heat exchanger drilling program in early 2008, leading to commercial geothermal electricity production to supply the nearby Beverly mine from the end of 2009.

Earlier drilling at Paralana established sufficiently high temperature gradients to warrant deeper drilling.

The aim of the upcoming operation will determine the temperatures at a depth of 3.5-5km, in a bid to move into full-scale development.

To help it achieve this aim, Petratherm said it has appointed world leading geothermal energy consultancy, US-based Global Power Solutions, to advise on Paralana and its other projects in Australia and Spain.

At Paralana, GPS will provide technical oversight to the Paralana well design and drilling process, together with planning and engineering design work for the requisite power generation plant and the integration of the above and below ground works.