Australia: Geodynamics’s demonstration plant sees further delays
Geodynamics Ltd. (GDY.AU) (recently) said progress on its geothermal energy demonstration plant in South Australia state could be delayed until well into next year after an investigation into an explosion at one of its wells uncovered operational deficiencies.
As reported from Australia, “Geodynamics Ltd. (GDY.AU) (recently) said progress on its geothermal energy demonstration plant in South Australia state could be delayed until well into next year after an investigation into an explosion at one of its wells uncovered operational deficiencies.
Results of the investigation show that Australia’s budding geothermal industry is experiencing some teething problems as it tries to work out how to generate power from rocks up to five kilometers below the Earth’s surface.
Local industry pioneers like Geodynamics and Petratherm Ltd. (PTR.AU) want to generate power by extracting water heated by the rocks and using the steam to run turbines.
What Geodynamics described as a high-pressure leak followed a loud noise April 24 at the Habanero 3 well, which spewed water and steam until it was plugged with mud about a month later.
An investigation into the explosion has found that chemicals in the well reacted with steel amid fluctuating temperatures to cause damage to the well’s casing.
In reaction to the investigation’s findings, shares in Geodynamics and Petratherm plunged Friday. Geodynamics closed down 17.5 cents, or 15.9%, at 92.5 cents and Petratherm closed down 4 cents, or 11.4%, at 31 cents.
Brisbane-based Geodynamics has had to plug the well and two others with concrete. It said the implications for future well design and material selection are “complex”.
Geodynamics, however, said the causes of the explosion are within the bounds of industry experience.
Graeme Bethune, the head of energy consultancy EnergyQuest, said Australia’s geothermal industry is growing very quickly, largely thanks to government grants and more recently the passing of a national mandatory renewable energy target.
Geothermal energy is already common in other parts of the world like New Zealand and the Philippines, he said. But it’s easier to generate power in some parts of those countries because heat from volcanic activity comes closer to the Earth’s surface.
“Certainly drilling for geothermal in Australia is pretty technically challenging because of the pressure that’s involved and the greater depth of drilling,” Bethune said.
“So I’m sure this incident’s all part of the R&D process of trying to develop this energy source in Australia.”
The incident was hard luck for Geodynamics, which had just proved its generating concept worked, and finished building a demonstration plant near the well in line for expected commissioning on April 27 – just three days after the explosion.
Following the investigation, the company is considering its options and will create a revised work program.
“These activities will take at least eight weeks and may lead to a revision of the previously indicated delay of 6-9 months in the commissioning of the 1 megawatt pilot plant,” it said in a statement.
India’s Tata Group (TTA.YY) has a 10.2% stake in Geodynamics and Australian integrated energy company Origin Energy Ltd. (ORG.AU) owns 6.8% of the company.
The Habanero wells are being drilled by the Innamincka Joint Venture, of which Origin has 30% and Geodynamics 70%.
The company has well control insurance and said Friday it has lodged a claim seeking to recover “most of the costs” of the well control operation. It also intends to lodge another claim to cover the expected costs of drilling a replacement well for Habanero 3.
“The company believes that the incident will not have a material impact on its long-term strategy for large scale geothermal power generation in the Cooper Basin,” it said.”
Source: Wall Street Journal