NZ’s Mighty River Power’s activities in Chile

NZ’s Mighty River Power’s activities in Chile GeoGlobal Energy project site in Chile (source: GeoGlobal Energy)
Alexander Richter 10 May 2010

An article from New Zealand highlights Mighty River Power's international activities and intentions particularly with its partner GeoGlobal Energy in Chile and the United States.

A recent article from New Zealand is looking into the country’s state-owned Mighty River Power (MRP) and its international activities, particularly in Chile. According to the article, MRP “could be building geothermal power stations in Chile by the start of next year with backing from the Government.

MRP is about five weeks away from a decision on whether to build a geothermal station in Chile.

MRP is developing its international geothermal programme in association with its United States-based geothermal partner, GeoGlobal Energy (GGE). MRP is a 25 per cent shareholder in the management company and the sole investor in approved projects.

It has US$100m (NZ$140.5m) to put into projects. About US$20m of that has already been spent.

MRP chief executive Doug Heffernan said the deal with GGE came about after the company decided to make geothermal its strategic focus.

“When I was looking to set up a geothermal business here in 2004, I said if we’re going to make this happen I need to get good people so I looked throughout the world and got hold of a guy working in Chile.”

That was Gregory Raasch, regarded as one of the top 10 in the world in geothermal development.

“He got me started and built up the first 50 [geothermal] people [at MRP].

“While he was here, we were looking to see if there was a play offshore. He had teamed up with a buddy back in the US and one thing led to another and he said if you guys are going to form together, we’d be interested in co-investing.”

Dr Heffernan said the New Zealand Government supported the investment.

“It’s off our balance sheet. The Government could argue they could have taken that as a dividend but they’re saying we’re happy you invest that provided the returns you get are at least as good as you got in New Zealand and you’re not exposing the company to additional risk,” Dr Heffernan said.

Considering that one report suggests Chile intends to develop as much as 2,000 megawatts over the next 10 years, it could be a lucrative pay-off.

“I guess if we’re successful they [the Government] may be prepared to support us some more,” Dr Heffernan said.

In New Zealand, the 140MW Nga Awa Purua follows the commissioning of the company’s 100MW Kawerau geothermal power station in 2008.

A third 110MW station, also in conjunction with the Tauhara North No2 Trust, at Ngatamariki is going through the resource consent stage.

Dr Heffernan said MRP could be building a station in Chile before Ngatamariki was approved.

“We could easily end up in 10 years’ time having been involved in projects the same size in Chile as we have in New Zealand.

“It’s exciting and a little bit scary.”

The Tolhuaca site is about 175 kilometres southeast of Concepcion. Dr Heffernan said it represented an estimated 55MW to 75MW potential. GGE’s discovery there was the first geothermal discovery in Chile in 40 years.

Dr Heffernan said they had a permit to drill a second well there, with the results due in the next five to six weeks to confirm the extent of the resource.

GGE has already been granted a commercial extraction permit for the field – a prerequisite for building a power station – and is working with Chilean electricity generator Colbun on the project. It would take three years from start to finish.

GGE has four other permits to explore in the region at Alitar in northern Chile and at Colimapu, southeast of Santiago. It has also been approved for a permit at Puchuldiza in the north, where drilling is expected to begin later this year.

At least two or three of those look like similar types of resource to Ngatamariki at 110MW, Dr Heffernan said.

“There is certainly potential for more than one station.”

He said MRP’s backing and New Zealand’s expertise in geothermal was instrumental in getting the permits.

“They [Chile] just don’t have any geothermal history, they don’t have a Wairakei or a Kawerau that was done back in the 1950s,” Dr Heffernan said.

“I think that’s why New Zealand’s reputation is so strong; we started really early. Being an island nation and having to develop what we’ve got because we can’t import electricity over the sea.”

He said geothermal was the perfect fuel – a “sexy coal” – and a renewable resource that did not rely on the weather like wind and solar power.

New Zealand’s geothermal projects had attracted the best people in the field internationally.

“If you talk to any of these guys that work in geothermal on the reservoir side, they just go around the world wherever the good projects are.

“So we want to have projects that are going to be exciting to young kids that are going through university and think: `I want to be in geothermal’.”

The company was also making a play in the US but its exploration was not as advanced there, he said.

“We’ve mainly worked on the big stuff and are trying to see if there is an entry point there.”

Dr Heffernan said MRP had changed considerably in the past decade and it was now one of the 10 biggest geothermal companies in the world. Contact Energy also made that list, but its work was vastly different. Contact has been working on hot dry rock geothermal technology in the Australian outback unlike MRP’s conventional geothermal work. Contact, through Origin, was investigating injecting water into the hot granite and then recovering it as energy.

For MRP, geothermal was definitely the focus, however. It has taken on 90 technical experts from 30 geothermal fields around the world. By 2012 the goal was to employ 120 people working in geothermal.

“People like to go where the interesting projects are occurring and globally there’s some very interesting projects being run from New Zealand,” he said.

Contact has been working on hot dry rock geothermal technology in the Australian outback unlike MRP’s conventional geothermal work.”