Australian Hot Rock receives US$6m drilling grant
Hot Rock Ltd. has received the draft Funding Agreement from the Department of Resources, Energy and Tourism for the AU$7 million (US$ 6 million) “Geothermal Drilling Programme” grant.
In news from Australia it is reported that, “Hot Rock (ASX: HRL) has received the draft Funding Agreement from the Department of Resources, Energy and Tourism (DRET) for the AU$7 million (US$ 6 million) “Geothermal Drilling Programme” grant and has until the 17th June to execute it so that funds can be drawn down.
Hot Rock announced on the 14th December 2009 that its application for the grant from the Commonwealth Government had been successful. This followed advice from the Federal Minister for Resources, Energy & Tourism, Martin Ferguson, that HRL had been offered the grant for the Koroit Project.
Mark Elliott, executive chairman, said the funds will be used to undertake a two well appraisal drilling and testing program at the company’s flagship “Hot Sedimentary Aquifer” (HSA) Koroit Project in the Otway Basin, south west Victoria.
“Receiving the GDP funding agreement is a major milestone for HRL in moving closer to generating electricity from geothermal energy in Australia within the next 2 years.” Elliott stated.
Sinclair Knight Merz (SKM) geothermal division in New Zealand has completed a suitable proof of concept well design to test the Koroit HSA reservoir.
In February, a Letter of Intent (LOI) was executed with Ensign Australia for the use of Rig 16, which is suitable for the SKM well design and a drilling contract is near completion.
Contracts have been executed and payments made for casing, wellheads and land access.
The company said the $7 million grant to HRL shows the government’s confidence in the company’s management and geothermal business model.
This grant made available to HRL is at no cost to the company and is a significant bonus for HRL shareholders.
The appraisal program will test the potential of the Koroit Project, which has an Indicated and Inferred Geothermal Resource estimation of 7,600PJ and 67,000PJ, respectively of in-place stored heat.
The Indicated Resource alone has the potential (at a P50 level of certainty) to generate over 100MWe of geothermal power, which is enough electricity to supply around 100,000 homes. The inferred resource, if proven, would, on the same basis, have the potential to generate more than 1,000MWe.
This will be the first geothermal drilling program to be conducted on HRL’s permits to test temperature and flow rates to indicate the viability of electricity generation from geothermal energy.
Importantly, geothermal energy is base-load which is power generated 24 hours a day, 7 days a week, it is renewable and has no greenhouse gas emissions.
Geothermal has the highest capacity factor of all power generation methods and is the best renewable power option for replacing Victoria’s current high reliance on electricity generated from brown coal fired power stations.
Commercial geothermal power generation using HSA has been operating in the USA for over 25 years and represents potentially the lowest risk and best short term development option for commercial geothermal energy developments in Australia.”
Source: company release via proactive investors