Chile announces geothermal drilling grant program, estimates 3 GW potential

Alexander Richter 4 Sep 2009

Chile's energy minister announces geothermal drilling grant for unsuccessful geothermal drilling campaigns and talks about conservative estimates for a geothermal potential of 3,000 MW for Chile.

Reported in Chile, the country’s energy minister Marcelo Tokman visited the companies exploring geothermal energy at the concession area at Apacheta in the Antofagasta region. He was accompanied by the general manager of ENG, Oscar Valenzuela, director of ENG, Nelson Muñoz, director of Geoestrella Jaime Ravinet and other representatives of the operating company.

Tokman paid a visit to the drilling site and the well being drilled to reach a depth of  2,000 m to determine the geothermal potential of the area.

The Energy Minister said “that Chile has a large untapped potential of geothermal energy, which can be an energy source of enormous importance in the future.” He added that “studies show conservative estimates for a potential of 3,000 MW for Chile.

On the occasion, Tokman announced, explained details and the extent of the subsidy quota for deep geothermal drilling.

The minister explained that this measure is part of government policy to promote non-conventional renewable energy with the aim of diversifying the energy matrix and to achieve greater autonomy based on the use of natural resources themselves.

The subsidy quota for deep geothermal seeks to promote the implementation of exploration programs for these resources in areas that have an existing geothermal exploration concession.

The grant will cover parts of the costs incurred by the companies that have made drilling for deep exploration without success.

The Minister said the aim of the grant is to “share the risk of failure, financially compensating the geothermal company that has carried out deep exploration without finding commercially exploitable geothermal resources and decides to give up its geothermal exploration concession.

The grant will cover geothermal exploration programs for the drilling of up to 3 vertical wells over 1,000 meters depth, which should be designed for geothermal exploration and production over time.

The coverage of the subsidy will be available on a declining scale, ie 70% cover the anticipated costs approved (CAA) of the first well drilled, a 50% CAGR of the second well drilled, and 30% of CAA’s third well, with a limit of US$ 8 million per project.

The beneficiaries of this grant must be holding a current geothermal exploration concession in accordance with the provisions of Law 19,657, and meet the constraints to be defined in the Regulations, as of the date of application.

Minister Tokman said that the now announced drilling grant is not going to be an isolated measure, as the Congress introduced amendments to the geothermal concessions law, which aims on the one hand to speed up the process of incorporation of the concession and on the other, to prevent speculative investment by ensuring the effective activity of the announced drilling grant. Furthermore the State, through Sernageomin, is investing the gathering of geological data to determine the geothermal potential in certain areas of the country, as another form of contribute to faster development of geothermal energy in Chile.

Source: Portal Minero (in Spanish)