Leading up to the GRC Annual Meeting and GEA Trade Show in Sacramento, I had the chance to interview Graeme Beardsmore, the Technical Director of Australian Hot Dry Rocks Pty Ltd., Australia’s leading geothermal exploration and development consultancy.
He lives and works in Melbourne, Australia, where he lives with his partner, Jenny. Having received his PhD on thermal history modeling from Monash University in 1996, he then worked 18 months with geothermal modelers in China and the United States (Dave Blackwell).
He has worked in the Australian geothermal industry since 2003, firstly as a Research Fellow at Monash, but mostly as Technical Director of Hot Dry Rocks Pty Ltd (HDR). Graeme is a Board Member of the International Geothermal Association, an Adjunct Research Fellow at Monash University, and sits on numerous committees of the Australian Geothermal Energy Group and Australian Geothermal Energy Association. He earns his living entirely from the geothermal energy sector.
How would you describe your company and your key activities?
HDR is Australia’s only dedicated geothermal energy consultancy. Eight full and part time staff work exclusively on geothermal projects around Australia and the world. We provide consulting services, operate Australia’s only thermal rock property laboratory, have field equipment for precision borehole temperature logging, and carry on an active internal R&D program to produce targeted hardware and software solutions for geothermal exploration. HDR does not hold or operate geothermal licences, but provides advice and services to a broad range of public and private sector organizations.
What are the services you offer and what are your company’s key markets?
Our main market encompasses the Australian private sector companies exploring for and developing unconventional geothermal resources. The public sector, however, is also a large part of our market and we are working with many state and federal government agencies to identify opportunities for geothermal development across Australia. Increasingly we are providing advice and services to international organizations. We have worked for NASA, the British Geological Survey and Google.org, amongst others. Our main services focus on exploration for and quantification of Geothermal Resources, as defined by the Australian Geothermal Reporting Code. HDR has delivered the majority of Code compliant resource reports in Australia. But our services also extend to thermal property measurements, field activities, project management, financial modeling, reservoir modeling, reflection seismic interpretation, licence reporting, preparation of prospectus material, stress field modeling. Through a network of complimentary consultancies and service providers around the world, we offer a comprehensive range of geothermal services for the entire life cycle of a project.
What do you consider the key obstacles and challenges for increased development in Australia and what do you think are key trends of the industry?
Clearly, the current challenge facing the Australian industry (and I don’t think we are unique here) is to overcome the financial barrier of completing the exploration phase. This normally becomes an issue for drilling the first deep resource appraisal well, but no new geothermal energy company has been able to raise money through listing on the Australian Securities Exchange for about two years now. There is a financial barrier because the people with the money identify exploration (especially drilling) with a high level of risk. The key challenge for HDR is to survive in this current capital-starved market. HDR requires clients with cash in order to survive. We don’t have the option of raising money through rights issues, for example. In order to survive we need to facilitate our client base’ access to capital by reducing exploration risk as much as possible. HDR’s services are entirely focussed on reducing the geological risk as much as practically possible prior to drilling. Of course, there still remains a financial risk for our clients’ investors due to uncertainty over the timing and level of a ‘price of carbon’ in Australia, so advocacy is also a part of HDR’s role. I think the risk-averse nature of the capital markets right now will mean that those projects seen as lowest risk will stand the greatest chance of securing funding. This will result in a trend towards shallower, lower temperature projects.
What do you think holds back speedier development of geothermal energy projects globally?
I firmly believe that a lack of knowledge is one of the biggest hurdles to geothermal development globally. Compared to the petroleum sector, for example, the number of experience professionals in the geothermal sector is very small. When we look at the ‘unconventional’ geothermal sector, you can almost count the number of experienced practitioners on one hand. It is difficult to rapidly grow an industry when there are so few people who know what they are doing. A lack of knowledge extends to the capital markets, which lack the depth of understanding to judge the true level of risk inherent in new geothermal projects.
What are your expectations for the event in Sacramento and who are you looking forward to meet?
I haven’t been to a GRC Annual Meeting since 2007, so I look forward to the whole thing. Having just been reelected to the Board of the International Geothermal Association, though, I particularly look forward to meeting my new colleagues with whom I will work for the next three years (the IGA Board Meeting follows the GRC Meeting). And being pragmatic, I also hope to meet a lot of potential new clients for HDR’s services.
Company website: www.hotdryrocks.com