O&G firm acquires geothermal permits, Western Australia

Esperance, West Australia (source: flickr/ Don Pugh Perth Western Australia, creative commons)

Alexander Richter 1 Apr 2021

Australia-based independent oil and gas exploration company Strike Energy Limited (Strike) announces having signed a  non-binding term sheet to acquire 100% of the existing geothermal rights of the Perth Basin via the acquisition of Mid West Geothermal Power Pty Ltd (MWGP).

Last week we reported on Mid West Geothermal Power having acquired a geothermal exploration permit in Western Australia.

CEO & Managing Director, Stuart Nicholls said: “Between Strike’s gas resources and potential future geothermal power, the Perth Basin could be a supplier of low cost and low to zero carbon energy into WA for more than 50 years. “As one of the leading experts of the Perth Basin’s Permian sandstones Strike has recognised the renewable energy potential of the area which it believes could be a unique nationally significant geothermal resource. “This geothermal resource is 100% complementary to Strike’s existing gas business and has the potential to generate meaningful operational and subsurface synergies with Strike’s substantial gas interests. Strike’s pursuit of this geothermal opportunity amplifies how it is intending to be the driver of WA’s energy transition and its long-term commitment to producing energy and fertiliser products with the lowest feasible carbon footprint.

MWGP Director Mark Ballesteros commented: “We believe the North Perth Basin contains one of the most prospective geothermal resources in Australia and has the potential to supply enough zero-emission, baseload power to make a significant contribution to reducing carbon emissions in Western Australia. We are excited to be consolidating with Strike and recognise that their technical and operational expertise offers immense synergies that will facilitate realising the substantial geothermal potential of the area.”

Perth Basin Geothermal Energy

Strike’s understanding of the Permian sandstones of the North Perth Basin has greatly increased as a result of the exploration and development of the Waitsia, West Erregulla and Beharra Springs gas fields in the Perth Basin. Reservoir engineering work and studies conducted by Strike and separately by MWGP corroborates the geothermal potential of this hot sedimentary lithology where the naturally occurring porosity and permeability has been preserved by a favourable diagenetic history of the sandstones. These high-quality reservoirs are modelled to have high flow rates of hot water that can be achieved without any requirement for stimulation. The Permian sandstones of the North Perth Basin have the key attributes of a successful geothermal energy source when not gas bearing, and is analogous to the Williston Basin in Canada, where geothermal opportunities are being commercialised.

These attributes include:

• Regionally pervasive and extensive sandstones with thick distribution across large areas
• Static measured temperatures of 150 to 200 degrees C
• A high level of retained permeability at depth
• Contains extremely hot water (where gas bearing structures are not present)
• Very high reservoir pressures Mapping of potential resources within water bearing units of the Kingia sandstone indicate more than 500 km² of geothermal resource where water temperatures exceed 150 degrees.

Modelling of the resource indicates a geothermal energy potential of up to 350 MW of synchronous, dispatchable power for at least 30 years. Early power plant engineering indicates the geothermal energy is best produced via a binary system whereby geothermal fluids will be produced, heat exchanged and then reinjected into the reservoir to reheat and maintain the pressure dynamics.

Geothermal Tenure & Complimentary Business Synergy

The early-Permian sandstones of the Perth Basin can be both a conventional gas reservoir or host to hot water wet sands, which can be used for geothermal purposes. Having dual interests over the same acreage is a natural hedge to all of Strike’s drilling activity, where all wells drilled into the basin could generate commercial outcomes.

The geothermal business will have immense overlap with Strike’s existing operations and intellectual property, in that Strike’s core competencies in subsurface mapping and identification of the Permian sandstones, deep Perth Basin onshore drilling, land access and community / regulatory engagement are all requirements for a successful geothermal operation. This overlap is hugely complementary and, should the transaction complete, will potentially enable the Strike group to drive down well costs and benefit from further economies of scale and further refinement of its Permian models, and may be able to generate longer term cashflows from existing sunk gas wells after watering out at end of life. I

In the event the acquisition of MWGP completes, Strike will hold the only geothermal rights in the Perth Basin with ownership of the Geothermal Special Prospecting Authority with Acreage Option 2 (GSPA-AO2) which cover 3,500km² of high-quality Permian area. Subject to completion of the transaction, Strike will complete, in partnership with ex-MWGP Directors (as Strike consultants) the required heat flow survey in order to convert 50% of the GSPA-AO2 to a For personal use only Geothermal Exploration Permit, which will secure geothermal exploration rights over 1,750km² of the Perth Basin in the area that Strike considers optimal for geothermal purposes.

Source: Company release to the stock market (pdf)