17/09/2009 - 06:50

Hot rocks vision to power Pilbara boom

17/09/2009 - 06:50


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It has the potential to become one of the great ironies of WA's unfolding LNG boom - hot rocks powering the Pilbara as it comes to grips with runaway oil and gas development.

Hot rocks vision to power Pilbara boom

It has the potential to become one of the great ironies of WA's unfolding LNG boom - hot rocks powering the Pilbara as it comes to grips with runaway oil and gas development.

Yet that is exactly what private Perth geothermal company New World Energy has in mind.

The unlisted Guildford company, which is already one of the biggest holders of geothermal energy permits in the state's South West, is now also the biggest geothermal energy proponent in the Pilbara after being named the winner applicant for nine permits stretching between Onslow and Canarvon.

Geothermal energy, already in widespread use around the world, is a major potential source of zero-emissions energy. The process involves tapping into the latent heat contained within rocks buried deep below the earth's surface and using it to generate power.

The targeted rock formations are typically accessed by drilling wells into the resource and extracting hot water which can then be used to generate electricity on the surface or used directly as a heat source. Once the heat has been removed the water is usually re-injected back into the ground.

According to NWE managing director John Libby, the geology of the Pilbara has significant potential for geothermal energy and is also expected to witness a threefold increase in electicity demand to over 1500MW over the next decade.

Much of this demand will come from the development of multi-billion dollar LNG plants currently planned or underway in the region, such as Woodside's $20 billion expansion of the Pluto LNG project near Karratha, and the ongoing expansion of the region's powerhouse iron ore sector. Citic Pacific's $5 billion Sino Iron magnetite project at Cape Preston will itself be the region's single biggest user of electricity, and while it has secured sufficient gas to support its initial production targets, the company envisages a steady and significant expansion of its production capacity over the coming decade.

Importantly, the existing electricity distribution network linking major regional centres such as Karratha and Port Hedland with major mining operations inland may be expanded as generation capacity and demand increases.

"The Pilbara region is just at the beginning of a period of massive resource project developments across the entire mining and petroleum spectrum," Mr Libby said. "These projects require vast new sources of electricity which simply cannot continue to be supplied from the high-cost and highly polluting fossil fuel based facilities which exist at present."

While gas will continue to be the main source of power for most major development in the region, Mr Libby said goethermal power could play a signficant role as a source of renewable energy credits, or as a carbon offset, for more traditional fossil-fuel powered activity such as LNG and iron ore production.

"They are pretty big CO2 emitters ... so absolutely there is potential for them to do deals with hot rock companies to get renewable energy certificates and then offset some of their CO2 emissions," Mr Libby told WA Business News. "So it's a pretty interesting model, I think."

Furthermore, geothermal energy was ideally suited to providing the sort of steady large-scale baseload energy which is a core requirement of the Pilbara's non-stop 24 hour iron ore and LNG operations.

Mr Libby said NWE hoped the formal grant of the Pilbara permits would occur in time to start initial exploration and evaluation work by the end of the year.

Similarly, it hopes to complete its first inferred geothermal resources for its granted south west permits in the Perth Basin over the next few months, and drill its first deep well in the basin within 18 months.

Pending the success of its exploration and appraisal program, Mr Libby said first geothermal energy production in the Perth Basin could potentially begin within four to five years.

Mr Libby said NWE was currently finalising a small seed capital raising, but was targeting a public offer and ASX listing in the nect few months.

"All going well, we'll list later this year, maybe early next year," he said.


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