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Ann: Mid-West Geothermal Power Project Inferred Resource, page-75

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12/05/22

10:26

Post #: 61360765
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Originally posted by Rockist ↑

So, Thursday morning... Overall it is fantastic that someone is seriously looking at geothermal in the Perth Basin. It has been known for many years and there must be some way to exploit it commercially and collect all the green credits you can get. I've found a good paper by Mark Ballesteros on the KIngia Sandstone and it's clear he is the competent technical driver. So far so good.

The Inferred Resource Statement is the problem. It is a bog standard volumetric stored heat calculation in which

volume of Kingia Sandstone x its water content x the heat contained in the water = heat stored in the Kingia Sandstone.

That is where the statement should have ended, with a large and impressive number in petajoules (PJ). From my fading memory of the Geothermal Reporting Code you could only proceed to calculate MWe if electricity generation was a reasonable strategy for exploiting the stored heat.

In this case a single central power station producing around 200 MWe is not a reasonable development strategy because its well-field would have to cover roughly 600 sq km in order to collect the required fluid. Unlike oil or gas, geothermal fluid loses heat and value the more it travels through pipes so a well-field more than a couple of sq km is usually not feasible. Therefore the statement's mention of 226 MWe power generation without further explanation is, in my view, misleading.

It's likely that Strike is focussing on power production, though there are other industrial and agricultural uses for a never-ending supply of hot water which could be profitable. If so, then the statement should have outlined an strategy of many small power plants distributed around the drillable area of the Kingia Sandstone. These would be more expensive and less profitable than a single large power station and therefore you could argue this was a material omission.

Ballesteros' 2020 paper models a series of 4 MWe power stations supplied by 3 well doublets - each 2-well doublet contains a production and disposal well. I don't know drilling costs these days but 10 years ago we reckoned a 3,000 m geothermal well through sediments cost roughly $10-15 million each, so 6 might cost roughly $60-90 million. A 4 MWe power plant might earn 4 x 24 x 365 x $100 = $3.5 million per year. If so, it's hard to see how a series of small power plants could be profitable. (can someone please check my numbers..)

Much depends on the flow rate available from the Kingia Sandstone. Power plants of similar size in the Upper Rhine Valley, which has similar geology, operate with just two wells (e.g. the Insheim plant which Vulcan has just bought for its lithium) and therefore the economics are more reasonable.

In my view, the future geothermal exploration program for Strike should focus on finding the areas with the best combination of high temperature, high flow-rate and shallow drilling in order to reduce potential drilling costs. They could also keep an eye on lithium contents..

Overall, the technical progress so far seems strong and I think there is enough encouragement to continue work towards a power generation business made up of multiple small power plants in strategic locations. This is a perfectly good strategy and there is no need to hide behind the facade of a single large power plant.

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Thanks for the analysis.
It's still very early in the process, so I doubt that STX has any firm plans.
Just complete the permitting, drill Future State-1, and then take it from there.

Anyway, just a point of clarification. The paper mentions 4 MWe per doublet. A plant will have 3 doublets (6 wells all from the same pad) and is modeled to produce 9.6 to 14.7 MWe.

STX Price at posting: 29.5¢ Sentiment: Hold Disclosure: Held
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