Peter. You keep asking questions. The graph you were looking at was comprised of nearly all US wells over some decades. Only a few were foreign. In Australia there have been so few geothermal wells drilled that it is hard to say anything general. Only minor grants were made before last year. The only deep wells drilled incorporating the $7 M GDP grants so far have been PAR 2 and SAL 1. They are expensive because the Lightning rig had to be especially imported from Abu Dhaby for which $1 M extra was paid (shared), and because it is large scale and high tech (computerised, 2000 HP). I doubt that the well costs here reflect government subsidies but rig hiring fees do correlate to the trends in oil prices. It was because of long waiting times and lack of large capacity rigs that GDY decided to buy their's. (They are also anticipating drilling 90 wells for their first commercial 500 MW plant.)
There are only three suitable geothermal drilling rigs presently in Australia: GDY's, Weatherford's, both 2000 HP, and another 1500 HP which is satisfactory for and accessible to PAX. Since both the Lightning rigs are sitting idle at the moment it must be a buyers' market.
Most of the geothermal companies are so low in cash that they almost dare not commence deep drilling even with the aid of a $7 M grant. The cash balance for two wells plus testing is formidable on their scales when the whole sector seems devoid of investor interest. One exception, HRL has contracted a rig to come from Thailand rather than use the idle Weatherford rig.
Rig technology has improved in terms of remote (indirect) handling (although some would still prefer seat-of-pants drilling) and in power while drill bit development has increased significantly in terms of hardness, heat resistance over last 20 years. Most oil drilling is in softer rock so that hard rock requirements were neglected somewhat previously. Successful drilling requires much experience and a good feel plus knowledge of the actual geology to be penetrated. Drill bits may improve further but I doubt that well costs are likely to come down much. A step function change is required in the method of achieving boreholes. One attempt to do this is the investigative work by Potter Drilling using spallation to shatter rock progressively. The demonstrations on the lab bench work superbly but to do this under high pressure hot fluids down a borehole is a problem of much higher magnitude.
I think that BdeG's strategy is, keep it conservative and secure until we get established. We must demonstrate first that it can be done (generate some power) and then later optimize, take short cuts, use or deepen existing oil/ gas wells for injection. To this end they will buy an off-the-shelf 6 MW plant which will be the reliable Rankine cycle. Fiddling with a new Kalina Cycle can be a project given to a University department at a later date. He also contracts out almost every segment of the project so that it can be said that everything is independently assessed which will carry great weight with potential JV partners and other financiers.
Will comment on this week's flurry of excitement tomorrow.
Juke
PAX Price at posting:
10.5¢ Sentiment: Buy Disclosure: Held
