BEACH Petroleum is hedging against an inevitable national carbon credits scheme by investing in geothermal exploration, managing director Reg Nelson said yesterday.
Speaking at a South Australian Chamber of Mines and Energy lunch, Mr Nelson said Beach had already spent $10 million for a share of the Paralana hot rocks project north of the state with Petratherm.
It expected to spend a further $20 million to install a power plant to supply power to the Beverley uranium mine by 2009.
"We don't know what form a carbon credits scheme will take but I believe it will happen," he said.
"Geothermal power will definitely become more and more considered for long term revenue potential, particularly for carbon credits. Hedging, of course, is secondary to what we see as a commercial proposition."
While geothermal would be a "small component" of Beach's oil and gas assets going forward, it would grow over an expected period of transition to renewable energy power generation.
Beach also was looking at potential geothermal projects in "politically stable areas" of Europe, where there was heavy reliance on Russian gas reserves and higher prices for that commodity.
"From an oil and gas industry perspective, it is one of the big issues in terms of carbon emissions. If all new power generation in Australia was gas, we wouldn't meet emissions targets," Mr Nelson said.
He said Beach's natural talents were in exploration, with geothermal an easy fit because it used the same equipment and skills as oil and gas.
"I do think that's where our natural skills lie (in exploration) and its where we can make the greatest value," Mr Nelson said.
"In terms of base load power, in terms of reliability, it's geothermal.
"Unless you can store energy from wind farms effectively, and solar power, it's problematic."
Beach shares rose 2c to $1.37.
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