The Ferret has been a hot rocks fan for years and truly believes it will be a major alternative to existing energy sources.
One hot rocks explorer that has been progressing in great style has been Geodynamics (ASX:GDY), which came to the Ferret's attention last January when the shares were $1.09.
Developments were so exciting old Ferret got carried away and drew investors to the stock's potential in April when price stood at $1.17.
On Tuesday, Geodynamics's shares changed hands at $2.08 as the company released a drilling progress report on Habanero 3.
The well is progressing with the 311mm diameter section now at 3,459m.
The revised bottom hole assembly continues to work well.
Drilling has been slow in the current Patchawarra Formation which consists of hard recrystallised sandstones and interbedded coal seams of early Permian age.
They form the major part of the pressure barrier maintaining the overpressures in the underlying granite fractures, and are recognised as the hardest rocks to drill in the well.
The rock temperature at this depth is 217 degrees C, based on previous logging of the Habanero 1 well.
There have been a number of drill bit changes over the past two weeks, with each change taking around 24 hours.
This doesn't seem much to write home about, but coupled with chairman Martin Albrecht's remarks at the recent annual meeting, it is a telling story.
"Habanero 3 may turn out to be one of the most important onshore wells ever drilled in this country," he said.
"In conjunction with the circulation testing planned at the completion of the well, we expect this will lead us to the proof of concept - that it is indeed possible to generate power from hot fractured rocks in commercial quantities.
"Professor Jeff Tester from MIT and chairman of a report to the US DoE has recognised the Cooper Basin as a geothermal resource of global significance.
"His report also recognised that we have the most advanced development of a major base load HFR geothermal power plant anywhere in the world."
Geodynamics is a company exploring hot dry rock (HDR) geothermal energy but it still has a way to go before producing energy from this source, scheduled for the end of 2010.
The company plans to deliver its first power from hot rocks into the grid and to then ramp up production to over 500 Megawatts (MW) by 2015, comparable in annual energy output to the Snowy Mountain Scheme.
This acceleration is a result of a review of its resource position and recognition that the nation's geothermal resources offer the greatest potential for a rapid response to Australia's demand for zero emission power.
The company claims that one cubic kilometre of hot granite at 250 degrees has the stored energy equivalent of 40 million barrels of oil.
Australia has large volumes of identified high-heat production granites within three to five kilometres from the surface.
This represents a vast resource of clean energy that can potentially be tapped by hot fractured rock geothermal technology.
The Cooper Basin, which stretches from the northeast of South Australia into the southwest of Queensland, is a province of national and indeed international significance with potential to generate very large amounts of zero emission power for hundreds of years.
SHARE PRICE MOVEMENTS
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Shares of Geodynamics yesterday fell 2c to $2.08. Rolling high for the year is $2.17 and low 80.75c. The company has 185.7 million shares on issue with a market cap of $386.3 million.
The chairman, in the annual report, said the global economy continues to expand, with pressure on oil, gas and coal commodity prices.
Although constrained by the run-out of long-term material supply contracts, the flow-on to correspondingly higher energy prices over this coming decade is inevitable.
Carbon taxes are also increasingly likely.
In this environment the true value and competitiveness of Geodynamics's HFR geothermal resources will rapidly gain further recognition, both at home and abroad.
Successful completion of Stage One activities early next year followed by the construction of the 1 MW demonstration plant, will add significant weight to this recognition.
Geodynamics continues to lead with ambitious plans for development of the Innamincka resources as the initial step of a vision for a central Australian geothermal energy province spanning the Queensland and South Australian borders.
Development of a nominal 40-50 MW station, known as Hot Rock 40, will be the first commercial demonstration of HRF power generation in the world.
This will also see the linking of power production from the Cooper Basin into the national grid.
BACKGROUND
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Geodynamics Ltd was registered as a public company in November 2000.
It was formed solely to focus on developing renewable geothermal energy generation from HDR in Australia.
The company was formed by Dr Doone Wyborn and Dr Prame Chopra from the Australian National University in Canberra (leading experts in HDR geothermal energy), and Dr Bertus de Graaf, who has a track record in resource development.
The board was strengthened by the appointment of Martin Albrecht (ex CEO of Thiess) as chairman, and Neil Galwey (current chairman of CVC Reef, a renewable energy fund) and Robert Flew (ex BHP Corporate) as non-executive directors.
The day-to-day management of the company is in the hands of Dr Bertus de Graaf (managing director) and Dr Doone Wyborn (executive director)
Geodynamics secured two HFR geothermal tenements in the Hunter Valley in New South Wales, two in Queensland and four in the Cooper Basin.
The success of Geodynamics's project near Innamincka has resulted in many other companies taking out exploration licences for hot rocks in a number of states, particularly South Australia.
As of November 2006, there were 15 companies exploring for hot rocks in 106 exploration license areas across four states (SA, NSW, QLD and Tasmania).
Victoria has passed legislation and issued competitive tenders across the whole state and the Northern Territory and Western Australia are in the process of developing legislation to allow exploration.
In November 2003, Geodynamics completed a placement raising more than $6.12m.
The funds were used to complete the Kalina cycle technology transfer and sub-licence agreement with Recurrent Resources LLC of the US.
By securing the Kalina agreement in October 2003, Geodynamics is in a position to combine the geothermal resource in the Cooper Basin with an efficient process for converting heat into electricity.
Stage Two will involve the installation of a 10-15 MWe commercial demonstration power plan and Stage Three will involve the installation of a commercial power plant with a nominal electricity generation capacity of 275MWe.
Geodynamics plans to sell the electricity into the national grid via a new high-voltage distribution line.
RNE Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
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