Origin’s HY result today would have to be significant for GDY....

Origin’s HY result today would have to be significant for GDY. Even though it has embraced renewable energy as inevitable for the LT future, Origin has to remain a conservative utility company. With an earnings downgrade of 34% it is in process of shedding 850 staff. That means it is seriously pulling in the spending reins.

“We also continue to review our activities and close, or discontinue or divest non-core assets, which will improve our available cash flow in the short to medium term,” Mr King said.

This will dent GDY’s prospects of JV cost sharing somewhat. It is not altogether unexpected but it more clearly underlines ORG’s position. HAB 4 cost over $50 M so that HAB 5 is likely to be similar. That makes $100 M for one well pair without any refinements. The project looks highly workable but the economics are formidable.

It is not surprising that the Savo Island project might well be expedited with only shallow wells being necessary (read cheap) and bound to be commercially viable when competing with the cost of diesel at $800 per MWh. At that rate almost any competing source of energy will be cheaper.

In early years GDY’s policy was not to get sidetracked
with taking on too many projects. Now that a more detailed R&D approach had to be adopted with consequent time elapse, GDY is much more suggestible to other shorter term conventional projects to run in parallel and that are guaranteed to operate at a profit. One limitation is that such isolated community power plants will always be very small, Vanuatu 4 to 8 MW (Kuth), the Solomons 15MW+, as determined by demand. This compares with the 1000s of MW of long term generating potential available in the Cooper Basin.

Juke