THE concept of tapping hot rock for energy is a slow-burn yarn, with subdued recent investor interest because of a dearth of drilling activity. But Petratherm reports positive news on several counts at its Paralana joint venture in the Flinders Ranges.
After drilling its second well to 4000 metres, Petratherm yesterday said the 190C temperature was better than first thought.
Helpfully, the rocks were also more fractured than expected and there was evidence of high-pressure briney water. "We now know a lot more about the geology and have the temperature right where we need it," says Petratherm chief Terry Kallis.
The basic idea of hot-rock energy is to push water down one hole, push it across rocks and then up another hole as steam to generate power. The more naturally fractured the rock is, the more easily the fluid will flow. "It's like discovering something with a good natural grain we can work with," Kallis says. The next step is well-stimulation work, followed by a production well and then a plant of up to 7.5 megawatts, building to a 30MW demo plant. The beauty for Petratherm is that it's free-carried by partners Beach Petroleum and TRU Energy, with the $150m demo plant supported by a $70m federal government grant.
Paralana has the distinct advantage of an energy-hungry client 10km away: the Beverley uranium mine. The need for utilities to meet renewable energy targets (or pay stiff penalties) also enhances hot-rock economics.
Before then, the project has to be proven to be commercially viable and that's a big ask. At least parties other than Petratherm will yield the cheque book.
We rate Petratherm a speculative buy and our favoured entry into the sector. The $24m market cap is supported by a Spanish project also funded by OPM.
PTR Price at posting:
24.5¢ Sentiment: Buy Disclosure: Held
