AWE Ltd., Sydney, signed an MoU with a subsidiary of Green Rock Energy Ltd. to drill wells to demonstrate geothermal energy potential in Western Australia’s onshore Perth basin on lands that overlap AWE’s oil and gas exploratory licenses.
The project, which has been awarded $5.4 million in Western Australia government funding, will involve drilling wells sited to maximize the probability of geothermal success and to provide AWE with data on known target hydrocarbon formations. The companies will seek commonwealth government funds.
Drilling to the deeper geothermal reservoirs could provide AWE with valuable information about its shallower conventional and unconventional oil and gas assets. The various permits lie within 40 km of the Indian Ocean coast from north of Mount Horner oil field about 70 km south beyond Woodada gas field.
Green Rock’s Mid West Geothermal Power Pty. Ltd. unit has made considerable progress in identifying the most prospective geothermal resources since its permits were awarded in 2009, including the use of leading edge interpretation of 3D seismic data.
The $5.4 million is awarded on a 1-for-3 basis by the state government’s Low Emissions Energy Development Fund towards demonstrating commercial production of geothermal energy.
Combined state and government funding would enable the drilling of two test wells with AWE providing the balance of drilling costs.
A key objective will be selecting optimal well locations for acquiring data on geothermal temperatures and flow rates sufficient for geothermal power generation and that allow AWE to enhance its assessment of potential hydrocarbon bearing formations. The target geothermal reservoirs lie at 3,000-3,500 m.
In consideration for joining the joint venture, AWE will pay MWGP as much as $250,000 conditional on completion of milestones up to and including the commonwealth funding being secured. If that funding is obtained, AWE has the right to farm in for a 50% interest in the most suitable GEP and would become operator of the drilling program, with geothermal well design and testing overseen by MWGP.
If commercial production of geothermal energy is successfully demonstrated, AWE will have the right to continue its participation in the project including the right to farm into MWGP’s remaining GEPs on terms to be agreed.