Australian hot rock geothermal energy is back on the agenda, to the excitement of enthusiasts who led the last wave of companies 15 years ago, and perhaps consternation and regret to those who lost their shirts when these failed.
The reason why the concept is back on the agenda is due to new drilling techniques developed by the shale oil and gas industry, according to Graeme Beardsmore, University of Melbourne fellow and shareholder in one of the revived Australian geothermal companies.
“There are projects underway right now that are adapting shale drilling techniques for geothermal,” he told Renew Economy.
“Back in the last wave of geothermal enthusiasm in Australia, none of this would be possible. [Shale techniques are] game changing potentially for the kinds of projects that were attempted in Australia 15 years ago.”
Today, ASX-listed Earth’s Energy is dusting off the South Australian Paralana hot rocks project, once owned by Petrathem before being shelved in 2014, and the Flinders West project previously owned by GreenRock, and exploration tenements in Queensland stretching from Gold Coast inland to Roma.
Groundbreaking Energy has licences to explore the old Panax Geothermal tenements in the Otway Basin in Victoria, where that company had its Salamander and Penola projects.
And a company calling itself Solutions Energy is claiming the former KUTh Energy tenements in Tasmania, although the official applicants for these licences are entities called Lemont Geo Lithium, Fingal Energy, and Hunter Valley Geothermal Energy for a Hunter Valley exploration area.
These licences have largely been revived in the last two years, and it’s all due to experience in the US shale oil and gas industry that has made this possible, says Earth Energy CEO Josh Puckridge.
“It’s the amount of oil and gas expertise and people moving into geothermal and bringing not just that technology but that work ethic,” he told Renew Economy.
He says oil and gas people have a mentality “that is very objective, and outcome driven, and geothermal globally is benefiting from that”.
Puckridge and Beardsmore says that over the last decade much of what was learned and tested in shale has been put to use in geothermal, mostly in the US, and these have sped up, reduced the cost, and simplified what’s known as enhanced geothermal systems (EGS).
These differ from traditional geothermal often found in shallow areas in volcanic regions, such as Iceland and New Zealand. EGS, or what used to be called Hot Rock geothermal in Australia, are designed to tap into super-heated rocks that may lie 4 kms or more beneath the surface.
A decade ago, it was being touted as a “baseload” clean energy source. Ultimately, though, the projects failed because they proved to be too complex.
EGS is when fluid is injected underground to force open fissures in the rock. Water is pumped down into these fissures, is super-heated by the rock, and that heat is transferred into electricity or process heat above ground.
Deviated drilling – developed by the oil and gas industry – means instead of just punching downwards through all rock types to reach heated granites, drillers can now go horizontally as well.
Vastly improved understanding of what’s underground and how to model it, means drillers can use deviated drilling to follow good rocks underground and extend the surface area of wells.
Earth’s Energy’s Paralana project for example, is being revived partly on the basis of desktop modeling of the underground geology that can glean much more information from work done 12 years ago.
“We’ve been able to pull together a comprehensive revised view of what the subsurface mechanics are there, what the subsurface modelling shows… in order to build a large scale powerplant,” Puckridge says.
Fracking now includes multi-zone stimulation, which is when multiple zones around a bore can be fractured at one time – useful when each simulation can cost $500,000 a time.
“Multi stimulations also increase the amount of fluid that can flow through the wells and the amount of heat that you can get from a bore,” Beardsmore says.
US company Fervo in Utah is the global market leader, using multiple horizontal simulations commercialising ideas being tested next door at the US Department of Energy research program, the Forge Project.
Canadian company Eavor is testing a method of drilling a well from vertical to horizontal over long distances and join up two wells underground. It means water can stay in the borehole and doesn’t need to be pumped out to do the heat transfer.
Beardsmore says the old Panax projects in the Otways would benefit from some of the horizontal drilling techniques, but Earth’s Energy’s Paralana would do well using multi-zone stimulation.
“Those techniques would also benefit in the Cooper Basin but I don’t think anyone would want to take that risk. It’s 400km from nearest power line,” he said
“The market is important, and you need to be close enough to a market to sell your energy.”
That particular detail about being close to market is one new piece of the puzzle that geothermal companies today are much more aware of: what to use geothermal energy for.
Beardsmore says projects wanting to generate electricity will need to be near transmission lines.
That means the old Geodynamics project at Innamincka – which is more than 1000km away from the nearest load centre of Adelaide let alone decent transmission lines – is a likely non-starter.
He points out that as drilling for EGS gets cheaper and easier, another use will be to tap the Earth for heat needed in manufacturing rather than burning gas.
In Western Australia, Allasso Energy is planning to hit these bases, with geothermal projects proposed for industrial centres at Karratha and Carnarvon.
But geothermal energy is expensive and complicated, as demonstrated by the figures quoted by the IEA in its latest report The Future of Geothermal Energy.
The international agency estimates some 300,000 exajoules of geothermal resources located within 8km of the Earth’s surface are available globally. That’s about 30 terawatts (TW) a year for 20 years.
“Compared with other renewable power generation sources and technologies, geothermal has the second-largest technical potential for electricity-generating capacity after solar PV, and almost three times that of onshore wind and more than five times that of offshore wind,” the IEA said in its report.
“At a depth of 2,000 m, only a limited number of countries with favourable geothermal conditions can effectively harness high-temperature heat for electricity generation.
“Conditions for geothermal electricity generation generally become more widely plentiful at greater depths: for instance, almost every region has technically suitable resources beyond 7 000 m.”
Australia begins to come into its own at depths of 4km, as shown below, and at depths of 7km-plus the whole country could be tapped for geothermal – admittedly at a very high cost.
The cost and checkered history of failure are what the next wave of geothermal companies in Australia are up against.
Puckridge is very aware of what drove the final nails into the geothermal coffin last time around.
“One of the macro issues was, at that time when geothermal was in the spotlight in Australia, it was still around the time that we were suffering from the effects of the global financial crisis,” he says.
“Coupled with some quite significant failures… what we saw was an overpromotion of geothermal, and we had that at the time when there were issues around the GFC for finding the right financing.”
Government funding was in good supply but companies could find the private risk capital to match it in the wake of the financial crisis, and these expensive projects were also competing with cheap thermal coal.
One after another, the companies folded.
Origin Energy pulled out of Geodynamics weeks before its flagship 1MW pilot was due to come online in 2013, and sold out of geothermal entirely two years later.
Petrathem foundered in 2014 and stopped up all wells after being unable to raise private funding for its Paralana project, to the relief of South Australian regulators who were increasingly worried about the rehabilitation risk to the state from failed geothermal companies.
Panax Geothermal slowly shifted its attention elsewhere after a name change and a failed capital raise in 2013.
ASX-listed Hot Rock changed its name to HRL in 2014 and over the next six years turned into a medical laboratory company.
Is there money there this time around?
“Good question,” says Beardsmore.
“We do hear there are large pools of money available for these projects but tracking them down is proving challenging, and there is a lot of retained scepticism in the financial community.”
And yet, government funders – often the leading source of cash for edge technologies like these – have returned to the field
This year ARENA spent $110,000 to investigate a geothermal heating system at a barramundi farm in Latrobe Valley, Victoria, and in 2023 the Western Australian government put $2 million towards Strike Energy’s Mid West Geothermal Project to drill a pilot well to demonstrate geothermal energy near Dongara to enable a future 180MW project.
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