WA geothermal project founders – due to a lack of oil

A geothermal drilling project in Western Australia’s Mid West region has come to an early end- apparently because one of the partners decided that there was not enough hydrocarbons to make the drilling program worthwhile.

Aspiring geothermal developers Green Rock Energy has partnered with oil and gas exploration and production company AWE for the Mid West Geothermal Energy Project, which was announced in March, 2013.

According to Green Rock and Pacific Hydro, the region could have enough geothermal resources to host a 25MW demonstration plant, and over time “the potential of hundreds of megawatts of generation”. The Mid West region, a booming mining province, has been cited as a potential hot spot for renewable technologies such as geothermal and solar.

But the geothermal program has foundered, and may lose more than $12 million in proposed government funding support, according to Green Rock, because AWE had withdrawn because the region did “not provide the hydrocarbon value it requires to continue with the project.”

Plans for another well had been abandoned, Green Rock said, because AWE was concerned that it lay within an area adjacent to a public drinking water resource.

Green Rock said it was disappointed with the decision because the wells were in areas that were highly prospective for geothermal resources. The wells did not require fracking and were not considered a risk to water resources.

Green Rock had teamed up with AWE to share costs, and it was now unlikely to gain the funds it required to match and access grants promised by state and federal government.

“We are extremely disappointed with AWE’s decision,” Gren Rock chairman Richard Beresford said in a statement.

“Particularly as we had been close to finalising terms and conditions with both the WA and Commonwealth Governments – the LEED and Emerging Renewables Funds respectively – for them jointly to provide a substantial majority of the funds to drill and test two geothermal wells.”

LEED had offered $5.4 million, while the federal government’s ERF, now managed by ARENA, had offered $7 million.

Beresford said Green Rock had taken the lead on these negotiations and has been working to obtain the funding agencies’ approvals for the change of location and schedule resulting from AWE’s decision  not to progress with a well at the first location.

He said both funding agencies have worked patiently and cooperatively in good faith with Green Rock to accommodate the Project’s requirements and the requested changes.

The company would now now review the situation with all the other parties involved – including the project’s power generation partner Pacific Hydro.

“But at present we consider it very unlikely that we will be able to secure an alternative funding and drilling partner to AWE in the time available,” Beresford said.