RNE 6.82% 4.7¢ renu energy limited

launch of hdr geothermal development in australia

  1. 1,507 Posts.
    Have been looking at this one since listing, looks like it's all go from here. Interesting price action last week after getting the go ahead.

    Floated recently at 50 cents with a low of 43.

    19m shares on issue. Woodside hold 30% of the company in escrow, with Santos having already signed up for any power that is generated if it all comes off.

    The figures are astounding, don't know much about this type of technology.

    Below are 2 recent announcements that give an idea of what it's all about. I got a few for a punt anyway.
    Comments appreciated.


    HOMEX - Brisbane

    * First listed company to acquire geothermal energy licences under
    pioneering legislation in South Australia.

    * Resource potential with heat equivalent to 50 billion barrels of

    * HDR geothermal electricity can operate on 24/7 basis with zero
    emissions of greenhouse gases.

    * Qualifies for significant financial incentives under Renewable
    Energy Act.

    * Mobilisation to site for field work within 2 months.

    * Approximately 800 shareholders following IPO.


    Geodynamics Limited (ASX code: GDY) is now preparing Stage One of its
    hot dry rock (HDR) geothermal electricity project. This is the first
    step of Geodynamics' overall vision of becoming the largest renewable
    electricity producer in Australia.

    The projected all-up costs of producing HDR geothermal electricity
    from Geodynamics' high temperature tenements is estimated to be lower
    than hydro, wind, biomass or solar alternatives. In addition, unlike
    many other renewable sources, HDR electricity can operate on a 24
    hour per day, 7 day per week basis and therefore provide electricity
    to higher revenue base-load customers.

    Geodynamics is taking advantage of three factors that have only come
    together recently:


    The core resource for HDR geothermal energy is naturally occurring
    heat within buried granitic rocks. Recovery of electricity from HDR
    geothermal sources is effectively a heat transfer process with zero
    emissions, unlike fossil fuels such as oil, coal or gas that rely on
    the burning of carbon to liberate heat.

    Oil and gas drilling in the Cooper Basin over the past thirty years
    discovered Geodynamics' HDR energy resource. The availability of
    information from five wells and gravity and seismic data has provided
    Geodynamics with approximately $20 million of data on the granite and
    its temperature. The drilling located massive granite rocks at depths
    of approximately 3,500 metres along with extremely high temperatures
    of 232 to 245 degrees Celsius near the top of the granite. These
    temperatures were noted then as amongst the highest in the world at
    this depth. Even higher temperatures will be experienced deeper in
    the granite.

    The Australian energy market has only just begun to realise the scale
    and potential environmental advantages of this energy source.


    In a pioneering move to accelerate the development of the Cooper
    Basin HDR resource, the South Australian Government offered
    Geothermal Exploration Licences for the first time in early 2001.
    Geodynamics was successful in acquiring one block (GEL 98) in that
    competitive tender. Since then, Geodynamics has also acquired the
    adjacent block (GEL 97).

    These two tenements cover an area of 985 square kilometres. The
    contained heat (thermal) energy is enormous. Geodynamics estimates
    that the stored thermal energy within an accessible 1000 m thick slab
    of granite within GEL's 97 and 98 is equivalent to 50 billion barrels
    of oil. By comparison, the proved oil reserves in the USA are
    estimated at approximately 30 billion barrels, and for Australia, 3
    billion barrels.

    To put this into perspective, this amount of thermal energy could,
    when converted into electricity, supply 100% of Australia's
    electricity needs for 75 years.


    The Australian Federal Government, like many other Governments in
    developed countries is providing financial incentives for greenhouse
    gas friendly sources of electricity. HDR geothermal energy meets the
    requirements of the Renewable Energy (Electricity) Act 2000. The
    financial incentives available under this Act have the potential to
    provide Geodynamics with an effective electricity selling price of
    double the current wholesale rate of around $35 to $40 per MWh. This
    incentive has a strongly positive effect on the profitability of
    generating HDR electricity. It also covers the cost of high voltage
    power transmission from the Cooper Basin to the national grid
    (estimated at $5 to $10 per MWh) several times over.

    In addition, Geodynamics is taking advantage of the rapidly
    increasing maturity of overseas HDR Development Programs. Companies,
    Governments and universities have invested almost $1000 million on
    HDR developments over the past few decades. To date, the lower
    temperatures and complex volcanic geology at available overseas
    locations compared with Geodynamics project has hindered full
    commercial exploitation. As an illustration of the attractiveness of
    Geodynamics project, the Cooper Basin has a granite temperature of
    250 degrees C or more at 4,000 metres depth compared with the
    European Union HDR project in France of only 170 degrees C.


    Following the IPO, Geodynamics has approximately 800 shareholders.
    The five largest shareholders are:

    Metasource 31.6%
    CVC REEF Limited 8.4%
    The Australian National University 7.9%
    Commonwealth Custodial Services 3.0%
    RBC Global Services Australia 1.5%

    Metasource Pty Ltd, the wholly owned sustainable energy subsidiary of
    Woodside Petroleum, has the right to purchase certain environmental
    credits from Geodynamics once large-scale electricity production
    commences, so long as it continuously holds its initial shareholding.

    Together with normal escrow provisions on founder and certainseed
    capitalist shareholdings, this means that approximately 44% of
    Geodynamics shares are either escrowed or linked to future benefits.

    At listing, Geodynamics will have 33,046,746 million shares on issue,
    of which 28,909,251 will be quoted. In addition, there are 1.24
    million unlisted options. Geodynamics will have a market
    capitalisation of $16.5 million at the issue price of $0.50 per


    The process of testing and developing the HDR resource in the Cooper
    Basin will commence immediately. The first step is drilling of
    Geodynamics #1 well, located approximately 8 km south of Innamincka.
    The drilling contract is now being finalised with mobilisation
    planned within 2 months.

    Geodynamics is adding a small number of specialist staff, including
    secondees from Woodside Petroleum and CSIRO, to manage its


    AusIndustry has confirmed that the conditions for Geodynamics' $5
    million R&D START grant have been met. Together with the $11.5
    million raised from the IPO, this grant provides Geodynamics with
    gross funding of up to $16.5 million, equivalent to 50 cents per
    share on listing.

    B de Graaf
    Contact 07 3876 8955 or 0417 767 277


    HOMEX - Brisbane

    Geodynamics is pleased to announce that:

    * The final permitting process for the first geothermal well -
    Habanero 1 - is completed and drilling activities can now proceed;

    * Documentation for drawdown of AusIndustry's $5M R&D Start grant is

    The Company is now well placed to realize the extraordinary potential
    of the known Hot Dry Rock geothermal resource in the Cooper Basin,
    the hottest spot on Earth outside volcanic centres, for the
    generation of emission-free electricity. Funds required to complete
    the "Proof of Concept" part of Geodynamics' business plan are in


    Habanero 1 (named after the world's hottest chilli pepper) will be
    drilled to a depth of 4500 to 4900m (14800 - 16000 ft). Century
    Resources (a subsidiary of the Downer EDI group) has been awarded the
    drilling contract. The cost of this historic and deep geothermal well
    is estimated at approximately $5.4 million, excluding contingencies.
    The drilling of this well is estimated to take ten weeks to complete.

    In finalizing the well design, Geodynamics has had the benefit of
    access to Woodside Petroleum's "state of the art" drilling software
    as well as a subsequent peer review with participation from Woodside
    Petroleum, Santos, CSIRO, PIRSA (Primary Industry and Resources,
    South Australia) and the geothermal division of Century Resources and
    other contractors.

    Access to the existing deep gas exploration well, McLeod 1, (500m
    away from Habanero 1) has been formalised with Santos. A workover
    programme to prepare this well for use as an observation well and
    also for water supply, is scheduled to start on 11 January 2003.

    In anticipation of the above, pad preparation has been completed and
    rig mobilization can now proceed as expenditure is incurred. Pending
    the delivery of 7300m of specialized steel casing, the spudding date
    is now scheduled for late January to early February 2003.


    All formal documentation with AusIndustry has been completed and
    drawdown of these committed funds can now proceed. The R&D Start
    grant will cover approximately 30% of the total estimated costs of
    Stage One ("Proof of Concept") of our business plan.

    B de Graaf

    For further information please contact Bertus de Graaf at 07 3721
    7500. Please also check our website at www.geodynamics.com.au

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