Endeavouring to reduce Australia's reliance on fossil fuels, Geodynamics Limited is focused on the development of a low impact, environmentally safe form of energy production: Hot Fractured Rock (HFR) geothermal energy. Geodynamics is the only listed company in Australia whose singular focus is on developing HFR geothermal energy.

Over the next 20 years consumption of electricity is expected to grow on average by 2.3% pa according to the Australian Institute of Energy. Alternative forms of energy need to be explored to augment the depleting supply of fossil fuels. There are incentives now in place in most developed nations to encourage the development of clean renewable energy. Geodynamics is investing in Australia's renewable energy industry and intends to be the prevalent renewable energy producer in Australia. The company venture is backed by prominent oil and gas companies, Origin Energy Ltd (17.8%) and Metasource Pty Ltd (13.6%); Metasource is Woodside Energy Ltd's sustainable energy company.

At present there are several international projects in the US and Europe which are investigating ways in which heat can be effectively mined. In some cases the approaches used in the oil patch to gain enhanced recoveries are also being applied in this research. Despite the lack of commercial success for earlier Hot Fractured Rock experiments (such as Fenton Hill, USA, the southwest UK, and Hijiori in Japan), the energy potential of hotter zones within a few kilometres depth below the surface continues to receive attention.

Incentives for companies to advance research and implementation of renewable energy resources in Australia became apparent on April 1st 2001 when the Renewable Energy (Electricity) Act 2000 came into operation. The act promotes production of energy from renewable sources. It is an example of an original way of meeting such a commitment by setting firm targets, identifying liable and eligible groups and using a market based tradeable renewable energy certificate to show agreement. The act allows major changes to be generated within the energy industry.

Australia has a very small percentage of the world's oil reserves (around 0.3%) according to the 2002 ABARE OUTLOOK. Furthermore, it is stated that oil will need to be imported at a rate of more than 150 MMbbl a year in 2004/05, and more than 200 MMbbl a year in 2009/10. Australia has been consuming oil three times faster than it has been discovering it. Consequently, to provide Australia with a continuous supply of electricity, new sources of energy must be discovered and developed.

"HFR geothermal energy has the potential to provide reliable zero emission electricity supply on a scale similar to that of coal and gas fired generation plants. The scope of the known resource is such that it can potentially supply power generation on a scale of major coal fired power generating plants (i.e. 100s to 1,000s MWe)", said Managing Director of Geodynamics, Dr Lambertus de Graaf.

HFR geothermal energy is produced using heat extracted from buried hot granites located 3 km or more below the Earth's surface, circulating waters through an engineered, artificial reservoir or underground heat exchanger. Geothermal power stations convert the extracted heat into electricity. Hot granites indicate a substantial source of renewable energy, free from CO2 emissions. HFR geothermal energy relies on existing technologies and engineering processes such as drilling and hydraulic fracturing and is the only known source of renewable energy with the capability to supply the market on a continuous basis. HFR is not reliant on environmental factors to work.

Geodynamics has secured significant geothermal exploration rights in South Australia and New South Wales and is investigating the potential in other states. Two Geothermal Exploration Licences (GELs) have been secured in the Hunter Valley in New South Wales and two in the Cooper Basin, in South Australia. Geodynamics is now testing the underground heat exchanger developed in the Cooper Basin for the development of a demonstration plant; the plant is needed to exhibit a proven example of HDR geothermal energy's economic viability. According to Dr de Graaf the Cooper Basin HFR project aims to develop a small demonstration plant (between 2-5MWe followed by a scale up to 100s of MWe).

The company listed on the Australian Stock Exchange on September 12th 2002 after successfully raising its necessary start up capital of $11.5 million, and an additional $6.5 million research and development start-up grant from Ausindustry for its Stage 1 programme. The achievement of the $16 million initial finances made it possible for Geodynamics to begin the development of their two well HFR circulation system in the Cooper Basin.

The development of the Cooper Basin project is moving ahead steadily for Geodynamics. "We (the company) have had some setbacks along the way, but are pleased with the progress made to date", said Dr de Graaf. "Once we have established that the cost of recovering heat from the target rocks meets our expectations, we will be the leading renewable energy source by a considerable magnitude. We can say this with confidence because the known HFR resource is enormous in scope."

According to Geodynamics, their tenements in the Cooper Basin are estimated as a thermal resource equivalent to 50 billion barrels of oil. This consists of a 1 km thick slab of granite covering 1000 km2 all above 5 km depth and with an average temperature of 270° C.

Geodynamics has created a three-stage business plan to develop the reserve:

Stage 1 is development of the underground heat exchanger. Habanero #1, an injection well located 8 km south of Innamincka, spudded on February 15th 2003 and completed on October 14th 2003, intersected heat-bearing rock at 3668 m and reached a TD of 4421 m. The completion of Habanero #1 was a drilling engineering achievement; being one of the deepest onshore wells ever drilled in Australia.

Geodynamics then commenced a Hydraulic Stimulation Programme which was completed in December 2003. Granites have an inner fabric of cooling joints and fractures, an effect caused by the cooling down of molten rock. Using hydraulic pressure, water is injected into these fractures resulting in fracture plane movement, causing micro-seismic events. As a consequence, small gaps are created and a natural heat exchanger is produced. At lower pressures, water can be circulated through this structure, extracting heat from the hot granite.

Eight wells were drilled and downhole monitors installed to detect the micro-seismic events around the basin. The monitors can locate events to within 10-20 m. There were 30,000 events detected during the stimulation programme.

The Habanero #2 well, spudded in July 2004, was designed as a production well. It is located 500 m from the company's injection well, Habanero #1, and was designed to intersect the underground heat exchanger.

On October 18th 2004, Geodynamics announced that pressure measurements established that the underground reservoir between Habanero #1 and Habanero #2 was hydraulically connected.

Stage 2 is the demonstration plant development stage and includes the construction of a geothermal power plant. According to Geodynamics, an independently reviewed economic model for a demonstration power plant, with an installed capacity of 13 MWe, indicated that the total cost of electricity generation (capital and operating costs) would be 6.2 cents/ kWh. A scale-up to 275 MWe would reduce the cost to approximately 4 cents/kWh. "The scale-up aims to provide power to the national grid through an entry point such as Olympic Dam, Leigh Creek or Broken Hill, a distance of 400 km to 500 km", said Dr de Graaf.

In early January 2005, Geodynamics was preparing for a reservoir-testing programme at Habanero #2. The company had installed and effectively tested the well-head and the drilling rig was released. Geodynamics was awaiting the Coiled Tubing Unit (CTU) for displacing the well from drill-mud to water. This was anticipated to take place by late-January, when the Habanero #2 would be passed over to the Geodynamics reservoir testing team. Following the completion of an initial well logging program, they will carry out flow tests early in early February. The company is positive that by the end of the first quarter of 2005 they will be in a position to assess the economic value of the Cooper Basin geothermal resource.

"Following a successful outcome of the reservoir testing programme, we will be in a position to commit to the development of a demonstration plant in July 2005, with the plant operational in late 2006", explained Dr de Graaf.

The main achievements for Geodynamics to date have been the substantial reduction in the risks of the Cooper Basin HFR project, including:

• Water losses negated because of over-pressures;
• Temperature >250° C at 4400 m confirmed;
• Horizontal reservoir confirmed (enables heat mining on a regional scale);
• Stimulated zone much larger than expected (expectations 0.075 km3, realised 0.70 km3);
• Discovery of overpressures (5200 psi) (potential for convective heat replenishment);
• Potential existence of world's largest geothermal field; and
• Hydraulic connection established.

Geodynamics has also acquired the Kalina Cycle Technology, which they claim is the world's best heat-to-power conversion technology. "This will ensure that the heat produced from the HFR geothermal resource will be utilised most efficiently, ensuring the lowest possible power production costs", stated Dr de Graaf.

Australia is facing a rapid decline in liquid petroleum production over the next decade. According to the Australian Petroleum Production Association Ltd (APPEA), liquids self-sufficiency is expected to decline from a current average of 75% to 50% by 2015. Projections by Australian Government forecasting agencies suggest that it could be as low as 40% by 2010.

While not set to replace Australia's petroleum based economy just yet, if commercially successful, the Cooper Basin HFR project will provide Australia with a feasible alternative energy source and help reduce the country's reliance on fossil fuels.

In view of Australia's oil reserves depletion, renewable energy is the answer for the future. But will it be HFR?