Australian Geothermal Plant Hits Major Setback after Joint-Venture Partner Backs Out

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Researched by Industrial Info Resources Australia (Perth, Australia)--A geothermal project in Perth might have come to an early end after Green Rock Energy Limited (ASX:GRK) (Perth, Australia) learned that its former joint-venture drilling partner, AWE Limited (ASX:AWE) (Sydney, Australia), had withdrawn from the project. AWE cited a lack of geothermal resources to make the Mid-West Geothermal Power (MWGP) project's drilling program worthwhile. Green Rock had also partnered with Synergy Limited as its offtake partner, Pacific Hydro (Melbourne, Australia) as its power generation partner, and New World Energy (Perth, Australia) to jointly develop the geothermal exploration permits.

The project developers had planned to locate the plant in the North Perth Basin, which is 250 kilometers north of Perth City, where Green Rock Energy held nine geothermal exploration permits, covering a total of 2,637 square meters.

Hot dry rock geothermal energy would have been utilized in a closed system, with the help of a steam-gathering system, which would ultimately drive a 5-megawatt (MW) steam turbine/generator to produce power for the grid. The project was meant to be the first phase of a 25-MW geothermal plant.

AWE signed a memorandum of understanding (MoU) with Green Rock Energy in March 2013 to pursue exploration drilling in the basin. AWE then rejected the first site, since it was close to a public drinking water facility. In April this year, AWE decided that the second site did not have enough hydrocarbon value to continue with the project.

"We are extremely disappointed with AWE's decision," Green Rock Chairman Richard Beresford said in a statement. The project owners are highly likely to lose $12 million in proposed funding. Beresford also said that it is improbable for Green Rock to secure alternative funding and a drilling partner in the time available.

Green Rock Energy is also developing a geothermal project in Roxby Downs, South Australia.

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