GEOTHERMAL ENERGY

The Hon. CARMEL ZOLLO (14:45): Is the Minister for Mineral Resources Development aware of any new developments in the geothermal industry that have consequences for South Australia and its leading role in developing this clean, renewable source of energy?

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (14:45): I thank the honourable member for her important question, because today has been a very significant day in the future of geothermal energy in this state with the announcement to the Australian Stock Exchange by Panax Geothermal Limited of the positive results from its pre-feasibility study for its Penola project. Based on analysis of this study, Panax Geothermal has announced it will begin drilling its first production well in September this year.

This government welcomes the announcement by Panax Geothermal Limited of further progress on its hot sedimentary aquifer project for the state's South-East. The Panax Geothermal announcement is a timely reminder of the excitement being generated within the energy sector by South Australia's geothermal industry.

Geodynamics Limited was the first to drill deep wells for hot rocks in both our state and in Australia, and its Habanero proof-of-concept project near Innamincka in the Cooper Basin is recognised as the world's leading effort in making progress towards the commercialisation of engineered geothermal systems.

It is significant to note that Tata Power and Origin Energy are backing Geodynamics' geothermal projects. Also, Petratherm Limited is scheduled to be the second company to drill a deep well to prove the concept of geothermal energy production in Australia, and the Paralana project is also located in South Australia.

Petratherm is also targeting hot rocks but will test the potential to flow heat energy from the insulating rocks that overlie the source of the geothermal energy. Petratherm has coined the term 'heat exchange within insulator' (HEWI) to describe the geothermal play at Paralana. It is significant to note that Beach Petroleum and TRUenergy are backing Petratherm's Paralana geothermal project.

Panax's Penola project in the South-East of South Australia is now expected to be the third deep drilling test to prove the concept of geothermal energy production in Australia. Panax is targeting heat energy contained in sandstones in the Otway Basin. This is now expected to be Australia's first deliberate test of a hot sedimentary aquifer play. These and other geothermal projects in South Australia have vast potential to make a meaningful contribution to clean baseload power supply.

Following on from progress made by several geothermal licence holders in our state, Panax's latest announcement is further evidence that South Australia is favourably placed to be a world leader in geothermal generation, technical skills, proven project development and long-term commercial success. South Australia's Otway Basin represents an area of anomalously high heat flows close to the National Electricity Market transmission grid. The Otway Basin also has an extensive and readily accessible database of petroleum well and seismic data that define hot wet sedimentary rock targets.

Panax has gained a significant advantage from the easily accessible and comprehensive seismic and well-informed database managed by Primary Industries and Resources SA. Both the federal and state governments have previously recognised the prospectivity of the area and are supportive of the pre-competitive information gathering.

The South Australian government previously awarded a $130,000 PACE grant to advance understanding of the Limestone Coast geothermal project area. As I am sure you are aware, Mr President, PACE (Plan for Accelerated Exploration), which is a policy introduced by this government in April 2004, has been a major driver of the increased interest by resource companies in exploring for new deposits in this state.

Investment in mineral exploration in South Australia has grown to more than $300 million a year, from just $40 million when this government came into office seven years ago. PACE has been central to that markedly improved performance. South Australia has attracted an estimated 97 per cent of all the investment in South Australian geothermal exploration projects in the period from 2000 to 2008. Some 28 companies have applied for 271 geothermal exploration licences in South Australia, representing 71 per cent of all geothermal licences applied for in Australia. Based on information to hand, this state is forecast to remain in the lead for Australian work program investment in geothermal projects in the period 2000 to 2013 at least.

It is very good news today that, along with those two other hot rock projects in the northern part of the state, this exciting new development by Panax in the South-East of the state is also moving towards development in the near future.