GEOTHERMAL ENERGY EXPLORATION

The Hon. CARMEL ZOLLO (16:41): I seek leave to make a brief explanation before asking the Minister for Mineral Resources Development a question about the geothermal energy industry in South Australia.

Leave granted.

The Hon. CARMEL ZOLLO: Geothermal technology is rapidly becoming a legitimate option for this country's future energy needs. I understand that the South Australian government has taken a proactive approach to supporting geothermal renewable energy. Will the minister provide an update on the current status of the geothermal energy exploration in South Australia?

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Industrial Relations, Minister Assisting the Premier in Public Sector Management) (16:42): I am delighted to advise all members, including those opposite that, of the estimated $462 million spent on geothermal exploration and proof-of-concept projects in Australia in the period 2002–09, 94 per cent was invested in South Australian projects. As part of that nation leading investment, I recently had the pleasure of joining federal resources and energy minister, Martin Ferguson, in the South-East of this state to officially open the Penola Project, the Salamander Well, operated by Panax Geothermal.

The Panax Geothermal Penola Project is located in the South Australian Otway Basin and is Australia's most advanced hot sedimentary aquifer project. The Panax project is a pioneer in the exploration of hot sedimentary aquifers in this country. Hot sedimentary aquifer projects differ from other geothermal drilling elsewhere in South Australia where hot rocks are being sought as the potential generator of energy.

Geothermal energy and technologies have many direct uses, including the generation of base load electricity. Geothermal energy is produced by flowing hot fluids (most usually hot water) in wells drilled into deep hot reservoirs so that the flow of heat energy can be used at the surface. Once cooled, the fluid is reinjected into the rocks from where the fluids first emanated. This describes the type of closed-loop geothermal energy production and reinjection cycle planned in South Australia.

Explorers in South Australia are on the hunt for two forms of geothermal resources, and both are non-volcanic forms of geothermal resources. One form is most often called hot rock. This process generally requires enhancement of the permeability of rocks to enable economic flows, and successfully enhanced hot rocks are called engineered geothermal systems or EGS resources. Geodynamics' Cooper Basin project and Petratherm's Paralana project near Beverley are Australia's flagship hot rock projects, and both are located in South Australia. Geodynamics has concluded its proof-of-concept for its Cooper Basin project. Petratherm plans to drill its second well at Paralana later in 2010, as to conclude its proof-of-concept phase.

The other form of geothermal resource is described as hot sedimentary aquifer. These projects do not generally require reservoir engineering and can be tapped at shallower drilling depths. Hot sedimentary aquifers are also maintained at generally lower temperatures than the hot rocks process. As I stated earlier, the Panax Penola project is Australia's frontrunner for the proof-of-concept phase for developing geothermal energy using hot sedimentary aquifers.

The eastern half of South Australia is characterised by geologic experts as having uncommonly high heat flows. To add to the attractiveness of this site, the Otway Basin, where the Panax project is located, is relatively close to the existing national electricity grid. Given success with flow testing of Salamander No. 1 well, Panax Geothermal intends the Penola project to be the site of a demonstration plant which the company hopes will generate a net 4.5 megawatts of power. A successful drilling project in this area could allow renewable geothermal energy to be tapped directly into the national electricity market.

Panax Geothermal's plan entails expansion to a phase 1 plant based on a number of production wells generating an estimated 13.5 megawatts of power and then a phase 2 plant based on additional production wells generating an estimated net 45 megawatts of power. I congratulate Panax Geothermal for its initiative and I applaud the federal government's support for this project, and others, through the Commonwealth Geothermal Drilling Program and the Renewable Energy Demonstration Program.

This state is a leader in renewable energy generation. We have about half of the nation's wind power, about 22 per cent of the nation's grid connected solar panels and, as I said, to date 94 per cent of all investment in the nation's geothermal projects since 2002. This government increased the renewable energy production target from 20 per cent to 33 per cent by 2020. We have also recently committed $20 million to a new renewable energy fund to accelerate investment, supported by a new commissioner and board.

Harnessing geothermal energy, as well as South Australia's position as a leader in wind farm and solar feed-in schemes, will enable us to remain at the forefront of renewable energy generation in this country. The government looks forward to seeing the results of the Penola project.