The entry into Spain has secured first mover advantage for Petratherm, in conventional and engineered geothermal systems (EGS), in one of the best renewable energy sectors in the world.
The Company's entry into the Spanish energy market is a strategic move that is consistent with the Company's stated objective of pursuing opportunities in areas where the geology, energy market and regulatory environment are conducive to commercially viable geothermal energy projects. The Company has secured seven geothermal energy projects across Spain covering both EGS and conventional geothermal technologies and is targeteing both direct use hot water and electricity as the two key products for sale to local markets.
The Company's main projects are adjscent to Spain's two largest cities, Madrid and Barcelona. The Company also holds two conventional volcanic geothermal projects on the islands of Tenerife and Gran Canaria on Spains Canary Islands. The Company has established a Spanish office in Madrid and expanded its skills base to service its growing project portfolio.
The Madrid geothermal exploration license (GEL) tenement area is located 25kilometres north of Madrid and covers an area of 330 squarekilometres. There are five existing wells that provide a wealth ofinformation on the potential geothermal resource including theexistence of large aquifers at depths of around 1,800 to 2,000 metresand around 3,000 to 3,400 metres (Figure 1). The extent of the Madridtenement is shown in the aerial photograph and the area is wellserviced with existing infrastructure such as electricity, road and water.
Figure 1 - Cross-section of Madrid tenement
In the 1980s, the Spanish Government undertook investigations fordirect heat use in the Madrid Basin. The result of this work lead totest drilling 2 wells at a site called Geo-Madrid into the upperaquifer. Results from the intitial drilling and testing were verypositive but government funding support ended before completion of theclosed loop system, terminating the project prematurely. In the light of renewed political support for renewable energy and higher energyprices, Petratherm has restarted this project.
A direct heating pre-feasibility study undertaken by independentconsultants GPC-IP (specialised geothermal consultants based in France that manage the Paris Basin 260 MW of district heating projects) has been completed at the Geo-Madrid site, along with an assessment of the broader resource potential across the tenement.
Key project parameters that underpin the pre-feasibility assessment of the overall Madrid tenement include:
• Reservoir depths ranging between 1,550 and 1,600 metres
• Reservoir thicknesses of between 200 and 800 metres
• Temperatures at depth ranging between 70ºC and 90ºC, and
• Flow rates ranging between 200 and 250 cubic metres per hour.
The pre-feasibility assessment concluded, under conservativeassumptions, that a well doublet could produce 8 MW of thermal energy capacity with an annual thermal production in excess of 45,000 MWh (to meet the needs of 7 nearby building complexes) and would result in aneconomic project with attractive returns.
Independent of the Company, GPC-IP presented a paper at the inauguralMadrid Geothermal Energy Conference in October 2008, which indicates that the broader Madrid Basin area has an exploitable energy potentialof 730 PJ and the Company's north-eastern Madrid license area has an exploitable energy potential of 170 PJ (a little more than the annualgas production from SA's Cooper Basin).
Following these positive findings, the Geo-Madrid drilling site has been rehabilitated for further works. A re-entry logging program ofthe two existing deep wells has been completed. The well re-entryconfirmed the structural integrity of one of the wells and its suitability for use as an injector well in the proposed 8 MW doublet system.
The 8 MW Geo-Madrid district heating project aims to service the heating and cooling needs of the nearby University and a number of large government buildings owned by the Madrid Regional Government. Energesis Geotermia, a large Spanish engineering group, has been engaged by Petratherm to undertake a heating and cooling demand study to accurately quantify the local market demand for the Geo-Madrid project. The Energesis Geotermia demand study was undertaken with the co-operation of the project's two key customers - the Autonomous University of Madrid and the Madrid Regional Government.
A very favourable initial reaction has been received from relevantregional and federal government departments and the Company isconfident of continued support from this sector. The Company isholding commercial talks with third parties interested in joint venture development of the Madrid district heating project.
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