July 23 (Bloomberg) -- Geodynamics Ltd., an explorer seeking to produce power from hot underground rocks, said Santos Ltd. and Chevron Corp., developers of shale gas projects in central Australia, are interested in becoming customers.
“Those discussions have commenced,” Geoff Ward, chief executive officer of Brisbane-based Geodynamics, said today in a phone interview. “I’ve spoken to those operators, and they are very positive about acting as initial customers for us. They see the interest in this as a long-term supply resource.”
Geodynamics expects to sign a customer in six months to 12 months, Ward said. The company is also planning to apply for funding from Australia’s A$10 billion ($9.3 billion) Clean Energy Finance Corp. and looking for a new partner after Origin Energy Ltd. withdrew from a joint venture this year, he said.
Geodynamics, trying to become the first company in Australia to operate a commercial geothermal plant, expects to start with a 5-megawatt to 10-megawatt project in central Australia’s Cooper Basin. The company plans to use data from a 1-megawatt pilot plant, which started producing power earlier this year, to form a development proposal for the project.
Chevron, the second-largest U.S. energy company, entered the Australian shale industry in February with an agreement to pay as much as $349 million to join Adelaide-based Beach Energy Ltd. in a project in the Cooper Basin. Adelaide-based Santos is also among shale gas explorers in the region.
The Santos and Chevron-Beach ventures are the “key targets” in the search for a customer, Ward said. “If we can continue to develop it into a material asset play, then it would be a natural fit with their operations in the Cooper.”
Geodynamics shares are down 86 percent in the past four years in Sydney trading, even with an 18 percent increase in 2013. Geodynamics closed unchanged today at 13 cents.
The industry has struggled to overcome technical setbacks and delays, with geothermal power unlikely to deliver much more than a “handful” of pilot projects and possibly some plants with a capacity of as much as 10 megawatts before 2020, Bloomberg New Energy Finance said in a June 28 report.
Geothermal developers in Australia are using technology that circulates water through cracks as deep as 5 kilometers (3.1 miles) underground, turning it to steam to run a turbine.
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