Panax updates Indonesian geothermal project
Wednesday, January 25 2012 - 03:29 AM WIB
1. SOKORIA GEOTHERMAL PROJECT (Flores, Indonesia)
A 2008 report completed by the Japan International Cooperation Agency has estimated the Sokoria field has a potential of 90 megawatts. The Indonesia Government estimates Sokoria?s resource potential at 145 megawatts with a possible reserve of 25 megawatts.
This advanced geothermal project has an extensive data base, including three exploration wells as well as an extensive magneto-telluric survey (?MT?) covering the target area, as well as hot spring geochemistry.
Our activities and achievements during the quarter included:
? Significant progress towards finalising the Definitive Development Study document, as the basis of being the initial Development Plan for the project;
? Finalising the full well field layout and well site selection for the 30 megawatt project;
? Finalising plant site selection and detailed plant design and scoping of parameters and pricing;
? Site selection for camp site, warehouse, lay down areas;
? Reconnaissance, planning and costing of required infrastructure upgrades or ?work around? for port, road, and bridge facilities;
? Significant progress towards finalising remaining matters with Federal Government relating to the boundary of the geothermal contract area. At the time of writing this has now been finalised; and
? Progress towards finalizing the final Power Purchase Agreement (?PPA?) with PT PLN (Persero) which is expected to be executed shortly.
During the quarter, we also held a series of meetings with members of both Local Government and Central Government, in Ende (capital of Flores), and continuing planning and reconnaissance work currently being conducted on and adjacent to the Sokoria project site.
Focus for the coming months will continue to be on finalising the final version of the PPA, finalising project plans, and finalising detailed field and plant design and preparation for drilling. Required environmental assessments will also be completed during the coming quarter. We are also progressing towards lodgement of required documentation for registration and securing for sale of the carbon credits for the Sokoria Geothermal Project. At the time of writing, we are progressing arrangements towards securing a suitable drilling rig for the initial tranche of production well
Well and Plant Site Selection
In areas of difficult terrain/forest or cultivated areas where it is necessary to minimise social and environmental impacts as well as roading and infrastructure requirements, it is preferable to drill multiple wells from a single well pad. It is expected that the Sokoria Geothermal Reservoir will require wells of about 2,000 metres true vertical depth and up to five wells of this depth could be drilled as deviated wells from a single well pad.
Planning for Sokoria indicates that sufficient production wells for the estimated steam requirements can be drilled from two well pads with up to four wells on each pad. A separate pad for reinjection wells is planned to the south. The production and reinjection well targets have been selected following consideration of geological and engineering requirements.
A Power Station site has been selected that is central to the production and injection pads so as to minimise piping costs and also that is below the production well pad elevations but above the proposed injection area so as to minimise or eliminate pumping requirements.
Electricity Supply Business Plan (Rencana Usaha Penyediaan Tenaga Listrik (RUPTL))
PLN have released the approved 2011?2020 RUPTL which has proved to be a valuable input into our Definitive Development Study document which is currently being finalised.
Details of the planned 70KV Trans Flores Electricity Distribution Network have also been released which show a 70KV branch connection to Sokoria from Roa on the Ropa to Ende transmission line.
2. NGEBEL GEOTHERMAL PROJECT (East Java, Indonesia)
The Ngebel Geothermal Project is a near-term development, in a strategic location that is underpinned by a guaranteed, commercially attractive power tariff. Panax will earn a 35 per cent working interest in the project, through funding of required exploration works before commercial development commences. Both companies will contribute to development costs.
Exploration has already been undertaken in the project area, including detailed geological mapping, geochemistry works for water and gas, thermal manifestation chemistry, heat flow modelling, heat flow mapping and geothermometry work.
Panax will be project operator during the exploration and feasibility stages, and fund the acquisition of existing data and reports about the project. This will include upper surface development planning, geological studies, geophysical studies, magnetotelluric data and a detailed feasibility study. This information will assist in the ongoing development of the project, and is anticipated to result in significant savings in both time and money.
The Ngebel Geothermal Project will supply geothermal energy to Indonesian state-owned power company PT PLN (Persero).
During the quarter we have made significant progress on the project including:
? Finalising and executing the Shareholders Agreement with PT Bakrie Power relating to the incorporated SPV Company that holds the rights to the Ngebel Project and will hold the Power Purchase Agreement (?PPA?) with PT PLN (Persero) for the 165 megawatt project;
? Establishment of strong Local and Federal Government support for the project through a series of government and community meetings in the general project area;
? Grant of the IUP Licence by the local government;
? Continuation of negotiations with PT PLN (Persero) for the Power Purchase Agreement for the project. This is expected to be finalised by end March 2012; and
? Advancement of the acquisition of the considerable prior exploration and appraisal works that have already been undertaken on the project by other parties.
Our focus during the coming quarter will be on:
? Finalising the Power Purchase Agreement with PT PLN (Persero) for the project;
? Completing the acquisition of the considerable prior exploration and appraisal works that have already been undertaken on the project;
? Continuation of on the ground exploration and testing works; and
? Continuing studies relating to the power transmission connection (of the order of about 30-35 kilometres) for the project, including transmission line route and environmental studies.
It is both very pleasing and very significant that Panax has been able to secure our position in this large and very commercially attractive geothermal development project, under strong competition for participation from some other very large players in the geothermal sector.
3. DAIRI PRIMA GEOTHERMAL PROJECT (Northern Sumatra, Indonesia)
Panax and Bakrie have a ?Binding Terms Sheet Agreement? with PT Dairi Prima Minerals (?PTDPM?), a subsidiary of the listed Bumi Resources Group, for the supply of up to 25 megawatts of geothermal power for PTDPM?s underground Dairi Prima lead/zinc mine that is to be constructed in northern Sumatra.
During the quarter under review, PTDPM received their final mining licences and approvals for the project, and development of the project is expected to commence in May 2012.
During the quarter, Panax has made quite solid and continuing progress in respect of the Dairi Prima Geothermal Project, including, but not limited to:
? Advancing our discussions with PT PLN (Persero) in regard to a substantial number of electricity supply related issues, and infrastructure agreement related issues, and at the time of writing, substantial progress has been made towards finalising all required terms;
? Advancing discussions with the current tenement holder for the Sibayak and neighboring geothermal licence areas, for rights of access to and usage by Panax and Bakrie of these geothermal fields ? active progress towards finalising these arrangements is well advanced;
? Detailed meetings in Jakarta between Panax and PTDPM, relating to development requirements, timings, schedules, and power plant design and associated requirements; and
? Substantial progress towards formalizing the Binding Terms Sheet Agreement into a formal and executed Power Purchase Agreement between the parties. Significant progress was made on the advancement of this project during meetings in Jakarta in December 2011 and January 2012 by Panax/Bakrie with PT PLN (Persero) in conjunction with the current tenement holder, the current power station operator, and with PT Dairi Prima Minerals, and separately between Panax/Bakrie and PT Dairi Prima Minerals, whereby a revised proposal has been discussed and verbally accepted between the parties.
This revised proposal has now advanced further and is expected to be finalized to completion in the coming weeks. This is a major achievement in advancing this high value project forward. Our efforts and focus during the coming quarter will be on further advancing these matters.
The supply arrangement will see the geothermal power plant supply up to 25 megawatts of geothermal power to the Dairi Prima underground mine at $US150 per megawatt hour for the first eight years and $US125 per megawatt hour thereafter.
Receiving licence approval was the final hurdle before PTDPM were able to proceed to approval for the development of the project to commence.
Now that PT Dairi Prima Minerals has received this, Panax can finalise advanced project planning and timeframes to enable the development of the geothermal project to commence. This means that we are one step closer to achieving geothermal production and generating cash flow from this project.
The first production from PTDPM?s underground mine is expected to occur by late calendar 2013.
Under the agreement between Panax Geothermal and PT Bakrie Power, both parties will be entitled to receive 50 per cent of all carbon credits generated from the project.
4. JAMBI GEOTHERMAL PROJECT (Central Sumatra, Indonesia)
In March 2011, Panax announced the signing of a Memorandum of Understanding (?MOU?) with government-owned power company PT Petrogas Jambi Power (?Jambi Power?).
Under the terms of the MOU, Panax holds an initial 95 per cent interest in the project areas.
Panax and its partner intend to expedite the securing of required licences and permits to explore and develop potential geothermal resources with a target of up to 80 megawatts per project.
During the quarter we continued our efforts on attempting to secure the granting of the required licenses for exploration and development of the area to commence.(end of edited exceprt)