Panax updates Indonesian geothermal project
Tuesday, October 30 2012 - 05:12 AM WIB
SOKORIA Geothermal Project
The Sokoria Geothermal Project is distinguished by four factors:
? The geothermal field is well-known from extensive previous work, from 1974 to now, including 3 wells in the target reservoir;
? The project has an agreed power price of approximately $US145/MWh for the first 30 megawatts of generating capacity plus carbon credits;
? There is strong support from local government and the local community to commence development; and
? The infrastructure is excellent, being within 16 kilometres of the capital of Flores, which is well serviced by regular airline services and a sea port.
The current maximum available generating capacity from all diesel generated sources in the area is about 12 megawatts. Electricity users often lose power daily. Most only have access to power for a portion of the day and some areas are not connected to power at all.
When the Sokoria Geothermal Project is complete the region will have access to secure power suppy 24 hours a day. Once a reliable power supply is available, the total market demand could exceed 30 megawatts. Our activities and achievements during the 2012 financial year, and our targets for the coming 2013 year, include:
? Progressing the Power Purchase Agreement (?PPA?) through to final form with execution expected shortly.
In June 2012, Panax was pleased to announce that it had received written advice from PT PLN (Persero) (?PLN?) in conjunction with the Indonesian Ministries of Finance and Energy, in regard to finalisation of Power Purchase Agreements (?PPA?) for both our Sokoria Geothermal Project and our Dairi Prima Geothermal Project.
PLN and the Ministries of Finance and Energy confirmed that all negotiations relating to the terms and conditions of the PPA?s for both Sokoria and Dairi Prima Projects are now final, and the final execution copies of these agreements are now being reviewed for execution. Based on the written advice received, execution of these agreements is expected to occur shortly. PLN went on to further thank both Panax and Bakrie for the manner and timeliness in which the negotiations were completed, and for the positive manner in which the negotiations were completed to a successful conclusion;
? The finalisation of these agreements is a significant milestone for the company and will be the key to enable Panax to progress to finalising required project financing for these two projects;
? The final commercial terms in each of the PPA?s are in line with the commercial terms previously disclosed to the market;
? Completion of the detailed Feasibility Study and Development Plan for the project (independently reviewed and verified);
? Continuation of the required environmental studies following drill and plant site selections, and to assist with all matters required to finalise registration of the project for carbon credit / CDM purposes;
? Focus for the coming months will continue to be on executing the formal PPA agreement with PLN, finalising project plans, and finalising detailed field and plant design and preparation for drilling;
? We are also progressing towards lodgement of required documentation for registration and securing for sale of the carbon credits for the Sokoria Geothermal Project; and
? At the time of writing, we are progressing arrangements towards securing a suitable drilling rig for the initial tranche of production wells.
DAIRI PRIMA Geothermal Project
Panax and its Indonesian joint venture partner, PT Bakrie Power, have signed a Binding Terms Sheet Agreement with PT Dairi Prima Minerals (DPM) for the supply of up to 25 megawatts of geothermal power for DPM?s proposed underground lead/zinc mine in northern Sumatra.
DPM is a subsidiary of Bumi Resources Group. First production from DPM?s mine is expected to occur in 2013/2014.
The region has one operating geothermal power plant at the Sibayak geothermal field and two neighbouring fields, operated by PT Pertamina Geothermal.
This is the most advanced geothermal field in the region with established geothermal reserves and 10 existing production wells.
The field is regarded as being under utilised and discussions are well advanced regarding the joint development of spare capacity of the Sibayak geothermal reserves to supply DPM?s mine.
Our activities and achievements during the 2012 financial year, and our targets for the coming 2013 year, include:
? Finalising the Dairi Prima PPA through to final form. Document is now having final legal review by both parties of the proposed execution copies of the agreement;
? We received written advice from PLN in conjunction with the Indonesian Ministries of Finance and Energy, in regard to finalisation of Power Purchase Agreements for both our Sokoria Geothermal Project and our Dairi Prima Geothermal Project. PLN and the Ministries of Finance and Energy have confirmed that all negotiations relating to the terms and conditions of the PPA?s for both Sokoria and Dairi Prima Projects are now final, and the final execution copies of these agreements are now being reviewed for execution. Based on the written advice received, execution of these agreements is expected to occur shortly. In the written advice received from PLN, Panax and Bakrie have been advised that ?PLN, in conjunction with the authorisations and directions from the Indonesian Government Department of Finance and the Department of Energy, advises PT Bakrie Power and Panax Geothermal Limited, that the negotiations relating to the terms and conditions for the Power Purchase Agreements, relating to your Sokoria Geothermal Project and to the Dairi Prima Geothermal Project, are now complete. The final versions of these agreements are now being finalised into executable format to enable final legal review and execution by each of the Parties?. The finalisation of these agreements is a significant milestone for the company and will be the key to enable Panax to progress to finalising required project financing for these two projects;
? Finalising the detailed Feasibility Study and Development Plan for the project
? 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 ? with the active support of all parties involved;
? Detailed meetings in Jakarta between Panax and PTDPM, relating to development requirements, timings, schedules, and power plant design and associated requirements;
? Continuation of studies relating to the power transmission connection (of the order of about 30 kilometres) for the project, including transmission line route and environmental studies; and
? Continuing process for registration for CDM?s for the project.
The first production from PTDPM?s underground mine is expected to occur during early 2014. Under the arrangements between Panax Geothermal and PT Bakrie Power, both parties will be entitled to receive 50% of all carbon credits generated from the project.
NGEBEL Geothermal Project
Panax has signed an agreement with Indonesian-owned power company PT Bakrie Power to develop the 165 megawatt geothermal project in East Java.
PT Bakrie Power won the tender for the Ngebel Geothermal Project in 2010, which involves the development of three, 55 megawatt geothermal power plants (for a total of 165MW) with the potential to expand to more than 200 megawatts.
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.
The Ngebel Geothermal Project is a near-term development, in a strategic location that is underpinned by a guaranteed, commercially attractive power tariff.
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 external 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).
Our activities and achievements during the 2012 financial year, and our targets for the coming 2013 year, include:
? Our announcement that the Ngebel Geothermal Project was expected to increase generating capacity to 220MW, in response to Indonesia?s growing demand for secure, renewable energy. The Ngebel Geothermal Project is expected to be revised to deliver capacity of 220MW (up from 165MW), allowing the project to deliver more power to a nation hungry for energy;
In Indonesia, only 65% of residents currently have access to reliable, grid-connected power ? a problem that the Indonesian Government is seeking to fix by incentivizing geothermal development of the country?s abundant geothermal resources;
The increase in planned capacity is a sign of Indonesia?s demand for geothermal energy;
? Purchase Agreement (?PPA?) with PT PLN (Persero);
? Receipt of the formal forward planning schedules from PLN, including timetable for completion of the transmission connection to the main Indonesian National Transmission Grid, to ensure grid connection for our project;
? Completion of the detailed Pre-Feasibility Study including full life of project economic
? Continuation of studies relating to the power transmission connection (of the order of about 25 kilometres) for the project, including transmission line route and environmental studies; and
? Advancement of the acquisition of the considerable prior exploration and appraisal works that have already been undertaken on the project by other parties.
Focus for the coming months will continue to be on executing the formal PPA agreement with PLN, finalising exploration project plans, and finalising detailed field and plant design and preparation for drilling.
Required environmental assessments continue to progress and will continue during the coming months.
We will also complete the acquisition of the considerable prior exploration and appraisal works that have already been undertaken on the project, and seek to commence on the ground exploration and testing works.
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.
JAMBI Geothermal Project
Panax has signed a Memorandum of Understanding with government-owned power company PT Petrogas Jambi Power to explore the east coast of Central Sumatra.
The companies are in the process of jointly applying for required licences and permits to explore and develop potential geothermal resources up to 80 megawatts.
The Jambi Geothermal Project is a strategic component of Panax?s Indonesian portfolio, increasing the company?s footprint in Indonesia and strengthening local partnerships.
Jambi Power has strong support from the Jambi Province?s local government for the development of geothermal energy in the region, and has an extensive database of information on the geothermal targets.
Jambi Power?s existing knowledge of the geothermal resource will significantly reduce risk on this project.
There is minimal diesel power generating capacity in the Jambi Province and it is insufficient to meet daily demand. Users have limited access to power and experience blackouts daily. This project would provide the community with reliable power 24 hours a day, seven days a week. There will also be opportunities for local participation in the project.
Energy generated from the proposed project would be connected into the local electricity transmission grid or used for local industry. Panax holds an initial 95 per cent interest in the project. (end of excerpt)