torrens energy

Corporate Strategy

Torrens is seeking to explore locations within a known active heat source, the SAHFA. The Company has identified (from fundamental geological principles) areas it believes are highly prospective for HFR geothermal energy. Torrens has targeted areas with potential active heat sources buried beneath insulating rocks, close to electricity markets or transmission lines. The Adelaide Geosyncline, where it coincides with the SAHFA, is such an area. These areas are described in detail in the Torrens Energy Prospectus (You can download the Prospectus here).

The initial objective of the Company is to identify deep drilling targets within its tenements that have a high probability of achieving 200°C or greater at a depth of less than 5,000 metres. Once such targets are identified, deep exploration wells will be designed to confirm the predicted temperature conditions and collect data on physical properties of rocks at depth. The deep drilling program is beyond the scope of the raising from this Offer, and a further capital raising would be required to fund the deep drilling program.

There are a number of other regions within the SAHFA that are currently under geothermal exploration. Most notable is the Cooper Basin where hot granite is overlain by insulating sedimentary rock, trapping the heat and raising temperatures. However, granite is only one of several types of rock that can generate high heat flow, with volcanics and some metamorphic rocks being alternatives. Torrens is not reliant on locating hot granites which is the underlying theme for many companies active in Australia, but will concentrate on using direct measurement to locate high heat flow in the exploration for hot rocks at shallow depth.

Background – Hot Rock Geothermal Energy

Hot Rocks, known to occur in South Australia are a vast untapped reservoir of energy, which can be used to generate electricity. Cold water is pumped into the ground, with superheated water being returned to surface and used in conventional or binary fashion to generate clean, reliable electricity.
 
Unique in the world, the South Australian Heat Flow Anomaly extends deep beneath the earth’s surface through the Torrens Geothermal Exploration Licences (GELs). Independent modelling suggests that this heat flow anomaly will generate temperatures well above the minimum required for power generation
 
Power generated from Hot Rock geothermal energy (rather than from volcanic activity which produces geothermal energy in regions such as New Zealand) has been independently estimated to have the potential to inject $10 billion into the Australian economy by 2030.

Standing apart from other sustainable energy sources such as solar, wind and waves, geothermal energy can offer 24/7 base-load power with no fuel, no emissions, and no waste. It has also been assessed as being more cost efficient under a carbon levy system, than most traditional forms of fossil-fuel based energy production.
 
Geothermal energy from volcanic activity has traditionally supported comparatively small, boutique power plants, but HFR geothermal energy, from a typically larger sized resource, is capable of sustaining large plants that can power a city.
 
Production techniques use existing technologies, with engineering processes widely used in the oil and gas industry. Similar HFR projects are being undertaken in other parts of South Australia, in Western Europe, and the US.

Chairman's Letter

Dear Investor,

It is now generally accepted that global temperatures are increasing, and that greenhouse gas produced from human activity is considered to be a major cause.

Carbon Dioxide (CO2 ) is the primary waste gas produced when burning fossil fuels and a substantial contributor to global warming. The continued demand for electricity has compounded this effect to the point where legislation is now being put in place to charge power producers for their contribution to atmospheric CO2 emissions.

Australia derives approximately 90% of its power from burning fossil fuels. Despite this heavy reliance on coal power generation, aggressive targets have now been set by both State and Federal Governments to address the issue of Australia’s contribution to global greenhouse gas emissions. Recently, the South Australian Government proposed a mandatory target of 20% of all electricity generated and consumed in South Australia to be from renewable sources by 2014. Torrens believes that this target can not be met unless alternative energy sources are brought to commercialisation.

With concerns that Australia will not be able to meet its short term targets for CO2 reductions, a resurgence has been triggered into the search for alternative energy sources such as geothermal, wind, solar, and nuclear. With the exception of nuclear power, it has become evident that energy alternatives such as solar and wind are incapable of meeting the large-scale baseload power requirements in Australia. With the nuclear debate raging and long lead times for nuclear design and commissioning, HFR geothermal energy has the potential to solve a wide range of problems.

Even without “carbon costs” factored in, the predicted cost per unit for large scale baseload geothermal power generation remains comparable to “cheap power” sources such as nuclear and natural gas power generation. These factors combined, bring in our view, HFR geothermal power to the forefront of Australia’s potential new sources of clean power for the future.

The unique geological conditions that exist in Australia make geothermal resources a far deeper and larger prospect than those resources being exploited elsewhere. HFR geothermal technology addresses these challenges and brings with it the potential for sustainable, cheap, clean, large-scale baseload power.

Torrens has identified a number of highly prospective areas for geothermal energy which have been secured through 14 GELs in South Australia. These licences are supported by infrastructure and can connect to the National Power Grid to deliver energy to the market.

Generating electricity from super-heated water from the earth is nothing new, as there are currently hundreds of conventional geothermal power plants in operation. The Australian experience however calls for a different approach, providing both risk and opportunity.

Yours Faithfully,

Malcolm James

Government Grants

PACE Grant Awarded
South Australia has a legislative framework that supports the development of geothermal resources, from exploration to power generation. In addition, the South Australian State Government established the Plan for Accelerating Exploration initiative (PACE). Torrens has been granted $100,000 in matching funding from the PACE Initiative, to be used on drilling expenditure in 2007.

Other Possible Grants
In addition to the PACE funding already secured, the Company will pursue other available grant schemes. Relevant schemes currently or recently open for submissions include:

  • The Victorian Department of Innovation, Industry and Regional Development administers the Sustainable Energy Research and Development Grants Program (SERD), which has committed $10 million over three years, with a minimum investment of $250,000 per project, to projects that

    i) Ensure a secure energy supply for Victoria;

    ii) Maximise industry competitiveness and job opportunities; and

    iii) Reduce greenhouse gases.

  • The Renewable Energy Development Initiative (REDI) administered by AusIndustry, supports renewable energy innovation and its early-stage commercialisation with grants between $50,000 and $5 million over three years. To date, four HFR geothermal companies have received a total of $12.6 million.
  • The Low Emission Technology Demonstration Fund (LETDF), administered by the Australian Greenhouse Office, commits $500 million to support the commercial demonstration of technologies that have the potential to deliver large-scale greenhouse gas emission reductions in the energy sector.