Panax managing director Dr Bertus de Graaf said, “This is expected to lead to the development of a national electricity grid connected demonstration plant by late 2011,” he said.

Dr de Graaf said the new ‘Lightning’ rig owned by US States-based Weatherford International Drilling had been unloaded at Port Pirie in South Australia.

“Following the completion of another drilling assignment, it will be mobilized to the Limestone Coast area for drilling a 4,000m deep production well, Salamander 1, as part of the Penola Project,” he said.

Dr de Graaf said Salamander 1 will be the first well to test a conventional geothermal resource in Australia.

“Salamander 1 targets a hot sedimentary aquifer (HSA) in sandstones of the Penola Trough,” he said.

“Unlike other geothermal systems, tests to establish an economic geothermal reservoir at the Penola Project can be carried out from a single well.”

An independently reviewed pre-feasibility study has shown Panax’s Penola Project has the potential to generate cheap clean energy for Australia.

“The Penola Project has the scope to be of national significance in the quest to reduce carbon emissions through providing competitively priced, zero emission, base-load power,” Dr de Graaf said.

“The fact that this project has a ‘Measured Geothermal Resource’ of 11,000 petajoules (PJs) adds to the considerable scope of the Penola Project.”

Dr de Graaf said the Penola Project’s close proximity to the National Electricity Market Management Company (NEMMCO) power grid increased its potential.

“The Penola Project represents a unique opportunity for the development of a hot

sedimentary aquifer geothermal project in Australia and has the potential to power hundreds of thousands of homes,” he said.

The Penola Project in GEL223 covers an area of 493 sq km and is part of Panax’s larger Limestone Coast Geothermal Project, which covers a total area of 3,127 sq km.

Panax’s focus is on exploring exisiting reservoirs containing hot geothermal fluids, which have less risks than hot fractured rock geothermal projects and a much shorter development time.