Old 06-02-2009, 06:46 AM
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Default Chile to develop Hot Rocks

SANTIAGO (Dow Jones)--Chile's Mining Ministry launched a tender for 20 geothermal exploration concessions Monday and will receive bids through July 31.
Bidding rules are available until June 30, Mining Minister Santiago Gonzalez said in a statement.
The Ministry expects investments of up to $3 million in each of the concessions spread throughout the country from north to south, covering a total area of 766,800 hectares.
The largest block on offer - Tuyajto 1 - is 92,400 hectares near the town of San Pedro de Atacama in the northern Second Region.
The government wants to tap Chile's 2,000 megawatts of geothermal potential to improve energy security going forward and reduce dependence on imported hydrocarbons.
"Given the interest that the development of geothermal energy has generated in our country...we could reach a much greater number [of concessions] in the near future," said Gonzalez.
Although initial geothermal exploration work is relatively inexpensive, deep wildcat wells required to determine the commercially viability of a reservoir can cost several million dollars each.
To encourage investment in geothermal energy, the government's National Energy Commission has proposed a mechanism by which the state would share risk in the final exploration stage through a subsidy or insurance plan if the wells do not produce.
Moreover, the National Geology and Mining Service implemented a program in 2007, financed by the Chilean and German governments, to identify areas with geothermal potential.
Previous exploration work in Chile has been carried out by state oil and gas company Empresa Nacional del Petroleo and partner Italian utility Enel SpA (ENEL.MI).
The new tender is expected to attract other renewable energy companies like U.S. company GeoGlobal Energy LLC, which plans to invest $1.5 billion in 500MW geothermal capacity in Chile, newspaper Diario Financiero reported, citing the company's country manager Rudiger Trenkle.
"To enter the geothermal business you need a lot of capital and patience," Trenkle said.
Trenkle was not available to comment Monday afternoon.
Chile is one of the countries on the so-called Pacific Ring of Fire, along with Indonesia, New Zealand and the Philippines, where volcanic activity has produced rich geothermal resources.

By Julian Dowling, Dow Jones Newswires; 56-2-820-4241; [email protected]
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chile, geothermal, hot rock energy

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