AGL Energy, Torrens in geothermal deal

St. Leonards, New South Wales-based AGL Energy, Australia's largest gas and electricity supplier, is getting into the geothermal game, announcing today that it will buy a stake in Western Australia's Torrens Energy.

AGL said it will pay Aus$2.2 million for a 9.99 percent stake in Torrens, a geothermal exploration company.

"Geothermal energy is an emerging renewable technology that will complement AGL's existing pipeline of renewable energy projects in wind and hydro," said Michael Fraser, managing director of AGL.

"This is an opportunity for AGL to participate in the development of this new industry."

AGL said it has also signed a geothermal alliance agreement with Torrens to commercialize base load geothermal projects close to the national electricity market, forming a 50-50 joint venture. Torrens will be responsible for carrying out the exploration activities, with AGL getting the option to participate in a number of base load renewable energy projects close to national electricity market.

AGL said it expects to invest Aus$10 million during fiscal 2009 in the new venture, excluding the Aus$2.2 million stake in Torrens.

In January, Torrens Energy announced what it called "outstanding" preliminary temperature results at its geothermal project area in South Australia (see Torrens Energy reports hot geothermal prospects).

The company said exploration drilling returned averages of 240 degrees Celsius at depths of 5,000 meters using temperature modeling, which Torrens said is higher than temperatures currently being used in Europe.

Torrens' landholding stands at 21 licenses, for a total of approximately 9,800 square kilometers, which AGL said is the largest landholding in South Australia.

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