A Code for Reporting Geothermal Resources and Reserves
Adrian Williams, Jim Lawless, Malcolm Ward, Fiona Holgate and Adrian Larking
Adrian Williams | March 2010
Background and status
• Australian Geothermal Energy Association (AGEA) and
Australian Geothermal Energy Group (AGEG)
lead role in defining a Geothermal Reporting Code covering• Exploration results• Resources• Reserves
• Launched in 2008• Rapid acceptance by companies and finance community
• extending outside Australia
• The Code is mandatory for AGEA members• i.e. for all leading geothermal companies in Australia
• Second edition early 2010
Some key engagements and positions
• Australian companies and regulators, international consultants• development driven by operating companies
• Decision to build on what exists - established terminology/frameworks
JORC (Joint Ore Reserves Committee) • one of the keys to Australia’s successful mining industry• compliant with international CRISCO template
SPE Code Committee
• Australian Securities Exchange• seeking to include in listing rules (as for JORC)
• IGA and IEA for international awareness and support
Parallel activities
IGA: Established committee, agreed to support Code and put on website
CANGEA : Have now released their own Code very closelybased on the Australian example, expected to beratified by the TSX
NZGA: Supportive, want to apply agreed methodology tonew national assessment
USGS: Have just done new national inventory, are discussing possibility of their own Code
Why high quality reporting is important
• Understanding and confidence are key building blocks• Terminology and meaning• Integrity and consistency
• Critical for investors and lenders (banks)• Equity funding critical in early stages (exploration, proof of concept)• Company values (and ability to raise equity funds) depend on understanding and confidence in
+ Exploration results and
+ Estimates of resources and reserves
• Debt financing is increasingly critical for later stages (project dev)+ Major focus on proven reserves
• New technologies and resources emerging• HDR, HFR, EGS, low temperature• Widely differing project types
• All forms of geothermal energy – hydrothermal and hot rock, natural and engineered
• All end uses - focus on electricity generation, but applicable to direct use
• High and low temperatures
• Projects in other countries carried out by Australian companies
• Existing projects as well as green-fields
• Not geothermal heat pumps
Scope
Key Principles
•Transparency:• The basis for the estimate should be clear
• Materiality:• All relevant issues disclosed
• Competency:• Relies on the professional judgement of an accountable “Competent
Person”, who has relevant experience
“Competent Persons”
Must be:• Affiliated to an appropriate professional organisation
• Register is being established for the 2nd Ed.• Membership includes agreement to conform to the Code of Ethics
• Qualified and experienced • Minimum criteria defined• Must describe their background
• Accountable• A complaints procedure is being established for the 2nd Ed.
And:• Must sign off on all Public Reports where Exploration Results or
Resources or Reserves are referred to• Declare their corporate affiliation
Two dimensional categorisation
“Geological” Knowledge and Confidence• The resource characteristics• How reliably they are defined• Typically: “Proven – Probable – Possible”
Commercial Extractability• What can be commercially extracted - now• What may be extracted under more favourable conditions• Typically:
• Reserve = commercial • Resource = commerciality not yet demonstrated, but reasonable prospects for eventual extraction
Classification
Increasing geological knowledge
and confidence
Exploration Results
Geothermal Resources Geothermal Reserves
Inferred
Indicated
Measured
Probable
Proven
Consideration of energy recovery and conversion, economic, marketing, environmental social, legal, and regulatory factors
(the “Modifying Factors”)
Note
The Code:• Provides for how exploration results and estimates of resources and
reserves are reported
It does not prescribe how the estimates are to be made • It is up to the Competent Person to be satisfied that an appropriate method
has been used
• Requires a certain level of definition of the methodology and assumptions e.g. Relate cut-off “grade” to a specific assumed power price and / or technology
Alignment
The Code has drawn on other established work•To promote consistency and understanding
JORC (mining industry and CRISCO) for implementation and reporting
•The Code•Principles, terminology, framework, layout
The SPE and other sources for principles & guidelines •The Lexicon
Reporting requirements versus guidelines
The Code contains:• Mandatory paragraphs• Explanatory paragraphs (in italics)
The Guidelines (Lexicon) contain:• Discussion on methodology: a comprehensive outline of preferred
methodology and default parameters, but not mandatory• Considerable scope left for individual judgement in how guidelines are
applied
Certainty classifications: resources
Exploration Results• Can be less formally reported but will not define resources• Still need a Competent Person Statement
Inferred Resources• Less direct indications of area, depth and character• Sound reason for indicating resource e.g. Geochemistry
Indicated Resources• Sampled by wells• Temperature indicated by geochemistry or nearby wells• Are defined by geophysics / temperature gradient mapping
Measured Resources• Sampled by wells• Deliverability demonstrated• Area defined by geophysics / temperature gradient mapping
Certainty classifications: reserves
Probable• Sampled by wells• Temperature indicated by geochemistry or nearby wells• Area defined by geophysics / temperature gradient mapping
Proven• Sampled by wells• Deliverability demonstrated• Area interpolated between wells• “No surprises” expected in future drilling• Clear prospects / no barriers to commercialisation
Units for reporting: 1st Edition
Exploration results• Should not include any definitive assessment of the quantum of contained or recoverable
energy
Resources• Should be reported as thermal energy in place (PJ)*• For higher certainty categories, can optionally report recoverable and/or converted energy
(e.g. MW-years or GWh)* • To do so the assumptions and the technology pathway must be defined
Reserves• Should be reported as thermal energy in place (PJ)*• Should also be reported as recoverable thermal energy (PJ) and/or converted energy e.g.
GWh or MW for x years• And the basis, development plan and technology pathway must be defined
* Items changed in 2nd. Edition
Conclusions
• The Australian Code is a good step towards a formal definition of geothermal Reserves and Resources
• It is uniquely suitable for reporting on both “conventional” and “unconventional” geothermal projects
• It is already starting to serve as a basis for international standardisation
• Experience gained in the first 18 months of operation is being applied to a revised 2nd Edition
• The Code, Lexicon, Practice Notes and example reports for various types of projects can be downloaded from:
AGEG or AGEA websites or
Google “Australian Geothermal Code”