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Hot Rock secures drill rig for Koroit geothermal project

Hot Rock (ASX: HRL) has secured a suitable rig and drilling slot from Ensign International Energy Services to complete its “proof-of-concept” exploration program at the Koroit Project in the Otway Basin, south west Victoria.

Ensign has signed a Letter of Intent (LOI) to provide a rig to drill two standard appraisal wells to test the temperature and flow rate of the Koroit resource. HRL is now completing a formal drilling contract.

HRL is focussed on developing Hot Sedimentary Aquifer (NYSE:HSA) projects in its large Otway Basin tenements. On the 14th December 2009, HRL was offered a Geothermal Drilling Program (OTC:GDP) grant for $7million from the Australian government.

The grant funds are to go toward the drilling and testing program of HRL’s maiden flagship geothermal project at Koroit, starting in 2010, followed by the development of a pilot plant by 2011.

Ensign is an Australian based integrated drilling company. It is a wholly owned subsidiary of Ensign Energy Services Inc of Canada which has more than 50 years of experience specializing in the drilling of petroleum and geothermal wells.

Ensign are now mobilizing Rig 16 from Thailand to Australia and will complete one well for another client before arriving at Koroit in September to spud HRL’s first well, KHR-1.

The Ideco ED1200 Rig 16 is rated at 1200 horse power (NYSE:HP) and capable of drilling KHR-1 well to a planned depth of 3,700m.

Rig 16 replaces the smaller 750HP MB Century Rig 3 secured in July 2009 to complete the program after MB Century withdrew because of the delay in the announcement of the GDP grant.

The larger horse power of Rig 16 compared to Rig 3 allowed HRL to redesign its wells to a larger flow rate at a small increase in cost.

The increased flow rate will enable the well to be used more effectively in a pilot plant design than just a single purpose exploration appraisal well.

After tenders had been sent to suppliers for long lead items, such as wellheads and casing for KHR-1 well, the winning tenderers have been selected, orders placed and deposits paid to secure supply.

HRL said it plans to drill the second well KHR-2 up to 3 months after the completion of a successful KHR-1 well and will place orders for its completion materials later this year.

Disclosure: The author holds no positions in the company