Basic Energy Corp. took a step closer to letting an Australian energy explorer acquire 70 percent participating interest in — and bear all the cost of exploring — a geothermal well in a 20-megawatt project in Batangas.

In a disclosure to the Philippine Stock Exchange Friday, Basic Energy said it executed a “heads of agreement” with New World Energy affiliate Geoenergy Inc. ahead of a “farm-in agreement” for deeper participation in the energy contract.

A heads of agreement is a non-binding document that lists the main issues relevant to a possible partnership agreement.

Geoenergy’s local partners are Filtech Energy Drilling Corp. and PhilCarbon Inc.

Basic Energy has done the geophysical and geological studies of the contract area, which is located at the southwestern tip of Batangas, where Mabini and neighboring towns have hot springs.

According to a previous assessment by the Philippine National Oil Co.’s Energy Development Corp., “Mabini is an intermediate-temperature geothermal resource with reservoir temperature of at least 180 degrees Celsius.”

The Mabini exploration area covers 3,841 hectares and was awarded to Basic Energy in July 2008.

The other area in Batangas with geothermal energy production potential is the town of San Juan. There are also hot springs on Maricaban Island.

The Earth Policy Institute (EPI), a Washington D.C.-based think tank on sustainable development, noted the Philippines “generates 23 percent of its electricity from geothermal energy and is the world’s second biggest producer behind the United States.”

“The Philippines aims to increase its installed geothermal capacity by 2013 by more than 60 percent, to 3,130 megawatts. Indonesia, the world’s third largest producer, has even bigger plans, calling for 6,870 megawatts of new geothermal capacity to be developed over the next 10 years — equal to nearly 30 percent of its current electricity-generating capacity from all sources,” EPI said. — ELR/VS, GMA News

Source: http://www.gmanetwork.com/news/story/233278/economy/basic-energy-aussie-firm-to-explore-batangas-geothermal-site