Sydney, Feb 21, 2008 (ABN Newswire) - Tasmanian-based geothermal energy explorer KUTh Energy (ASX: KEN) has been offered a Federal Government Renewable Energy Development Initiative (REDI) grant to test a new model for developing a geothermal energy source.

Classical hot-rocks or Engineered Geothermal Power (EGP) projects require the hot basement rocks to be stimulated after initial deep drilling to enhance the fracturing of the basement thus allowing adequate water flow to capture the heat. This is known as "fraccing" and although a well established technique, embodies geological and hydrological risks.

A section of the KUTh tenement in north-eastern Tasmania is known as the Tamar Conductivity Zone. The Company's interpretation is that this is a large, deep, natural fracture zone filled with brine (salty water), which reaches into the buried extension of a known hot granite (see Figure 1).

The $1.8 million REDI grant has been offered to allow KUTh to test whether the granite has been naturally fractured and is saturated with hot water at depth. If it is, and is large enough to sustain electrical generation, KUTh will have proved a significant new geothermal energy type that is amendable to cheaper and more rapid development than other hot-rocks projects in Australia.

"The Tamar Conductivity Zone has the potential to be the first of a new class of hot-rocks geothermal projects enabling a more rapid development to generation, with fewer risks, than the classical EGP type of project," says Dr Roger Lewis, KUTh Energy's Principal Consultant and Chairman of its Technical Advisory Board.

KUTh Energy has over 14,000 km2 of geothermal tenements in Tasmania, which it is actively exploring for geothermal energy generation and for direct use heating and drying applications. This new opportunity will be explored in parallel with KUTh's existing programme. Both are commercially attractive due to the presence of existing high and low-voltage electricity infrastructure in the areas of interest.

"KUTh is deeply appreciative of the Department of Innovation, Industry, Science and Research and AusIndustry for their support of KUTh's innovative approach. Geothermal energy has a major role to play in securing Australia's future energy supply and this project, with Government backing, will enhance our progress towards renewable energy targets nationwide," KUTh's Chief Operations Officer, Malcolm Ward says.