Tauhara II Geothermal Development Project

Presentation to Enterprise Lake Taupo Craig Stephenson – Environment and Land Manager

28 July 2010

Content

Contact – who we are How geothermal works Tauhara II project

© Contact Energy Limited

28 July 2010

Tauhara II

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Contact – who we are

Contact is New Zealand’s largest private electricity operator – we are not owned by the Government We are owned by: • Origin Energy (Australia) – 51% • 80,000 individual New Zealand shareholders; more New Zealander’s have shares in Contact than in any other company. Some of our leaders (most of them New Zealanders): • Whaimutu Dewes – Director • David Baldwin – Managing Director • Graham Cockroft – Chief Operating Officer • James Kilty – Project Director, Renewables • Ulrich Biesenbach, GM - Geothermal We directly employ over 1000 people throughout New Zealand

© Contact Energy Limited

28 July 2010

Tauhara II

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Contact – our values

Our values guide our behaviour – the way we treat each other and our stakeholders • First - being an intelligent and responsible leader • Fresh - we dare to be different • United - working together to a common goal • Open - building open and enduring relationships

“Be the neighbour you want”
We are passionate about our role in securing a sustainable future for New Zealand
© Contact Energy Limited 28 July 2010 Tauhara II 4

A quick overview of Contact’s operations © Contact Energy Limited 27 July 2010 Tauhara II 5 .

baseload energy © Contact Energy Limited 27 July 2010 Maximising the Benefits of Geothermal Development 6 .000 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Geothermal Hydro Gas Coal Wind New Generation Demand • Geothermal is critical to ensuring New Zealand’s security of supply.000 megawatts of coal-fired generation at Huntly with renewable.000 MW 4.000 7.000 6. both meeting demand growth and facilitating the retirement of old thermal plant • Vital in replacing the 1.000 1.The security of supply benefits NZ Electricity Supply Mean Demand Profile 8.000 2.000 3.000 5.

Geothermal is New Zealand’s most cost effective fuel type Entry Limit Price 180 160 140 120 100 80 60 40 20 0 CCGT at $7.30/GJ Wind Range Hydro Range Geothermal Range Source: Contact © Contact Energy Limited 27 July 2010 Tauhara II 7 $ / MWh Base Range $25/t Carbon $50/t Carbon .10/GJ Gas CCGT at $15/GJ Gas Coal @ $5.

Contact’s operations and projects – an overview © Contact Energy Limited 27 July 2010 Tauhara II 8 .

How Geothermal Works © Contact Energy Limited 28 July 2010 Tauhara II 9 .

© Contact Energy Limited .

© Contact Energy Limited .

© Contact Energy Limited .

© Contact Energy Limited .

Typical Wellpad Cross Country Line Separator Station Sump Flash Tank or Silencer Branch Line Wellheads 14 .

© Contact Energy Limited .

Tauhara II Project Overview © Contact Energy Limited 28 July 2010 Tauhara II 16 .

TAUHARA II: The Project and the Resource The project comprises. • 250 MW Power station • Steamfield • Transmission connection Located on the WairakeiTauhara Geothermal System (magenta line) Consent application area is shown by the lighter blue line © Contact Energy Limited .

Proposed Development Layout © Contact Energy Limited 18 .

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Tauhara Geothermal Resource • Tauhara field area • Resource – Size – Sustainability – Effects and adaptive management • The Tauhara II project is sustainable – modelled out to 2060. © Contact Energy Limited 28 July. 2010 23 .

50 km2 • Twice the area of Wairakei or Rotokawa – Wairakei 25 km2 – Rotokawa 20 km2 © Contact Energy Limited 28 July.Tauhara is a large geothermal field • Tauhara . 2010 24 .

2010 25 .Tauhara is a hot geothermal field • Measured temperatures up to 300 OC • Geochemical temperatures up to 320 OC • 30OC hotter than previously measured (@ 270 OC) • Resource Area >250 OC (-500 masl) is inferred to be three times larger than at Wairakei or Rotokawa © Contact Energy Limited 28 July.

2010 26 .New Geological Information .Drilling © Contact Energy Limited 28 July.

2010 27 .Underground Resource Production and discharge strategies © Contact Energy Limited 28 July.

© Contact Energy Limited 28 July. 2010 28 . modelling • Better understanding of subsidence mechanisms and how to avoid. • Extensive subsidence monitoring. physical testing. • The avoidance of subsidence effects is the primary requirement for Contact in managing the Tauhara Geothermal Field. • Pressure monitoring in geothermal field.Subsidence • Intensive research project conducted over last four years – Drilling. cores.

© Contact Energy Limited 28 July.Subsidence Damage Remediation The ambulance at the bottom of the cliff is a subsidence damage remediation requirement in Contact’s consents – all property damage within defined subsidence bowls is Contact’s responsibility to fix. 2010 29 .

© Contact Energy Limited 28 July 2010 Document title 30 .

Questions? © Contact Energy Limited 28 July 2010 Document title 31 .

Extra slides if needed © Contact Energy Limited 28 July 2010 Document title 32 .

2010 33 .Well Drilling – covering much greater… • Aerial Extent • Depth © Contact Energy Limited 28 July.

2010 34 .Shallow Materials Properties • Extensive coring and materials testing has been conducted over the last three years • Professor Mick Pender from Auckland University constructed specialist testing equipment © Contact Energy Limited 28 July.

Models Developed • 3D Reservoir Simulation – Wairakei model developed • Subsidence Models – 3D – coupled to reservoir simulator – 1D – concept confirmation © Contact Energy Limited 28 July. 2010 35 .

Best achieved including development in South Tauhara © Contact Energy Limited 28 July. Multiple model scenarios have been run out to 2060 2.Sustainability of the resource 1. 2010 36 . Long term sustained performance from the resource can be achieved beyond 2060 3.

Inside the Tauhara bowls. Substantial increase in subsurface data and knowledge. recovered and tested ~ 4 km of core material and measured pressures/temperatures within and outside the subsidence ‘bowls’ 2.Subsidence 1. is anomalously compressible and of sufficient thickness to explain the location and amplitude of the subsidence bowls © Contact Energy Limited 28 July. material at various depths (up to 400m). 2010 37 .

Adaptive approach enables sound management of effects 2. With Tauhara II.Adaptive management 1. 2010 38 . Requires flexibility to be effective 3. Contact will have infrastructure and fluids available to implement adaptive management © Contact Energy Limited 28 July.

© Contact Energy Limited .

© Contact Energy Limited .

© Contact Energy Limited .

© Contact Energy Limited .

© Contact Energy Limited .

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