Environmental and Regulatory Review

Habanero 3 incident

The key environmental issue encountered during 2009 was without doubt the incident at Habanero 3 and the resultant environmental impacts. The Company engaged a hydrogeologist and an environmental consultant to carry out a detailed hydrogeological and environmental assessment. Based on that assessment, a remediation/rehabilitation strategy for any potential surface and subsurface impacts resulting from the well incident has been prepared and is currently with the regulatory authorities in South Australia for review. The strategy demonstrates how the Company will proactively manage the incident including monitoring through the installation of at least two wells and chemical analysis of water and soil to ensure that any potential effects on the environment are effectively managed. The Company is confident that there will be no observed material, long term, environmental impacts from the incident.

During 2009 the Company has taken a number of key steps in terms of environmental management. The most significant of these is the development and implementation of an Environmental Management System (EMS). The EMS establishes a set of processes and practices which ensure that Geodynamics minimises it adverse environmental impacts, meets the commitments of its environmental policy and achieves its objectives and targets. The EMS applies to all of Geodynamics operations, sites and offices. Staff and contractors working for Geodynamics are expected to comply with the spirit of the EMS in relation to all day to day activities undertaken for and on behalf of Geodynamics.

Regulatory approvals

Geodynamics is required to obtain various regulatory approvals before undertaking any regulated activities. In South Australia these include:

• Holding a licence under the Petroleum Act 2000, with conditions attached. Currently we have Geothermal Exploration Licences (GELs) and Geothermal Retention Licences (GRLs) for our activities in the Cooper Basin;
• Submitting a Statement of Environmental Objectives (SEO) approved by PIRSA;
• Submitting an Environmental Impact Report (EIR) approved by PIRSA that forms the basis for the SEO;
• Submitting an Activity Notification to PIRSA for approval 35 days before undertaking a regulated activity and issuing a Notice of Entry to all occupiers of the land;
• Receiving an approval for the Activity Notification before commencing the activity. Occupiers can object to the notice of entry;
• PIRSA consulting with a number of other agencies prior to approving an EIR/SEO including the Environment Protection Authority and Department of Water Land and Biodiversity Conservation and the Department of Environment and Heritage.

Project Management Capability

Geodynamics now has a fully staffed project management group. A significant amount of effort has been expended on developing and implementing the Geodynamics Project Management Process (PMP) which describes the methodology by which Geodynamics plans and delivers projects. It consists of process maps, guidelines, and a set of standard document templates that are to be used on projects to ensure consistency in the approach and appropriate governance is applied by the newly established Program Control Group (PCG). Improvement of the PMP is an ongoing process and many incremental improvements have been implemented during the year.

The implementation of the Geodynamics Enterprise Resource Planning (ERP) system will further improve the way projects are managed by integrating the PMP with other processes across the organisation.

Following completion of the 1 MW Project, Geodynamics conducted a detailed Post Implementation Review (PIR). The PIR resulted in a number of improvement recommendations, a large number of which have already been implemented. The key lessons pertain to:

• The need to conduct detailed integrated planning for projects prior to attempting execution;
• Initiating the project properly to ensure key project elements such as scope definition, estimating, approvals and scheduling are addressed when the project is commenced;
• Scope Management and Estimating prior to embarking on the execution phase of a project, to ensure it is scoped in detail and that cost estimates are rigorous, independently reviewed and based on a robust scoping effort.

Advances in procurement

During 2009, Geodynamics has focused on streamlining the procurement, contract management and logistics operations of the organisation. The Company has appointed two procurement Specialists; one focused on subsurface and drilling activities and one focused on the surface and power plant construction activities to enable closer integration with the operational teams and tailored procurement strategies.

Geodynamics has designed a warehouse facility to support the Cooper Basin operations and developed an operational plan. The warehouse facility will comprise a number of 40 ft containers connected by canvas domes to provide covered and air-conditioned storage for vital and sensitive equipment and materials.

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