Vulcan Energy Resources is set to acquire two electric drill rigs in the Upper Rhine Valley in Germany at its Zero Carbon Lithium Project, where plans are in place to produce both renewable electricity and lithium on a ‘carbon negative’ basis from deep geothermal wells.

The deep geothermal rigs represent a scarce, strategic asset for Vulcan (ASX:VUL), as Europe navigates an energy crisis and the increasing need for renewable heating, the company said today.

These electric rigs “will ensure drilling can be conducted with minimum greenhouse gas emissions” VUL said.

It also gives the company the potential to generate renewable energy for local communities in Germany (heat and/or power, depending on location) at a critical time for decarbonisation in Europe.

Funded with a portion of the proceeds from the company’s recent $200 million placement, the acquisition will “assist with timely project development, targeting phase-1 production in 2024.”

Rigs to be operation ready in late 2022

Managing director Dr Francis Wedin said the acquisition of the electric drill rigs will be an important step in advancing the Zero Carbon Lithium Project towards production.

“Consistent with our strategy to evaluate the production and sale of heat as well as power from our planned geothermal projects, the deep geothermal rigs will give us the potential to generate renewable energy, as we continue discussions with multiple local stakeholders to provide renewable heating to communities and renewable power to the German grid,” he said.

Vulcan has commenced assembling an experienced in-house drilling team, which will operate under the company name VERCANA GmbH Ltd, headquartered in Karlsruhe, Germany.

Following refurbishment, the rigs will be operation-ready in late 2022, VUL added.

Geothermal development updates

Vulcan’s in-house geological engineering company, GeoT, is advancing studies towards the completion of the DFS.

The studies include re-processing of 3D seismic data, integrated reservoir characterisation, structural and geomechanical studies, and fluid and heat flow simulation modelling.

Once complete, this work will be reviewed by independent consultants GLJ Ltd.

The company says the studies are in line with its stated target timeline, subject to relevant stakeholder permissions, to begin drilling in its phase-1 areas towards the end of 2022, and to commence production in 2024.

Increasing support for geothermal energy project development

Government support for geothermal technology and the expansion of renewable energy projects continues to grow in the three states in which Vulcan is operating in the Upper Rhine Valley.

To accelerate the expansion of renewable energy technologies in the region, the state government of Baden-Württemberg has launched a task force aimed at halving the planning and approval timeline for the commissioning of new projects.

This comes after Freiburg District President Bärbel Schäfer stated last week that deep geothermal energy must be used in the Upper Rhine Valley, as “global warming is so relevant we have to pull out all the stops very quickly.”

Additionally, the company notes it has been added to PricewaterhouseCoopers Australia (PwC) ASX “Mid-Tier 50” list, with PwC stating: “Our analysis also demonstrates that positive ESG strategies, including supporting the transition to a lower carbon global economy, aligns with long-term value creation”, and “new entrants… Vulcan Energy, saw the largest increases to market capitalisation across the MT50, on the back of strong project results and additional funding.”