Strike Energy (ASX: STX) has chosen the Australian Gas Infrastructure Group (AGIG) to build, own and operate the first phase of the development of the West Erregulla gas project.
The 50 terajoules (TJ) per day plant will involve an investment of more than $200 million. Production of gas is targeted for the first half of 2022.
The gas plant in the Perth Basin will be built adjacent to the West Erregulla gas field with a raw gas trunk line connecting to the upstream development. The plant will process raw gas to sales specification before delivering it into Western Australia’s gas transmission network.
AGIG will invest more than $200m in infrastructure and services under what Strike describes as a competitively priced long term tariff.
Strike says this structure will avoid its needing to raise substantial up-front capital and allow it to focus on developing the upstream wells and infrastructure.
AGIG a gas infrastructure leader in Australia
AGIG is one of the Australia’s largest gas infrastructure businesses with operations across every mainland state and the Northern Territory, supplying more than two million customers.
Its operations include 40,000km of gas distribution and transmission pipelines, 60 petajoules of gas storage capacity, gas processing and remote power generation. Its pipelines include the Dampier to Bunbury line.
The company is at present building Australia’s largest green hydrogen project, Hydrogen Park SA.
Strike Energy was founded in 1997 and listed on the ASX in 2004.
Its primary focus is the significant gas discovery at West Erregulla, in WA’s Perth Basin, which was a major turning point in the company’s history.
The company states that its aim is to be Australia’s lowest-cost onshore gas producer, “providing natural gas to support Australia’s transition to a lower carbon future”
West Erregulla is described as one of Australia’s biggest onshore gas fields able to produce a product that is high in methane, with no liquids and within a high-pressure formation.
One hundred jobs to be created
A final investment decision is to be made before the end of the year, and AGIG will now begin front end engineering, long lead procurement and other early works required for tenure and project approvals.
Strike expects that more than 100 jobs to be created in the building of the gas plant and associated pipelines.
Managing director Stuart Nicholls said he was pleased to be partnering with AGIG, a “world-class operator” of gas infrastructure.
“We’re excited about the long term future of the WA domestic market and, with our forecast low cost of production, believe we are in a prime position to move forward with confidence at a time when many in our industry are deferring or cancelling projects,” he added.
The announcement coincides with news reports today that the National COVID-19 Coordination Commission has recommended to the federal government that Australian taxpayers should underwrite a massive expansion of the domestic gas industry.
This would involve opening new fields and building hundreds of kilometres of new pipelines.