Strike Energy Limited has partnered with Australian gas infrastructure leader AGIG as the preferred proponent to design, build, own and operate a 50TJ/day gas plant for the processing of Strike's gas from the proposed Phase 1 West Erregulla development under a long-term tolling arrangement.
The 50 TJ/d gas facility will be constructed adjacent to the West Erregulla gas field with a raw gas trunkline connecting to the West Erregulla upstream development and will process raw gas to sales specification before delivering it into WA's gas transmission network.
The project represents an investment of more than $200 million in infrastructure and services ( by AGIG under a competitively priced long-term tariff. This structure will avoid substantial upfront capital for Strike and facilitate Strike's focus on execution of the upstream wells and infrastructure. The proposed tariff arrangement is supportive of Strike's view that the Perth Basin CQ Permian gas play is a competitive low-cost gas development.
The contract award to AGIG and subsequent infrastructure development are subject to execution of full form documentation consistent with agreed key terms, and conditions precedent including each party taking a final investment decision on their respective developments, all to be completed or satisfied by the end of 2020.
In preparation for a targeted final investment decision by the end of 2020 and first gas delivery in 1 H 2022, AGIG will now begin front end engineering (FEED), long lead procurement and other early works necessary to secure the requisite tenure and project approvals prior to commencing construction. During construction of the Phase 1 project, Strike anticipates that more than 100 jobs will be created in the building of the gas plant and associated pipelines.
Strike Energy Managing Director & CEO Stuart Nicholls, said: "We are really pleased to be partnering with AGIG, a world-class operator of gas infrastructure, for the development of Strike's significant natural gas assets. We're excited about the long-term future of the WA domestic gas 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 canceling projects.
"AGIG has a long and successful history of operating infrastructure in the region and in building relationships with the area's land holders and stakeholders. AGIG owns and operates WA's critical Dampier to Bunbury Natural Gas Pipeline, which connects domestic gas production in the north to the major WA South West market. Strike is well positioned with the West Erregulla gas field being located adjacent to the DBNGP, and in entering into this new partnership with the pipeline's operator, AGIG.