Strike signs on with AGIG for WE plant

THE West Erregulla news keeps flowing from the Perth Basin after Strike Energy said this morning it had signed a $200 million deal with AGIG to build a 50 terajoule per day gas processing plant under a build, own, operate deal. 
Strike signs on with AGIG for WE plant Strike signs on with AGIG for WE plant Strike signs on with AGIG for WE plant Strike signs on with AGIG for WE plant Strike signs on with AGIG for WE plant

Helen Clark


AGIG operates the Dampier to Bunbury gas pipeline, which the acreage is beside. 
The plant will process gas from Strike's phase 1 development of West Erregulla. 
A raw gas trunkline will connect the field to a nearby facility which will process it to sales specification before sending it into the state's transmission network. 
What Strike calls a "competitively priced long term tariff" means it will avoid a large upfront spend and allow it to focus on its wells and upstream infrastructure. 
"The proposed tariff arrangement is supportive of Strike's view that the Perth Basin Permian gas play is a competitive low-cost gas development," it said. 
The contract is subject to execution of full form documentation consistent with agreed terms and conditions precedent including each party taking final investment decision on their respective developments by year's end, it said. 
Strike will begin front-end engineering and design and plans sanction by year's end then first gas by the first half of 2022. 
The joint venture Strike shares with Warrego Energy 50-50 is on track to drill two wells in the second half of  this year and plans to make a decision on a third appraisal well, West Erregulla-5, by November.
Talks are still underway with other Perth Basin operators on the possibility of sharing a rig to offset costs. 
Strike suggests phase 1's construction period could create 100 jobs. 
Strike drilled West Erregulla-2 last year reaching a total vertical depth of over 5000m and hitting gas across all three targets.
Wesfarmer's CSBP, its fertiliser arm, signed with Strike last year to take gas from its Phase 1 development, signing an agreement before West Erregulla-2 even spud. 
It signed a $5 million agreement last May to take up to 25TJ/d from Strike. 
"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,' managing director Stuart Nicholls said. 
"With expansion options designed into the facility and a competitive long-term tariff arrangement, this transaction will assist to underpin and accelerate not only the West Erregulla Project but also the potential development of Strike's Greater Erregulla resources."
Strike's partner Warrego Energy is in a trading halt. 
The two have been in recent disagreement over the actual resources at the project, with Warrego's third party assessment released to market this week suggesting a 2C contingent resource of 513 billion cubic feet, but Strike's own of November standing at 1.2 trillion cubic feet. 
One of the differences is apparently divergent views on the use of seismic amplitudes to calculate resources. 
Strike is up over 9% today at 19.2c per share.