Australia's Strike pens A$48.5mn gas engine deal for WA gas power plant

Sydney-listed energy producer Strike Energy has signed a A$48.5mn ($31.8mn) contract with Clarke Energy to procure twenty 4.5 MW Jenbacher gas reciprocating engines for its proposed South Erregulla peaking gas power plant in Western Australia, the company announced on August 1.

According to Strike, reciprocating gas engines have been preferred over turbine technology due to their higher efficiencies and quicker start-up time, which suits the peaking role that this power plant will operate under. As part of the contract, Clarke Energy will also provide commissioning support to the peaking gas power plant.

The plan to develop the 85 MW peaking plant was announced by Strike last month. The proposed power plant will be fuelled by South Erregulla’s gas reserves, which support a project life of over 25 years. The project is expected to utilise about 1.3 petajoules/year of gas and generate revenue of A$40-50mn/year over the first five years of operations. The operations are set to commence by October 2026.

The investment required for the project is estimated to be in the range of A$120-A$160mn. Last week, Strike agreed to terms for a A$153mn development financing package from Macquarie, with about A$53mn allocated specifically to the South Erregulla power project. The remaining contribution will come from Strike’s existing production operations.

The South Erregulla gas field development is part of Strike Energy's government-endorsed gas acceleration and development strategy which aims to provide incremental gas supply into a tightening Western Australian market.