Warrego, Strike Sign HoA for West Oz Project

Warrego Energy and Strike Energy have signed a binding heads of agreement (HoA) for the joint development of the West Erregulla gas field onshore Perth Basin, Western Australia, the companies said in a joint statement published on October 8.

As per the HoA, the companies have agreed an increase in first phase capacity to 80 terajoules/day delivered to the Dampier to Bunbury Natural Gas Pipeline (DBNGP). The Australian Gas Infrastructure Group remains the preferred proponent to build, own and operate the facility and will complete a supplementary front end engineering design study for the larger capacity plant by the end of this year, the companies said.

The joint venture should be ready to consider a final investment decision (FID) by the end of first quarter of 2021 following the drilling, testing and evaluation of the WE-3 and possibly WE-4 appraisal wells, the companies said. The target date for first gas sales from West Erregulla remains mid-2022. The joint venture has added WE-5 to the current drilling campaign, but this well is unlikely to be drilled before FID is taken.

Warrego and Strike have also entered into a gas balancing arrangement to align the interests of both parties with respect to the difference in total contracted volumes and contract start dates for each foundation gas sales agreement. “This will ensure the seamless delivery of sales gas to foundation gas customers and enable the joint venture partners to sell uncontracted gas on an equal basis,” they said.

Marketing of additional capacity over and above the foundation gas sales will continue, although further gas sales are not needed to achieve FID.

Strike is partnered at West Erregulla project with fellow Australian explorer Warrego in a 50:50 equity split. West Erregulla gas project has been awarded lead agency status in Western Australia.