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Strike Energy (ASX:STX) - Managing Director & CEO, Stuart Nicholls
Managing Director & CEO, Stuart Nicholls
Source: Strike Energy
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  • Strike Energy (STX) has teamed up with Australian gas infrastructure leader, Australian Gas Infrastructure Group (AGIG) to develop a gas plant
  • The 50 terajoules per day gas plant will process gas from the proposed phase one West Erregulla development
  • Under the partnership, AGIG will invest more than $200 million into the infrastructure and services of the project
  • The parties are now entering the front end engineering phase and plan to have a final investment decision by the end of the year
  • Meanwhile, the first gas is expected for delivery in the first half of 2022
  • Strike is up 11.4 per cent as the market opens, trading for 19.5 cents per share

Strike Energy (STX) has teamed up with Australian gas infrastructure leader, Australian Gas Infrastructure Group (AGIG).

Under the partnership, AGIG will help design, build, own and operate a 50 terajoules per day gas plant to process gas from the proposed phase one West Erregulla development.

The gas facility will be constructed near West Erregulla and will have a raw gas truckline connecting to the West Erregulla upstream development. This will help process raw gas to sale standards before it is delivered into WA’s gas transmission network.

AGIG will invest more than $200 million into the infrastructure and services of the project, under a competitively priced long-term tariff. This structure will avoid heavy upfront costs for Strike and help the company focus on the execution of the upstream wells and infrastructure.

Of course, drawing up a full contract between both businesses is dependent on the execution of documents that outline the partnership’s key terms. Each party will also need to make a final investment decision on their developments, which are expected to be completed or satisfied by the end of 2020.

In preparation for a targeted final investment decision and the first gas target delivery in the first half of 2022, AGIG will commence the front end engineering, long lead procurement and other early works to secure tenure and approvals prior to commencing the construction.

Strike Energy Managing Director and CEO Stuart Nicholls is excited about the long term future of the WA gas market.

“We’re excited about the long-term future of WA domestic gas market, and with our forecast low cost of production, believe we are in the prime position to move forward with confidence at a time when many in our industry are deferring or cancelling projects,” he said.

AGIG is one of Australia’s largest gas infrastructure business that has operations in every mainland state and the Northern Territory, supplying to over two million customers.

“The group owns and operates WA’s critical Dampier to Bunbury Natural Gas Pipeline (DBNGP), which connects domestic gas production in the north to the major WA South West market,” Stuart explained.

“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,” he added.

Strike is up 11.4 per cent as the market opens, trading for 19.5 cents per share at 10:27 am AEST.

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