A joint venture between Gina Rinehart’s Hancock Energy and John Poynton-chaired Strike Energy has been granted a gas production licence at the West Erregulla project in the Perth Basin.
A joint venture between Gina Rinehart’s Hancock Energy and John Poynton-chaired Strike Energy has been granted a gas production licence at the West Erregulla project in the Perth Basin.
The production licence granted by the Department of Energy, Mines, Industry Regulation and Safety is a further tick for West Erregulla, as the JV partners progress to a final investment decision later this year.
As operator, Strike envisages a nameplate capacity gas development of 87 terajoules per day, with Australian Gas Infrastructure Group providing gas processing and export pipeline infrastructure.
West Erregulla and other onshore development projects in the Perth Basin, where Strike is particularly active, are currently required to supply the domestic market only.
Strike is already producing into the domestic gas market from its Walyering project in the basin.
Earlier this week it received Australian Energy Market Operator support to develop a peaking power plant to supply energy generated from its South Erregulla project to the South West Interconnected System in the years ahead.
The approval comes on the same day as the long-awaited final report from an inquiry into Western Australia’s domestic gas policy setting is expected to be tabled in parliament.
Strike has been an outspoken advocate for gas export exemptions for onshore projects – currently banned – over the course of the inquiry.
Strike managing director Stuart Nicholls said the receipt of the production licence was another step forward for West Erregulla, a project considered the company’s flagship asset.
“Receiving production licence L25 further de-risks the path for the development of the West Erregulla gas field,” he said.
“West Erregulla, Strike’s flagship asset, will be a timely and major source of new gas in WA, which will produce well into the 2040s.”
The company’s gas acceleration strategy was endorsed by the state early in 2023, with a view to supporting the development of four Perth Basin projects by the middle of the decade as a gas supply squeeze emerges in the local market.
“Strike has now delivered primary environmental approvals and production tenure across three of the four gas fields that make up its gas acceleration strategy,” Mr Nicholls said.
West Erregulla has independently estimated gross 2P reserves of 452PJ of gas.
The project was the subject of a bidding war between Strike and Hancock for Warrego Energy – previously ASX-listed and now a Hancock subsidiary – in late 2022 and early 2023.
Strike had sought to buy-out its JV partner in a bid to take 100 per cent ownership of the project, but was outbid by Hancock.
The resulting transaction made the pair JV partners and resulted in a cash windfall for Strike, which had bought up almost 25 per cent of Warrego when the Hancock takeover became unconditional.
Strike shares fell 2.7 per cent in early trade.
