Warrego Energy has signed heads of agreement (HOA) with its joint venture partner Strike Energy for the joint development of the West Erregulla gas field in onshore Perth Basin, Western Australia.

The HOA provides an agreed pathway for the Phase 1 development of the gas field which includes gas processing and plant capacity, gas balancing and gas sales, and optimisation of timing and alignment of critical activities.

Located in the EP469 onshore oil and gas region of Western Australia, the West Erregulla gas field was discovered in 19990.

The field is estimated to contain up to 1.6 trillion cubic feet (tcf) of gas.

Warrego Energy executive director and Australia CEO David Biggs said: “The agreement between Warrego and Strike provides an aligned and efficient pathway for the development of the West Erregulla gas field.

“The construction of a single gas processing plant provides capital and operational efficiencies to both companies as well as a smaller operational footprint. Importantly, it provides greater certainty to existing and future gas customers, regulators and stakeholders and is another significant step in de-risking the project.

“Results from WE-3, which is currently being drilled, and WE-4 have the potential to enhance our view of reserves and resources as we move towards FID in 2021.”

FID on West Erregulla Phase 1 development expected in first quarter of 2021

The Phase 1 development of the West Erregulla gas field project is subject to final investment decision (FID), which is expected to be taken Warrego and Strike by the end of the first quarter of next year.

It is also subject to the completion of definitive documentation for gas processing arrangements and completion of limited due diligence.

The joint venture has agreed to significantly increase the Phase 1 capacity to 80 TJ/d delivered to the Dampier to Bunbury Natural Gas Pipeline (DBNGP).

Warrego and Strike also plan to seek construction financing for the Phase 1 development construction on a co-ordinated basis.

The joint venture partners expect that will be able to consider FID after the drilling, testing and evaluation of the WE-3 and possibly WE-4 appraisal wells.

Addition of WE-5 to the current drilling campaign has also been approved by the joint venture, but it is unlikely to be drilled before FID is taken.

The target date for first gas sales from the development could be in the middle of 2022.