Perth Basin interest grows as Strike preps WE-5 testing
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Eyes are going to be on Strike Energy (ASX:STX) over the coming weeks as it prepares to test the ability of its West Erregulla-5 well in the Perth Basin to produce gas.
The timing couldn’t be better given the growing interest in securing gas supplies amidst growing concerns about the security of Western Australia’s domestic gas supply situation.
Gas supplies in the state are forecast to decline at an average rate of 2.8% per annum between 2021 and 2030 while demand is expected to grow by 0.7% per annum during the same period.
Recent exploration successes by Strike and others mean that the Perth Basin is considered to be key to meeting this shortfall.
This is highlighted by Beach Energy (ASX:BPT) and Japan’s Mitsui E&P securing an agreement to supply about 2 terajoules of gas per day to Clean Energy Fuels Australia for a five-year period from their Waitsia gas field.
Here’s where Strike steps in with its West Erregulla gas field, which is already proven to be productive with the success of the West Erregulla-2 appraisal well that produced 69 million standard cubic feet of gas per day during testing.
While the company was unable to test the subsequent WE-3 well due to an abnormally over-pressured Permian gas column and sand ingress at the WE-4 well.
It is now conducting final pressure testing at the WE-5 well where the target Kingia Sandstone has been observed to be strongly gas charged while initial pressure were measured at greater than 7,000psig, which is positive for its future production potential.
Once testing is completed, the company will install the xmas tree before completing the well across the Kingia in preparation for production testing.
Strike will also commence flow testing of WE4, noting that its clean-up activities are moving towards the testing phase after sand production noticeably subsided.
Successful gas flows at either or both wells is likely to further drive interest in the Perth Basin.
Beach and Strike are not the only Australian players with interests in the Perth Basin.
Talon Energy (ASX:TPD) is partners with Strike (sorry) in EP447, where the Walyering-5 appraisal well is expected to be drilled this quarter.
Drilling will target an in-place best estimate prospective resource net to Talon of up to 38.7 billion cubic feet of gas and 0.98 million barrels of condensate.
Walyering is known to have good quality gas with very low levels (less than 1%) of carbon dioxide, which will require minimal processing and hence lower production costs.
It also has high condensate content that could improve the economics of the project.
Lockyer Deep is just 15km east of Waitsia and 15km north of West Erregulla.
It also targets the same Permian Kingia and High Cliff targets at West Erregulla.