Strike, Warrego reach gas development deal for West Erregulla

Strike and Warrego will jointly develop the West Erregulla field
State Gas is drilling more coal seam gas production wells in Queensland
Here’s all you need to know about gas stocks

Strike Energy (ASX:STX) and Warrego Energy (ASX:WGO) have signed a binding agreement for the West Erregulla gas development in Western Australia’s Perth Basin.

While Strike had previously committed to the development of a 50 terajoule per day (TJ/d) phase-one plant to process its 50 per cent share of gas from the field, the inclusion of its joint venture partner has cranked up the processing capacity to 80TJ/d.

The gas development is subject to a final investment decision that will be made before the end of the first quarter 2021 after the drilling, testing and evaluation of the West Erregulla-3 and possibly West Erregulla-4 appraisal wells.

Gas sales from West Erregulla could begin as soon as mid-2022.

Strike and Warrego have also approved the addition of West Erregulla-5 to the current drilling campaign, though this well is unlikely to be drilled before a final investment decision is made.

West Erregulla-2 flowed 69 million standard cubic feet of gas from the primary target Kingia Sandstone during testing in October last year, confirming the field as one of the best resources in the onshore Perth Basin.

Strike Energy (ASX:STX) and Warrego Energy (ASX:WGO) share price charts

Queensland gas drilling

Over in Queensland, State Gas (ASX:GAS) has engaged a drilling contractor to drill at least four coal seam gas production wells in phase-two of its exploration and appraisal program at the Reid’s Dome gas project in the Bowen Basin.

Centred on the highly successful Nyanda-4 well, the wells will be drilled and production tested to provide additional data to secure a significant certified reserves booking and enable field development planning and infrastructure design.

Nyanda-4 produced gas in excess of 500,000 standard cubic feet per day following the installation of customised pumping equipment.

The Richard Cottee-led company is also discussing the use of an additional rig to drill the proposed Rougemont-1 well in its new Rolleston-West project along with production monitoring wells at Reid’s Dome.

Cottee took coal seam gas trailblazer Queensland Gas Company from a $20m explorer up to its $5.7bn acquisition by UK major BG Group, which was acquired by Shell in 2016.