Warrego Energy’s domestic supply position bolstered following NW Shelf LNG onshore gas deal
Special Report: Warrego Energy is well positioned both in terms of gas supply and geographical position to be one of the most competitive sources of large-scale available gas to supply the Western Australian domestic market.
In a boost to Warrego Energy’s (ASX:WGO) own gas commercialisation ambitions, Woodside Petroleum (ASX:WPL) has just struck a deal with Warrego’s neighbours Beach Energy (ASX:BPT) and Mitsui to process onshore gas from their Waitsia field via the North West Shelf (NWS) LNG plant. This will take a large volume of gas out of the domestic market and tighten the local supply / demand outlook significantly.
The news comes following announcements by Woodside of delays to financial investment decisions on its Scarborough and Browse developments in response to the COVID-19 pandemic and lower oil and gas prices.
In particular, the delay of Woodside’s $US20.4bn development of the Browse field has left the North West Shelf venture looking elsewhere for backfill gas, and turning to other WA gas companies like Beach and Mitsui to boost supplies for its five LNG trains.
With half the Waitsia reserves now committed to LNG, Waitsia stage two processing capacity is committed to supplying gas for LNG for the period late 2023 for approximately five years. .
Warrego, on the other hand, is focused on contracting its gas in the domestic WA market, and the recent WA government announcement banning the export of onshore gas as LNG (apart from that committed by Waitsia) and interstate only bolsters its position as a WA gas supplier.
In particular, Warrego’s plans for marketing its 50 per cent interest in West Erregulla never included assumptions around an export component, and Warrego is “well positioned both in terms of gas supply and position, and has the potential to be one of the most competitive sources of large-scale available gas to supply the Western Australian domestic market”, according to David Biggs, Warrego’s Australian CEO.
“We see a domestic gas marketing window from 2023/24 all the way out to the late 2020s which works well for Warrego.”
Not to mention the upcoming appraisal program at West Erregulla which, if successful, “could potentially add considerable volumes to the substantial 513bcf gross 2C contingent resources attributed by RISC to West Erregulla from WE-2, which was a fantastic result from a single well”, Biggs said.
Warrego recently appointed David Biggs to lead Warrego’s Perth-based team to commercialise its West Erregulla gas resources, together with one of WA’s best gas marketers — Cathy McKeagney, who joined forces with Warrego earlier this year as general manager commercial.
Both Biggs and McKeagney have vast experience in the oil and gas sector having worked in senior roles for BHP, Woodside, the NWS JV, and most recently, together at AWE Ltd prior to its takeover by Mitsui in 2018 for $602m after discovering the Waitsia gas field in the Perth Basin in 2014.
At the time, Waitsia was the largest onshore gas discovery in Australia for 40 years, no doubt thanks to these two gas gurus.
As the classic saying goes, it’s all about the right people, in the right place, at the right time, and Warrego certainly appears to have the winning formula for success!
This article was developed in collaboration with Warrego Energy, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.