Australia’s Strike considers Walyering gas boost

Australian independent Strike Energy aims to increase output at its Walyering project in Western Australia (WA) state well beyond its present nameplate capacity, while carrying out a review of its South Erregulla field following disappointing test results.

Walyering's production exceeded the plant's nameplate capacity this month but problems with its South Erregulla development are unlikely to be resolved in the current 2023-24 fiscal year, Strike said in its half-year financial results to 31 December.

The 33 TJ/d (880,000 m³/d) Walyering plant produced 34 TJ/d on 6 February, with the firm aiming to move it to a partially unmanned operation by 30 June, as part of a cost out intended to save A$1.5mn ($980,000) across all operations.

Chief executive Stuart Nicholls said Strike was reviewing its safety case at Walyering given the prospectivity of Walyering-7 appraisal well to be drilled in July-September and the potential for Walyering-5 and 6 wells to further increase upstream capacity beyond the facility's current nameplate.

"We're looking at potentially taking the facility on a low to no cost basis by reviewing our safety case, which will take some months, but to take the capacity of the facility to beyond 40 TJ/d," Nicholls said on 28 February.

Strike said following the failed flow testing at South Erregulla-3 and South Erregulla-2 a reserves and resources review will be completed by 30 June, with development options to be studied for maximising value of discovered and tested gas. Results so far made development of the western side of the field "quite challenging", Nicholls said, with Strike focused on reserves at the South Erregulla-1 discovery well that flowed at 80mn ft³/d (2.2mn m³/d).

Average gas sales for July-December were previously reported at [20 TJ/d](https://direct.argusmedia.com/newsandanalysis/article/2532366] but have increased since to average 26 TJ/d during February, Strike said. The gas firm's production costs were A$0.51/GJ for the half-year with an average spot gas price for the period above A$9/GJ, the highest recorded for WA since 2010.

Strike said it would target bringing up to four sources of gas on line by 2026, with the outcome of the state government's review of its domestic gas supply mandate possibly leading to access to LNG sales for onshore projects, which would make investment in the Perth basin more attractive. The review follows concerns the exit of coal-fired power generation from WA's main grid in the early 2030s is likely to substantially worsen the expected gas shortfall, as the state turns to gas-fired power plants for electricity.

Strike has modelled a 307 TJ/d shortfall by 2033, taking into account the closure of US aluminium producer Alcoa's Kwinana refinery that uses 55 TJ/d, something it said is likely to drive incentives for increased Perth basin production.

By Tom Major