LNG

The Western Australia emerging natural gas producer Warrego Energy has guaranteed its way forward by signing a long-term supply agreement with a foundation customer.

Warrego said it signed its deal with Alcoa of Australia, operator of one of the world's largest integrated bauxite mining operation for its West Erregulla gas field in the onshore Perth Basin.

The deal covers 155 petajoules of gas, with supply to begin in January 2024. The length of the agreement has not been disclosed.

Additionally, the binding gas sales deal is subject to a final investment decision on West Erregulla, which is expected in the first half of 2021.

Nevertheless, Warrego said it intended to expand its gas sales portfolio and is continuing to negotiate with other potential customers.

Alcoa operates three alumina refineries, the Kwinana, Pinjarra and Wagerup plants in Western Australia, along with two bauxite mines.

Warrego Group Chief Executive Dennis Donald said the company was delighted with the agreement to supply Western Australia’s largest and most experienced gas buyer.

“Securing such a large-scale and long-term agreement with a top-tier customer like Alcoa is testament to the quality of the West Erregulla gas field and the commercialisation strategy adopted by Warrego and will send a positive signal to other potential gas buyers,” Donald explained.

Donald added that Warrego was well advanced in progressing gas processing options, which include third-party processing and shared infrastructure.

At present, the company is drilling its WE-3 well in the northern area of the West Erregulla field.

At least one further well (WE-4) is scheduled to be drilled in the next 12 months, along with the possibility of a fifth one (WE-5).

Warrego noted that any increase in West Erregulla’s certified resources will be welcomed by the market, and a success at WE-3 could add considerably to the current 513 billion standard cubic feet of gross contingent resources

Warrego has a 50-50 joint venture partner in Strike Energy and recently announced the spudding of its second well in the West Erregulla concession.

The field forms part of a triangle between Mitsui’s & Co.’s Waitsia wells and Beach Energy’s Beharra Springs Deep, which has been claimed to have the potential to hold a world-class hydrocarbon deposit.

West Erregulla-2 was spudded in June 2019 and drilled to a total depth of 5,100 metres, the deepest well drilled in onshore Australia, and flow tests achieved a world-class maximum flow rate of 69 million standard cubic feet of gas per day.

The appraisal drilling campaign was one of a string of positive announcements for Warrego, which was formed in late 2007 by Scottish oil and gas workers Dennis Donald and Duncan MacNiven.

“The major discoveries of the West Erregulla-2 well helped consolidate our position as a key player in the Perth Basin and has laid the foundation for exploration and appraisal success through our current campaign,” stated Donald.