A FIRST well aimed at producing natural gas for a proposed urea fertiliser and ammonia production project at Geraldton, was spudded on Saturday.
Strike Energy Ltd told the Australian Securities Exchange (ASX) last Monday that it had begun drilling the SE1 well near Eneabba at its wholly-owned South Erregulla prospect and was already down to 1045 metres depth in the first section of the hole.
SE1 is expected to encounter Kingia sandstone - a band of soft rock containing porous sand reservoirs charged with natural gas and water in the North Perth Basin that was discovered in 2014 - at a revised depth of 4369m, Strike told the ASX.
This is up to 200m shallower than gas-producing drilling penetration of Kingia sandstone at the West Erregulla 2 well in 2019, less than five kilometres from where SE1 is being drilled, Strike said.
At West Erregulla 2, Strike was the operator, drilling in a 50-50 joint venture partnership with Warrego Energy.
"SE1 is being drilled with a further optimised design in order to ensure the well conditions when drilling (and coring) through the primary objective in the Kingia Sandstone are maximised for reservoir preservation and data acquisition," Strike said.
"The primary objective of SE1 (and any subsequent appraisal wells in South Erregulla) is to delineate approximately 350 petajoules of high confidence resource in order to secure the gas requirements for Project Haber, Strike's proposed Geraldton based 1.4 million tonnes per annum urea fertiliser manufacturing facility," it said.
"This amount of gas feedstock should allow the company to progress the project banking and equity processes with sufficient gas to cover the proposed tenor of any debt facilities as identified in the recently completed Strategic Roadmap Report prepared for Strike by ANZ Bank and Azure Capital.
"On confirmation of success at SE1, Strike will look to sanction additional detailed engineering (Front End Engineering Design or FEED), finalise the urea offtake and progress the equity-debt processes for Project Haber."
As previously reported in Farm Weekly, at full production the proposed Project Haber plant located in an industrial area at Geraldton could theoretically supply 74 per cent of Australia's 1.9mtpa current urea fertiliser usage, most of which is imported from China, Russia and Egypt.
Synthetic urea comprises 46pc nitrogen and is the most popular nitrogen fertiliser used in Australia.
Cheap natural gas is said to be the key to urea manufacturing - it represents about 70pc of cost of production - and is why Project Haber hinges on the success of Strike's South Erregulla gas project finding sufficient gas to be piped about 125 kilometres to Geraldton.
Synthetic urea is manufactured by reacting natural gas, atmospheric nitrogen and water together at high temperature and pressure to produce ammonia and carbon dioxide.
These gases are reacted again at high temperature and pressure to produce molten urea which is cooled and processed into prills as fertiliser and for industrial use.
Further processing produces UAN (Urea Ammonium Nitrate) liquid fertiliser and SCR (Selective Catalytic Reduction) urea - the main component of AdBlue pumped into the exhausts of most diesel trucks to clean up nitrous oxides.
In December through the Supply Chain Resilience Initiative, the Federal government awarded Strike a $2 million matched grant to help fund Project Haber and the State government awarded the project 'lead agency' status.
The State government's lead agency framework aims to streamline approvals processes for projects of State significance by co-ordinating government agency responses under an appointed 'case manager'.
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