STRIKE Energy is set to go ahead with its Project Haber urea fertiliser production plant at Geraldton following high-quality conventional gas finds near Eneabba.
On Monday Strike announced via the Australian Securities Exchange (ASX), combined Kingia and Wagina sandstone gas discoveries at its SE1 well had given it confidence to proceed with Project Haber.
"Strike's 100 per cent owned South Erregulla-1 well has delivered multiple gas discoveries that provides a high degree of confidence in the gas resources required to unlock its transformational low-carbon urea fertiliser development, Project Haber," Strike managing director and chief executive officer, Stuart Nicholls, told the ASX.
"The completion of South Erregulla marks the end of a very successful exploration campaign for the company," Mr Nicholls said.
"The results of this campaign will, via Walyering (a joint venture with Talon Energy, with the first of two proposed wells drilled and being flow tested further south in the Perth Basin near Cataby), bring the company's first cash flows forward and, with South Erregulla, release significant upside through the integration of value-added, domestically-focussed and low-carbon downstream activities.
"Strike has been progressing multiple milestones at Project Haber over the last 18 months and, with this new resource confidence, Strike will now look to execute several pending workstreams that will see the development of the project accelerate substantially," he said.
As previously reported in Farm Weekly, Strike was looking to delineate about 350 petajoules of "high confidence resource" with SE1 to provide the gas requirements for Project Haber which aims to produce 1.4 million tonnes of urea fertiliser per annum.
Cheap natural gas is said to be the key to producing local urea because it represents about 70pc of production cost and is why Project Haber hinged on SE1 finding sufficient gas to be piped 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 diesel exhaust cleanup chemical AdBlue.
Earlier this year Project Haber was awarded Major Project Status by the Federal government because of its potential to reduce the carbon intensity of urea used in Australian agriculture by 60 per cent.
More than 90pc of about 2.4mtpa of urea fertiliser used in Australia each year is imported and the only local production plant in Brisbane is due to close at the end of this year, supposedly because it could not secure East coast gas supply contracts at a low enough price to keep it viable.
Strike told the ASX the target Kingia sandstone was encountered by SE1 4783 metres down, with a high-quality subsection from 5844m, an overall Kingia gas column of 52m and a 14m "net pay" zone.
The Kingia sandstone in the drill hole included two sections of "high-quality reservoir" with average porosity of 13.3pc and porosity up to 20.2pc with no gas water, consistent with other Kingia discoveries, Strike said.
It said gas reservoir pressure was measured at an average of 46,844 kilopascals (6800 pounds per square inch).
Last month Strike advised SE1 had also encountered a gas resource in Wagina sandstone, overlaying its target Kingia sandstone, from a depth of 4072m.
The Wagina discovery was a 16m thick gas-charged sand section with "high-quality flow units" and porosities up to 14 per cent, overlaid above 61m of lower permeability "gasifier" with average porosities of 6pc, Strike said.
It pointed out this was a similar layout to the Beharra gas field, 14 kilometres to the west and drilled in the 1990s and early 2000s, where constant recharge from the underlying gasifier is believed to be the reason gas production from the field significantly exceeded original recoverable reserves estimates.
When the Wagina discovery is included in the results from the SE1 drill hole, "the company has a high degree of confidence in its 100pc owned gas position and will now look to progress the offtake, engineering/construction and environmental approvals processes for its urea manufacturing facility," Strike said.
It said production testing of SE1 would be "prioritised" to immediately after the current testing of Walyering 5 was completed.
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