STRIKE Energy has confirmed it has discovered sufficient gas resources at its South Erregulla 1 (SE1) well to enable its Project Haber plans to produce urea fertiliser, near Three Springs, to proceed.
Highly-regarded global oil and gas consultants Netherland, Sewell & Associates Incorporated (NSAI) have independently certified Strike's assumptions of proven and probable (2P) gas reserves and proven and probable contingent (2C) resources, Strike told the Australian Securities Exchange last week.
The certified combined estimate of the SE1 double discovery in overlying Wagina Sandstone and underlying Kingia Sandstone was about 399 petajoules of dry gas, sufficient for Project Haber, Strike said.
It said further appraisal drilling, aimed at converting contingent Wagina resources (a contingent resource is a gas discovery not currently considered commercially viable for a particular reason) to 2P reserves, was planned for the second quarter next year.
"With NSAI independently certifying combined net 2P reserves and net 2C contingent resources of approximately 399PJ in the Kingia and Wagina Sandstones, Strike can now confirm it has the gas feedstock required to progress its integrated low-carbon fertiliser development, Project Haber," said Strike managing director and chief executive officer Stuart Nicholls.
"Strike has a total of 982PJ of independently certified 2P and 2C conventional reserves and resources across its globally low-cost Perth Basin gas projects (Strike has wholly-owned or part-interests in exploratory gas wells from near Three Springs south to near Cataby and expects maiden cash flows from two of them next year)," Mr Nicholls said.
"This natural gas endowment has considerable value, particularly at a time when parts of Australia and the rest of the world are experiencing severe energy and fertiliser shortages."
In a presentation to last month's Good Oil and Gas Energy conference in Perth, Strike said it planned to complete "major pre-FID (final investment decision) milestones" for Project Haber within the next six months and to make that final decision on whether it goes ahead within the next 18 months.
By vertically integrating from a prospective domestic gas producer into an ammonia and urea fertiliser manufacturer with possibly AdBlue diesel exhaust cleaning fluid manufacturing added later - natural gas is the raw material for those commodities - Strike is proposing to displace more than $2 billion a year in imports into Australia and create about 300 full-time jobs for 30 years, it said.
It pointed out Australia's urea consumption grew 19 per cent, from 2.1 million tonnes in 2020 to 2.5mt last year and 92pc of that was imported, with global urea prices largely determined by international gas prices which have been affected by the Russia-Ukraine war and trade sanctions against Russia.
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The sanctions cover both Russian gas and urea fertiliser - Russia exports 15 per cent of the world's urea, more than China with 9pc.
As previously reported in Farm Weekly, Project Haber proposes to produce 1.4mt of urea fertiliser a year at a 3500 hectare Mid West Low Carbon Manufacturing Precinct surrounding SE1 and possible future South Erregulla gas wells.
Strike secured a $6 million agricultural finance facility from Rabobank to support a $13.5m agreement to purchase the farmland property north west of Three Springs, with the deal expected to be finalised last month.
It is also seeking and assessing potential co-development partners for the precinct, which is proposed to include a 100 megawatt wind farm and a 70mW solar farm to provide power for urea manufacture and any other manufacturing enterprises that ultimately establish in the precinct.
A southern portion of the precinct is proposed to be planted out as carbon sequestration reafforestation, with Strike committed to net zero emissions by 2030.
The proposed Mid West Low Carbon Manufacturing Precinct abuts one of the farming properties across WA that oil and gas giant Woodside Energy is planting with native trees to offset its emissions under a massive project in conjunction with Greening Australia.
Strike had originally proposed building the urea manufacturing plant at Geraldton, but slashed $85m from the project's estimated capital cost by not having to build a 105 kilometre gas pipeline from the SE1 well to Geraldton.
Project Haber has been recognised as a project of major significance by the Federal government.
