AWE approves first stage Waitsia gas field development

Highlights

AWE Limited (ASX: AWE) has announced that the AWE-Operated L1/L2 joint venture has made the Final Investment Decision (FID) for Stage 1A of the Waitsia gas field development project, located in the onshore Perth Basin, Western Australia.

Stage 1A comprises the installation of new infrastructure and upgrades to existing assets that will connect the recently flow tested Waitsia-1 and Senecio-3 gas wells to the Xyris Production Facility (XPF).

Treated gas from XPF will be delivered to the Parmelia pipeline for domestic consumption.

Engineering, execution and management costs for Stage 1A of the Waitsia gas project are estimated at gross US$17.5 million (US$9 million net to AWE). Construction work will include two four-inch flowlines from the well heads to a northern gathering manifold and a six-inch pipeline to transport the gas to XPF.

FEED studies have been completed, and an EPCM contractor has been selected.

In addition, the pipeline licence and the environment plan for the in-field gas pipeline have been approved.

The initial capacity of XPF will be approximately 10 TJ per day, with further expansion possible, and first gas is scheduled for August 2016. A take or pay gas sales agreement, based on 90% of annual gas quantity, has been negotiated with Alinta Energy for 10 TJ/day over a 2.5 year period.

Pricing remains confidential for commercial reasons. Mr Bruce Clement, AWE’s Managing Director and CEO, said that FID of the first stage of the Waitsia gas project was a landmark for AWE and would reinvigorate the potential for onshore gas production in Western Australia.

“The 484 Bcf gross Waitsia gas project, with its excellent conventional reservoir quality and proximity to existing infrastructure, is incredibly exciting for AWE and represents another significant step-up in the company’s growth potential.

“First stage production from Waitsia will provide early cash flow from mid-2016 as well as valuable data that will help us optimise our plans for full field development,” he said.

“When fully developed, AWE anticipates that production from the Waitsia Field could be increased from the 10 TJ/day of Stage 1A to more than 100 TJ/day, which represents approximately 10% of Western Australia’s daily domestic consumption,” Clement said.

“The Waitsia development will deliver substantial benefits to the local Mid West community through additional direct investment, supplier agreements and employment opportunities, while at the same time adding significant volumes to domestic gas supply and contributing substantial royalties to the WA government over the project life.

“We are also evaluating the potential for co-developing the nearby Senecio/Synaphea/Irwin (SSI) tight gas fields. Together, these tight sandstone reservoirs are estimated to contain an additional gross 237 Bcf of gas,” he said.

“AWE has a strong track record of early involvement in projects where we can add significant value as they are progressed through to development. Pr ojects such as Ande Ande Lumut and Sugarloaf highlight how AWE uses its expertise to generate asset value growth.

“Similarly, once developed the onshore Waitsia gas project’s low operating costs, in an historically strong west coast gas market, will likely see AWE become the low cost gas producer in Western Australia,” Clement added.

Adapted from a press release by Louise Mulhall

Read the article online at: https://www.worldpipelines.com/project-news/05012016/awe-approves-first-stage-waitsia-gas-field-development/