Strike announces plans for 85 MW peaking gas power plant in Western Australia
Sydney-listed energy producer Strike Energy announced plans on June 24 to build a fully integrated 85 MW peaking gas power plant in South Erregulla, Western Australia (WA), with operations set to commence by October 2026.
The proposed power plant will be fuelled by South Erregulla’s gas reserves, which support a project life of over 25 years. The project is expected to utilise about 1.3 petajoules/year of gas and generate revenue of A$40 ($26.5mn)-A$50mn/year over the first five years of operations.
The power plant will comprise 20 x 4.5 MW reciprocating gas engine generators. The engines will be located southeast of the existing SE-1 wellhead.
The investment required for the project is estimated to be in the range of A$120-A$160mn. Last week, Strike agreed to terms for a A$153mn development financing package from Macquarie, with about A$53mn allocated specifically to the South Erregulla power project. The remaining contribution will come from Strike’s existing production operations.
"Converting gas to peaking power during lower renewable output in the South West Interconnected System (SWIS) commands a significant premium to the underlying value of the gas should it have been sold under traditional methods into the WA domestic gas market," Strike said.
"The integration of Strike’s gas resources to firming capacity for renewable generation in the SWIS will also reduce the reliance on, and facilitate the retirement of, the state’s coal-fired power and increase the reliability of renewable power," the company added.
WA’s main electricity network, SWIS, serves most of the state’s population, with more than 1.1mn customers. It extends to the coast in the south and west, to Kalbarri in the north and Kalgoorlie in the east.
The company has made a submission to the Australian Energy Market Operator (AEMO) to apply for Certified Reserve Capacity (CRC) and a Network Access Quantity (NAQ) to support the development and production of the power plant.
Strike owns the 3,500-hectare precinct above the South Erregulla gas field and production licence L24, where it plans to locate the required infrastructure.
The South Erregulla gas field development is part of Strike Energy's government-endorsed gas acceleration and development strategy which aims to provide incremental gas supply into a tightening Western Australian market.
Last year, the company launched its gas acceleration strategy post-receipt of A$136mn in proceeds from the sale of its Warrego Energy shares. The company is targeting up to four sources of gas production - Walyering, Ocean Hill, and the South and West Erregulla gas fields - to come online by the end of 2025, commencing with Walyering.