How Will Strike Energy's Gas Development Help Western Australia's Gas Market?

Strike Energy Limited (Strike - ASX: STX) has announced that their South Erregulla gas field’s Phase 1 40 TJ/d development has received primary environmental approval under Part IV of the Environmental Protection Act 1986 (WA) by the Environmental Protection Authority. This approval is a significant step towards the final investment decision for the project.

Background on South Erregulla development

The South Erregulla gas field development is a key component of Strike's Gas Acceleration and Development Strategy, which aims to address the growing demand for gas in Western Australia. The project aims to provide incremental gas supply to the tightening gas market in the region.

Completion of primary government approval process

The issuance of the Part IV approvals for the South Erregulla development completes the primary government approval process required before a final investment decision can be made. With the primary environmental approval in place, Strike Energy can now proceed with confidence to consider investment opportunities.

Update on appraisal drilling campaign

As part of the South Erregulla development, Strike has recently commenced the appraisal drilling campaign, with the spudding of the South Erregulla-3 (SE-3) well on October 21, 2023.

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The drilling operations have progressed well, with the well reaching a depth of 4,373m within the intermediate section.

Gas discovery during drilling

During the drilling process, Strike observed a significant amount of gas while drilling through the Beekeeper Formation. This required prolonged flaring and circulation of mud gas. Despite the challenges, Strike has managed these conditions safely and successfully, ensuring the continuation of drilling operations.

Objective of the SE-3 well

The primary objective of the SE-3 well is to gather valuable data on reservoir characteristics and distribution across the South Erregulla gas field. This data will help expand the existing 128 PJ of independently certified 2P Reserves, which will be crucial for the future development of the field.

Next steps

Once the casing point is reached, Strike intends to conduct wireline logging of the section to further analyze the reservoir and its potential. This will provide valuable insights for the company's decision-making process regarding the future development and production of the South Erregulla gas field.

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