AWE and Origin Energy have agreed to a non-binding term sheet with AGL Wholesale Gas for the first gas sale from Stage 2 of the Waitsia Gas Project, located onshore Perth Basin in Western Australia.
The term sheet details the commercial terms for the sale of 15 terajoules (TJ) of gas daily, or 5.5 picojoules (PJ) per annum to AGL from the Stage 2 of the Waitsia Gas Project.
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This represents a 15% of nominal daily production capacity in Stage 2.
AWE CEO and managing director David Biggs said: “Today’s announcement is a significant step in the development of Stage 2 of the Waitsia Gas Project.
“AGL is one of Australia’s leading integrated energy companies and we are pleased to be able to contribute to their entry into the Western Australia market with the first gas sale from Waitsia Stage 2.
“We are aiming to finalise the gas sales agreement with AGL by mid-2017, and we anticipate completing term sheets with other customers over the coming months.
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By GlobalData“The agreement with AGL reflects the growing demand for onshore gas and highlights the benefits that a new supplier can bring to the market in terms of diversity, lower risk and certainty of supply.
“Pre-FEED is making good progress and we are looking to enter FEED in the June quarter. AWE is targeting a FID by the end of the 2017 calendar year.”
The term sheet will form the basis of a gas sales agreement, which AWE expects to be concluded by mid-2017.
Terms and price have not been divulged for commercial reasons.
AGL acting executive general manager energy markets Richard Wrightson said: “AGL’s long-term entry into the WA retail gas market this year will be well-supported by the gas from the Waitsia Gas Project post 2020.”
AWE and Origin hold equal interest in the Waitsia gas field.
The Stage 2 of the field will have the capacity to deliver 100 TJ per day, which is equivalent to approximately 10% of Western Australia’s domestic gas requirement.
AWE plans to produce the first gas from the Stage 2 by 2020.
The field is currently in pre-front end engineering and design (FEED) stage and is expected to enter FEED in the June quarter.
The final investment decision (FID) is planned at the end of this year, subject to FEED completion and further gas sales agreements.
