Strike Energy Limited has announced the launch of Project Haber, a Western Australian ammonia and urea manufacturing facility, which comes after a year of feasibility studies.
Strike and TechnipFMC have completed feasibility studies on a 1.4 million tonne per annum urea production facility which would process gas from Strike’s Greater Erregulla development in the Perth Basin.
Natural gas is a critical input into ammonia and urea production, and access to competitively priced gas from Strike’s Perth Basin resources would be a key enabler for the project.
In parallel, Strike has been awarded (subject to final execution) an option for a long-term lease over a 60-hectare site in Development WA’s Narngulu Industrial Estate. The site is adjacent to the Geraldton Port and has direct access to state rail and road networks.
The design of the facility includes an 800 kilotonne per annum ammonia production train, 300 kilotonnes of on-site urea storage, power/utilities and steam generation, rail sidings for transport and a 120-kilometre raw gas pipeline from the Perth Basin. The development has been designed to the awarded location in Narngulu.
Strike’s onshore gas resources in the Greater Erregulla region will form the backbone of the commercial viability of the project. Project Haber will consume 86 terajoules per day of natural gas, and up to 628 petajoules over a 20-year timeframe.
According to Strike, the Narngulu location was selected due to its proximity to Strike’s Perth Basin gas fields and access to transport and shipping options.
Whilst the economics are supported by Strike’s high quality, low-cost gas, it is envisaged that over the useful life of the plant an increased amount of green hydrogen would supplant the raw gas input.
As such, Project Haber includes the construction of a 10-megawatt hydrogen electrolyser which will enable Strike to take advantage of the abundant local wind energy generated in the Mid-West region to form a green hydrogen input stream, which would represent approximately 2 per cent of the initial hydrogen consumed.
Local renewable energy will also be preferenced where possible to generate the electricity feed into the plant and reduce fuel gas consumption.
The total development is forecast to cost approximately A$2.30 billion with a 20-30 year useful life.
Gross fertiliser revenues from Project Haber are estimated between approximately A$540-700 million per annum, based on current urea prices in both wholesale and direct markets.
Strike has commenced discussions with several parties with an interest in securing offtake and/or equity in the project. In Q2/21, the company will commence a formal offtake tender with various Australian and international urea consumers.
With the competitive advantage of a low-cost gas input, access to transport infrastructure and proximity to Australian fertiliser consumers, Project Haber is anticipated to deliver more competitively priced urea than international imports into Australia.
Strike plans to secure offtake agreements for up to 80 per cent of the product prior to entering into front-end engineering and design for the project.
Towards the end of CY21, Strike will start marketing equity participation in Project Haber, where the company expects to retain a roughly 30 per cent carried interest in the project.
Strike Energy’s CEO and Managing Director, Stuart Nicholls, said Strike believes Australia should be adding value to its natural resources, rather than just exporting them for others to high grade and sell back.
“The launch of Project Haber concludes more than a year of feasibility work by the company aimed at identifying the best way to monetise Strike’s world-class gas resources in the Perth Basin,” Mr Nicholls said.
“That work has resulted in this compelling development opportunity, which can kick start Australia’s gas led recovery, and manufacture Western Australia’s natural resources into a product stream the country now relies on global imports for.”
“Once in production, Project Haber can support the ongoing competitiveness of Australia’s agricultural industries by lowering one of the main cost inputs into Australian farms, all whilst employing regional West Australian’s and consuming local natural gas.”
Mr Nicholls noted that Project Haber is a carbon-conscious development where the natural advantage of converting gas to urea is that a portion of the project’s carbon is returned to the soil. He also advised that, with the application of emerging technologies, the development will integrate as much renewable energy into its hydrogen input stream as it can over time.
“Through ownership and integration of Strike’s upstream gas resources with this infrastructure, Strike will have a 20 plus year market for its gas via a product that has strong growth rates, all whilst being a meaningful participant in the energy transition to a lower carbon footprint,” he commented.
“Strike is confident that Project Haber will attract and secure high-quality partners and customers in order to generate the appropriate financing conditions to commit to construction. On completion, we see Project Haber delivering considerable shareholder value in the form of long-term industrial revenues.”
Strike anticipates that Project Haber will create more than 1,000 jobs during construction and hundreds of direct and indirect long term operational roles.