Strike Energy plans to build WA gas power station

Strike Energy is seeking approval to build a $120m gas power station in WA to capitalise on the state’s energy transition, after dumping plans for a fertiliser facility.

Strike Energy has unveiled plans to construct a new gas power station in WA after abandoning plans to build a fertiliser facility with the proceeds of its Perth Basin discovery.

The plan, unveiled on Monday, marks Strike’s attempt to capitalise on the policy of the WA government towards placing gas at the heart of its transition plans.

WA is Australia’s most gas friendly state, and the state Labor government has vowed to grow the domestic industry – in stark contrast to eastern states where a gas supply crunch is looming.

In 2022, Strike unveiled plans to use gas from its Perth Basin discovery, as well as wind and solar-generated electricity, to produce around 1.4m million tonnes of urea fertiliser a year – a project expected to cost $3bn.

But in an update, Strike’s managing director Stuart Nicholls said the company has changed tack and has now sought approval from the Australian Energy Market Operator to construct an 85MW peaking gas power plant. Should it proceed, the plan will commence by October 2026.

Strike said the facility will be fuelled by gas from its South Erregulla site, which have proven reserves of 37PJ, which it said was enough to support the power station for 25 years.

Mr Nicholls said the strategy would allow Strike to capitalise on WA’s energy transition, particularly The South West Interconnected System (SWIS) where the existing gas power station is older.

WA’s state Labor government in contrast to its east coast peers has said it wants to bolster gas production to help lower prices, but Mr Nicholls noted the state has a network of ageing gas power stations.

“A lot of them are quite old. The majority of gas power generation in WA is between 15 and 34 years old,” Mr Nicholls said.

“This is a really important piece of infrastructure around the northern end of the SWIS and Strike is taking advantage of being the very first mover and being able to capture the available network access quantity.”

While coal is the dominant source of electricity across Australia, it plays a much smaller role in WA.

The state’s vaunted domestic gas reservation policy bans exports from onshore projects and requires big offshore players to place 15 per cent of their gas into the local market.

The WA domestic reserve has been credited with keeping WA gas prices for big industrial users at levels far lower than their east coast counterparts.

But in recent months, WA has endured a chaotic period following a spate of coal power station outages and an uptick in demand.

But with coal power waning in WA too, the state is increasingly reliant on gas, which has coincided with the state enduring record high electricity prices.