Empire Oil & Gas Complete Commissioning for Red Gully Gas Plant in Western Australia

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Researched by Industrial Info Resources Australia (Perth, Australia)--The Oil & Gas Industry in Western Australia has reached another significant milestone. Empire Oil & Gas (ASX:EGO) (Perth, Australia) expects final commissioning of the Red Gully gas and condensate plant in Western Australia to progress swiftly, and first gas is scheduled to flow in the next few days. The plant is located in the Perth Basin, an hour north of Perth, and will produce gas and condensate from Red Gully-1 and Gin Gin-1 wells.

The company received the appropriate approvals to commence commissioning last week, and Empire Oil & Gas has stated that the Red Gully-1 and Gin Gin-1 well heads have been serviced and are fully operational after specialist work was completed. The two wells are high in condensate and produce between 50 to 80 barrels of condensate per 1 million cubic feet of gas. During testing, the Red Gully-1 well produced 12 million cubic feet of gas and 832 barrels of condensate per day.

Empire has an agreement to sell the natural gas to Alcoa of Australia (ASX:AAI) (Perth, Australia), and Aloca will access the gas through the Dampier-Bunbury pipeline that runs just a few hundred metres from the Gin Gin site. The project involves a forward gas sale component, under which Alcoa agreed to pay $24.01 million (AUD$25 million) for the costs of constructing the Red Gully gas facility. Empire Oil & Gas plans to deliver the condensate to the Kwinana oil refinery, providing cash flow to finance more wells in the surrounding area.

Technicians from Enerflex Australasia Holdings Pty Limited (Perth) are currently onsite commissioning the export compressor and flash gas compressor. Some areas have been delivered with low-voltage electricity to test the operation of field instrumentation.

Empire is now a significant gas and condensate producer in Western Australia, and the Red Gully plant is the only gas processing facility in the Perth Basin. Oceaneering Services Australia Limited (Perth) will operate the plant with a small personnel team--including a production manager, process engineer and maintenance manager--based off-site and just two operators based permanently on-site.

Construction and well costs are estimated to have cost $52.83 million (AUD$55 million). The two wells are expected to produce roughly 25 billion cubic feet per year. The gas currently being produced has been sourced conventionally and there is unconventional gas in shale nearby, which is being considered for further exploration.

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