Some snips from the article ------But Mr Donald said he fully...

Some snips from the article ------

But Mr Donald said he fully expected West Erregulla-2 to be commercial even at current WA prices given low overheads, a low cost to access the resource and the ability to start with a small-scale plant before ramping up.Strike already in late May sold an option to Wesfarmers' CSBP subsidiary for up to 100 petajoules of gas from West Erregulla-2.

Mr Donald told The Australian Financial Review that if flow test results at West Erregulla-2 reflect those from Waitsia, "you wouldn't need a lot of wells to gain the volumes of gas you need" for LNG.He pointed to vastly lower costs to extract conventional gas onshore than for distant offshore resources struggling to be commercialised economically for LNG. Fields in that bracket include Woodside Petroleum's Browse gas resources far off the north-west coast.


Strike, the operator of the exploration venture in the EP469 permit in the North Perth Basin, saw its shares rocket 90 per cent on Tuesday after the result was announced, while Warrego shares surged 69 per cent. Both stocks were 8-10 per cent softer by Wednesday afternoon but Mr Donald suggested he did not regard the spike as overdone."I would be so bold to say we are probably still a bit cheap," he said, while acknowledging the market would be cautious ahead of firmer results.

The well is still being drilled deeper to reach the High Cliff sandstones lying at a depth of about 5km, where the partners "have a high degree of confidence" that they will add to the gas resource at the site, Mr Donald said. Gas was also found in a shallower sandstone but it wasn't tested.

The total depth of 5.2 kilometres should be reached early next week, to be followed by production and flow testing. That means a preliminary estimate of the volume of gas at the field is still about two weeks away.