STX (ASX) Ann: West Erregulla Update

Originally posted by bevans: ↑

Ok, I have now watched the presentation, and I have a few notes for discussion.

1 - The FEED & EPC contractor for project Haber will be announced in the coming weeks. Considering they have done most of the pre-FEED it makes sense to keep Technip on board for continuity and their extensive experience, plus they need a major project in Australia to shake off that schmozzle of a project in Prelude (although mostly not their fault, still some poor design work done). Do we think Technip will get the gig?

2 - $300 Billion offtake with Koch. I can't imagine they would stake their entire expansion plan for Australia on someone else's asset, especially at those sorts of overall figures. For me, if someone local doesn't lob a buyout at Strike, these guys will. I can see that being a massive opportunity lost for local businesses if they get beaten to this opportunity. As a Strike shareholder, I'm really selfish in that I just want the best outcome for me, but as an Australian, I would be extremely disappointed to see opportunity this go to an international company.

3 - Expecting major pushback on the environmental side of Walyering. Hopefully this preps them for what will only get worse when the project Haber application goes in. He mentioned that one of the benefits of the low carbon precinct is they only have to do one application instead of two.

@gimo211

What is your opinion of SN's note regarding their attempts to lobby the WA government to allow them an export licence for the remainder of the gas produced?

In my opinion, this is massive. I can imagine SN and the team will look to convince the WA government that the feedstock to project Haber will fulfil their obligations to the domestic market (15% by volume), meaning any surplus will be sold on the international market. Without needing to set aside 15% of their produced reserves for the domestic market it will allow them to monetise their entire reserve at a significant premium to the figures of $7/GJ that you previously mentioned. He talks about accessing the NWS export capabilities through existing infrastructure, which is an extremely low-cost way of doing it as the pipelines and export facilities are already in place, you just need to front up capex for the tie-in infrastructure and a tariff per GJ for using it.

Could be wrong on this last point, but just thinking about how amazing that would be really ruffles my jimmies.

Expand

Stuart refers to the "Western Australian government response to the WA gas and downstream opportunity study":
Government Doc here
Acil Allen study here

Acil Allen pointed out that the WA export ban closing out a potential commercialization path for new and emerging upstream gas projects and hence, might act contra-productive to bring such projects forward.

Therefore, they recommended to the government a "strategic use of LNG export licenses to facilitate domestic supplies" by formalizing a transparent approach along specific, publicly available criteria to grant exceptions from the export ban as a way to improve the initial project economics of new and emerging upstream gas projects and in return for commitments to supply the domestic market "on terms which support the development of downstream industries following the period of LNG export":

The WA government positively picked-up in its response on this recommendation...

It is immediately clear that Strike perfectly meets the criteria and an exemption from the export ban would directly facilitate the development of project Haber and the domestic low-cost and low-carbonate production of fertilizer for Australia...

A win-win for all stakeholders involved...

Stuart said that the development of project Haber allows them to apply for an exemption from the LNG export ban and they are working together with the government how the delivery of project Haber is in-line with the government directions. ...and he sees a lot of exciting upsides, currently not realized in Strikes value...