$2.3b urea plant push for Narngulu

Aspiring gas producer Strike Energy has announced an ambitious $2.3 billion proposal to build another WA urea plant — in the Geraldton industrial suburb of Narngulu — to help commercialise its gas resources in the Perth Basin.

Strike said on Monday that subject to financial support from interested partners, the plant would be built in Geraldton and service WA and interstate fertiliser markets reliant on imports.

The proposal joins a pipeline of urea production and storage projects in WA, headed by Perdaman Industries’ $4.5b plant planned for Karratha.

Strike Energy is partnering with Warrego Energy in the development of its West Erregulla gas field in the Perth Basin — south-east of Dongara — which is underpinned by cornerstone supply contracts with customers including Alcoa and Wesfarmers.

Gas will be piped 120km from the gas field and turned into ammonia and urea in Narngulu, south of Iluka Resources’ operations.

Strike Energy announced plans for the project after gaining a long-term lease over a 60ha site, where it intends to build its own rail siding.

Known as Project Haber, the design also includes an 800-kilotonne per annum ammonia production train, 300-kilotonne on-site urea storage, power and steam generation.

Strike Energy chief executive Stuart Nicholls said rail would transport urea to ships at the port for movement to the east coast.

“Returning empty trains may provide an excellent opportunity to efficiently distribute and store urea throughout the State,” he said.

Mr Nicholls said Australia should be adding value to its natural resources, rather than just exporting them for others to high-grade and sell back to us.

“Once in production, Project Haber can support the competitiveness of Australia's agricultural industries by lowering one of the main costs of inputs into Australian farms, all whilst employing regional West Australians,” he said.

Mr Nicholls said Project Haber was a “carbon-conscious development” and converting gas to urea meant a portion of the project’s carbon was returned to the soil. “Also, with the application of emerging technologies, the development will commence a transition to integrate as much renewable energy into its hydrogen input stream as it can over time,” he said.

The project is expected to last 30 years, and Strike plans to secure offtake agreements for up to 80 per cent of the product before entering front-end engineering and design for the project.

Mr Nicholls said the company planned to use increasing amounts of green hydrogen in the manufacturing process as it became available.

The company said the proposed urea plant would provide a new market for its wider Perth Basin gas resources, soaking up some 628 petajoules of gas over 20 years and helping monetise its strong position in the region.

Strike shares were 1¢ up at 33.5¢ as at 11am, capitalising the company at $585 million.

The company said the proposal was supported by feasibility studies by it and TechnipFMC on a 1.4-million-tonnes-a-year plant, which would generate up to $700m in annual revenues.

Strike has secured an option from the WA Government over a 60ha site at the Narngulu industrial estate in Geraldton, which has access to Geraldton port and State rail and road networks.

“The design of the facility includes an 800,000-tonnes-a-year production train, 300,000 tonnes of on-site urea storage, power/utilities and steam generation, rail sidings for transport and a 120km raw gas pipeline from the Perth Basin,” it said.

Front-end engineering and design, however, would depend on Strike securing offtake agreements for at least 80 per cent of the urea.

“Strike has entered into discussions with several parties with an interest in securing offtake and/or equity in the project,” the company said, noting it would aim to retain a 30 per cent carried interest in a development.

The plant would be “primarily focused on meeting the needs of Australian farmers, with surplus product to be made available to international markets, it said.

Strike said the development’s location would give it an advantage in servicing the Wheatbelt region, which accounts for 30 per cent of Australia’s urea consumption.

Geraldton Port alone already imports more than 260,000 tonnes of fertiliser a year.