Plans to expand the exiting onshore Waitsia gas field development north of Perth have received a major boost with the signing of the first gas sales accredited to the Stage 2 project.

Waitsia operator AWE Limited said that it an JV partner Origin Energy have agreed a nonbinding term sheet with AGL Wholesale Gas for the first gas sale of 15 TJ per day of gas, or 5.5 PJ per year, to AGL from Stage 2.

AWE said  this equates to 15% of Stage 2 nominal daily production capacity and represents a material contribution towards underwriting the project.

The term sheet will form the basis of a Gas Sales Agreement, which AWE expects to be concluded by mid-2017 calendar year. Term and price have not been disclosed for commercial reasons.

AWE and Origin each hold a 50% interest in the Waitsia gas field and are jointly marketing Stage 2 gas. Stage 2 will have capacity to supply 100 TJ per day, or 10% of Western Australia’s domestic gas needs, for 10 years. AWE is targeting first gas from Stage 2 in calendar year 2020.

Waitsia Stage 2 is currently in Pre-Front End Engineering and Design (“FEED”) and is on track to enter FEED in the June quarter. AWE is targeting a Final Investment Decision (FID) by the end of calendar year 2017, subject to completion of FEED and further gas sales agreements.

David Biggs, CEO and Managing Director of AWE Limited CEO and managing director David Biggs said the signing of the sales agreement is a significant step in the development of Stage 2 of the Waitsia Gas Project.

“AGL is one of Australia’s leading integrated energy companies and we are pleased to be able to contribute to their entry into the Western Australia market with the first gas sale from Waitsia Stage 2.

“We are aiming to finalise the Gas Sales Agreement with AGL by mid-2017 and we anticipate completing term sheets with other customers over the coming months.

“The agreement with AGL reflects the growing demand for onshore gas and highlights the benefits that a new supplier can bring to the market in terms of diversity, lower risk and certainty of supply.

“Pre-FEED is making good progress and we are looking to enter FEED in the June quarter. AWE is targeting a FID by the end of the 2017 calendar year,” Mr Biggs said.