AWE Limited and Origin Energy will move ahead with developing the Waitsia gas field after making a final investment decision on the first stage of the project, valued at $17.5 million.

Stage 1A of the project will see the Waitsia 1 and Senecio 3 gas wells connected to the recently refurbished Xyris Production Facility (XPF) – with the companies upgrading existing assets and installing new infrastructure.

Among that infrastructure will be two four inch flowlines from the well heads to a northern gathering manifold and a six inch pipeline to transport the gas to the XPF.

AWE said front end engineering design studies had been completed over the project area, with an engineering, procurement and construction management contractor also selected.

Treated gas from XPF will be delivered to the Parmelia pipeline for domestic consumption, AWE said, with the company having signed a take or pay gas sales agreement with Alinta Energy for 10 terajoules of gas per day over 2.5 years.

AWE’s agreement with Alinta covers 90 per cent of annual gas quantity from the project, with AWE managing director Bruce Clement saying he expected the Waitsia field to potentially produce up to 100 terajoules per day once fully developed.

“First stage production from Waitsia will provide early cash flow from mid-2016 as well as valuable data that will help us optimise our plans for full field development,” he said.

“We are also evaluating the potential for co-developing the nearby Senecio/Synaphea/Irwin (SSI) tight gas fields. Together, these tight sandstone reservoirs are estimated to contain an additional gross 237 Bcf of gas,” Mr Clement added.

First gas from the XPF is expected in August 2016.

AWE and Origin Energy each hold a 50% stake in the L1/L2 permits, with AWE acting as operator.