The number of companies aiming to cash in on WA’s fertiliser boom is growing with an oil and gas junior unveiling plans to develop a urea plant at Narngulu, near Geraldton.
Strike Energy this week announced an ambitious $2.3 billion proposal to build a giant urea plant in WA to help commercialise its gas resources in the Perth Basin and make “expensive” urea imports a thing of the past.
The proposal — subject to financial support from interested partners — has been dubbed Project Haber and involves building a urea plant near Geraldton to service WA and interstate fertiliser markets currently reliant on imports.
Strike hopes the plant would be up and running by late 2023, producing 1.4 million tonnes of urea per year for 30 years — more than 70 per cent of the the entire 1.9 million tonnes of urea Australian farmers use each year.
Strike Energy chief executive Stuart Nicholls said the project would create 100 jobs during construction and generate up to $700 million profit a year.
He hoped the project would break ground early next year.
“We are looking to conduct an offtake tender at the end of the year, for major urea consumers to secure some of our product,” Mr Nicholls said.
“We will then look at debt financing for equity parters. Strike is likely to end up with a 30 per cent stake.”
Strike’s announcement comes after Nutrien Ag Solutions and CBH Fertiliser revealed separate plans to significantly boost their WA fertiliser storage capacity.
Nutrien Ag Solutions last month announced it would build a 50,000-tonne liquid urea storage facility at Coogee Chemicals’ Kwinana site.
We are looking to conduct an offtake tender at the end of the year, for major urea consumers to secure some of our product.
In October, CBH Fertiliser revealed it would build a $50m fertiliser storage facility at Kwinana to store 128,000 tonnes of granular and liquid fertiliser.
Mr Nicholls said Strike’s access to globally competitive gas would enable it to succeed after the price of producing local urea skyrocketed due to the rising cost of energy.
“Fertiliser is a function of natural gas, so it had been a depressed market for Australia for a long time before gas and energy prices rose to a price that you cannot make it locally anymore,” he said.
“We would think that our product is going to be cheaper than the imported price.”
Mr Nicholls said the company was also on the hunt for storage locations in WA, South Australia and Victoria to store between 300,000 and 600,000 tonnes of urea.
Project Haber would join 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, which is underpinned by cornerstone supply contracts with customers including Alcoa and Wesfarmers.
The company said the proposed urea plant would provide a new market for its wider Perth Basin gas resources, soaking up than 628 petajoules of gas over 20 years and helping monetise its strong position in the region.
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.
We would think that our product is going to be cheaper than the imported price.
The design 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.
Front-end engineering and design, however, would depend on Strike securing offtake agreements for at least 80 per cent of the urea.
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.