Strike Energy will be the first Australian energy company to be carbon neutral by 2030, according to managing director Stuart Nicholls.

The target puts Strike Energy at the forefront of carbon-neutral commitments in the energy industry by more than a decade.

A major component of Strike’s approach to lower carbon emissions is the development of its Haber project near Geraldton.

Project Haber is a 1.4mtpa urea development 90km from Strike’s well heads in South Erregulla which will provide 300 jobs locally for 30 years.

According to an ACIL Allen report commissioned by Strike in April 2021, urea production consumes the majority of the carbon from the gas stream and will enable partial chemical sequestration of the project’s carbon output.

Earlier this year, Strike completed the acquisition of Mid West Geothermal, which led to its 100 per cent ownership of the geothermal rights in the Perth Basin.

The use of geothermal energy will allow the company to develop a 10MW hydrogen electrolyser to assist with its urea production.

Mr Nicholls told the Energy Club May industry dinner that Strike could potentially support up to 350MW of renewable power a year through its geothermal resources in the Perth Basin.

“The Perth Basin is truly unique,” he said. “It’s going to be the engine room of the West Australian economy in the near term.” He said Strike chose to focus on the production of urea because of its importance in the agriculture sector and the challenges involved in hydrogen production.

“I like to treat hydrogen like milk,” he said. “It doesn’t travel well, you don’t want to put it into a pipeline, and ultimately if you can consume it on location it’s going to be better for you.” By focusing on putting gas into fertilisers today, it would allow Strike to use its gas endowment for Australia’s hydrogen revolution tomorrow. “We don’t need to be diving head-first into the shallow end,” Mr Nicholls said.

Mr Nicholls said oil and gas companies needed to focus on more than just financial returns to attract future investors, who were beginning to question the reliability of gas markets over the next 20 years, which led Strike to extend beyond the traditional business model of gas production and sales.

“Energy is becoming a crowded space; not only the rise of renewables and the lowering of their costs, but battery technologies and the hydrogen revolution is upon us,” Mr Nicholls said. “At the same time, this crazy 2020 happens. The gas market erosion started to confront us in the immediate horizon.” He said the challenges in the oil and gas market were akin to tidal waves; impossible to discern from shore until it was too late. 

“The new world standard is upon us,” Mr Nicholls said. “It’s not coming in five to seven years’ time. It is the carbon revolution that is confronting us immediately.”

Oil and gas companies were already seeing the effects of this revolution with investors refusing to discuss oil and gas investments which were expensive, highly capital-intensive and with a long payback period. Super funds and Australian banks were also pulling money out of oil and gas and carbon-heavy investments.

According to Mr Nicholls, 70 per cent of Australia’s farming land is only arable because of the use of nitrogen-based fertilisers, of which urea is the primary source in broadacre farming. He said that rising energy prices and tariffs on ammonia nitrate were ultimately incentivising Australian ammonia producers to make explosives rather than urea, leading to a 100 per cent reliance on imported urea for fertilisers.

Australia uses around 1.9million tonnes a year of urea fertiliser. By using its gas for urea production, Strike aims to structurally lower the price of urea in Australia while simultaneously lowering its carbon footprint by up to 60 per cent of current levels. Mr Nicholls said Strike would use modern technology to produce gas with a lower carbon footprint compared to traditional methods.

Strike’s strategy is built on leveraging its upstream and project development capabilities to supply low cost, low carbon energy to WA’s domestic energy market; and build a value-adding urea manufacturing industry that supports local jobs and Australia’s agricultural industries.

“Once we have a cash flow, we will use it to develop unique renewable energy assets,” he said. “This will ultimately allow us to drive our carbon emissions to zero.

Thank you to our May Dinner Sponsors; Yokogawa, Grondal Bruining, Australian Gas Infrastructure Group and Enscope.

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