The Strike Energy Ltd (ASX: STX) share price was trading higher today following news of a new pipeline for the Western Australia gas market.
At close of trade today, the Strike Energy share price is up 1.92% to 26 cents. In comparison, the All Ordinaries Index (ASX: XAO) is 0.5% higher at 6,888 points.
What's driving the Strike Energy share price?
The oil and gas explorer provided a business update following APA Group's (ASX: APA) pipeline announcement earlier today.
The APA Group advised it plans to invest $460 million to build a 580km gas pipeline. The 12" pipeline will connect gas fields from the Perth Basin to the Goldfields region, forming an interconnected Western Australia gas grid. The project is due to become operational mid-2022, and will provide additional capacity to the whole network while increasing gas supply options.
Strike said APA's move to build a new pipeline connection validated how large-scale and low-cost gas resources could benefit the wider state economy.
With Strike's onshore gas assets located close to the Goldfields region, it can provide supply to the pipeline. This will reduce energy transportation costs for customers purchasing Perth Basin gas. The company estimates that with the new project, Strike's geographical advantage will increase to 80% of the existing gas market in Western Australia.
Furthermore, the company noted that as gas became more readily available and affordable, it would take over its more expensive counterpart, electricity.
What did the managing director say?
Commenting on the new pipeline, Strike Energy managing director Stuart Nicholls said:
APA's pipeline announcement is a significant endorsement in the potential of the Perth Basin to be a long term, competitive source of energy for the Goldfields.
Gas is the fuel of choice to replace diesel fired electricity in the Goldfields. It is reliable and affordable, has significantly lower emissions, and facilitates high penetration of complimentary renewable energy.
Strike Energy's market access continues to grow. We look forward to engaging further in discussions with potential end users of Perth Basin gas.
About the Strike Energy share price
The Strike Energy share price has lifted more than 26% in the last 6 months, and is closing in on its 52-week high of 29 cents. The company has a market capitalisation $455.9 million, and trades at an average volume of 1.8 million shares daily.
