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Empire Oil And Gas To Receive A$15M From Alcoa For Construction Of Red Gully Gas Plant

Empire Oil & Gas (ASX: EGO) and the EP 389 joint venture will receive in the coming days the second payment of A$15 million from Alcoa (NYSE: AA) for the construction of the Red Gully Gas Processing Facility in the Perth Basin.

Under the first part of the gas sales agreement, Alcoa is providing a staged $25 million prepayment to the joint venture to underwrite the cost of the facility.

The second, larger, part of the agreement is a standard gas sales agreement.

The Red Gully Gas and Condensate Processing Facility is capable of processing 10 million cubic feet of gas and associated condensate from the Red Gully-1 and Gingin West-1.

Condensate produced will be sold to the BP Refinery at Kwinana, Western Australia.

The plant is expected to be commissioned late 2012.

Gingin West-1 flowed 7.5 million cubic feet (MMcf) of gas and 375 barrels of condensate per day during testing while Red Gully-1 flowed 12MMcf of gas and 832 barrels of condensate.

Partners in EP 389 are Empire (68.75%), ERM Power (21.25%) and Wharf Resources (10%).

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