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Warrego secures £22m funding to develop pioneering Australia gas plan

A Scottish company developed by a former soldier has secured AUS$40m (£22 million) funding for a pioneering plan to produce gas in Western Australia.

Warrego has agreed a deal under which two Dutch companies will fund appraisal and development work on a discovery containing so-called tight gas, which it hopes to bring into production in 2016.

Dennis Donald, founder and managing director of Warrego, said the agreement with Dyas BV and Mazarine Energy provided a vote of confidence in the firm from two "respected and highly competent enterprises".

Aberdeen-based Warrego secured the deal after spending years working up a plan to produce gas from the West Erregulla find.

The gas in such tight fields is held in much narrower pores than are found in conventional deposits and they were long considered to be uneconomic.

While West Erregulla has been estimated to contain plenty of gas, it has lain undeveloped since it was discovered in 1990.

Developed by Mr Donald with Duncan MacNiven, Warrego believes advances in drilling technology pioneered in the North Sea could make tight gas developments viable.

The two men previously built a successful drilling business operating in the North Sea. Mr Donald went into the oil and gas industry after serving as an engineer with the marines.

Warrego expects to complete 3D seismic surveying work on West Erregulla this year followed by the drilling of an appraisal well in 2015.

Following the completion of the agreement, Warrego will have a 20% stake in West Erregulla, Dyas will have 30%, with Mazarine Energy on 50%.

Mazarine will take over the operatorship from Warrego following the appraisal program.

On its website, Warrego says the permit containing West Erregulla lies within the Native Title Claim area of the Amangu people.

The company says: "Warrego believes that the successful development of West Erregulla can only be achieved in co-operation with the Amangu, and the business looks forward to an enduring and mutually beneficial relationship with the Amangu community over time."

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