Buru Energy Ltd has executed a strategic development agreement (SDA) with Clean Energy Fuels Australia Pty Ltd (CEFA) to co-develop the Rafael Gas Project in the Canning Basin in Western Australia.
The two companies intend to target the replacement of “long-haul trucked or imported fuel used for power generation and mining in the northwest of Western Australia”, providing a local source of liquified natural gas (LNG) and liquids and supporting “the development of new market opportunities in the region”.
BRU expects the SDA to provide a clear pathway to building a long-term gas and condensate business in WA, combining the company’s upstream resource and expertise with CEFA’s downstream capabilities, strong financial backing and presence in the Western Australian domestic LNG market.
“Watershed moment” for Rafael Project
“The agreement with CEFA is a watershed moment for Buru and the Rafael Gas Project,” Buru Energy CEO Thomas Nador said.
“It marks a clear demonstration of the company’s gas strategy and transition from explorer to developer and long-term producer.
“Rafael is the only confirmed source of conventional gas and liquids in onshore Western Australia north of the North West Shelf Project.
“It is a unique opportunity to provide energy to a growing market that is not connected to a gas pipeline and currently faces challenges with high energy costs and security of supply.
“Combining forces with the I Squared backed CEFA/Octa Group is a material development on the path to commercialising the Rafael resource.
“I look forward to our collective effort to deliver the economically attractive Rafael Gas Project.”
CEFA has a track record of developing and operating small-scale LNG assets in Australia – it sits within the Octa Group portfolio, which is owned by I Squared Capital (ISQ), a top 5 global infrastructure fund with US$40 billion in assets under management.
“We are very pleased to be working with Buru on the Rafael Gas Project as part of our Energy Transition Platform,” CEFA and Octa Group CEO and director Basil Lenzo said.
“Our proven virtual pipeline or ‘trucked LNG’ model lowers long-term regional energy costs and emissions and provides a viable alternative to diesel for new and existing energy users.”
Details of the strategic development agreement
Under the agreed upon business model developed by Buru and CEFA, CEFA will fully finance, build, own and operate an LNG plant with a capacity of up to 300 tonnes per day, as well as associated condensate infrastructure on the Rafael 1 wellsite.
CEFA will also be responsible for the midstream elements of the project involve the distribution of LNG and condensate to end users.
Both companies will work together to conduct sales and marketing with customers, and Buru will be responsible for the financing, construction and operation of the upstream elements of the project, which currently consist of two wells (including the Rafael 1 discovery well).
BRU will also handle Native Title negotiations and Western Australian State Government environmental approvals for the small-footprint project.
CEFA’s investment in the Rafael Project will be recovered through gas processing fees charged to Buru over an estimated 20 years of production life, with terms to be negotiated in the coming months.
Buru is assessing and pursuing several options to fund the planned 2025 Rafael 1 well recompletion and testing program to support an independent certification of Rafael’s reserves, and the drilling of a development well in 2026 – reserve certification is a key condition precedent to binding agreements with CEFA.
BRU expects to make the final investment decision for Rafael in late 2025 or early 2026, with plans to achieve strong cashflows beginning in the second half of 2027.