Arc has received the $40 million prepayment from Alcoa. These funds will be used to accelerate the Canning Basin Gas (C-Gas) program’s exploration phase, which is underway with the Valentine-1 well.

Strong gas shows have been observed in this well’s secondary objectives, the Anderson and Laurel Formations.

Arc has said the shows seen so far are likely to be residual, but results so far confirm a significant hydrocarbon system in the basin’s Fitzroy Trough, reservoir-quality sands, and good shale seals.

The well is approaching the top of the primary objective and it will be followed by Stokes Bay-1, which is to be drilled from the same pad.

Arc said today the gas sales agreement with Alcoa has established a powerful commercial alliance with Western Australia’s largest domestic gas consumer and the state’s largest and most active onshore oil and gas producer and explorer.

“In addition to the commercial benefits to both Arc and Alcoa, the GSA promotes the exploration and development of Western Australia’s onshore hydrocarbon resources and represents an innovative and timely response to the Western Australian Government’s concerns regarding the security of domestic gas supplies,” managing director Eric Streitberg said.

“The GSA provides the flexibility to develop Canning Basin gas discoveries quickly and flexibly, and with maximum commercial benefit to both parties. The agreement will also underpin the infrastructure needed to deliver gas from the Canning Basin.

“We look forward to a long and fruitful relationship with Alcoa and the success of Arc’s C-Gas program.”