Arc Energy and Energy World Corporation announced they had signed a memorandum of understanding to develop an LNG business for local markets.

The alliance would initially investigate the feasibility of producing and shipping LNG from the Canning Basin to markets in the Pilbara and southwest regions of the state.

Arc said such a system had the potential to “dramatically reduce the time and cost” of getting the gas into the market.

“Our Canning Basin exploration program, although high risk, has the potential to find large oil and gas accumulations and … we are seeking ways to monetise any discoveries as quickly and cheaply as possible,” managing director Eric Streitberg said.

“We are also very focused on helping to find a solution to the [domestic gas] problem in WA.”

The partners said they believed that the threshold economic size and time to market could be substantially reduced, as a result of Arc’s upstream operational and exploration skills and EWC’s small-scale LNG systems.

Among its other endeavours, Hong Kong-based EWC is currently building a two-train facility with a capacity of 1 million tonnes per annum in south Sulawesi.

“The competitively priced modular LNG technology being developed by EWC for its Sengkang gas field developments in Indonesia can be readily utilised for the WA gas business,” EWC managing director Stewart Elliott said.

“A successful development onshore on the west coast of Australia would further underpin and strengthen our Australian operations.”

In eastern Australia, EWC has announced plans to commercialise its Queensland gas reserves via modular LNG plants, with a capacity of 10,000tpa, adjacent to both the Eromanga and Gilmore gas plants.