AWE Ltd. may start initial production at its Senecio and Waitsia fields as soon as 2016 after announcing what may be the largest onshore natural gas discovery in Western Australia since the 1960s.

The project could supply as much as 10% of the West Australian market in the next 10 to 20 years, Bruce Clement, managing director of the Sydney-based oil and gas explorer, said in a phone interview.

AWE is seeking to tap increasing natural gas demand in Western Australia state and take advantage of a shift in the mining industry away from high-cost diesel fuel, he said. Senecio and Waitsia may hold 360 Bcf of gas, and potentially more, AWE said last week.

“This is another potentially significant supplier into the market and will diversify sources of gas,” Clement said. “And it confirms there is opportunity onshore Western Australia to bring more gas to market.”

AWE holds 50% of the venture, and Origin Energy Ltd. owns the rest. While AWE is seeking to bring some gas to the market “early” in 2016, more significant production is expected to occur later, Clement said.

“There will be interest I’m sure from other parties,” he said. “But Origin and AWE have the financial and operating capability to develop and deliver the project, so I don’t believe there’s a need to bring in additional partners.”

AWE in December rejected a A$752 million ($662 million) initial takeover proposal from Senex Energy Ltd., saying it undervalued its shares. AWE’s market value is now about A$970 million after a 38 percent gain this year. The shares fell 1.9% Sept. 25 to close at A$1.84 in Sydney.

AWE’s project may be constrained by the pace of evaluating and testing the discovery rather than access to infrastructure and markets, according to a Sept. 18 Macquarie Group Ltd. report. It depends on successful tests and a development decision, which could take months, if not years, Macquarie said.