Fossil fuel firm AWE has signed an agreement with Alinta Energy to allow the development of a gas field in the Perth basin.

The deal is set to see the first gas produced from the Waitsia field since its discovery near Dongara in the mid-west of WA in 2014.

The field has been described as the biggest onshore gas reserve found in Western Australia for decades. The find inspired interest in onshore developments over costly offshore options.

The first gas is set for delivery by Alinta by August, which should bring the domestic market around 10 terajoules (TJ) per day for two and a half years.

AWE had been trying to develop the field in a joint venture with Origin Energy, with plans for a combined $17.5 million in new infrastructure and upgrades to supply gas into the Parmelia pipeline.

AWE managing director Bruce Clement says the deal will bring new cash flows from mid-year, and there could be more expansion in the future.

“When fully developed, AWE anticipates that production from the Waitsia field could be increased from the 10TJ/day of Stage 1A to more than 100TJ/day, which represented approximately 10 per cent of Western Australia's daily domestic consumption,” he said.

“The Waitsia development will deliver substantial benefits to the local mid west community through additional direct investment, supplier agreements and employment opportunities.”