Shell Australia (Shell) has taken a final investment decision to develop the first phase of Arrow Energy’s Surat Gas Project in Queensland, Australia.
This decision will bring up to 90 billion cubic feet per year of new gas to market at peak production, which will flow to Shell-operated QGC to be sold locally and exported through its plant on Curtis Island.
“The utilisation of QGC’s existing upstream pipelines and treatment facilities enables Arrow to significantly reduce development costs, making the project competitive and economically attractive,” said Maarten Wetselaar, Integrated Gas and New Energies Director at Shell. “The Arrow joint venture partners’ decision not to build another two trains on Curtis Island provided the opportunity to create this alternative pathway to market for the resource. The approach we have taken to this investment is aligned with Shell’s focus on actively managing all operational and financial levers to deliver sustainable cash flow generation. It reflects our disciplined approach to capital spend, which takes a long-term view of the fundamentals of supply and demand.”
“QGC has reached strong and stable production since its start up in December 2015, and Arrow has the strong technical capability to develop the Surat Basin fields innovatively and efficiently,” said Shell Australia Chairman Tony Nunan. “QGC supplied 16 percent of the demand in the Australian east coast domestic gas market in 2019 and celebrated its 500th LNG cargo. Gas from Arrow will provide more supply to both Australian domestic customers and export markets.”
Arrow CEO Cecile Wake said “Today’s decisions by PetroChina, Shell and Arrow demonstrate commitment to and confidence in Queensland and the Australian market at a time of global economic turmoil from COVID-19 and against the backdrop of sustained low oil prices.
“The Surat Gas Project is the first large-scale CSG project in Australia to be underpinned by a significant infrastructure collaboration and gas sales agreement, together with a suite of supporting agreements, which have been put in place between Arrow and the Shell-operated QGC joint venture.
“This agreement enables the use of capacity in QGC’s existing gas and water processing, treatment and transportation infrastructure, reducing the impacts on landholders, communities and the environment and ensuring that more gas can be economically developed.”
Ms Wake said Arrow would this year commence construction of more than 600 phase one wells and is on track to deliver first gas from the project in 2021. Over the full 27 year life of the Surat Gas Project, Arrow expects to develop around 5 TCF of natural gas.
Construction of the project will commence in 2020, with first gas sales expected in 2021.