Arrow, Shell Ink 27-yr Australia Supply Deal
Australian Arrow Energy and Anglo-Dutch Shell have signed a 27-year gas supply deal on Australia’s east coast which will see the gas sold both domestically and exported, the companies said December 1.
The deal between Arrow and the Shell-operated Queensland Curtis LNG joint venture will commercialise the majority of Arrow’s roughly 5 trillion ft³ of gas reserves in the Surat Basin, Arrow said.
“The deal offers long-awaited infrastructure collaboration in the natural gas industry, creating better cost efficiencies and enabling us to bring this gas to market in a challenging investment climate,” Arrow CEO Qian Mingyang said.
Qian said phased development activity would start with the expansion of Arrow’s Tipton fields, near Dalby, and reach new development areas from around 2021.
Shell chairman Zoe Yujnovich said the onshore gas development in Queensland, which has none of the oil produced by traditional gas fields and is expensive to develop, would have stayed in the ground if it weren’t for the region’s LNG development.
“The Arrow JV partners showed restraint earlier this decade by not building another two trains on Curtis Island, but that doesn’t change the need for scale that only LNG demand can provide,” she said. "QCLNG’s existing connection points with the gas market would enable Arrow to reduce development cost – making products investable despite challenging market conditions,” she said.
The current Queensland total gas supply is roughly 1,450 PJ/yr, of which Queensland residential and industrial demand is about 178 PJ/yr, Arrow said.
“Collaboration will accelerate first gas production to approximately 2020, bringing an additional 240 PJ/yr or 655 TJ/day of gas to the Queensland market at peak production,” Qian said. “When more gas is developed, everyone wins – Australians win again because there is more gas to heat our homes and provide energy to our factories and exporters win because they have more gas to feed their job creating export projects,” Yujnovich said.