Shell JV Sanctions Oz Surat Gas Project [Update]
(Adds comments from Appea at the end.)
Arrow Energy, a joint venture comprising Shell and PetroChina, has sanctioned start of the first phase of its Surat gas project in southern Queensland, with construction set to begin this year, it said April 17 in a statement.
Arrow’s sanction decision follows the April 17 announcement from PetroChina and Shell, of a final investment decision (FID) for phase one of the project.
“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,” Arrow CEO Cecile Wake said. “This significant investment comes at a critical time and will cement Arrow’s position as a major producer of natural gas on the east coast.”
Wake said Arrow, which operates the project, would this year begin 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 trillion ft3 of natural gas.
“This decision will bring up to 90bn ft3/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,” Shell Australia said in a separate statement. In December 2017, Arrow inked to a 27-year gas sales agreement to underpin the Surat gas project and supply gas to the Shell-operated QGC joint venture.
Arrow operates five gas fields in the Surat and Bowen basins in southern and central Queensland, respectively, and produces the equivalent of more than 40% of Queensland’s total domestic gas demand.
The upstream lobby group Australian Petroleum Production & Exploration Association (Appea) welcomed the announcement and said that the decision on the project by shareholders represents a commitment to the continued development of Queensland’s natural gas resources for local and export customers.
“This significant investment comes after Arrow has devoted over 10 years to assessing the project, working with landholders and the broader community, and closely collaborating with government,” Appea CEO Andrew McConville said. “It comes at a critical time as Queensland meets the economic challenges posed by the Covid-19 pandemic, and Australia increases its focus on energy security and maintain our trading relationships.”