The Hague-based Shell reached a final investment decision to develop Arrow Energy’s $6.4 billion Surat gas project in Queensland, Australia.
Arrow Energy is a joint venture between Shell and PetroChina.
The project will bring online up to 90 billion cubic feet per year of new gas to market at peak production, Shell said in its statement. The volumes will flow to QGC, which will sell it locally or exported through the QCLNG facility on Curtis Island in Queensland.
QCLNG (QGC) is a Shell-operated joint venture between Shell, CNOOC and Tokyo Gas. QGC was part of BG Group before Shell acquired the latter in 2016.
“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”.
Shell Australia chairman Tony Nunan added that QCLNG facility has reached stable production since it started operations in December 2015. The facility has supplied 16 per cent of the demand in the Australian east coast domestic gas market in 2019. Additionally, it reached a 500 LNG cargo milestone.
Construction of the Surat gas project will start in 2020. Shell expects to produce first gas in 2021.
Arrow energy reached a 27-year gas sales agreement in 2017 that underpins the Surat gas project. The deal provides a path to market for up to 5 trillion cubic feet of Arrow’s Surat gas.
Arrow currently produces 140 million standard cubic feet per day (MMSCF/day). During the life of the Surat gas project over 2,500 new wells will be developed. As operator, Arrow will build and operate the project.