Shell and PetroChina Invest in Australian Gas Project Expansion

Shell and PetroChina will invest in the second phase of a coal seam gas project in northeast Australia to boost supply to domestic customers and long-term LNG shipments, the UK-based supermajor said on Monday.

Arrow Energy, a 50/50 joint venture between Shell and the Chinese giant, announced plans to develop Phase 2 of its Surat Gas Project in Queensland, Australia, at a time when local authorities and industry groups warn that the eastern coast of the continent could see natural gas shortages if no new supply comes online soon.

The gas from the project will flow to the Shell-operated QCLNG liquefied natural gas (LNG) facility on Curtis Island, near Gladstone, to meet long-term contracts and supply domestic customers, the supermajor said. This is part of an existing 27-year gas sales agreement between Arrow Energy and QGC.

According to Shell, Phase 2 is expected to contribute around 22,400 barrels of oil equivalent per day, or 130 million standard cubic feet per day, at peak production.

First gas from the new project phase is expected in 2026.

Phase 1 of the Surat Gas Project was approved in April 2020 and included more than 600 wells.

Separately, the JV Arrow Energy said that construction on the second phase of the Surat Gas Project, or SGP North, is scheduled to begin later this year, with infrastructure to include up to 450 new gas production wells, a new field compression station, 27 km (17 miles) of pipeline, and road and infrastructure upgrades over two phases.

“Embarking on Phase 2 of the Surat Gas Project with Arrow is part of our commitment to bring more gas to market,” said Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director.

Shell, the world’s top LNG trader, continues to believe that LNG will play a pivotal role in the global energy transition.

Australia’s east coast could see shortages of natural gas as early as in 2027 unless more supply is made available soon, the Australian Competition and Consumer Commission (ACCC) said in a report last month, adding another warning about the domestic market of one of the world’s biggest LNG exporters.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com

• Is the Era of Explosive U.S. Shale Growth Over?
• Oil Rig Count Rises As WTI Jumps To $77
• Woodside Unlikely To Face Rival Bid in Deal for U.S. LNG Firm Tellurian