Shell and PetroChina give green light to Australian coal-seam gas project

SHELL and PetroChina have approved the first stage of their A$10bn (US$6.3bn) Surat Basin coal-seam gas project in Queensland despite the current downturn in the energy sector.

Shell and PetroChina’s 50–50 joint venture, Arrow Energy, aims to produce 90bn ft³/y at peak production. Arrow is the largest undeveloped gas field on Australia’s east coast with around 5trn ft³. Construction on the project will begin this year and first gas is expected in 2021. More than 600 wells will be drilled in the first phase, with 2,500 expected to be drilled over the lifetime of the project.

Some of the gas will be sold as LNG via Shell’s QGC gas production plant in Gladstone. Maarten Wetselaar, Integrated Gas and New Energies Director at Shell, said: “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.”

Tony Nunan, Shell Australia Chairman, said: “QGC has reached strong and stable production since its startup in December 2015, and Arrow has the strong technical capability to develop the Surat Basin fields innovatively and efficiently.”

Annastacia Palaszczuk, Queensland Premier, welcomed the announcement and said that the project would mark a milestone in Queensland’s economic recovery from the Covid-19 pandemic.

Keith Pitt, Minister for Resources, Water and Northern Australia, said: “This is a real vote of confidence in Australia’s gas industry and the energy policy settings that have been established by the Government. It is a welcome shot in the arm for regional businesses.”