Shell signs off on Phase 2 of Australia’s Surat Gas Project

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SHELL is investing in the second phase of its Surat Gas Project in Queensland, Australia as it pushes to supply more gas to the country amid warnings of coming shortages.

The Surat Gas Project is operated by Arrow Energy, a 50/50 venture between Shell and PetroChina. It produces gas from onshore coal seams in Queensland, with the first phase including more than 600 wells. The second phase will see an additional 450 wells drilled and the construction of a 121 TJ/d field compression station plus 27 km of medium pressure pipeline to connect the new supplies to a processing plant. Ultimately the gas will be fed to the Shell-operated LNG facility on Curtis Island for exports and to supply the domestic market, Shell said.

This second phase will have the capacity to produce 130m ft³ of gas, with production scheduled to begin in 2026.  

Earlier this year, the Australian Energy Market Operator warned that the east coast market risks seasonal shortfalls in gas supplies from 2026 and that urgent investment is needed to meet demand from homes, business, and the energy industry.

Zhengxin Peng, Arrow CEO, said: “At a time when more gas is needed for homes, businesses, and industries, the SGP North development will solidify Arrow’s position as a major producer of natural gas on the east coast.”

There are environmental tensions over efforts to increase gas supplies in order to bridge the shift from coal-powered generation towards renewables as the country seeks to hit targets to reduce emissions 43% by 2030. Reports began to circulate last week that the Woodside’s Browse LNG project will be rejected by the Western Australia Environmental Agency.

Meanwhile, Chevron is seeking approval to drill new offshore wells to increase supplies to Australia’s largest LNG facility – the Gorgon project off Western Australia.