Gas from the project will flow to Shell’s QCLNG liquefied natural gas (LNG) plant on Curtis Island near Gladstone to fulfil long-term contracts and supply domestic customers. This is part of an existing 27-year gas sales agreement between Arrow Energy and QGC. Phase 2 is expected to deliver approximately 22,400 barrels of oil equivalent per day (or 130 million standard cubic feet per day) at peak production.

“Starting Phase 2 of the Surat Gas Project with Arrow is part of our commitment to bring more gas to market,” said Zoë Yujnovich, Integrated Gas and Upstream Director at Shell. “QCLNG booked its 1000th cargo late last year, reflecting its importance as a gas supplier to Australia and the region. This investment will enable us to maintain and grow this important, secure energy source that provides a lower-emissions alternative to options such as coal.”

During its 2023 Capital Markets Day, Shell said it would secure continued supply of raw gas to its existing LNG assets through additional backfill projects to increase value for shareholders. Phase 2 will deliver volumes to be processed through the QCLNG infrastructure and will include up to 450 production wells, a field compression station, 27 kilometers of new pipeline, and road and infrastructure improvements.

Arrow Energy CEO Zhengxin Peng announced that the first gas delivery is expected in 2026. In a press release, he added: “At a time when more gas is needed for homes, businesses and industry, the SGP North development will cement Arrow’s position as a major natural gas producer on the East Coast. Natural gas is an important part of the energy transition and the expansion demonstrates our shareholders’ confidence in our ability to manage and deliver large-scale projects.”