Shell has announced its plan to develop Phase 2 of the Surat Gas Project (SGP) in Queensland, Australia, with its partner Petrochina through their 50/50 joint venture Arrow Energy.
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 private customers.
QCLNG is a Shell-operated joint venture between Shell (73.75%), CNOOC (25%) and MidOcean Energy (1.25%).
Phase 2 is expected to deliver approximately 22,400 barrels of oil equivalent per day (boe/d) or 130 million standard cubic feet per day (mscf/d) at peak production. First gas is expected in 2026.
“The start of 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.
“QCLNG celebrated its 1000thth 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 offers a lower-emissions alternative to options such as coal,” Yuinovich added.
During its 2023 Capital Markets Day, Shell announced that it would ensure continued gas supply to its existing LNG assets through additional backfill projects to increase shareholder value.
Construction of SGP North is scheduled to begin in late 2024. The infrastructure will include up to 450 new gas production wells, a new field compression station, 27 km of pipeline, and road and infrastructure improvements in two phases.
Notably, Shell and PetroChina established the Arrow Energy joint venture in 2010. Arrow announced a 27-year gas sales agreement in 2017 to supply gas to the Shell-operated joint venture QCLNG. The SGP is expected to include up to 2,500 gas wells and produce 4,000 petajoules of gas.
Phase 1 of the Surat Gas Project was approved in April 2020 and involved more than 600 wells. The SGP is Arrow’s major project to commercialise the majority of the Surat Basin’s gas reserves, which amount to approximately five trillion cubic feet (tcf).
