Arrow Energy, a 50/50 joint venture between Shell and PetroChina, has given the green light for the second phase of the expansion of its Surat Gas Project (SGP) in Queensland, Australia. First gas delivery is expected in 2026.
Phase 2, also known as SGP North, will produce approximately 22,400 BOE/D (130 MMscf/D) of gas at peak times, which will supply the Shell-operated Queensland Curtis LNG (QCLNG) plant on Curtis Island near Gladstone to meet long-term contracts and domestic demand, Arrow reported in announcing project approval on August 12.
Zoë Yujnovich, Integrated Gas and Upstream Director at Shell, noted that QCLNG has completed its 1,000th This will mark a milestone reached at the end of 2023 that underlines the “importance of the plant as a gas supplier for Australia and the region”.
With the launch of Phase 2 of the Surat coal seam project, Shell and PetroChina are now demonstrating their “commitment to bringing more gas to market,” Yujnovich added.
Phase 2 construction work includes
- Up to 450 new production wells and associated gathering systems.
- Expansion of the road and telecommunications network.
- A 121 TJ/d compression station with four compressors.
- A 27 km long medium-pressure pipeline connects the new field compression station to Shell’s Queensland Gas Co. (QGC) central processing plant in Bellevue.
- Low pressure gas connection to QGC’s McNulty field compression station.
- Expansion and modernization of the water and brine infrastructure.
Photo credit: Arrow Energy
Asia’s energy transition will lead to a strong global increase in LNG demand by 2040
In its LNG Outlook 2024, Shell expects global demand for liquefied natural gas (LNG) to grow by more than 50% by 2040 as the industrial shift from coal to gas gains momentum in Asia and these rapidly developing countries use more LNG to support their economic growth.
“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,” said Arrow CEO Zhengxin Peng, noting that SGP North will “solidify Arrow’s position as a major natural gas producer on the east coast” of Australia.
Shell and PetroChina formed the Arrow Energy joint venture in 2010 and in 2017 announced a 27-year gas sales agreement to supply gas to Shell-operated QCLNG, a joint venture between Shell (73.75%), Chinese company CNOOC (25%) and Washington DC-based MidOcean Energy (1.25%).
Arrow Energy said it will drill approximately 2,500 gas wells in the Surat Basin over the course of its 27-year purchase agreement, while utilizing its existing assets and infrastructure to minimize the project’s overall environmental footprint.
Phase 1 of the Surat Gas Project was approved in April 2020 and involved the drilling of more than 600 wells to expand Arrow’s operations between the existing Daandine and Tipton fields, two of the four fields the Company operates in the Surat Basin.
According to Shell, QCLNG will meet 15 percent of demand on Australia’s east coast by 2023.
Outside Australia, Shell plans to expand its global LNG business by 20-30% by 2030 compared to 2022, and LNG liquefaction volumes are expected to increase by 25-30% compared to 2022, as outlined at the company’s Capital Markets Day in 2023.
