Arrow Energy to Expand Surat Gas Project with Shell Investment

Arrow Energy to Expand Surat Gas Project with Shell Investment

(IN BRIEF) On August 12, 2024, Arrow Energy announced plans to expand its Surat Gas Project in Queensland, Australia, with significant investment from Shell. Phase 2 is expected to produce about 22,400 barrels of oil equivalent per day at peak output, supplying the Shell-operated QCLNG liquefied natural gas facility. This expansion, which includes the construction of up to 450 production wells and new pipeline infrastructure, aims to meet long-term contracts and domestic energy needs, with first gas expected in 2026. The investment reflects Shell’s commitment to increasing its LNG business and providing a reliable, lower-emission energy source.

(PRESS RELEASE) LONDON, 13-Aug-2024— /EuropaWire/ — In a significant development for the energy sector, Arrow Energy has announced plans for Phase 2 of its Surat Gas Project in Queensland, following a substantial investment from its joint venture partner, Shell. The collaboration between Shell and PetroChina, which owns 50% of Arrow Energy, aims to enhance gas supply to the Shell-operated QCLNG liquefied natural gas (LNG) facility on Curtis Island, near Gladstone.

The Surat Gas Project Phase 2 is poised to play a crucial role in fulfilling long-term contracts and meeting the needs of domestic customers. This expansion is anticipated to yield around 22,400 barrels of oil equivalent per day, or 130 million standard cubic feet per day, at peak production, contributing significantly to Australia’s energy landscape.

“This expansion reflects Shell’s commitment to ensuring a steady and reliable gas supply,” commented Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director. “The milestone of QCLNG marking its 1000th cargo underscores its vital role in supplying gas to Australia and the broader region. Our investment in Phase 2 will help maintain and expand this crucial energy source, which is a lower emissions alternative to traditional coal.”

During its 2023 Capital Markets Day, Shell emphasized its strategy to secure additional feedgas supply through backfill projects, which align with its goal of enhancing shareholder value. Phase 2 will incorporate the construction of up to 450 production wells, a field compression station, and 27 kilometres of new pipeline, along with necessary upgrades to roads and infrastructure to facilitate operations.

The first gas from this expansion is expected to commence in 2026, further solidifying Arrow Energy’s role in meeting the growing energy demands of the region.

Notes to Editors:

• Arrow Energy is a joint venture established in 2010 between Shell (50%) and PetroChina (50%).
• In 2017, Arrow announced a 27-year gas sales agreement to supply gas to the Shell-operated QCLNG joint venture.
• Phase 1 of the Surat Gas Project was approved in April 2020 and involved the development of over 600 wells.
• QCLNG, a joint venture between Shell (73.75%), CNOOC (25%), and MidOcean Energy (1.25%), supplied 15% of demand on Australia’s east coast in 2023.
• The production wells in the Surat Gas Project extract natural gas from coal seams in the Surat Basin.
• The investment in Phase 2 is projected to deliver an internal rate of return exceeding Shell’s hurdle rate for its Integrated Gas business.
• Shell has set ambitious goals to grow its LNG business by 20-30% by 2030 compared to 2022 levels, with liquefaction volumes anticipated to increase by 25-30%.
• According to Shell’s LNG Outlook 2024, global LNG demand is projected to rise by over 50% by 2040, driven by coal-to-gas switching in Asia to support economic growth.
• Shell believes LNG is essential in the energy transition, offering a cleaner alternative to coal in heavy industry and power generation, while providing flexibility to power systems amid rapid growth in renewable energy. For further details, refer to Shell’s Energy Transition Strategy 2024.

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