Shell and PetroChina invest in the expansion of an Australian gas project

Shell and PetroChina will invest in the second phase of a coal-seam gas project in northeast Australia to boost supplies to domestic customers and long-term LNG deliveries, the UK-based oil and gas giant said on Monday.

Arrow Energy, a 50/50 joint venture between Shell and the Chinese energy giant, announced plans to develop Phase 2 of its Surat gas project in Queensland, Australia, at a time when local authorities and industry groups are warning that natural gas shortages could emerge on the continent’s east coast if new sources of supply are not established soon.

The 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, the company said. This is part of an existing 27-year gas sales agreement between Arrow Energy and QGC.

According to Shell, Phase 2 is expected to produce around 22,400 barrels of oil equivalent per day, or 130 million standard cubic feet per day, at peak production.

The first gas from the new project phase is expected in 2026.

Phase 1 of the Surat Gas Project was approved in April 2020 and included more than 600 wells.

The Arrow Energy joint venture also announced that construction on the second phase of the Surat Gas Project (SGP North) is scheduled to begin later this year. The infrastructure is expected to include up to 450 new gas production wells, a new field compression station, 27 km (17 miles) of pipeline, and road and infrastructure improvements in two phases.

“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.

Shell, the world’s largest LNG trader, remains convinced that LNG will play a central role in the global energy transition.

Australia’s east coast could face natural gas supply shortages as early as 2027 if more gas is not made available soon, the Australian Competition and Consumer Commission (ACCC) said in a report last month, issuing another warning about the domestic market of one of the world’s largest LNG exporters.

By Tsvetana Paraskova for Oilprice.com

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