Shell invests in gas project in Australia

Shell has taken a final investment decision to develop the first phase of Arrow Energy’s Surat Gas Project in Queensland, Australia.

In a statement, Shell said the decision will bring up to 90 billion cubic feet per year of new gas to market at peak production, which will flow to Shell-operated QGC to be sold locally and exported through its plant on Curtis Island.

“The utilisation of QGC’s existing upstream pipelines and treatment facilities enables Arrow to significantly reduce development costs, making the project competitive and economically attractive,” said Maarten Wetselaar, Integrated Gas and New Energies director at Shell.

“The Arrow joint venture partners’ decision not to build another two trains on Curtis Island provided the opportunity to create this alternative pathway to market for the resource. The approach we have taken to this investment is aligned with Shell’s focus on actively managing all operational and financial levers to deliver sustainable cash flow generation. It reflects our disciplined approach to capital spend, which takes a long-term view of the fundamentals of supply and demand.”

“QGC has reached strong and stable production since its start up in December 2015, and Arrow has the strong technical capability to develop the Surat Basin fields innovatively and efficiently,” said Shell Australia chairman Tony Nunan.

"Shell taking FID on the first phase of Arrow Energy's Surat Gas Project (SGP) in Queensland was a surprise, as project sanctions will be a rarity this year after E&P operators globally took an axe to their 2020 capital budgets. We understand the first of five phases to be developed is a lower cost expansion of the existing Tipton area, and will deliver an additional 255 TJ per day of gas to Shell's QCLNG project," said Wood Mackenzie's senior analyst Daniel Toleman

Construction of the project will start in 2020, with first gas sales expected in 2021.