Shell has announced its plan to develop Phase 2 of Surat Gas Project (SGP) in Queensland, Australia alongside its partner Petrochina through their 50/50 incorporated joint venture, Arrow Energy.
The gas from the project will flow to the Shell-operated QCLNG liquefied natural gas (LNG) facility on Curtis Island, near Gladstone, to meet long-term contracts and supply domestic customers.
QCLNG is a Shell-operated joint venture between Shell (73.75%), CNOOC (25%) and MidOcean Energy (1.25%).
Phase 2 is expected to contribute around 22,400 barrels of oil equivalent per day (boe/d) or 130 million standard cubic feet per day (mscf/d) at peak production. The first gas is expected in 2026.
“Embarking on 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 marked its 1000th cargo at the end of last year, reflecting its significance as a gas supplier for Australia and the region. This investment will enable us to sustain and grow this important, secure energy source that offers a lower emissions alternative to options like coal,” Yuinovich added.
During Capital Markets Day in 2023, Shell said it would secure further feed gas supply for its existing LNG facilities through additional backfill projects to increase value for shareholders.
Construction on SGP North is scheduled to begin late 2024, with infrastructure to include up to 450 new gas production wells, a new field compression station, 27km of pipeline, and road and infrastructure upgrades over two phases.
Notably, Shell and PetroChina formed the Arrow Energy joint venture in 2010. Arrow announced in 2017 a 27-year gas sales agreement to supply gas to the Shell-operated QCLNG joint venture. The SGP is expected to comprise up to 2500 gas wells and produce 4000 petajoules of gas.
In phase 1 of the Surat Gas Project was approved in April 2020 and included more than 600 wells. The SGP is Arrow’s world-scale project to commercialize most of the Surat Basin gas reserves amounting to about five trillion cubic feet (tcf).
