Shell plc and PetroChina Co. Ltd. are moving ahead with plans to develop the second phase of the Surat Gas project in Queensland, Australia.
Arrow Energy, a joint venture formed by the companies in 2010, would develop the onshore project in the eastern part of the country. Phase 2 would produce 22,400 boe/d, or about 130 MMcf/d of natural gas.
Those volumes would be used to feed the 8.5 million metric tons/year Queensland Curtis LNG (QCLNG) facility near Gladstone, as well as domestic customers in the region. Arrow signed a 27-year gas supply agreement with QCLNG in 2017.
Phase 1 of the project was approved in April 2020 and included more than 600 wells. Phase 2 would include up to 450 wells and a field compression station.
The wells produce natural gas from coal seams in the Surat Basin, one of the country’s largest coalbed methane assets.
[Overcoming obstacles in the LNG market: NGI sits down with Baker Botts' Jason Bennett, department chair of global projects, to discuss U.S. LNG projects and the hurdles they currently face. Despite those obstacles cropping up, global demand for LNG is going nowhere, and the U.S. remains a prime supplier. Find out more from NGI’s Hub & Flow podcast.]
Australia’s east coast is the most populated region in the country. It has faced higher energy costs as offshore natural gas production used to meet domestic demand has declined. The country has implemented rules that allow it to restrict exports in the event of a domestic supply shortfall.
Shell pledged last year to secure additional feed gas supply for its LNG terminals and said the second phase of Surat would help solidify QCLNG’s role as a regional gas supplier. The facility met 15% of Australia’s east coast gas demand last year.
QCLNG is jointly operated by Shell (73.75%), China National Offshore Oil Corp. (25%) and MidOcean Energy LLC (1.25%).
