Shell and PetroChina formed the Arrow Energy joint venture in 2010 and the firms each have a 50 percent stake in the company.
Arrow announced a 27-year gas sales agreement to supply gas to the Shell-operated QCLNG joint venture in 2017.
The first phase of the Surat gas project was approved in April 2020 and included more than 600 wells which source natural gas from coal seams in the Surat Basin.
Now Shell and PetroChina will develop the second phase of the Surat gas project under the 27-year gas sales deal.
Phase 2 is expected to contribute around 22,400 barrels of oil equivalent per day (or 130 million standard cubic feet per day) at peak production, Shell Australia, a unit of LNG giant Shell said in a statement issued on Monday.
This phase will comprise up to 450 production wells, a field compression station, 27 kilometers of new pipeline, and also road and infrastructure upgrades.
Shell Australia expects first gas from the new phase in 2026.
The gas from the project will flow to the Shell-operated two-train 8.5 mtpa liquefaction plant on Curtis Island to meet long-term contracts as well as supply domestic customers.
QCLNG is a joint venture between Shell (73.75 percent), CNOOC (25 percent), and also MidOcean Energy (1.25 percent)
According to Shell, QCLNG supplied 15 percent of demand on Australia’s east coast in 2023.
“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,” Yujnovich said.
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