Arrow Energy, a joint venture (JV) between Shell and PetroChina, has announced the commencement of Phase 2 development of the Surat Gas Project in Queensland, Australia.  

The gas from the Phase 2 development will be directed to the Shell-operated QCLNG facility on Curtis Island, near Gladstone.  

This is in line with a 27-year gas sales agreement between Arrow Energy and Shell's QGC business, aiming to fulfil long-term contracts and cater to domestic customers. 

At peak production, Phase 2 is anticipated to contribute approximately 22,400 barrels of oil equivalent per day (bopd), which equates to 130 million standard cubic feet per day.  

This expansion is a part of the overall Surat Gas Project, which is projected to produce over 4,000PJ of gas throughout its lifetime, utilising up to 2,500 gas wells. 

Construction is set to commence later this year, with plans including up to 450 new production wells.  

The infrastructure will also encompass various upgrades such as a new field compression station, pipelines to connect the new field compression station to the Bellevue central processing plant, and enhancements to water and brine facilities. 

The Arrow Energy JV was established in 2010 by Shell and PetroChina.  

The first phase of the Surat gas project (SGP), which included more than 600 wells, received approval in April 2020. 

The second phase is designed to deliver gas volumes for processing through QCLNG's infrastructure, with the first gas output expected in 2026.  

QCLNG, a Shell-operated joint venture with partners CNOOC and MidOcean Energy, supplied 15% of the gas demand on Australia's east coast in 2023. 

The production wells for the project will extract natural gas from coal seams located in the Surat Basin. 

Arrow CEO Zhengxin Peng said: “Natural gas is an important part of the energy transition, and the expansion demonstrates the faith our shareholders have in our ability to manage and deliver large-scale projects.

"It means more jobs, more opportunities for local contractors and suppliers, including indigenous businesses, and other economic benefits for the local community, including upgrades to local roads. 

“Like the first phase of the SGP, we will be minimising our environmental footprint and impact to the community through our agreement with Shell QGC, which enables us to use existing facilities and infrastructure.”