Sydney — Shell-PetroChina subsidiary Arrow Energy has received approval for the Surat Gas project in Queensland, Australia, which is the largest resources project given the go-ahead in the state since the sanctioning of the three LNG projects at Gladstone, the Queensland government said Thursday.
Not registered?
Receive daily email alerts, subscriber notes & personalize your experience.
Register Now"The approval of these petroleum leases is a critical milestone in Arrow delivering 5 trillion cubic feet of gas into the market," Arrow CEO Mingyang Qian said.
The A$10 billion ($7.14 billion) project, which is planned to produce gas for LNG export and domestic uses, is scheduled to be operational in 2020, according to Queensland premier Annastacia Palaszczuk.
The 5,000 Pj it is expected to bring to market is scheduled to be over 27 years, including 240 Pj/year during peak production from 2026, the state government said.
The leases cover around 2,500 sq km on blocks in the Surat Basin -- a gas-rich hotbed for the three Gladstone LNG projects. The Surat is already home to major gas projects operated by the upstream operator of Australia Pacific LNG Origin Energy and Gladstone LNG operator Santos, as well as the Shell-operated QGC venture, which exports the fuel via the Queensland Curtis LNG project.
"More gas being produced is good news for all gas customers, both domestic and export," Queensland Resources Council chief executive Ian Macfarlane said.
Queensland mines minister Anthony Lynham said Arrow proposes to use nearby existing QGC infrastructure including processing facilities and pipelines to transport gas to domestic and export facilities.
On Wednesday, energy consultancy EnergyQuest's chief executive Graeme Bethune said that Shell and PetroChina would need to be confident that the development will be profitable given losses of more than A$6 billion on the investment since 2010.
"Investors already feel over-exposed to Australia and the Queensland CSG [coalseam gas] projects, which have cost them dearly. It would hardly be surprising if they are cautious about further investment but any pullback on drilling or development could easily make the situation worse," he said at the time.
EnergyQuest also last week warned that supply shortages and diversions to the domestic market could result in two of the six trains at the Port of Gladstone needing to be shut down by the middle of the next decade. And on Wednesday, it said that Australia needs to urgently start importing LNG to mitigate the region's supply issues and reduce the risk of further regulatory intervention aimed at diverting LNG to the domestic market.
QCLNG has a nameplate capacity of 8.5 million mt/year and is neighbored by the 7.8 million mt/year GLNG and 9 million mt/year APLNG. In 2018, the three projects used 20.58 million mt of their combined 25.3 million mt/year capacity, according to data from the Gladstone Ports Corporation.
The first LNG was exported from Gladstone in January 2015 from QCLNG, and the last of the six trains came online in October 2016 at APLNG.
-- Abache Abreu, abache.abreu@spglobal.com
-- Nathan Richardson, newsdesk@spglobal.com
-- Edited by Irene Tang, newsdesk@spglobal.com