Arrow Energy, the 50-50 joint venture (JV) of Shell and Petrochina, has been granted 14 leases for the AUD10bn (approximately US$7.1bn) Surat coal seam gas (CGS) project in Queensland (Australia). The asset is estimated to hold about 5 tcf (140 bcm) of natural gas and Arrow Energy agreed in December 2017 to a 27-year agreement to sell output from Surat to the Shell-run Queensland Curtis LNG (QCLNG) project. The JV will use QCLNG’s gas processing and pipeline infrastructure in order to sell its gas both for export and into the Australian market. With this agreement, Arrow Energy will cut its project costs and will ship gas to the target markets faster.
Australia is expecting a gas shortage by the mid-2020s and the federal government is eager to see the startup of the project. However, Arrow Energy still has to give the greenlight for its development amid technical issues and ongoing negotiations over gas sales pricing.
Several liquefaction terminals are located in Queensland, of which Australia Pacific LNG (APLNG, led by Origin-ConocoPhillips), Gladstone LNG (GLNG, operated by Santos) and Queensland Curtis LNG (QCLNG, led by Shell).