Arrow Energy has inked one of the largest gas supply deals on Australia’s east coast.
The 27-year deal between Arrow and the Shell-operated QCLNG joint venture will commercialise the majority of Arrow’s gas reserves in the Surat Basin.
Arrow Energy CEO Qian Mingyang said the company’s equal shareholders, PetroChina and Shell, had approved Arrow’s execution of a binding Gas Sales Agreement (GSA) following 18 months of detailed work on upstream collaboration agreements.
“The deal offers long-awaited infrastructure collaboration in the natural gas industry, creating better cost efficiencies and enabling us to bring this gas to market in a challenging investment climate,” Mr Qian said.
“Collaboration between the parties will see use of existing QGC-operated infrastructure such as gas compression, processing and transmission infrastructure as well as water transport and treatment facilities.
“Utilising existing upstream infrastructure will reduce impacts to landholders and to communities.”
Mr Qian said phased development activity would commence from the expansion of Arrow’s Tipton fields, near Dalby, and build to new development areas from around 2021.
The current Queensland total gas supply is ~1450PJ a year, of which Queensland residential and industrial demand is approximately 178PJ a year.
“Collaboration will accelerate first gas production to approximately 2020, bringing an additional 240PJ per year or 655TJ per day of gas to the Queensland market at peak production,” Mr Qian said.
In addition to state benefits, the deal is expected to bring economic stimulus for local communities through flow-on employment and procurement opportunities, infrastructure contributions and investments in community programs.
The project will create around 1000 new jobs – 800 during peak construction and around 200 ongoing operational roles.
Mines Minister Dr Anthony Lynham said a reliable, accessible gas supply is critical as an energy and feedstock supply to industry.
“It’s Queensland gas that has been helping put downward pressure on electricity prices for Australian homes and businesses,” Dr Lynham said.
“The government will be interested in the company’s proposals for domestic gas supply and their production timeline.
“It’s important for industry and jobs that more gas gets to market.”
The gas is expected to come from Arrow’s existing production licences and authorities to prospect in the Surat.