Arrow Energy has today signed off on one of the largest gas supply deals on Australia’s east coast, expected to drive the creation of 1000 jobs.
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 – about 5 trillion cubic feet (TCF).
Arrow Energy chief executive officer 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 project is expected to create about 1000 new jobs – 800 during peak construction and around 200 ongoing operational roles.
The current Queensland total gas supply is about 1450PJ/yr, while Queensland residential and industrial demand is about 178PJ/yr.
“Collaboration will accelerate first gas production to approximately 2020, bringing an additional 240 petajoules per year (PJ/yr) or 655 terajoules per day (TJ/d) of gas to the Queensland market at peak production,” Mr Qian said.
Queensland Resources Council (QRC) chief executive Ian Macfarlane said today’s announcement brought the scale and infrastructure of LNG production to bear on Arrow’s proven gas reserves.
“That’s the only way to get this gas out of the ground at an affordable price”, said Mr Macfarlane
“More gas being produced is good news for all gas customers both domestic and export.
“The QRC congratulates Arrow and Shell’s QCLNG on this milestone agreement which again demonstrates that Queensland is leading the way when it comes to working to address the problem of the gas shortage.”
Arrow Energy said it was also continuing to progress development options in the Bowen Basin, where it operates one of the oldest and geographically largest domestic gas projects (Moranbah Gas Project, owned jointly with AGL Energy) for electricity and industrial uses.
The company recently invested more than $500 million in the Daandine Expansion Project (commissioned in late 2016) and commenced a $100 million-plus project this year to expand capacity at its Daandine and Tipton fields by 30 per cent.
Western Downs Regional Council Mayor Paul McVeigh said 18 months of negotiations between Arrow, Shell and PetroChina had come to fruition with Arrow Energy’s announcement of their 27-year commitment to the region.
“This deal adds to the future of our region’s economy, strengthening our energy sector, and complementing our other three economic pillars: manufacturing, agriculture and intensive agriculture, ” he said.
With 10 solar farms approved and the Cooper’s Gap Wind Farm set to begin construction, this resource sector expansion project secured the Western Downs’ claim to being the Energy Capital of Queensland, and soon Australia, he said.