Gas rig
Representational image of a gas rig Pixabay

Arrow Energy, the joint venture between Shell and PetroChina, will soon develop the second phase of Surat coal seam gas project (SGP) in Australia's Queensland.

According to Shell, the phase 2 development will produce 130 terajoules of additional gas per day at peak production. The first gas production is expected in 2026, as phase 1 was launched in 2020, Reuters reported.

"At a time when more gas is needed for homes, businesses and industries, the SGP North development will solidify Arrow's position as a major producer of natural gas on the east coast," Arrow CEO Zhengxin Peng said.

The announcement by Arrow Energy comes in the wake of calls for more investment to increase the local energy supply. Australia's energy market operator and competition watchdog, too, had urged oil and gas companies to invest more to increase the supply of energy.

"Embarking on Phase 2 of the Surat Gas Project with Arrow is part of our commitment to bring more gas to market," Energy Connects quoted Zoë Yujnovich, Integrated Gas and Upstream Director at Shell. "QCLNG marked its 1000th cargo at the end of last year, reflecting its significance as a gas supplier for Australia and the region. This investment will enable us to sustain and grow this important, secure energy source that offers a lower emissions alternative to options like coal."

The gas will flow to the Shell-operated QCLNG liquefied natural gas (LNG) facility on Curtis Island, near Gladstone. It is expected to meet the requirements of long-term contracts and domestic market, as part of a 27-year agreement between Arrow Energy and QGC.