JOHANNESBURG (miningweekly.com) – Multinational oil and gas major Shell and its joint venture (JV) partner PetroChina have approved a major gas supply deal that will bring to market Arrow Energy’s significant gas reserves in the Surat basin of Queensland.

The JV partners have approved a 27-year deal between Arrow and Queensland Curtis Liquefied Natural Gas (QCLNG), which Shell owns in a JV with another Chinese oil major, CNOOC.

The supply agreement includes the use of existing gas pipelines and related infrastructure.

“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,” Arrow CEO Qian Mingyang said.

Arrow has gas reserves of about five-trillion cubic feet in the Surat basin.

Qian said phased development activity would start from the expansion of Arrow’s Tipton fields, near Dalby, and build to new development areas from around 2021.

First gas production is estimated for 2020. The collaboration between Arrow and QCLNG will bring an additional 240 PJ/yr or 655 TJ/d of gas to the Queensland market at peak production.

The current Queensland total gas supply is about 1 450 PJ/y (4 000 TJ/d), of which Queensland residential and industrial demand is about 178 PJ/y.

Queensland Mines Minister Dr Anthony Lynham noted the announcement about the sales agreement and said that the state government would be interested in the company’s proposals for domestic gas supply.

“It is important for industry and jobs that more gas gets to the market,” he commented in a statement.

The Queensland Resources Council (QRC) welcomed the news and said that it wished other states would follow Queensland’s lead and open up gas reserves to fix the energy crisis households and businesses, especially manufacturers, along the eastern seaboard are facing.

“This one agreement alone will deliver enough extra gas to more than power Queensland’s entire industrial demand every year out to 2047," QRC CEO Ian Macfarlane said.

Arrow reported that the project would create about 1 000 new jobs, 800 of which would be during peak construction and the rest in ongoing operational roles.