Shell, PetroChina to expand Surat coal seam gas project in Australia

Shell and PetroChina have decided to expand the Surat coal seam gas project (SGP) in Queensland, the British oil and gas giant said on Monday, amid calls for more investment to boost local energy supply.

The decision comes at a time when industry executives have been pushing for government measures to bring back investments put off by a slew of state interventions to curb energy prices and boost domestic supply.

Australia’s energy market operator and competition watchdog have also asked oil and gas companies to invest more to increase supply in an increasingly stretched market.

The second phase development of the project will bring more than 130 terajoules of additional gas per day, operator Arrow Energy, a joint venture between Shell and PetroChina, said in a separate statement.

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The first phase of the project began in 2020 and is now in production.

Shell did not give any cost estimate for the second phase of development, but said it was expected to contribute around 22,400 barrels of oil equivalent per day at peak production and first gas was expected in 2026.

“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,” said Arrow CEO Zhengxin Peng.

Arrow holds large reserves of undeveloped gas on the east coast, which is facing a supply crunch and higher prices.

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