Arrow Energy to award FEED contract for Surat basin expansion

PERTH (miningweekly.com) – Queensland gas producer Arrow Energy, the joint venture between Shell and PetroChina, has announced that it will undertake front-end engineering design (FEED) for a major expansion of its Tipton gas project, in the Surat basin.

“The planned expansion of Arrow’s Tipton operations is expected to involve 90 new wells in the initial phase and another 180 wells over the next 25 years – along with new gathering lines, an upgraded water treatment facility and four new compressors,” said Arrow Energy CEO Qian Mingyang.

The project will involve a significant upgrade of existing facilities and will more than double production capacity from Tipton to more than 80 TJ/d.

The Tipton expansion follows a recent investment by Arrow of more than A$600-million in its Surat basin infrastructure, comprising the A$500-million Daandine expansion project, commissioned in late 2016, and commencement of a A$100-million Produce the Limit project earlier this year, to expand capacity at its Daandine and Tipton fields.

Together, the expansion projects will bring Arrow’s Surat gas production to more than 170 TJ/d, for domestic and export use.

Qian said that after FEED was complete, shareholders would consider a final investment decision.

He said that in addition to these expansion activities, collaboration with industry proponents would be important in bringing Arrow’s sizeable gas reserves into the east coast gas market.

“I am expecting that we will reach agreement on a path to market for the majority of Arrow’s Surat basin gas reserves later this year.”

The Australian Petroleum Production and Exploration Association (Appea) said that Arrow’s FEED announcement was good news for Queensland and the east coast domestic gas market.

Appea Queensland director Rhys Turner said that Arrow’s announcement showed that Queensland-based operators continue to do "the heavy lifting" in getting more gas to market.

“This initiative, coupled with the recent announcement by QGC, a Shell joint venture, that it will soon start drilling up to 161 additional wells as part of project Ruby, shows the industry in Queensland is getting on with the job.”

Turner said that the only way to meet gas demand for exports, domestic manufacturing, and energy generation, in a sustainable manner, was to increase supply.

The Queensland Resources Council has also welcomed Arrow’s news, with CEO Ian Macfarlane expressing the hope that other states would follow Queensland’s lead and open up gas reserves to help fix the energy crisis on the east coast.