Arrow Energy has sanctioned commencement of the first phase of its Surat Gas Project (SGP) in southern Queensland, with construction set to begin this year.

CEO Cecile Wake said Arrow’s sanction decision follows the announcement from its shareholders, PetroChina and Shell, of a final investment decision (FID) for phase one of the SGP.

“Today’s decisions by PetroChina, Shell and Arrow demonstrate commitment to and confidence in Queensland and the Australian market at a time of global economic turmoil from COVID-19 and against the backdrop of sustained low oil prices,” Ms Wake said.

“This significant investment comes at a critical time and will cement Arrow’s position as a major producer of natural gas on the east coast,” she said.

“The Surat Gas Project is the first large-scale CSG project in Australia to be underpinned by a significant infrastructure collaboration and gas sales agreement, together with a suite of supporting agreements, which have been put in place between Arrow and the Shell-operated QGC joint venture.

“This agreement enables the use of capacity in QGC’s existing gas and water processing, treatment and transportation infrastructure, reducing the impacts on landholders, communities and the environment and ensuring that more gas can be economically developed.”

Ms Wake said Arrow would this year commence construction of more than 600 phase one wells and is on track to deliver first gas from the project in 2021. Over the full 27 year life of the Surat Gas Project, Arrow expects to develop around 5 TCF of natural gas.

“An initial 200 construction jobs will be created during phase one, with an anticipated further 800 construction and operating roles over the life of the Surat Gas Project,” Ms Wake said.

“Arrow recognises the current uncertainty caused by COVID-19 and oil-price volatility and will ensure that its development plans retain sufficient flexibility to manage these evolving challenges while bringing more gas to market.

The decision to sanction phase one of the Surat Gas Project and commence construction this year is good for Queensland. It will mean more jobs, more opportunities for local companies and other economic benefits for regional Queensland, which has been home to Arrow for more than 20 years.”

Arrow currently operates five gas fields in the Surat and Bowen basins in southern and central Queensland, respectively, and produces the equivalent of more than 40 per cent of Queensland’s total domestic gas demand.

“This FID is the result of extensive collaboration between not just Arrow and the QGC joint venture, but also with landholders, communities and the State Government.

“In taking this investment decision, Arrow is enlivening those collaboration arrangements for the benefit of Arrow and its shareholders, the QGC joint venture and all Queenslanders,” Ms Wake said.

“Importantly there have been sustained efforts by Arrow, its landholders and local communities to jointly develop tailor-made ways of working on high quality black soil with minimised impacts, which will be the foundation of positive co-existence into the future.

“We sincerely appreciate the efforts of all involved, including the State Government, to bring Arrow to this point, and we look forward to safely and successfully delivering the first phase of this exciting project.”

“In these challenging COVID-19 times, Arrow remains committed to operating its business and executing this project safely and responsibly to protect the health and well-being of its people and all of the regional communities where we operate,” she said.

Federal Minister for Resources Keith Pitt said Arrow’s decision was great news in difficult times.

“This is a real vote of confidence in Australia’s gas industry and the energy policy settings that have been established the Government,” Minister Pitt said.

“It is a welcome shot in the arm for regional businesses especially in the Western Downs region of Queensland.

“Arrow holds the largest undeveloped reserves on the east coast at around 5 trillion cubic feet.”