Arrow Energy has reached a supply agreement with Shell-operated QCLNG joint venture (JV) to commercialise its significant gas reserves in southern Queensland, Australia.

Under the terms of the 27-year deal, Arrow will bring to market five trillion cubic feet (TCF) of its gas reserves in the Surat Basin, where the company has produced gas for more than ten years.

The development comes after company shareholders PetroChina and Shell approved the execution of a binding gas sales agreement (GSA) for the foregoing supply deal.

“Utilising existing upstream infrastructure will reduce impacts to landholders and communities.”

Arrow Energy CEO Qian Mingyang said: “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.

“Collaboration between the parties will see use of existing QGC-operated infrastructure such as gas compression, processing and transmission infrastructure, as well as water transport and treatment facilities.

“Utilising existing upstream infrastructure will reduce impacts to landholders and communities.”

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The company is planning to undertake phased development activity, beginning with the expansion of its Tipton fields, near Dalby, and building of new development areas from around 2021.

The collaboration with QCLNG allows the company to expedite first gas production to around 2020, with potential to supply an additional 240 petajoules a year (PJ/y) or 655 terajoules a day (TJ/d) of gas to the Queensland market at peak production.

It is expected that the project will generate 1,000 new jobs, including 800 during peak construction and 200 ongoing operational roles.