Queensland company, Arrow Energy, has agreed one of the largest gas supply deals on Australia’s east coast, to bring to market its significant gas reserves in southern Queensland.

The 27-year deal between Arrow and the Shell-operated QCLNG joint venture, will commercialise the majority of Arrow’s gas reserves in the Surat Basin (approx. 5 trillion cubic feet (TCF)), where the company has produced gas for more than a decade.

Arrow Energy CEO, Qian Mingyang, said the company’s equal shareholders, PetroChina and Shell, had approved Arrow’s execution of a binding Gas Sales Agreement (GSA) following 18 months of detailed work on upstream collaboration agreements.

“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,” Mr Qian said.

“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 to communities.”

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

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

“Collaboration will accelerate first gas production to approximately 2020, bringing an additional 240 petajoules per year (PJ/yr) or 655 terajoules per day (TJ/d) of gas to the Queensland market at peak production,” Mr Qian said.

In addition to state benefits, the deal is expected to bring economic stimulus for local communities through flow-on employment and procurement opportunities, infrastructure contributions and investments in community programs.

The project will create around 1000 new jobs - 800 during peak construction and around 200 ongoing operational roles.

In 2018, Arrow will invest more than $3.9 million in life-saving social programs including the doubling of specialist heart services to regional Queenslanders through the iconic Heart of Australia program, as well as new Indigenous education programs.

Arrow Energy is continuing to progress development options in the Bowen Basin in Central Queensland where it operates one of the oldest and geographically largest domestic gas projects (Moranbah Gas Project, owned jointly with AGL Energy) for electricity and industrial uses.

* ACCC: Gas Inquiry 2017-2020 - September2017 Interim Report