ARROW Energy remains confident its $20 billion-plus project to convert coal seam gas from its Bowen and Surat basins gas fields to liquefied natural gas for export will be approved by owners Shell and PetroChina despite cost pressures and competitive markets.
Arrow chief executive Andrew Faulkner told reporters visiting the Moranbah gas project, in the northern Bowen Basin, that shareholders Shell and Petrochina had committed as much as $8 billion for a two-train LNG development scheduled for a final investment decision by late next year.
That figure included roughly $5 billion spent acquiring Arrow and Bow Energy and (assuming next year’s budget is approved) another $3 billion to be spent on exploration next year. Earlier this year Shell chief executive Peter Voser spoke of cost inflation in Australia and flagged the possibility that LNG projects here could be deferred. But Mr Faulkner yesterday said while domestic costs were increasing, ”we put up the best case we can” and he remained ”confident” of board approval.
Mr Faulkner said recent cutbacks in Queensland’s coal industry had ”taken some of the heat off the market” in terms of cost pressures.
Arrow estimates it has 48,000 petajoules of gas across its Bowen and Surat basins acreage, more than enough to support a two-train LNG plant at Gladstone, of which 8000 petajoules is classed as ”proven and probable”.
Mr Faulkner said Arrow’s Surat Basin acreage was an ”extremely sweet area” in terms of gas reserves and production and was an integral part of an LNG export project.
Coal seam gas extraction from the Surat Basin produces 10 times more water than in the Bowen Basin and landholdings are generally smaller, meaning more access agreements need to be negotiated with farmers.
Arrow is yet to get state or federal approval for its Surat or Bowen gas projects, but it has submitted environmental impact statements to the Queensland government.
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