Arrow remains on target

Arrow Energy is one of the largest integrated energy companies in Australia. Photo: Arrow Energy

Arrow Energy is one of the largest integrated energy companies in Australia. Photo: Arrow Energy

By Emma Brown

May 6, 2015

AS the oil price continues to plunge, the industry is battening down the hatches to remain competitive in a turbulent climate.

Despite being equally owned by industry giants Royal Dutch Shell and PetroChina, integrated CSG company Arrow Energy has not been immune to the downturn.

“Every oil and gas company in Australia and worldwide is looking closely at opportunities to reduce costs; Arrow is no different,” Arrow Energy spokesperson said.

The company currently delivers about 20 per cent of Queensland’s natural gas from its five CSG fields in the Bowen and Surat basins and is still pursuing projects to achieve its target of meeting growing international demand for cleaner fuels.

“Arrow is continuing to assess development options for its significant CSG resources in both the Bowen and Surat basins, to deliver to shareholders a best value investment proposition.”

While Arrow is still making significant progress across four of its projects, Bowen Gas, Surat Gas, Arrow Surat Pipeline and the Arrow Bowen Pipeline, its plans to develop the Arrow LNG plant on Curtis Island have stalled.

In January this year, joint venture partner Royal Dutch Shell declared the proposed Arrow LNG plant at Curtis Island was “off the table”.

The $22 billion project was just one of several ventures deferred by the energy giant in wake of the collapse in oil prices.

However, Shell Australia spokesperson Paul Zennaro said work would continue on the company’s “substantial gas resources” in the Surat and Bowen basins.

“Shell continues to be driven by value and finding the best development option for Arrow gas. Discussions are ongoing on collaboration opportunities,” he said.

The development of the CSG reserves will proceed but won’t be commercialised through a separate LNG plant as first planned.

Last year, Royal Dutch Shell deferred the project due to cost pressures, which forced Arrow to cut hundreds of jobs.

Bowen Gas

The Bowen Gas Project (BGP) made significant progress in 2014; receiving state and federal environment approvals in September and October, followed by the deployment of front-end engineering design (FEED) in December.

Arrow Energy chief executive Andrew Faulkner said the approvals were critical milestones in the further development of Arrow’s significant reserves in the region.

“The decision to proceed with FEED demonstrates the attractiveness of our Bowen Basin reserves,” Mr Faulkner said.

“This (FEED) design stage represents an important step forward for Arrow’s Bowen Gas Project and I expect FEED work will take around 12 months to complete.”

The upstream project will be developed in three phases, starting from Moranbah and extending north to Glenden before eventually progressing south of Moranbah.

The project entered the define phase in late 2014, which is expected to take about 12 months.

The staged expansion will see the development of 4000 gas wells and infrastructure across 40 years and will result in a major expansion in CSG production volumes for Arrow.

“Phase one of the BGP involves about 500 CSG wells, four field compression facilities, one central gas processing facility and supporting infrastructure,” an Arrow Energy spokesperson said.

In November 2014, Arrow appointed logistics company DHL to provide fourth-party logistics (4PL) management to the CSG developments in the Bowen Basin – a first for the Australian resources sector.

“We have great confidence that a 4PL relationship with DHL is the best way to achieve both safety and value outcomes for logistics task of our Bowen proposals,” Mr Faulkner said.

The contract was signed for one-and-a-half years and covers logistics services to the proposed Bowen Gas Project and the Arrow Bowen Pipeline; the bulk of the contract depends on the proposed projects transitioning to construction.

Arrow Energy has years of experience in the burgeoning Bowen Basin; developing CSG from the region since 2000 and supplying it commercially since 2004.

Arrow Bowen Pipeline

The 500km Arrow Bowen Pipeline received federal environmental approval in October, more than a year after the Queensland gave it the green light.

Mr Faulkner said the proposed pipeline was a key piece of infrastructure that would deliver Arrow’s significant gas reserves to the market.

The high-pressure steel pipeline will transport CSG from the Bowen Basin to a gas hub 22km northwest of Gladstone. The proposed route begins in the southern part of the Whitsunday Region and runs south through the Isaac, Rockhampton and Gladstone shires.

Arrow is currently working with landholder requirements, cultural heritage, engineering and environmental constraints to determine the exact route within the proposed corridor.

“A final investment decision is a matter for Arrow’s shareholders,” Arrow Energy spokesperson said.

Arrow will need a clear 40m easement in order to minimise the construction impact on the surrounding land; this process is expected to take around three to six months and the overall construction is expected to take about two years.

Surat Gas

The proposed Surat Gas project, between Wandoan and Millmerran in southwest Queensland, is set to significantly expand Arrow’s CSG operations and cater to both domestic and export markets.

Development options for Arrow’s Surat Basin gas reserves are being progressed, and collaboration discussions with third parties are continuing, to identify the best option for monetising Arrow’s gas reserves,” an Arrow Energy spokesperson said.

Federal government approval in December 2013 allowed Arrow to progress with its plans for CSG exploration, development and production in the basin, which included 6500 wells.

 

Arrow Surat Pipeline

The proposed Arrow Surat Pipeline is a high-pressure pipeline that will transport CSG from the Surat Basin to a gas hub west of Gladstone where it will join the proposed Arrow Bowen Pipeline.

In the project’s environmental impact statement, Arrow stated that the pipeline was important to the economic competitiveness of CSG distribution in Queensland; providing socio-economic benefits to the state as well as the Commonwealth and local economies.

The proposed route runs north from the Kogan area, through the local government areas of Western Downs, Banana, North Burnett and Gladstone.

Construction will proceed in two phases: firstly, the northern section from Gladstone down to west Dalby, followed by an extension from Dalby to west of Cecil Plains.

About 6000km of gathering lines are expected to be installed to move CSG and water from wells to gas processing water treatment facilities.

Community initiatives

Arrow has been particularly focused on giving back to the communities in which it operates.

“We understand that our long-term success is closely linked to the social wellbeing of the communities where we work,” Arrow Energy spokesperson said.

Arrow rolled out a number of community initiatives in the second half of 2014 including a mobile cardiac and respiratory service; a domestic violence workshop to Gladstone; an indigenous training program in the Western Downs and regional visits from the Brisbane Broncos.

All of these initiatives were part of Arrow’s Brighter Futures program.

“Our community investment program supports the sustainable development of communities in our operational footprint,” Arrow Energy Spokesperson said.

“Our program supports three areas of community interest: health and safety, education and environment.”