Queensland-based Arrow Energy has taken a step towards the development of its export gas project in Bowen Basin, committing to a range of detailed assessments before any formal commitment to the development.
Arrow, which is jointly owned by Royal Dutch Shell and PetroChina, said on Monday it will proceed with front-end engineering design studies for its Bowen Basin reserves, which will take 12 months to complete.
The $70 million contract for the work was awarded to Clough-AMEC, although the issue that has yet to be resolved is whether the gas will support the development of another export project.
Arrow Energy supplies gas into the domestic market from the nearby Moranbah gas project, which is a joint venture with energy retailer and producer AGL. It is estimated to supply more than a fifth of Queensland's gas demand.
Arrow was bought by Shell and PetroChina in 2010, and has been looking to develop its extensive gas reserves in the Surat and Bowen Basins, with the construction of two pipelines for the two sets of projects and a possible export processing plant.
Arrow had earlier indicated a decision to develop its gas reserves for an export plant would be taken by late 2013, although timing has been delayed as other projects have proceeded.
BG's Queensland Curtis gas project is due to ship its first gas by year end, which will be followed by the Gladstone LNG project which includes Santos as a shareholder and then Origin Energy's Australia-Pacific export project about mid-2015. The emergence of the US and Canada as potential gas exporters into the Asian market has undercut the export ambitions of some of these Queensland projects, and is believed to have been the reason for Arrow slowing some of its development work.
The proposed Arrow Bowen gas project would involve extracting gas from Arrow's petroleum tenures and represented a major expansion in CSG production volumes, Arrow said.
"The decision to proceed with FEED demonstrates the attractiveness of our Bowen Basin reserves," Arrow chief executive Andrew Faulkner said. Arrow had been developing CSG from the Bowen Basin since 2000 and supplying it commercially since 2004.
Arrow Energy's Surat gas project has already received the approval of federal and state governments, with approvals also in place for its Curtis Island gas export processing plant.
Environment approvals for the Bowen gas project and pipeline have yet to be received.
