Reports related to this article:
Project(s): View 16 related projects in PECWeb
Plant(s): View 5 related plants in PECWeb
Released February 04, 2015 | PERTH, AUSTRALIA
en
Researched by Industrial Info Resources Australia (Perth, Australia)--Royal Dutch Shell (NYSE:RDS.A) (The Hague, Netherlands) announced it has cancelled the Arrow liquefied natural gas (LNG) production project in Australia for economic reasons. The cancellation comes after more than five years of design engineering, environmental impact studies and economic evaluation. The Australian federal government granted conditional environmental approval for the project in 2013.
Shell and PetroChina Company Limited (NYSE:PTR) (Beijing, China) each own a 50% share of Arrow Energy, and have invested upward of AU$3 billion (US$2.3 billion) in the Arrow LNG project development. Arrow Energy was formed in 1997, and was listed on the Australian stock exchange in 2000. The Shell and PetroChina joint venture acquired Arrow Energy in August 2010 for AU$3.5 billion (US$2.7 billion), along with the significantly smaller Bow Energy for AU$500 million (US$388 million). Arrow Energy owned the tenements to large reserves of coal seam gas (coal bed methane) in Queensland that were intended in part to supply the Fishermans Landing LNG project on the mainland in Gladstone.
The Arrow LNG project was to include a two-train, 8 million-tonne-per-year LNG production plant (expandable to 18 million tonnes per year); natural gas export pipelines; upstream coal-seam gas-processing facilities; and gas-gathering systems and infrastructure, such as water treatment plants.
Shell and PetroChina cancelled development of the Arrow LNG project after more than a year of discussions. The LNG production plant and supporting facilities will not go ahead. The supporting facilities would have included power generation, LNG storage tanks, jetty and mooring facilities for LNG exports, desalination systems, and accommodations to house the construction and operational work forces.
The Arrow LNG project owners have had to evaluate the future demand for LNG from Asia and measure the cost of construction and operations, especially the high labor-related operational costs in Australia. Shell and PetroChina have had to compete for sales agreements with an offering of expensive Australian LNG. Japan, Korea and China are Australia's biggest LNG customers, and have committed to pay a good price for LNG exports now and in the future. Demand is high and Australian reserves can cater to this demand.
Three LNG production plants on Curtis Island will export a combined total of 20.8 million tonnes per year of LNG to Asia for 15 to 20 years. The plants include:QCLNG, by BG Group's (Reeding, England) Australian subsidiary, Queensland Gas Company [QGC]; APLNG, by ConocoPhillips (NYSE:COP) (Houston, Texas) and Origin Energy (Sydney, New South Wales); and GLNG, by Santos Limited (ASX:STO) (Adelaide, South Australia). These foundation-phase production capacities are intended eventually to increase to a combined total of 48 million tonnes per year.
Shell has decided that Arrow Energy's expansive coal seam gas reserves should be supplied to one or more of these three LNG plants on Curtis Island. In the long run, investing in the advancement of the upstream projects throughout the Bowen and Surat basins for supply to existing facilities on the island is expected to be a better business decision. The LNG facilities are said to be in need of natural gas supply for expansions, as QGC, Origin Energy and Santos' reserves look to be shy of required amount to make possible their plans for LNG production capacity expansions.
The QCLNG project began operations after Christmas in 2014. Both the APLNG project and the GLNG project will begin exports in 2015.
For related information, see February 10, 2014, article - Final Investment Decision Delayed on Arrow LNG Project on Australia's Curtis Island; November 14, 2013, article - Fishermans Landing LNG Project in Queensland Struggles with Gas Supply; and August 24, 2011, article - Chiyoda, Saipem, and CB&I Consortium Awarded FEED Contract for Arrow LNG Project in Queensland.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Shell and PetroChina Company Limited (NYSE:PTR) (Beijing, China) each own a 50% share of Arrow Energy, and have invested upward of AU$3 billion (US$2.3 billion) in the Arrow LNG project development. Arrow Energy was formed in 1997, and was listed on the Australian stock exchange in 2000. The Shell and PetroChina joint venture acquired Arrow Energy in August 2010 for AU$3.5 billion (US$2.7 billion), along with the significantly smaller Bow Energy for AU$500 million (US$388 million). Arrow Energy owned the tenements to large reserves of coal seam gas (coal bed methane) in Queensland that were intended in part to supply the Fishermans Landing LNG project on the mainland in Gladstone.
The Arrow LNG project was to include a two-train, 8 million-tonne-per-year LNG production plant (expandable to 18 million tonnes per year); natural gas export pipelines; upstream coal-seam gas-processing facilities; and gas-gathering systems and infrastructure, such as water treatment plants.
Shell and PetroChina cancelled development of the Arrow LNG project after more than a year of discussions. The LNG production plant and supporting facilities will not go ahead. The supporting facilities would have included power generation, LNG storage tanks, jetty and mooring facilities for LNG exports, desalination systems, and accommodations to house the construction and operational work forces.
The Arrow LNG project owners have had to evaluate the future demand for LNG from Asia and measure the cost of construction and operations, especially the high labor-related operational costs in Australia. Shell and PetroChina have had to compete for sales agreements with an offering of expensive Australian LNG. Japan, Korea and China are Australia's biggest LNG customers, and have committed to pay a good price for LNG exports now and in the future. Demand is high and Australian reserves can cater to this demand.
Three LNG production plants on Curtis Island will export a combined total of 20.8 million tonnes per year of LNG to Asia for 15 to 20 years. The plants include:QCLNG, by BG Group's (Reeding, England) Australian subsidiary, Queensland Gas Company [QGC]; APLNG, by ConocoPhillips (NYSE:COP) (Houston, Texas) and Origin Energy (Sydney, New South Wales); and GLNG, by Santos Limited (ASX:STO) (Adelaide, South Australia). These foundation-phase production capacities are intended eventually to increase to a combined total of 48 million tonnes per year.
Shell has decided that Arrow Energy's expansive coal seam gas reserves should be supplied to one or more of these three LNG plants on Curtis Island. In the long run, investing in the advancement of the upstream projects throughout the Bowen and Surat basins for supply to existing facilities on the island is expected to be a better business decision. The LNG facilities are said to be in need of natural gas supply for expansions, as QGC, Origin Energy and Santos' reserves look to be shy of required amount to make possible their plans for LNG production capacity expansions.
The QCLNG project began operations after Christmas in 2014. Both the APLNG project and the GLNG project will begin exports in 2015.
For related information, see February 10, 2014, article - Final Investment Decision Delayed on Arrow LNG Project on Australia's Curtis Island; November 14, 2013, article - Fishermans Landing LNG Project in Queensland Struggles with Gas Supply; and August 24, 2011, article - Chiyoda, Saipem, and CB&I Consortium Awarded FEED Contract for Arrow LNG Project in Queensland.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
