Australia grants environmental approval to Arrow coal-seam gas project

By JAMES PATON
Bloomberg

Royal Dutch Shell and PetroChina-owned Arrow Energy is a step closer to deciding on the development of coal-seam gas reserves in Australia after clearing the last major environmental hurdle.

The Australian government allowed Arrow’s plans to extract gas from Queensland state’s Bowen Basin to proceed, according to documents lodged on the environment department’s website.

With the decision, Arrow has received approvals for all five parts of a potential liquefied natural gas (LNG) project.

While Arrow initially proposed an LNG export project to sit beside rival plants on the east coast run by BG Group, Santos and Origin Energy, it’s looking at alternatives for the gas and is in talks with other companies.

Shell, scheduled to report its third-quarter earnings this week, delayed a decision to go ahead with the Arrow LNG project last year due to cost inflation in Australia.

“The environmental approval allows them to extract the gas, so that’s important either way, even if they’re not going to liquefy it, and they sell it to a third party,” said John Hirjee, a Deutsche Bank analyst in Melbourne.

The Santos-led project will need gas and is the “most logical” buyer of the Arrow supplies, Hirjee said. Origin managing director Grant King said earlier this year that joining with his company would be up to Arrow.

“Development options are being progressed, and collaboration discussions with third parties are continuing, to identify the best option for monetizing Arrow’s gas reserves,” Brisbane-based Arrow said.

Arrow already won state and federal approvals for its Surat Basin gas proposal, two pipelines and the LNG plant.

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