Royal Dutch Shell PLC has made a $500-million (Aus.) commitment to drill as many as 161 new natural gas wells onshore Queensland by yearend 2018 as part of a program named ‘Project Ruby.’
The program is being run through its Queensland Gas Co. business in the Surat basin and follows the initial $1.7 billion (Aus.) spent in 2015 to establish gas supply for the Curtis Island LNG plant near Gladstone.
Project Ruby has been set in motion to maintain supply to the LNG plant as existing coal seam gas wells decline. But it is also in response to the forecast shortfall in domestic gas supplies on Australia’s east coast. Shell has committed to provide more than 75 petajoules, representing more than 10% of the domestic east coast demand and 40% of Queensland’s domestic market.
Shell Australia Chairman Andrew Smith called his company’s investment a vote of confidence in Queensland’s onshore gas industry and compared it favorably compared with Victoria and New South Wales, where drilling has stalled.
Smith was particularly critical of Victoria’s moratorium on all exploration drilling. He pointed out that it is in the Victorian manufacturers’ interest to have local gas available for their use. He added that Shell and other producers can send gas from Queensland to Victoria to fill the need, but the costs of doing so are higher than shipping gas from the US to Victoria.
The result is that Queensland business has a competitive advantage in attracting manufacturing jobs from Victoria.
Gas supply has become a major issue following blackouts and brownouts in the eastern states during the past 12 months. The growth in LNG exports is seen as the main reason as well as it leading to rapidly rising prices for domestic supplies.
Shell’s commitment comes just a week after Prime Minister Malcolm Turnbull called a meeting of the country’s major gas producers to discuss how to boost domestic supplies in the face of the looming shortage.
