In April 2020, Arrow Energy sanctioned the first phase of the $10 billion Surat Gas Project (SGP), a world-scale coal seam gas (CSG) project aimed at commercialising the majority of the company’s gas reserves in the Surat Basin in Southern Queensland, approximately five trillion cubic feet (TCF). The project is expected to run for 27 years, and will include up to 2,500 new wells and create about 1,000 jobs across its lifetime. With the first phase of the project now underway, there are a number of opportunities for manufactures and suppliers of pumping and associated equipment to take hold of.
Arrow Energy has operated in the Surat Basin for more than 15 years. The sanction decision follows the final investment decision (FID) for phase one of the SGP from its shareholders, PetroChina and Shell.
Arrow Energy CEO, Cecile Wake, said, “The decisions by PetroChina, Shell and Arrow demonstrate commitment to and confidence in Queensland and the Australian market at a time of global economic turmoil from COVID 19 and against the backdrop of sustained low oil prices.
“This significant investment comes at a critical time and will cement Arrow’s position as a major producer of natural gas on the east coast. “The Surat Gas Project is the first large-scale CSG project in Australia to be underpinned by a significant infrastructure collaboration and gas sales agreement, together with a suite of supporting agreements, which have been put in place between Arrow and the Shell-operated QGC joint venture.
“This agreement enables the use of capacity in QGC’s existing gas and water processing, treatment and transportation infrastructure, reducing the impacts on landholders, communities and the environment and ensuring that more gas can be economically developed.”
Phase one works underway
Phase one works were scheduled to begin in the second half of 2020 with a focus on an expansion between Arrow Energy’s current operational areas at Daandine and Tipton, with expansion to take place later to the north and south of Daandine, down to Tipton.
Initial works will bring around 300TJ/day of gas to the market. The first phase will see more than 600 wells drilled and the construction of inlet processing facilities (IPFs) at Shell-QGC operated David and Harry Field Compression Stations.
The IPFs will enable the company to supply gas from its operational fields under the gas sales agreement, with the David IPF to be the first delivery point online from late 2021. Arrow Energy will continue to use its existing gas compression facilities at Daandine and Tipton, with upgrades to the Tipton Central Gas Processing Facility to take place.
The company will use its existing water treatment facilities, which will be improved through upgrades to the Tipton and Daandine Water Treatment Plants, including a connection to existing Shell-QGC operated water facilities at David, Broadwater and Glendower Ponds.
Water will be sent to the Shell-QGC operated Kenya Water Treatment facility and two new brine storage ponds will be constructed at the facility to support coal seam water treatment for a Beneficial Use Network.
The Beneficial Use Network is expected to be in place by 2023 to return a portion of treated water to users with Condamine Alluvium allocations in order to offset any potential impact from drawdown on the Condamine Alluvium and to maximise beneficial use of its treated CSG water.
Additional treated water will be beneficially used via the existing SunWater Chinchilla scheme. In November, Valmec was awarded the first phase of the project, initially to deliver critical water treatment facilities, valued at $16 million, and involves procurement, construction and commissioning works at the Daandine facility.
“An initial 200 construction jobs will be created during phase one, with an anticipated further 800 construction and operating roles over the life of the Surat Gas Project,” Ms Wake said.
“The decision to sanction phase one of the Surat Gas Project and commence construction…is good for Queensland. It will mean more jobs, more opportunities for local companies and other economic benefits for regional Queensland, which has been home to Arrow for more than 20 years.”
Peak construction is anticipated for 2021-2025.
Works beyond phase one
Planning for subsequent phases continues and Arrow Energy will seek shareholder investment for these phases once engineering definition is complete. Ultimately, up to 2,500 wells are planned across all phases, to bring a peak of 700TJ/day of gas to market from tenure areas north of Wandoan to south of Cecil Plain
Subsequent phases in the future plans include:
• An additional 1,900 wells and associated gathering to expand across Arrow Energy’s Surat tenure areas
• Construction of two new field compression stations at Lynwood, south of Arrow Energy’s Tipton development and Girrahween, near Miles
• Construction of two additional Inlet Processing Facilities (IPFs) at Shell-QGC operated Jammat and McNulty Field Compression Stations
Wells and gathering nearby the new compression stations will be constructed to feed into the new infrastructure. Arrow Energy also plans to step out into new development areas to construct wells and gathering south of Wandoan, and south and east of Cecil Plains.
Reducing site footprint with innovative drilling technique
Traditionally, CSG wells are drilled straight down to create a vertical well. Where conditions allow ‘deviated’ wells – wells that are drilled at angles away from vertical – can be drilled instead.
In the Surat Basin, the seams are thin and discontinuous, so the wells need to target multiple, smaller seams. This is why Arrow Energy is using deviated wells from multi-wells pads in the Basin where possible, allowing the company to cluster the wellheads in groups on single well pads to reduce the impact on farmland and farming operations, while still reaching the same area of coal seam from a single surface point that would otherwise require multiple vertical wells with their own well pads.
Where geology allows, Arrow Energy has committed to multi-well pads and deviated wells on Intensively Farmed Land (IFL). Multi-well pads are preferred where the lowest coal targets are deeper than 400m with surface spacing for deviated wells is up to 2.5km on average.
This benefits landholders by reducing the overall footprint by 25 to 50 per cent compared to traditional vertical well field design. The deviated section of a well can extend at an angle of 70-82 degrees to horizontal distance of up to 800m from the well pad, enabling the company to target a greater amount of coal without impacting the agricultural land directly above, while minimising its infrastructure footprint.
Outside of IFL areas, or where coals are shallower (less than 400m), vertical wells are used with surface spacing from 800m to 1.5km (or greater).
Constructing the wells
There are five major steps in construction of wells and associated gathering infrastructure:
• Site survey and construction or upgrading of access tracks as required
• Construction of well pads
• Well drilling
• Installation of well pad infrastructure, including well head skid and generators or power connection
• Completion of the well, including installation of downhole pumping apparatus
• Connection of the well to Arrows water and gas networks with underground collection pipes, referred to as the gathering system
• Well commissioning
The site survey involves a small team in a light vehicle surveying the well pad location and other necessary infrastructure, such as access roads and pipeline routes.
The establishment of access tracks to the site, if not already existing, may also be required. This work can take between two land five days to complete.
Well pad construction
After the survey is complete, the well pad site is cleared and levelled. Where required, fauna spotters/handlers inspect the site prior to these works commencing to rescue or relocate any birds or animals.
The pad area that is cleared and levelled will be much larger than the final size of the constructed well pad to accommodate the drilling and completions works, and will be rehabilitated once the works are completed.
In general, an area of 100mx100m is cleared for a single well pad, while a multi-well pad that can accommodate up to eight wells can require an area of up to 100mx200m. Depending on the size of the pad, construction can take up to eight days to complete.
Drilling activities may occur on a 24-hour basis and can take up to seven days to complete. The process involves a drill rig, and both heavy and light vehicles delivering parts and personnel to site.
Once the drill rig is mobilised to site, an initial surface hole is drilled to a planned depth, a steel casing is inserted into the surface hole and cemented in place. The cement is pumped down through the steel casing, out the open end at the bottom of the hole and back up the outside of the casing to the top to ensure any gaps are filled between the steel casing and the surrounding rock.
Deviated drilling tools are then used to drill on a designated path to reach the coal. Once the production hole has reached its final depth, a specifically tailored casing is installed. Expanding (swelling) packers are used around the outside of the casing to isolate the coal seams from other aquifers or rock formations, and cement is pumped around the outside of the production casing to ensure the isolation.
Testing is then undertaken on all casings to ensure well integrity and the well is “suspended” (made inoperable to prevent gas production) until it can be “completed” (made ready to operate) through the installation of a downhole submersible pump, and commissioned (started up).
Completion and commissioning
At this stage, surface infrastructure is installed on the well pad, including:
• A well head
• A metering skid to manage and measure gas flow
• Gas-driven generator or reticulated power equipment for a submersible pump
• A control cabinet and communications aerial to enable remote monitoring
To complete a well, a completion/workover rig and about nine workers will arrive at the well pad. The crew will take four to seven days to drill out the internal cementing tools and install an electric submersible pump into the well.
The pumps reduce water pressure in the coal seam to allow the gas to flow. Once this has been completed, the well sites are ready to be connected to the water and gas networks and commissioned for operation.
The well pad construction site will then be reduced to the final operating size and the excess area will be rehabilitated. Typically, a single-well pad may have a fenced area about 20mx30m, while the multi-well pad size will vary depending on the number of wells and site layout.
The remaining disturbed area will then be rehabilitated in accordance with the landholder requirements, and can be used by the landholder for regular agricultural purposes. The rehabilitated area may be required from time-to-time for well maintenance activities.
Gas and water gathering pipeline construction
Before constructing pipelines, surveying and pegging of the pipeline route and construction areas, known as a “right-of-way” (RoW), need to take place. The route will be planned with the property owners, and designed to minimise impacts to the day-to-day use of the property and future land use.
Once the RoW is pegged, the area is cleared, with vegetation and topsoil stockpiled separately, for use during rehabilitation after works are completed. Erosion and sediment controls are implemented and gypsum is spread on top of the exposed sub soil. The pipeline route is then excavated by a trenching machine.
The depth of the trench is dependent on land use, however there will be a minimum of 750mm of cover over the pipe. The gathering pipeline will then be laid out along the route, before being welded together to create a “string” and lowered into the trench and backfilled.
At this stage, aboveground safety infrastructure, such as high point vents and low point drains, is installed as required. After backfilling and compaction of the trench, the RoW is rehabilitated including grading the ground and reinstating original formations and natural contours.
The grading/profiling is followed by evenly spreading the preserved topsoil across the RoW using a grader. The buried pipeline is then pressure tested to ensure strength and to test for leaks. The final step is to seed vegetation on the RoW which is done in consultation with the landholder.
Maintaining the infrastructure
The frequency of maintenance of the wells will vary, but Arrow Energy has averaged it to once every two to three years. Where there are up to eight wells on a multi-well pad, the frequency will be higher than for vertical well pads, with two to eight maintenance events per year, on average. For a four well pad, it is expected to undertake one to four maintenance events per year.
Routine inspections and maintenance of the well pads will also need to be undertaken, which could range from weekly to quarterly, depending on the individual well. Typically for these wells, Arrow Energy expects fortnightly inspections for maintenance and safety checks.
There are a number of opportunities for Australian manufacturers and suppliers to get involved in the project, including for the provision of electric submersible pumps and choke valves. All procurement and supply opportunities are advertised on the Industry Capability Network (ICN) Gateway. To view current work package listings or register your interest in future contracting opportunities, visit www.arrowenergy.com.au/suppliers-contractors/supplier-portal.