Shell goes ahead with major Australian offshore gas project worth $2.5 billion

British oil and gas major Shell Plc said on Monday it has approved the development of the Crux gas field off Australia, with construction expected to start in 2023 and the first gas expected in 2027 at an analyst-estimated cost of around US $2.5 billion.

The project would help Shell’s Asian customers move from coal to gas, and also provide a secure supply source following the imposition of sanctions on Russia, the company said. The gas from the project will feed the 3.6 million tonne a year Prelude floating liquefied natural gas (FLNG) facility, Shell said in a statement.

Integrated gas portfolio

“This project forms an important part of Shell’s integrated gas portfolio,” said Wael Sawan, Integrated Gas, Renewables and Energy Solutions Director at Shell. “The project will help us to meet the increasing demand for LNG as the energy market transitions to a lower carbon future. The project will also boost our customers’ security of supply, which is becoming an ever more significant consideration for global consumers,” he added.

The Crux field lies in Commonwealth marine waters in the northern Browse Basin, 620 km north-east of Broome. The development will comprise a platform operated remotely from Prelude, with five wells to be drilled initially. An export pipeline will connect the platform to Prelude, which is around 160 km to the south-west of Crux, Shell said.

Energy commitment to Australia

“Developing the Crux project reinforces our commitment to Australia, including boosting the regional economy, creating jobs and providing training opportunities,” Shell Australia Chair Tony Nunan said in a statement. “The use of Prelude’s existing infrastructure enables significantly reduced development costs, making Crux competitive and commercially attractive,” he added.

Global LNG demand is expected to rise significantly amid an energy supply crunch, with Asia expected to create a significant part of the demand as domestic gas production declines, regional economies grow and energy sources with higher CO2 emissions are replaced with LNG. The emergence of LNG will also help tackle concerns over air quality and to help progress towards carbon emissions targets, according to analysists.