Shell to go ahead with £1.4 billion gas field development off Australia

30 May 2022

Shell Australia announced on May 30 that it has taken a final investment decision to approve the development of the Crux natural gas field, off the coast of Western Australia. The project will be developed with Shell’s joint venture partner SGH Energy and will reportedly cost around $2.5 billion (£1.4bn).

Image: Shell/Kent Smith

In a statement, Shell said that construction in the Crux field will begin in 2022 with first gas expected in 2027. The project will provide further supplies of natural gas to the existing Prelude floating liquefied natural gas (FLNG) facility, the energy major said.

“This project forms an important part of Shell’s integrated gas portfolio,” said Wael Sawan, Integrated Gas, Renewables and Energy Solutions Director at Shell. “Natural gas from Crux will play a key role in helping Asian customers move from coal to gas as a cleaner-burning fuel. 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.”

The Crux field is in Commonwealth marine waters in the northern Browse Basin, 620 kilometres north-east of Broome. The development will consist of a platform operated remotely from Prelude. Five wells will be drilled initially, and an export pipeline will connect the platform to Prelude, which is around 160 kilometres to the south-west of Crux.

Energy research and consultancy firm Wood Mackenzie has estimated the development will produce 1.6 trillion cubic feet (tcf) gas, 60 million barrels (mmbbl) of condensate and 40 mmbbl of LPG. Wood Mackenzie Research Analyst Michael Song said: “In a global context, Crux is an example of the type of incremental, shorter-cycle, high-return development that the industry is targeting as it maintains capital discipline despite strengthening commodity prices. That being said, the volumes will enter the market at a time when we see significant new supply ramping up. Across 2026-8 we expect more than 100 million metric tonnes per annum (mmtpa) of new LNG supply to enter the market from Qatar, the US, Nigeria and Canada.”

Wood Mackenzie Research Director Andrew Harwood said: “In maintaining output from the Prelude facility, Crux will support Shell’s belief in LNG’s key role in the energy transition. Shell is also making substantial investments in its Renewables and Energy Solutions business in Australia, as it seeks to diversify away from its legacy oil and gas business.”