PERTH (miningweekly.com) – The Queensland government has welcomed an announcement by oil and gas major Shell that the QGC joint venture (JV) would drill an additional 161 wells to expand operations in the Surat basin.

Shell Australia on Tuesday said that the move would enable further supply to both domestic customers and natural gas exports.

The drilling project, dubbed Ruby, will underpin 350 new and existing jobs during the 16 month construction, and will sustain QGC;s gas productions as older wells decline, Shell said.

Shell chairperson Andrew Smith said this latest project was the company’s way of continuing to supply gas into the east coast market whilst protecting valuable export jobs in regional Australia.

“This is the next significant milestone for the QGC project and a further vote of confidence in Queensland’s onshore gas industry,” he said.

“We are proud to be investing in regional Queensland, where state and local government have had the vision to establish the rules for a gas industry that creates jobs and supports farmers by providing water, building new roads and paying taxes.

“During construction the Queensland gas industry created more than 40 000 jobs, and even today after construction has been completed it employs 13 000 people.

“In a week where the actions of governments in Victoria and New South Wales have been topical, it is worth noting not one job like these 13 000 exists in Gippsland or the Hunter Valley.”

Smith said that Queensland had shown itself to be a leader in creating an onshore gas industry, creating valuable export jobs, and added that Shell’s announcement shows the industry is growing and creating more jobs.

“Local gas production also means Queensland customers will pay less for gas than those in southern states. This is a competitive advantage for Queensland business in attracting manufacturing jobs from Victoria where gas customers will be forced to pay more for political reasons.”

Queensland’s Minister for Natural Resources Dr Anthony Lynham said ongoing investment in the state’s A$70-billion coal seam gas-liquefied natural gas industry shows the policy settings are right.

“This is good news for gas supplies and jobs in Queensland,” Lynham said.

The new wells will be drilled in 2017 and 2018 in QGC’s existing tenements in south-west Queensland. Discussions with landholders are underway to agree access conditions and compensation, as well as the location of wells and associated infrastructure to ensure minimum impact to agricultural activities.

Shell’s QGC business is a net contributor to the domestic gas market and will sell more than 75 petajoules, net of domestic gas purchases, to customers in Australia this year. This represents more than 10% of east coast gas demand and 40% of Queensland’s demand.