Located in the gas-producing Surat and Bowen Basins, the domestic gas acreage will be operated by Santos and was released by the Queensland government under the Queensland exploration program in a move to enhance gas supply on the east coast.

Spread across nearly 400kms, the new domestic gas acreage is located 19km east of Surat town.

The onshore license is immediately south of the Wallumbilla gas hub, which enables the Santos Shell joint venture to benefit from the existing infrastructure. This is expected to yield reduced development costs while fast tracking the delivery of natural gas to the domestic market.

Santos revealed that exploration in the new acreage will target natural gas in deep sandstone reservoirs of the Bowen Basin, underneath the Surat Basin.

Should the exploration results turn out to be positive, the Santos Shell joint venture will look to potentially exploit a material new gas supply source to supply to the Australian east coast domestic gas market.

Santos managing director and CEO Kevin Gallagher said: “As Australia’s lowest cost onshore natural gas developer, I am very pleased that Santos will be the operator to develop these blocks exclusively for the domestic market because low cost supply is the best way to put downward pressure on gas prices.

“Santos has reduced connected well costs in Queensland by 84 per cent and completed well costs in the Cooper Basin by 50 per cent since 2015.”

The Queensland government stated that prior to launching exploration in the new domestic gas acreage, the Santos Shell joint venture will have to fulfill native title and environmental requirements apart from negotiating land access agreements.

It also said that any gas produced from the domestic gas acreage can be sold only in Australia under its strategy to address the east coast gas shortages and high prices.

Queensland Mines Minister Anthony Lynham said: “These land releases mean more petajoules in pipes and more Queensland gas for Australia’s east coast.

“Queensland continues to lead the nation on gas and again, I’m imploring other states to follow our lead.”