ARROW ENERGY

SURAT GAS PROJECTApril 30 – May 10

SURAT GAS PROJECTTODAY’S AGENDA

Welcome and introductionsWelcome and introductions

A E d tArrow Energy update

Field Development update

Surat Gas Project Environmental Impact Statement (EIS) overview

Groundwater

Agriculture and amenity

ARROW ENERGYTHE HISTORYTHE HISTORY

2P 3P Shell / PetroChina

16000

18000S e / et oC a

Takeover

12000

14000

PJ

8000

10000

Staff numbers

2007 212s re

serv

es

4000

60002010 432

2011 700

Gro

ss

0

2000

Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11

2012 * 1200

*Dec 2012

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ARROW ENERGYCURRENT OPERATIONS

• Commenced gas production in 2004• 1100 wells – 600 producing• Providing energy to 400 000 homes

CURRENT OPERATIONS

• Providing energy to 400,000 homes

Domestic - Surat Basin• Tipton• Daandine• Daandine• Kogan• Stratheden

Domestic - Bowen Basin• Moranbah Gas Project

Arrow LNG• Surat Gas Project

B G P j t• Bowen Gas Project• Arrow Surat Pipeline• Arrow Bowen Pipeline• Arrow LNG PlantPower supply• Braemar 1, Braemar 2 (100%),Yabulu,

Daandine, Moranbah, Swanbank

PROGRESS UPDATEARROW ENERGY

Gas Sales: 100% of LNG sold

Reserves: 8000PJ – equal to or greater than2P reserves at FID

Reserves: 8000PJ equal to or greater than other proponents when FID was taken

Budget: $1-Billion approved to spend in 2012400050006000700080009000

Staffing: Large single accommodation contract in Brisbane (13 floors) signed in March. New accommodation for Moranbah and Dalby

01000200030004000

Arrow APLNG QCLNG GLNG EIS Approvals

Arrow Surat Pipeline – approved in 2010 LNG Plant, Surat Gas Project and Bowen

Pipeline out for public consultation20000

Arrow APLNG QCLNG GLNG

Pipeline out for public consultation Bowen Gas Project – IAS submitted

Land Access: 476 agreements in place; 270 underway in 2012; no cases before Land Court 5000

10000

15000

underway in 2012; no cases before Land Court

FEED readiness review underway, LNG Construction tender end 2012

0APLNG ARROW QCLNG GLNG

2P reserves 3P reserves

ARROW ENERGYEIS APPROVALS – STATUSEIS APPROVALS – STATUS

Proposed Project Timeframes

2011 2012 2013 2014 2015 2016 2017 2018Arrow Surat Pipeline – approved

Arrow Surat Pipeline ConstructionSurat Gas Project EISFinal Investment Decision

Surat Gas Project EIS Submission

Arrow Bowen Pipeline EIS

LNG Plant Project Construction

Arrow Bowen Pipeline ConstructionArrow Bowen Pipeline EIS Submission

Gladstone LNG Plant EIS LNG Plant Project ConstructionGladstone LNG Plant EIS Submission

Bowen Gas Project EIS

LNG Production

Bowen Gas Project EIS Submission

BGP IAS submitted

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EIS Submission EIS consultation Approval decision expected (2yr approvals)

ARROW ENERGYAPPROACH TO SCL

Strategic Cropping Land (SCL) lies over just 15% of Arrow’s total tenurej

ATP 683 has SCL over the eastern portion (Condamine Floodplain)

This area contains a significant amount This area contains a significant amount of gas reserves

ATP 683 is the subject of best practice j ptenure management & technology trials to demonstrate co-existence

Last week, Arrow informed 700 properties of its intent to relinquish those properties from the tenure, to give more certainty to the community

Arrow previously excised the town of Cecil Plains from the ATP in Nov 2010

ARROW ENERGYAPPROACH TO SCL - ACCESS

95 agreements in place (ATP 683) access to 16 black soil properties for

exploration & drilling trials and waterexploration & drilling trials and water monitoring & research

11 agreements in negotiation 11 agreements to commence 11 agreements to commence

Access and safety inductions tailored to intensively farmed land

Single contact for all land holders

Restricted personnel access –t ti l l t ipotential electronic access;

i.d. permits for black soil

Privacy provision at discretion of Privacy provision at discretion of landholder (option to make public)

New all-terrain vehicles to reduce impact in wet weatherimpact in wet weather

ARROW ENERGYAPPROACH TO SCL – EXPLORATION

Exploration & Appraisal

Pitless drilling trials have commenced

SCL specific project management including dedicated rig and crewg g

Infrastructure trials – pipeline and power reticulation

Detailed feasibility assessment of Substitution of Allocation scheme

New mobile wash down units New mobile wash down units

No fraccing on ATP 683 (or existing Surat Gas Project area)

Worked through Arrow Committees with landholders, Local/State Govts USQ, NGOs

,

ARROW ENERGYAPPROACH TO SCL – FIELD DEVELOPMENT

Field Development

Evaluating drilling of up to 8 wells g g pfrom a single well pad to reduce footprint and associated infrastructure

Increased well spacing (160 to 320 acres (0.8km to 1.5km))

Flexibility in well locations

Studying ways to reduce gathering system pipe diameter and potential for alternative construction method - plow (not trench) smaller gathering pipe to preserve soil profile

3 existing field development case studies with farmers on SCL (various farming practices)

ARROW ENERGYWATER MANAGEMENT

Produced Water • Arrow – 25 GL per year (750 GL total)

CSG I d t 125 GL• CSG Industry - 125 GL per year • Existing farmers - 124 GL per year

GAB impact of CSG industry’s total drawdown represents 0.004% of water in the GAB (1/25,000th of 65M GL) before mitigation

Local impacts - working with landholders to b tit t th i G t li d t ll tisubstitute their Govt licensed water allocations

from GAB; plus other regional options

First supply agreement being finalised to use 50% of c rrent ater prod ction from Tipton50% of current water production from Tipton

Arrow has commenced a central research centre and farm Theten to showcase CSG water for irrigation over 370 1300 ha of cropswater for irrigation over 370 – 1300 ha of crops

70 – 100 water monitoring bores planned in the Surat in 2012 as part of a $75M water research programprogram

ARROW ENERGYSURAT GAS PROJECT TIMELINE

Sept 2012 End 2013

Surat concept Select Engineering Definition Project Execution

D i t S l t A i t d i th b t hi h l l d i

Technology trialsWe are here

During concept Select, Arrow engineers are studying the best high level design for:

• Well types, well spacing and artificial lift• Gas and water gathering flow lines to centralised facilitiesGas and water gathering flow lines to centralised facilities• The number, approximate locations and capacity of centralised production

facilities• How to power centralised facilities and wells• The development sequence

At the end of this stage, we will have an integrated view of how the above designs work together as a system

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designs work together as a system

ARROW ENERGYINDICATIVE CENTRAL GAS PROCESSING FACILITIES

We expect to have centralised gas production facilities (CGPFs)production facilities (CGPFs) processing gas from wells.

Indicative feed areas (shown in l i ) b dcolours opposite) are based on:

• the maximum distance gas can be drawn from wellsdrawn from wells

• good drainage characteristics, taking into account the terrain

Each CGPF has processing and compression equipment

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ARROW ENERGYQUESTIONS

SURAT GAS PROJECT DEVELOPMENT AREAS AND TIMING

Target area for development between 2013 and 2023:between 2013 and 2023:

~ 2,000 wells

Production wells: ~ 15 wells in next 12 months

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