Shell and PetroChina will expand the huge Surat coal seam gas project in Queensland, a decision that will be met with dismay from environmental activists but which should provide supply for an increasingly stretched energy market.

Gas from the project extension will supply both domestic and export customers through the Queensland Curtis LNG plant near Gladstone. The project, the second phase of the Arrow Energy joint venture, is expected to supply 130 million cubic feet a day of gas at peak production, enough to power almost 1 million homes.