Shell-owned QGC sparked the $70 billion investment wave in coal seam gas a decade ago that promised huge financial returns for the state and the business, but the industry has since been buffeted by economic shocks including the current COVID-19 global recession which has devastated the oil and gas sector.

In 2017, Shell wrote off $390 million worth of its coal-seam and other gas exploration and evaluation ground associated with the Queensland Curtis LNG plant at Gladstone because of poor drilling and testing results.

Earlier this year Shell and PetroChina wrote down $520 million from the value of its joint venture company, Arrow Energy.

Overnight, Shell said the write down of its global integrated gas business would be in the range of $US8 – $US9 billion, “primarily in Australia including a partial impairment of the QGC and Prelude asset values”.

“Shell has revised its mid and long-term price and refining margin outlook reflecting the expected effects of the COVID-19 pandemic and related macroeconomic as well as energy market demand and supply fundamentals,” the company said.

“This has resulted in the review of a significant portion of Shell’s Upstream, Integrated Gas and Refining tangible and intangible assets.

“The Upstream and Integrated Gas asset valuation updates, including of the related exploration and evaluation assets, are largely driven by the change in long-term prices with some impacts due to a changed view on the development attractiveness.”

Overall, Shell said its writedowns would total between $US20 and $US27 billion before tax.

However, QIC chief executive Damien Frawley yesterday told a superannuation forum that while renewables were the future, gas would be around for a long time.

“Renewables and alternative sources of energy are here to stay,” Frawley said.

He said QIC had invested strongly in renewable energy with a portfolio that would generate enough electricity to supply 465,000 homes.

He said fossil fuels, including coal-fired power over time were in decline and the investment merit of renewables would give rise to greater opportunity and allocation for the sector.

“When you think about it, one of the big contributors to the Queensland economy is indeed, gas,” Frawley said.

“Gas plays a role in the overall energy solution of Australia. It might just be in the transition of old world to new world but it also plays a role for a much longer duration than the transition.”

Sunsuper’s Bernard Reilly said gas was part of the overall solution.