The company said the major coal seam gas project would involve the staged development of about 1500 production wells and associated infrastructure in an area covering its existing gas production fields at Tipton West, Daandine, Stratheden and Kogan North.

The project will also include a broader area extending from Wandoan to Dalby and south to Millmerran and Goondiwindi, in which Arrow holds petroleum tenure and environmental approvals for exploration.

Arrow said its initial investment in the region, including the development of a pipeline between the Surat Basin and Gladstone, would most probably exceed $1.5 billion with further development planned as domestic and export expansion opportunities arose.

Arrow chief executive officer Australia Shaun Scott said the project would increase the company's workforce, and add to regional economic growth and domestic reserves of natural gas.

"We believe that gas is the energy of the future and will play an important role in meeting national and global demands for cleaner energy," he said.

"Arrow's plans include ongoing and increased supply to the Queensland domestic gas market, and potential supply to the Gladstone LNG project at Fisherman's Landing and the Shell Australia LNG project on Curtis Island."

Earlier this year, the company flagged it was planning its largest ever exploration work program for the current financial year to convert resources into reserves that can be monetised via Fisherman's Landing and Curtis Island LNG opportunities.

Both Fisherman's Landing and Shell's LNG project will source gas from Arrow's fields in central Queensland.

The Fisherman's Landing LNG project, which is being jointly developed with Liquefied Natural Gas Limited, will include an initial 1.5 million tonne per annum LNG plant with a second train of similar capacity also planned.

The project is targeted to start production in 2012.

Shell's Australia LNG project involves the phased construction of up to four LNG trains, each with a capacity of 3-4MMtpa.

The foundation train will use about 200 petajoules per annum as feed gas and require up to 4000PJ for its first 20 years of operation.

Shell has said it believes its jointly held tenements with Arrow contain sufficient gas resources for the first train.

Arrow supplies more than 20% of Queensland's overall annual gas consumption of around 160PJ via its current field developments in the Surat and Bowen basins.

The company says its estimated gross resource in the Surat Basin stands at 12,400PJ.