THE first stage of Arrow Energy's long awaited $10 Billion Surat Gas Project (SGP) in Southern Queensland will go ahead after a final investment decision was made by Shell Australia and PetroChina today.

The first phase of the SGP development will begin construction this year, including more than 600 wells and is set to deliver its first gas in 2021.

Arrow CEO Cecile Wake said the decision to sanction phase one of the SGP and commence construction this year is good for Queensland.

"It will mean more jobs, more opportunities for local companies and other economic benefits for regional Queensland, which has been home to Arrow for more than 20 years," she said.

With so much disruption caused by COVID-19 Ali Davenport, CEO of Toowoomba and Surat Basin Enterprises (TSBE) who Arrow have been long term members of, said she was also thrilled for the opportunities and revenue it will generate for the Western Downs region.

"The project will initially require 200 construction roles, which will then lead to 800 roles, meaning this project will generate money right throughout the economy," she said.

"Construction jobs have many beneficiaries with workers spending money locally on restaurants, accommodation, entertainment venues and retail.

"There will also be 200 ongoing jobs over the anticipated 27-year life span of the SGP.

"TSBE will work with Arrow Energy to ensure local contractors are utilised as much as possible."

The project area is divided into five main development regions, namely Wandoan, Chinchilla, Dalby, Millmerran/Kogan, and Goondiwindi.

It is underpinned by 16 petroleum leases which cover around 2500 sqkm on blocks between Dalby and Chinchilla.

It will also produce up to 90 billion cubic feet per year of new gas to market at peak production.

This will then flow to Shell operated QGC to be sold locally and exported through its plant on Curtis Island.

Integrated Gas and New Energies Director at Shell, Maarten Wetselaar said the utilisation of QGC's existing upstream pipelines and treatment facilities enables Arrow to significantly reduce development costs, making the project competitive and economically attractive.

"The approach we have taken to this investment is aligned with Shell's focus on actively managing all operational and financial levers to deliver sustainable cash flow generation," he said.

"It reflects our disciplined approach to capital spend, which takes a long-term view of the fundamentals of supply and demand."

Arrow has been negotiating binding land access compensation agreements with local landholders and involving them in its field development planning.

Ms Wake praised the Queensland Government's role.

"We sincerely appreciate the efforts of all involved, including the State Government, to bring Arrow to this point, and we look forward to safely and successfully delivering the first phase of this exciting project," she said.

"In these challenging COVID-19 times, Arrow remains committed to operating its business and executing this project safely and responsibly to protect the health and wellbeing of its people and all of the regional communities where we operate."