The 2 trillion cubic feet Crux gas field project will be the source of backfill for the Prelude floating LNG vessel, which has not sent a cargo since February.
The development will consist of five subsea production wells tapping into the northern Browse Basin, which will then be tied back to an unmanned platform.
This platform will then connect via a 165km long export pipeline to the Prelude facility where it will also be operated remotely.
Shell is the operator of the Crux development with an 82% interest alongside its joint venture partners Seven Group Holdings Energy (15%) and Osaka Gas (3%).
"Shell Australia and its joint venture partners, SGH Energy and Osaka Gas, are very pleased that NOPSEMA has accepted its Offshore Project Proposal to develop the Crux gas field," a Shell spokesperson told Energy News today.
"The Offshore Project Proposal acceptance is the first of five regulatory approvals Shell will need to proceed with this project. We remain committed to the development of Crux."
In a statement to Energy News in April, a Shell spokesperson confirmed project sanction had been delayed due to the pandemic and "market uncertainty" however did not give any time frame on when the decision would be made.
Post-sanction it will take approximately four to five years to build the platform and connect the subsea production wells. Late last year the venture hoped to bring the field into production as early as 2024.
Prelude's lengthy shutdown is due to power generation problems and issues with the sewerage system, among others.
Prelude has a nameplate LNG capacity of 3.6 million tonnes of LNG per annum. Overall capacity through the vessel is 5.3MMtpa with condensate production and LPG included.
Late last year Seven Group Holdings said in an investment presentation it was sounding out the market for LNG and condensate offtake. At the time the company remained bullish about a "growing interest" from a range of overseas LNG buyers and investors from Japan, China, and Europe.
However since Seven made that presentation, things have changed drastically in the international energy market, with the oil price crash of April and weak demand for gas throughout Asian markets.
Seven's latest presentation from a month ago stated that production was anticipated "when the market is more balanced."
The company also noted it was considering selling its stake in the field, however this too was put on hold until next year.
The Crux field has a production life of more than 15 years.
Shell's latest results saw it take impairments of US$9 billion from its integrated gas business, which included costs associated with the Prelude FLNG project.