Contractors Vying For a Piece of the Substantial Gorgon Pie

22 Sep 09

It is Australia's all time biggest resources project, ushering in the nation's largest trade deal, and now Gorgon will see an unprecedented cash splurge on local contractors.

The Gorgon liquefied natural gas (LNG) project, at Barrow Island about 130km off Western Australia's north west coast, has been tipped to transform the region.

Contractors are lining up for a slice of the $43 billion it is expected to cost to build.

From caterers and transport companies, accommodation houses and tradespeople, everyone is vying for a piece of the biggest pie since the Northwest shelf.

One of them is food and support service group Compass Australia, which has won a $150 million three-year contract to feed workers on the gas project, and to maintain the accommodation that is to be built.

George Mifsud, the Compass human resources director, said the contract was a highlight for the company.

"It is definitely a contract we are proud to be part of," Mifsud told reporters.

"We will be taking food onto the island and off the island, and there will be very little waste, and no waste on the island itself," he said.

Compass plans to hire 1000 people in WA during the next eight months, a big boost for the company, which currently employs about 12,000 nationwide.

The sheer numbers alone give an idea of the scale of the works needed to unlock the 40 trillion cubic feet of liquified natural gas at the Gorgon fields.

It is expected the project will generate $33 billion in spending on Australian goods and services during the next 30 years.

Chevron Australia, one of the joint venture partners in Gorgon, and the operator of the massive project has promised to use local suppliers wherever possible.

Already $2 billion has been signed-off and about 1400 people given jobs.

Another $10 billion has been set aside for contractors and these jobs are expected to be awarded during the next few months.

It is forecast to boost Australia's gross domestic product (GDP) by $65 billion and generate $300 billion in Australian export earnings in its first 30 years.

During peak construction, expected to last up to three years from the end of next year, 10,000 direct and indirect jobs will be created.

All the job ads generated have been tipped to give local newspapers a boost.

Gorgon will also create the world's largest geosequestration project, to pump unwanted carbon dioxide deep below the ground, estimated to cost more than $1 billion.

Although many environmentalists remain sceptical of the claims, it is said it will cut potential emissions from the project by 40 per cent.

All going well, Gorgon will start producing gas for sale in 2014.

WA's Chamber of Minerals and Energy (CME) predicts Gorgon and other local projects will cause the population of the Pilbara to jump by 17,000 by 2014, an increase of 40 per cent.

During the last resources boom, when mining executives were forced to live in tents because of inadequate housing supply, there was only a 20 per cent increase in the Pilbara's population.

There have already been calls for the state government to improve local infrastructure to avoid repeats of the same problems.

And in 2014 Gorgon will still be in its infancy.

The amount of gas in Gorgon is said to be enough to power a city of one million people for 800 years, although the huge sales it generates will probably mean it produces for only 30-60 years.

And what sales they are.

Although the figures may be a little rubbery, the Rudd government last week claimed supply deals worth about $145 billion have already been agreed.

The largest deal is a $50 billion deal to supply PetroChina with LNG over a 20-year period.

Since then, Korea Gas Corporation has signed an agreement for 1.5 million tonnes of LNG annually for 15 years from the Gorgon project - and more contracts are expected.

CME director Paul Frewer said contractors were being given a great opportunity to bid for lucrative deals connected to Gorgon.

"I think it is fair to say that given it is exploring the largest gas field known in Australia it is a once in a generation opportunity," Frewer said.

"These are very large contracts that are currently being put out and companies will certainly benefit significantly from them," he said.

Source: Australian Associated Press

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