Lining up for slice of Gorgon project

MELBOURNE: It is Australia's biggest resources project, ushering in the nation's largest trade deal, and now Gorgon will lead to an unprecedented cash splurge for local contractors.

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

Contractors are lining up for a slice of the A$43 billion ($53.5 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 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 said.

"We will be taking food on to 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 Western Australia during the next eight months, a big boost for the company, which currently employs about 12,000 nationwide.

The numbers alone give an idea of the scale of the works needed to unlock the 1.1 trillion cubic metres of liquefied natural gas at the Gorgon fields.

It is expected the project will generate A$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 project, has promised to use local suppliers wherever possible.

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

Another A$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 by A$65 billion and generate A$300 billion in 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 A$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 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 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 to 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 A$145 billion have already been agreed.

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

MILLIONS TO GET STARTED

Some of the contracts announced as a result of the Gorgon project:

* A$150 million ($186 million) to Compass Group Australia for operation of the accommodation, catering and cleaning services for the construction and production camps.

* A$150 million to Kentz Corporate to design, install, test and commission telecommunications on Barrow Island.

* A$500 million to Thiess for site preparation for the LNG plant and an expansion of logistics infrastructure on the island.

* A$180 million to Toll Holdings for receipt, warehousing and movement of goods once they are delivered to Barrow Island as well as waste removal and cleaning services.

* A$520 million to TDK Joint Venture for the design, manufacture, delivery and commission of a 3300-bed Gorgon construction village.

* A$100 million to Marine Mermaid Australia for access to a marine supply base.

* A$240 million to Offshore Marine Services Alliance for the provision of ocean-going tugs, barges and small landing craft and associated vessels.

* A$160 million to Agility Logistics to supply personnel and equipment.

SOURCES: Chevron Australia, Compass Australia

- AAP