Chevron advances Gorgon plan

CHEVRONTEXACO has surprised the local engineering industry by deciding to build the Gorgon gas project along similar lines to the North West Shelf project.

This contrasted with industry expectations the $11 billion project would employ ‘modular’ construction techniques, leading to doubts about the amount of work flowing to local engineering and construction firms.

“Modular construction will not happen,” Gorgon development manager Ian Binnie told WA Business News.

“It is more expensive, takes longer and is more complex”.

“The development will be more akin to the ‘stick build’ construction on the Burrup Peninsula.”

Mr Binnie’s comments clarify the likely economic impact of the project and come just a week after the Gorgon joint venture said it was “far too early” to comment on procurement plans or construction techniques.

He said the joint venture’s preferred approach had always been ‘stick build’ construction, which would involve doing most of the work on-site on Barrow Island.

The joint venture had commissioned a number of studies, including with engineering firms Thiess and Technip Coflexip, to evaluate the alternative approach of modular construction.

This would involve fabricating and assembling modules at a remote location and towing them to Barrow Island.

“Modularisation extends the schedule and increases costs,” Mr Binne said.

“It’s only over the past week or 10 days this has come together.”

This conclusion will come as welcome news for local engineering firms, who had been concerned that modularisation of the project would make it easier for contracts to be awarded to overseas suppliers in countries such as South Korea or Indonesia.

Mr Binnie said the Gorgon joint venture’s “aspiration” was to achieve two-thirds local content, the level achieved by Woodside on the North West Shelf’s Train Four project.

However, for the purposes of estimating the likely economic impact of the project, the joint venture had adopted a “conservative” assumption of 50 per cent local content.

The Gorgon development moved closer to formal start-up early this month when the State Government granted in-principle approval for the restricted use of Barrow Island, north of Onslow.

The Gorgon joint venture will have access to 300 hectares on Barrow Island, which Mr Binnie said was sufficient space to construct its LNG facility.

The projected economic benefits of the development, based on the assumed 50 per cent local content, include a peak construction workforce of 3,000 in 2006 and a permanent workforce of 400.

The project is also expected to generate 6,000 indirect jobs across Australia, including at least 1,700 in WA.

Annual exports would be worth about $2.5 billion.

A formal go-ahead for the development is subject to legislation passing through State Parliament, the granting of all necessary State and Commonwealth environmental approvals, and the successful marketing of the gas.

The Gorgon joint venture plans to call tenders later this year for an engineering, procurement and construction (EPC) contractor.

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