Clough in race for Apache contract

OIL and gas contracting specialist Clough remains in the running for a $200 million contract for the offshore production facilities at Apache Energy's Reindeer gas field following John Holland Group's successful tender for onshore plant construction.

Apache last week awarded John Holland a $160 million contract to build all associated onshore processing facilities at Devil Creek, 50 kilometres south-west of Dampier.

The contract supercedes a $260 million onshore contract initially awarded to Clough last year, but terminated in December when Apache was forced to suspend the project in the wake of the global financial crisis.

At the same time, Apache terminated Clough's $200 million engineering procurement and construction contract for all related offshore work at the Reindeer gas field.

However, the Reindeer-Devil Creek development was revived in January when Apache secured a new foundation gas customer, Citic Pacific Mining.

Clough, which subsequently secured a $45 million contract to design and fabricate Devil Creek's processing modules, did not retender for the main onshore contract.

Clough managing director John Smith confirmed that his company was one of three groups tendering for the more lucrative offshore contract.

Mr Smith said Clough chose not to re-tender for the onshore contract as it would have needed to subcontract out significant portions of the work, such as earthmoving, significantly reducing the final margin available to Clough.

In comparison, offshore design and construction were among Clough's core capabilities.

John Holland's Devil Creek success comes two months after it struck an alliance with global oil and gas engineering group Arup in a bid to re-establish a foothold in the booming energy sector and offset the slowdown in mining project development.

"This new work is part of our long-term strategy to bring the full scope of our construction services to bear on emerging oil and gas projects across Australia," John Holland structural mechanical process division general manager, Brendan Petersen, said.

"The diversity within John Holland ensures these complex projects can be delivered from start to completion by the one contractor."

Apache spokesman David Parker said the Devil Creek project was especially significant for Apache as it was the company's first onshore development in Australia and would further enhance its ranking as one of WA's main domestic gas suppliers as operator of the Varanus Island gas plant.