Engineering a bright future

MAJOR opportunities exist for local engineering, procurement, construction and management companies to take advantage of the billions of dollars worth of LNG and oil projects planned for construction in Australia.

As technology and construction methods improve, the oil and gas sector has shifted towards modularisation.

In a change in the industry over the years, sections of sophisticated platforms and rigs, such as giant oil and gas producer Woodside's $12 billion Pluto LNG project, are constructed in different parts of the world and later brought into the state for completion.

Woodside is building parts of the massive gas project in manufacturing plants in Malaysia, Thailand and China.

These large-scale projects require huge amounts of labour and pose a challenge for the Western Australian industry to capture the procurement work locally.

A recent WA Business News forum heard that such large LNG projects, which could be developed for more than 30 years, require a high degree of maintenance work for the life of the project.

"LNG plants are sophisticated, particularly subsea," Nick Palmer, vice-president of facilities and engineering at Perth-based Technip Oceania, said.

"For an LNG plant in particular, it takes a lot of people to build; it's a big exercise where you need a big, stable workforce."

The forum was told that the oil and gas industry has shifted towards offshore procurement as a consequence of capacity issues in WA, industrial relations problems, and increasing production and operating costs.

This is illustrated by Monadelphous Group's decision this year to build its first supply office overseas in Beijing to establish ties with Chinese engineering companies to source fabricated steel products.

A newly established subsidiary, SinoStruct Pty Ltd, has now commenced operations, sourcing steel products from a number of centres in western China and providing specialised engineering services for projects in Australia.

Monadelphous managing director Rob Velletri said the engineering company, which has secured $900 million in new contracts and contract extensions in the past financial year, was making major inroads with its strategy to grow sales revenue in the oil and gas sector.

"Monadelphous' strengthening position in the oil and gas sector will provide the opportunity to take advantage of the large number of multi-billion LNG projects planned for construction in Australia to support the company's sustainable organic growth," Mr Velletri said.

In a bid to generate long-term business growth in "a severely labour-constrained environment", the company has developed other strategies to increase workforce capacity.

Coupled with the China strategy, the company is building its offshore fabrication and assembly capability while increasing the modularisation of components in order to accelerate project delivery and maximise productivity of the Australian workforce.

On the flipside to this, companies such as Ausclad, which is listed on the Singapore Stock Exchange under the name AusGroup Ltd, have record order books from undertaking work procurement locally.

Kwinana-based Ausclad supplies engineering solutions in industrial fabrication, construction and maintenance throughout Australia.

The company was last week awarded a $30 million labour supply contract for the Blacktip offshore gas field project in the Bonaparte Gulf, south-west of Darwin.

The company was also recently awarded a contract by Apache Energy on behalf of the WA-209-P joint venture, valued at $42.8 million, for the fabrication of the Reindeer Gas Field wellhead platform.

Ausclad managing director John Sheridan said the scope of work included the procurement, supply, fabrication, testing, assembly and loading-out of the Reindeer wellhead platform, which consisted of a fully integrated topside, jackets, piles and buoyancy tanks.

Australian Marine Complex general manager Richard Clark said the Henderson-based manufacturing, fabrication, assembly and maintenance facility was built to keep jobs in WA.

"The government invested $350 million down there (but) they need to invest more," he told the forum.

"If we can't take the work, where are they going? They go back overseas."

Mr Clark said construction would be done overseas otherwise.