17/09/2009 - 00:00

Gorgon promises jobs bonanza

17/09/2009 - 00:00


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WESTERN Australia has entered a new era of oil and gas-led development that will underpin the state's economic growth for decades, according to the head of the $43 billion Gorgon LNG project at Barrow Island.

WESTERN Australia has entered a new era of oil and gas-led development that will underpin the state's economic growth for decades, according to the head of the $43 billion Gorgon LNG project at Barrow Island.

US energy giant Chevron, and fellow Gorgon partners Shell and ExxonMobil, this week formally approved development of Australia's biggest ever resources development, paving way for work to commence almost immediately.

Preliminary site works will begin on Barrow Island within weeks, while full-scale construction will get under way early next year, ahead of first LNG exports in 2014.

"A new era of oil and gas has arrived - Gorgon is here," Chevron Australia managing director Roy Krzywosinski told WA Business News.

"This will have enormous benefits for the WA economy as well as the Australian economy in terms of jobs, local content investment and the environmental benefits associated with natural gas."

Gorgon partners will spend about $33 billion on Australian goods and services over the life of the project, which will also create 10,000 jobs during construction and over 3,500 full time jobs once in operation.

About $5 billion in Gorgon-related contracts have already been awarded, and at least a further $8 billion in additional contracts are due for award by the end of the year.

After signing off on the Gorgon development with Chevron's global gas chief George Kirkland, Premier Colin Barnett was wary of declaring WA to be on the verge of a new economic boom.

"We've had periods of hectic activity before, and they have invariably ended in tears. The opportunity for Western Australia now is to have long-term development over perhaps the next 20 years," Mr Barnett said.

"And I hope we don't get the mentality of that boom word in this state or this country. This is an opportunity to not only have a great project, but also to make sure the benefits are spread widely throughout our community."

Hours later, Apache Energy formally turned the first sod at its $900 million Devil Creek domestic gas project near Karratha ahead of first production in 2011.

Furthermore, at least three other major LNG projects worth $70 billion are currently in advanced planning stage.

Front-end engineering and design has begun for both Woodside Petroleum's $20 billion Pluto LNG expansion near Karratha, and Chevron's nearby $25 billion Wheatstone LNG project. Meanwhile, Woodside wants to approve development of the $30 billion Browse LNG project in the Kimberley by the end of next year.

Nonetheless, doubts remain over just which projects will proceed.

Despite Woodside's support for the state government's proposed Kimberley processing hub at James Price Point, fellow Browse partners Chevron and Shell remain sceptical that it is a better option than piping gas to the North West Shelf.

Both Chevron and Shell this week confirmed they were still to be convinced otherwise.

"We'd like to see the options that are out there on the table fully understood and fully developed so a quality investment decision can be made, that's where we are at," Mr Krzywosinski said.

"Every project needs to go through a maturation stage, and we think Browse is still early in its maturation stage."

Chevron owns less than 10 per cent of Browse, but Mr Krzywosinski said Chevron's competing investment obligations at its own projects such as Gorgon and Wheatstone would not affect its decision to support development of Browse.

"If it's economic, we'll do it," he said.

Shell Australia vice-president Jon Chadwick said Shell also had the capacity to fund all its competing LNG proposals in Australia, including Gorgon, Browse, Sunrise, Gladstone and its likely Prelude floating LNG project near Browse.

However, it did not believe sufficient work had yet been done to prove James Price Point was the best option for developing Browse.

"It's just too early to say which is the best development option, and like the other non-operating partners, we feel very strongly about that," Mr Chadwick said.

Mr Chadwick also warned that not all of the LNG projects planned in Australia could or would proceed.

"It's important to remind ourselves that these are huge projects, and they require strong sponsors," he said. "Not every company on the planet can do it."

As reported in WA Business News' major projects survey last week, there are currently ten LNG developments jointly worth $180 billion proposed off north-western Australia alone.



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