Major projects keep rolling

13/08/2008 - 22:00

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Three major developments in the gas, iron ore and power sectors this week have once again highlighted the ability of big projects to insulate the Western Australian economy from the global economic slowdown.

Three major developments in the gas, iron ore and power sectors this week have once again highlighted the ability of big projects to insulate the Western Australian economy from the global economic slowdown.

The most significant news was the decision by the three partners in the Gorgon gas project to spend $1 billion and employ 1,200 staff and contractors, just to decide whether they should proceed with what would be Australia's largest ever resource project.

Australia's biggest engineering company WorleyParsons Ltd was at the centre of two other major announcements.

Worley is heading a consortium that includes many of WA's biggest companies to study the development of a series of $1 billion, 250 megawatt solar thermal power stations across Australia.

The study will be jointly funded by industry partners including Woodside Petroleum, BHP Billiton, Rio Tinto, Fortescue Metals Group and Wesfarmers (see page 15).

Worley also quietly announced this week that Fortescue Metals Group had awarded a two-year, $260 million contract to manage the expansion of its iron ore mining operations in the Pilbara.

Worley managed the design and construction of FMG's recently completed iron ore operations, which cost a total of $2.8 billion.

Like its bigger competitors BHP and Rio, FMG is pressing ahead with rapid expansion plans to take advantage of growing Chinese demand and high prices for iron ore.

The amount of money being spent in the iron ore industry is being rivaled only by the oil & gas sector.

The major project currently underway in that sector is Woodside Petroleum's $12 billion Pluto liquefied natural gas (LNG) project, located on the Burrup Peninsula.

The ubiquitous WorleyParsons also has a lead role in Pluto, as one of the major engineering contractors.

The Gorgon partners are increasingly positive about their project, which is likely to cost in excess of $20 billion to develop, though no official estimates are current.

"Now more than ever the timing is right," Chevron Australia general manager, Greater Gorgon Area, Colin Beckett told an industry briefing this week.

"There is a real sense of energy flowing through the Gorgon Project participants and team and a determination to deliver on the development of this world-class resource," Mr Beckett said.

Mr Beckett also announced this week that the Gorgon LNG project would include a 300 terrajoule per day domestic gas plant.

The Gorgon project has been under consideration for more than a decade and faced numerous environmental and financial hurdles.

Mr Beckett said a final investment decision would be made after the project obtained all approvals, which he anticipated would be "over the next 12 months".

That would be followed a five-year construction phase before the first LNG was produced.

Mr Beckett said the project partners had brought forward their plans for a domestic gas plant. However its start-up would not occur until commissioning of the third LNG 'train'.

The project is a joint venture between Chevron, Exxon-Mobil and Shell.

A study by ACIL Tasman has found that the project would have a peak construction workforce of around 6,000 people and that over 30 years would purchase goods and services in Australia worth $33 billion.

It would also generate government revenue of about $39.8 billion.

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