The cost of Chevron Australia’s Gorgon gas fields project: what the workers say

Professor Bradon Ellem (image courtesy of The University of Sydney)

Stranded gas. Once a looong way from its intended market, heavy global investment, particularly by US multinational corporations (MNCs) in recent years, sees the delivery of natural gas to consumers no longer the problem it once was. And Australia is host to one such operation.

Chevron’s Gorgon gas Project – Australia’s largest ever resource project – is a joint venture with ExxonMobil located off the northwest coast, at Barrow Island. With five gas trains planned once fully operational, natural gas from the greater Gorgon fields will be sent to the Island a Class A Nature Reserve – for purification and transportation to domestic and international markets.

On Tuesday (14 April, 2015), WOW guest, Professor Bradon Ellem (The University of Sydney Business School) presented research findings from a report commissioned by the International Transport Workers’ Federation (ITWF) (and subsequently submitted to the Productivity Commission),  detailing workers’ experiences on this project and their own assessment of why the job – originally costed at USD37 billion dollars – is yet to produce any gas (originally scheduled for 2014) and now running at USD54 billion dollars.

With employer, lobbyist and government criticism about the blowouts overwhelmingly focussed on the labour side of things – labour law, the workforce and its cost, and the high presence of unions (unusual for offshore projects) – Bradon sat down with around 50 maritime, construction and maintenance workers – most  of whom were members of either the Australian Manufacturing Workers Union (AMWU), Construction, Forestry, Mining, and Energy Union (CFMEU) or Maritime Union of Australia (MUA) – to get their thoughts.

So, what emerged?

Professor Ellem commented on the extraordinarily rich detail provided by participants about the nature of their work. Key issues included rostering, contractor coordination, job control and safety. Bradon explains:

“The focus on safety is a massive issue… Since the report was completed tensions have increased; in particular around roster arrangements, workers’ [mental health], and a major accident on the Island [in preparation for a] cyclone [Olwyn] in March [2015]. The expiry of worker EBAs [Enterprise Bargaining Agreements] earlier this year has also raised basic IR [Industrial Relations] issues such as controls over the labour processes – there are about 20 major subcontractors on the project plus labour hire – and the complexity of the work organisation itself.”

The participants also highlighted how cost blow out and delay controversies were diverting attention from other issues such as the distribution of surpluses through the local reinvestment of royalties, local jobs, and the environmental impact of the project  beyond northwest Australia. Equally, in such projects one needs, says Bradon, to look outside Australian boundaries to understand the dynamics because the industry is about global production, global flows of capital, and the potential for global unionism.

In concluding, Professor Ellem noted that whilst it was well known Barrow Island workers are well paid, wage costs – not having increased further than that committed to at the start – are a small part of the project’s budget. Instead, he argues that the cost blow outs are a symptom of operational delays rather than the result of labour problems.

Contact the Centre Manager for a copy of Professor Ellem’s PowerPoint presentation: wow@griffith.edu.au or phone 07 3735 3714.