The National Interest

Gorgon

Since the Gorgon project was first announced by Chevron, it has blown out from $13 billion to $52 billion.  And it is expected to blow out even further. 

Chevron likes to blame the MUA for this cost overrun, because we are an easy target and anti-union politicians will believe anything about us, in order to support justify their ideological views.

The truth is, Chevron couldn’t be more wrong in its claims.

Recent research undertaken by BIS Shrapnel (download here) found that the integrated rating wages cost represented approximately 0.25 per cent of the total $52billion project cost of the Gorgon project.

The research concludes that, “improving management processes and systems to assure equipment and materials are available on time, by insuring adequate supervision, and by fully removing waste in activities with a focus on compressing the critical path. Improving training for supervisors and project managers is a must to capture increased productivity.”

This research points to management, rather than the wages of workers, as the key driver of project cost blowout.

A good example of this is the relative performance of the fully unionised Patricks AMC wharf and the non-unionised Barrow Island wharf in loading and unloading barges.

A KJV report (download here) revealed that it takes an average of 95 days to load and unload a barge at the fully unionised AMC wharf.  It then takes the non-unionised Barrow Island wharf an average 132 days to load and unload the same barge.  And this, during the dry season, when the weather is at its best at Barrow Island.

This mismanagement by Chevron on Barrow Island has meant workers have had to be stood down at the AMC, while waiting for barges to return from Barrow Island.

The problems with Gorgon are with the management of the project, not MUA workers and their wages, which represent the tiniest of fractions of the total overall cost of the Gorgon project.

Download Gorgon Report