Delays in completing the $270m US Defence tank farm have seen a change at the top

With a construction deadline looming, there has been a major change to the US Defence tank farm project in the Territory. Read what's happened.

With construction deadline looming, engineering contractor Saunders International has been removed as lead builder for the A$270m US military bulk fuel storage facility at East Arm.

Effective from Saturday April 15, US company Latitude 63 will replace Saunders International in management and delivery roles associated with the project.

The project was originally scheduled for completion by September 15, but that is now likely to be delayed until later this year.

It is understood Wet Season conditions have contributed to the construction delays.

The announcement comes as workers put the lid on the final tank this week.

Part of a broader US Defence Force plan to decentralise the nation’s bulk fuel storage facilities, Latitude 63 recently finished building a fuel storage facility for Crowley at Fairbanks, Alaska.

A recent drone image of the US tank farm site before the final lid was attached.

When completed, the East Arm storage facility will be the Territory’s largest.

Awarded the contract in late 2021, Saunders International told the Australian Stock Exchange last week Crowley “has decided to restructure” delivery of the fuel storage facility.

“As a result, Saunders … today announces that it has been issued with a ‘Notice of Termination for Convenience’ by Crowley,” the statement read.

“The contract permitted Crowley to terminate the contract at it its sole and absolute discretion at any time without cause and for any reason, a common contractual clause in construction contracts. Saunders is nearing completion of the 11 jet fuel storage tanks.

“Crowley has made this decision for their own strategic reasons and Saunders will continue to collaborate with Crowley and their US-based partner organisation as they complete the project.

“Saunders will support the transition and will provide ongoing services as required.”

It estimated the contract loss would cost the company $40m.

Saunders officials with chief minister Michael Gunner at the announcement of the East Arm tank farm contract with Crowley

Crowley said the change was not expected to impact local involvement in the project, which has had a workforce of up to 200.

In a statement the company said the change was to “ensure the project meets contractual timelines set by the US government”.

“Crowley and its partner organisation Latitude 63 Australia will assume all management and delivery roles and responsibility from Saunders International Limited.

“Crowley is committed to maintaining the network and level of employees and vendors that are currently involved in the project to ensure it is delivered on time.

“Crowley’s enhanced delivery strategy will require additional workforce and resources and we will endeavour to continue sourcing those workforce solutions locally.”

“Crowley will continue its strong support for local jobs and increased opportunities for local industry and our Indigenous partners, who will remain at the forefront of this project.”

The Darwin bulk fuel storage facility represents a $270m investment in the Northern Territory.