Danish contract to recycle Northern Endeavour oil platform ‘sank 450 jobs’

Labor’s rejection of at least three domestic bids to recycle the Northern Endeavour offshore oil platform has drawn sharp criticism from unions and businesses.

Drew Shannon’s company United Salvage was passed over for a contract to recycle the Northern Endeavour oil platform. Picture: Jane Dempster

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Drew Shannon, whose company was spurned by Labor in favour of a Danish shipyard to recycle the nation’s biggest oil infrastructure clean-up, has accused Anthony Albanese of offshoring jobs and making only a “superficial” commitment to supporting local ­industry.

A 25-year maritime veteran and managing director of ship-breaking company United Salvage, Mr Shannon leapt at the opportunity last year to bid for the contract to recycle the Northern Endeavour – a floating oil platform moored 550km northeast of Darwin that hasn’t produced oil in six years and was taken into ­federal hands in 2020.

Under his plan, the 43,000-tonne vessel would have been scrapped in Whyalla, with its topside dismantled at a disused slipway and the hull later hauled ashore.

The metal would then be fed to the local steelworks, which is hungry for scrap steel, in a 2½-year project expected to create more than 450 jobs.

The Northern Endeavour is a 274m-long floating oil platform. Picture: Department of Industry, Science and Resources.

But The Australian on Friday revealed the federal government had opted to send the vessel all the way to Denmark where it will be scrapped by US ship-breaking company Modern American Recycling Services (MARS) at its ­European facility in Fredrikshavn.

The rejection of at least three domestic bids has drawn sharp criticism from unions and Australian businesses, with Mr Shannon questioning why Labor opted to send the vessel more than 13,000km overseas for scrapping.

“I’d like the Prime Minister to explain how he stood in front of Whyalla and said Labor’s all about jobs, jobs, jobs yet here I am – our company has 450-plus job opportunities to recycle this taxpayer-funded ship, and yet he’s decided to put it out of sight, out of mind,” Mr Shannon said.

“I saw it as a win for Whyalla, a win for Australia. That we could produce green steel and that we were providing a service at a disused facility.”

While the Whyalla site would have required additional funding to restart, Mr Shannon said that investment represented a down payment on an impending decommissioning boom that is estimated by industry to be worth $60bn in the coming decades.

“Our focus has been preparing, and having available, a facility that can meet every standard that is required of tenders so that we’ve got a facility that can be reactivated for a new industry.”

Mr Shannon in Port Kembla on Friday. Jane Dempster

An independent economic impact assessment of United Salvage’s bid, conducted by South Australia’s Regional Development Authority, estimated the project would inject $320m into Whyalla and the economy across South Australia’s Upper Spencer Gulf.

“The beauty of this shipbuilding facility (is) it sits inside the steel plant,” Mr Shannon said, referencing plans to supply the scrap metal to a new electric arc furnace planned for Whyalla – supported by multimillion-dollar cash injection from the state and federal governments to keep the steelworks afloat.

“The demand for scrap steel (from that) will only increase tenfold,” he said.

But during initial talks with the Industry, Science and Resources Department about United Salvage’s tender, Mr Shannon said he was never clear on their expectations for the project – before they ultimately declined an invitation to visit the mooted Whyalla site.

“It was a lot more taking from us, what we thought, what we believed was available,” he said.

“I invited them to come to Whyalla and they declined.”

After five months of silence from the department, he was informed last Friday that United Salvage’s bid had been rejected.

According to its website, the department gave the contract to MARS following a “global, competitive, open tender” process.

Questioned about the decision to bypass local industry and send the Northern Endeavour all the way to MARS’s Danish shipyard, a spokesman for Resources Minister Madeleine King told The Australian local firms lacked the capacity to handle the project.

“This is one of the few facilities in the world with the capacity to recycle the Northern Endeavour FPSO,” the spokesman said.

But that claim is flatly rejected by local bidders and unions alike, who argue the job can be done here, with industry insiders saying the department was motivated by keeping costs down rather than any effort to establish a domestic decommissioning sector.

“That is a wholly incorrect statement on their part,” Mr Shannon said of the government’s justification.

“It is achievable in South Australia to recycle that ship … there’s no substance behind what the government has said and the actions it’s taking.

“We have the facilities in Australia to receive the hazardous waste materials. We have the facilities to haul the ship out of the water. We have the equipment and the personnel in Australia.”

Resources Minister Madeleine King. Picture: NewsWire / Martin Ollman

Mr Shannon said that by choosing a Danish shipyard over local bidders, the federal government had “set a precedent” that effectively greenlights the oil and gas industry to direct future decommissioning work abroad, rather than looking to Australia.

“Despite the Prime Minister and Minister King saying that we want Australia geared up for work to be done in Australia, they’re not proving it by their own actions,” he said. “They talk the talk, but they do not walk the walk.”

Labor’s own “offshore decommissioning road map,” released in December, promised to maximise the involvement of local businesses and workers in dismantling the Northern Endeavour “where possible”, using the project to kickstart a domestic industry capable of taking on similar work.

The road map forms part of Labor’s flagship Future Made in Australia program which will channel billions into initiatives such as solar panel manufacturing and green hydrogen production.

But Mr Shannon said the government’s decision on the Northern Endeavour rendered Labor’s commitment to reviving domestic industry as “superficial”.

“I hear a lot of talk, but I’m not seeing a lot of commitment or leadership on the part of this government,” he said.

“This was a project that could be a benchmark for industry, but the federal government’s just walked away from that and totally ignored it.”