GAS & IRON DIGGING FOR DOLLARS DOWN UNDER; North West Shelf Project: tapping a seabed bonanza

The Burrup Peninsula, a rocky nodule off the tip of northwestern Australia, is a blot on Mother Nature's sculptural genius. Other than the snug little town of Dampier, the strip is nothing more than a moonscape of rubble and scourging heat populated by a few gum trees and scrawny kangaroo.

When scouting the area in 1688, British buccaneer William Dampier shrugged it off as a useless area of sun and flies.

Yet today platoons of workers are slowly transforming this chunk of ornery outback into part of one of the world's most ambitious resource development projects -- the North West Shelf natural gas venture.

The gas lies deep beneath cyclone-prone waters some 80 miles offshore. Reserves are estimated at 12 trillion cubic feet, making it the 40th largest known deposit in the world.

For Australia, the project is the equivalent of America's North Slope in Alaska -- a Bunyanesque financial and engineering feat that could help fuel a new resource projects boom in Western Australia.

A key hurdle for financing the project was overcome in June with an agreement between five partners in the venture and eight Japanese utility companies over the sale of liquefied natural gas (LNG).

Beginning in 1986 the group is to deliver some 6 million tons of LNG a year to Japan. The sale, expected to bring in about $1.7 billion (1.5 billion Australian) a year, would be Australia's largest export deal. The "memorandum of intent" between the two sides is still subject to final approval, which could come by the end of the year. The sale is key to the financing of the LNG export facility and other parts of the project.

The construction grindstones, meanwhile, are already turning. The project officially began last September when the five participants -- Woodside Petroleum (50 percent), BP Petroleum Development Australia Pty. Ltd. (16 2/3 percent), California Asiatic Oil Company (16 2/3 percent), Shell Development Pty. Ltd. (8 1/3 percent), and Hematite Petroleum Pty. Ltd. of Australia (8 1/3 percent) -- penned a contract to supply Western Australia with gas for 20 years.

The partners have secured a $1.3 billion ($1.1 billion Australian) loan for the initial phases of the project -- itself something of a coup considering that Woodside, the operator for the joint venture, has net assets of only about $459 million. Total cost over the next 12 years could top $9.2 billion.

"Unequivocally it is one of the biggest private borrowings in world financing ," trumpeted a Woodside spokesman.

As an engineering feat it will be no small accomplishment either. Three offshore production platforms are to be emplanted in the area. The first, one of the world's biggest, is to be towed into place in mid-1982. Its 45,000- ton "jackets" (legs) are being built in Japan and will cost millions just to nuzzle into position. The rig is expected to pump gas by 1984.

A second platform is slated to go up two years later, and a third is planned for the early 1990s. A pipeline will link the briny platforms with the Barrup Peninsula. Sheathed in concrete, the 84-mile line will be embedded in the ocean floor and covered with rocks. A treatment plant is to be built at Withnell Bay on the peninsula to make gas, condensate, liquefied petroleum gas, and LNG.

A fleet of seven specialized tankers is expected to eventually cart the LNG to Japan. And a 940-mile onshore pipe, Australia's longest, will shoot gas to customers in Perth and other towns in that southern area.