THE North-East is in the running for a multi-million pound investment project that could create dozens of jobs.

Compressor company Corac is looking at possible sites in the region, believed to include Tyneside and County Durham, as the base for a facility to manufacture products for oil firm Shell.

Corac, of Middlesex, and Weir Pumps, of Glasgow, which has a plant at Billingham, have signed a deal with Shell, estimated to be worth £4m, to develop a range of compressors that could extend the life of North Sea gas fields up to five years.

The contract involves Corac, Weir and Shell using their combined expertise to develop a gas compression system following the oil firm's warning that mature fields in the UK and US are declining more quickly than expected.

Corac and Weir have already undertaken viability studies and have held talks on detailed design specification with engineers from Shell. Following a successful conclusion, the compression technology will be developed to its full commercial potential.

The technology is expected to become a significant part of the fast growing world compressor market, which is estimated to be worth in excess of £24bn.

Corac, which employs 20 staff, is led by executive chairman Professor Gerry Musgrave, originally from Jarrow, on Tyneside.

It is those Tyneside links which could swing the investment in favour of the region, hit by the Via- systems closure announcement last week, which saw more than 1,000 people put out of work at sites on North and South Tyneside.

But the region is likely to face stiff competition for the investment from Wales, and it could be the amount of grant aid available that swings the final result.

However, the region is likely to learn its lesson from the Viasystems experience, which moved to the North-East with the aid of a £17m grant from the Government.

The Corac facility could be running in a year, with the first compressor produced in 15 months time.

Prof Musgrave said: "We're thrilled to announce the signing of the first contract for our unique compressor. This is a major development towards proving the commercial viability and world-beating quality of our product.

"This is challenging technology but is totally achievable via the pioneering expertise of the three partners involved.

"We believe we can address the pressing need to considerably extend the existing lifespan of gas fields."