Water authority board members awarded the contract to Impregilo on Thursday.

Preliminary work on the tunneling portion of the so-called third straw could begin in as little as a month.

The project, expected to go on line by 2013, also includes a new pumping station inside Lake Mead's Saddle Island and pipelines linking the third straw to the valley's two existing water intakes and treatment plants.

Separate contracts for the pumping station and connector pipes are scheduled to be awarded later this year.

According to an estimate produced in 2007, the entire project could end up costing $817 million.

Marc Jensen, director of engineering for the authority, said the contract awarded to Impregilo is the largest in agency history and could stay that for a while.

Starting in 2010, the authority hopes to begin construction of a massive pipeline network to tap groundwater across eastern Nevada. That project is expected to cost between $2 billion and $3.5 billion, but the work probably will be divided up into a number of separate contracts, none of them as large as Impregilo's, Jensen said.

The company will have to work hard for its money. Excavating the 20-foot-tall, concrete-lined shaft is expected to be difficult, dangerous work. Even 75 feet below the lake bed, workers on the project could get wet.

"There will be water in-flow. The question is, 'How much?' " Jensen said.

Using core samples collected from floating drill rigs, authority officials have charted a corridor for the intake shaft that appears to avoid the sort of fractured, volcanic rock that is difficult to tunnel through.

"That will save money, save time and save the risk of a problem during construction," Jensen said.

The new intake will draw water from one of the deepest points in Boulder Basin, about four miles from a new treated wastewater outflow that is being built to release the Las Vegas Valley's treated effluent at the bottom of the lake.

Several authority board members asked about the proximity of the two projects. Kay Brothers, deputy general manager for the authority, said the authority collaborated with the Clean Water Coalition to choose the best locations for the treated sewage outflow and the drinking water intake.

Impregilo won the tunneling contract over a consortium that included one of the companies now involved in the construction of the Hoover Dam bypass bridge.

But the losing bidder won't go away completely empty-handed. To compensate the consortium for the work that went into its final bid proposal of $588 million, the authority will pay the group $600,000.

Jensen said the authority offered proposal payment as incentive to get contractors to bid on the project.

"They spent more than 600,000 (dollars) preparing their final proposal," he said.