[RigZone.com] Woodside Energy Group Ltd. has given the go signal to develop the Trion oil field in Mexico, projecting to spend $7.2 billion for 24 wells, the company said in a news release.
The Trion field is located in the Perdido Fold Belt, Gulf of Mexico, at a water depth of 2,500m approximately 180km off the Mexican coastline and 30km south of the US/Mexico maritime border.
The Trion oil field became part of Woodside’s portfolio after merging with BHP’s petroleum business in June 2022. Woodside owns a 60 percent stake in the asset through its subsidiary Woodside Petroleo Operaciones de Mexico, S de R.L. de C.V., while Pemex Exploracion y Produccion owns the remaining 40 percent stake in a joint venture.
The asset, which was discovered by Pemex in 2012, is located in a water depth of 8,202.1 feet (2,500 meters), approximately 111.85 miles (180 kilometers) off the Mexican coastline and 18.64 miles (30 kilometers) south of the Mexico-USA maritime border.
Woodside will develop Trion through a floating production unit (FPU) with an oil production capacity of 100,000 barrels per day. The FPU will be connected to a floating storage and offloading (FSO) vessel with a capacity of 950,000 barrels of oil, according to the news release. The company targets its first oil production in 2028. Trion has estimated resources at 479 million barrels of oil equivalent.
The development plan is still subject to joint-venture and regulatory approval, which is expected in the fourth quarter of 2023, Woodside said. Total capital expenditure is forecast at $7.2 billion, of which Woodside’s share is $4.8 billion. The plan includes the installation of 18 wells drilled in the initial phase, with a total of 24 wells drilled over the life of the Trion project. Gas that is not reinjected or used on the FPU will be shipped to the Mexican markets, the company said.
“Trion is a valuable resource with a mature development concept. Our strong balance sheet and disciplined approach enable us to invest in opportunities such as Trion, expanding our global portfolio and delivering long-term value”, Woodside CEO Meg O’Neill said in the announcement.
“The investment is aligned with Woodside’s strategy, exceeds Woodside’s capital allocation framework targets and will be a strong contributor to Woodside’s cash flows, shareholder returns, and the funding of future developments in oil, gas, and new energy”, O’Neill said. “This development leverages Woodside’s proven expertise in deepwater project execution. The project’s tendering process has resulted in approximately 70 [percent] of total forecast capital expenditure as lump sum or fixed rates, with key contracts to be progressively executed following joint venture approval.”
Woodside expects the investment to deliver an internal rate of return greater than 16 percent, with a payback period of less than four years.
“We are developing Trion because we believe it will deliver value for Woodside shareholders and benefit for Mexico, including generation of jobs, taxation revenue, and social benefit. We value the ongoing relationship with PEMEX and the support of the Mexican Government and regulators”, O’Neill added.
Woodside said its greenhouse gas emissions reduction targets remain unchanged by the Trion investment decision. “Trion has an expected carbon intensity of 11.8 kgCO2-e/boe average over the life of the field, which is lower than the global deepwater oil average, and will be subject to Woodside’s corporate net equity Scope 1 and 2 emissions reduction targets”, O’Neill said.
“Two-thirds of the Trion resource is expected to be produced within the first 10 years after start-up”, she added.
These factors allow Trion to be “resilient” amid the International Energy Agency’s net zero targets, Woodside said.
Earlier this year, Woodside had reported progress on energy transition targets, awarding contracts for the decommissioning of its subsea infrastructure at the Enfield, Griffin, Stybarrow, and Echo Yodel oil and gas fields offshore Western Australia and for the permanent plug and abandonment of wells in the Stybarrow field to Transocean.
In Woodside’s latest annual general meeting, O’Neill said that Woodside is on track to meet its 2025 and 2030 emissions reduction targets of 15 percent and 30 percent respectively, with a goal of achieving net zero emissions by 2050.
Trion is a greenfield development that would represent the first oil production from Mexico’s deepwater, with potential for future discoveries to be tied back to Trion facilities.
The Trion project was discovered by PEMEX (Mexico’s state-owned petroleum company) in 2012. In 2017, BHP Petroleum and PEMEX signed an agreement for the development of the Trion discovery. Following the merger with BHP Petroleum, Woodside will continue the agreement with PEMEX for field development.
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