BHP sanctions Shenzi North, moves Trion into FEED phase

Aug. 5, 2021
The BHP board has approved $544 million in capex to execute the Shenzi North oil project in the US Gulf of Mexico.

Offshore staff

MELBOURNE, Australia – The BHP board has approved $544 million in capex to execute the Shenzi North oil project in the US Gulf of Mexico.

The capex approved represents a 100% share interest. According to the company, the project offers very attractive returns at a nominal IRR of more than 35%, a breakeven of about $25/bbl, and a payback of less than two years.

BHP is the operator and holds a 72% share in Shenzi North. Repsol holds the remaining 28% working interest and is expected to make a final investment decision (FID) later this calendar year.

Shenzi North represents the first development phase of Greater Wildling, following exploration success in 2017, with the resource and development plan further refined through ocean bottom node seismic data and analysis.

The project will take advantage of existing infrastructure and production capacity in the nearby Shenzi TLP on Green Canyon block 653. The project will add two wells and subsea equipment to establish a new drill center north of Shenzi with the capacity to produce up to about 30,000 boe/d. Production is expected to begin in the 2024 financial year.

BHP increased its share in the deepwater Shenzi field to 72% with the acquisition of Hess’s 28% working interest in November 2020.

In addition, the company’s board has also approved $258 million in capex to move the Trion oil project in Mexico into the front-end engineering design (FEED) phase. The focus of these studies will be on completion of the engineering, commercial arrangements, and execution planning required to progress to an FID from mid-calendar year 2022.

BHP holds a 60% participating interest in and operatorship of blocks AE-0092 and AE-0093 containing the Trion discovery in the deepwater Gulf of Mexico offshore Mexico. PEMEX Exploration & Production Mexico holds a 40% interest in the blocks.

Geraldine Slattery, BHP President Operations Petroleum, said: “Both Shenzi North and Trion are strong growth assets for our business, providing attractive returns from relatively low carbon intensity resources.

“Shenzi North is aligned with the petroleum strategy to unlock and deliver further growth options in this key Gulf of Mexico heartland.”