Eleven years after it was discovered some 2,500 meters below the surface of the Gulf of Mexico off the coast of Tamaulipas, the Trion oil and gas field is one step closer to production after the National Hydrocarbons Commission (CNH) approved its development plan on Tuesday.
The ultra deepwater field is a joint venture of Australian company Woodside Energy, which has a 60% stake, and Mexico’s state oil company Pemex, which discovered Trion in 2012.
Located about 180 kilometers off the Gulf of Mexico coast and 30 kilometers south of the Mexico-United States maritime border, the field is estimated to contain well over 400 million barrels of oil. Extraction is slated to commence in 2028 and continue until 2052.
The CNH said in a statement that its governing body approved the development plan for extraction during a meeting on Tuesday.
It said that the development strategy presented by Woodside and Pemex was determined to be “adequate for the characteristics of the Trion field” and that exploitation will increase knowledge of reserves in the area.
The CNH noted that it is the first development plan it has approved for an ultra deepwater field.
“This milestone allows us to fully progress into execution phase activities with our contractors,” said Woodside CEO Meg O’Neil.
“We look forward to working with Pemex and our other stakeholders in Mexico to deliver this important project.”
Pemex noted in a statement that it is participating in the project as a “non-operating partner.”
“… With this project, proven and probable reserves of 478.7 million barrels of crude oil equivalent will be exploited with an investment of US $7.2 billion,” the state oil company said.
“According to the development plan, the production of hydrocarbons is estimated to begin in 2028.”
The Trion development plan, according to the CNH statement, estimates a total cost of $10.43 billion including investment and operating expenses. A total of 12 wells are set to be drilled in the field.
Production is expected to peak in December 2028 with the daily extraction of 110,000 barrels of oil and 101 million cubic feet of gas. Citing the development plan, the CNH said that total production during the life of the contract is expected to be 434 million barrels of oil and 219 billion cubic feet of gas.
“By investment size, the Trion project occupies fifth place, above the Zama project, whose development plan was approved by the CNH in June with a total investment of $9.08 billion,” the commission said.
Woodside said in June that “the expected returns from the development exceed Woodside’s capital allocation framework targets and deliver enduring shareholder value.”
It also said that development is expected to deliver “economic and social benefits to Mexico.”
The Perth-based company said it was “aligned” with Mexico’s ambition to increase oil production and that over US $10 billion in cumulative taxes and royalties would flow into Mexican government coffers.
Trion is expected to yield returns of over 19%, or more than 16% when including $460 million that Woodside will pay on behalf of Pemex, the news agency Reuters reported.
Woodside said Wednesday that it has “executed key contracts relating to the development” of Trion.
They include the floating production unit (FPU) engineering, procurement and construction contract with HD Hyundai Heavy Industries; the rig contract with Transocean; the FPU and floating storage offloading installation contract with SBM Offshore; and the subsea trees contract with OneSubsea UK, the company said.
Woodside, Australia’s largest oil and gas producer, acquired its 60% stake in Trion last year when it merged with the petroleum division of the Melbourne-based company BHP Group. BHP acquired the stake in Trion in 2017 during the presidency of Enrique Peña Nieto, whose government opened up Mexico’s energy sector to private and foreign companies.
The CNH’s announcement that it has approved the field’s development plan comes after Pemex’s processing of crude dropped to 768,732 barrels per day (bpd) in July, well below President López Obrador’s target of 1 million bpd in order to achieve self sufficiency for fuel by 2024.
With reports from Forbes México and Reuters
