Woodside Energy Group Ltd. has received the green light from Mexico’s regulator to proceed with the Trion oilfield development plan and has now also secured approval from its state partner for project capital.
“Woodside’s Final Investment Decision (FID) to develop the Trion resource, announced on June 20, 2023, was subject to the approval of the Trion joint venture and the regulatory approval of the FDP. [field development plant]”, the Australian company said in a stock market filing this week. “These two conditions have now been met.”
Woodside operates the Gulf of Mexico field, located in a water depth of 8,202.1 feet (2,500 meters), with a 60 percent interest. PEMEX Exploración y Producción, which discovered Trion in 2012, has the remaining 40 percent.
Welcoming the approval of the FDP by the National Hydrocarbons Commission, Chief Executive Meg O’Neill said: “This milestone allows us to fully progress implementation phase activities with our contractors” .
“Subsequent to the approval of the FDP, Woodside has booked undeveloped proved (1P) reserves of 324.7 MMboe gross (194.8 MMboe of Woodside’s share) and more probable (2P) undeveloped proved reserves of 478.7 MMboe crude (287.2 MMboe),” Woodside said. . The 1P and 2P estimates include 12.6 million barrels of oil equivalent (MMboe) gross and 15.2 MMboe gross of fuel used in operations, respectively.
Perth, Western Australia-based Woodside expects $7.2 billion in capital expenditure for the Trion development, excluding the lease of the project’s floating storage and offloading (FSO) unit. “The investment is expected to deliver an internal rate of return (IRR) of more than 16 percent with a payback period of less than four years,” Woodside’s FID regulatory filing said. “The projected IRR excluding capital transportation is over 19 percent.”
Woodside expects Trion to begin production in 2028, targeting overseas markets.
The reserves will be tapped through a floating production unit (FPU) with a production capacity of 100,000 barrels per day, to connect to an FSO vessel with a capacity of 950,000 barrels, according to the FID announcement.
The initial phase of drilling includes 18 wells, consisting of nine production wells, seven water injectors and two gas injectors, according to Woodside. The company expects to drill 24 wells over the life of Trion, located 180 kilometers (111.8 miles) off the Mexican coast and 30 km (18.6 miles) south of the US-Mexico maritime border.
The independent energy company said in the FDP approval announcement that it has now also executed key contracts for the project. The FPU Engineering, Procurement and Construction Award went to HD Hyundai Heavy Industries Co. Ltd., while the FPU and FSO installation rights have gone to SBM Offshore NV. The platform contract has been awarded to Transocean Ltd., while OneSubea UK Ltd. has awarded the contract for underwater trees.
Woodside said in the FID announcement that Trion is part of the company’s emissions reduction goals.
“Woodside believes Trion is resilient in a decarbonized world, due to a number of factors, including its short expected payback period of less than four years, the fact that two-thirds of the resource is expected to be produced within 10 years since inception, no portfolio cash flow resilience in IEA NZE [International Energy Agency net zero emissions] “Trion is expected to have a carbon intensity of 11.8 kgCO2-e/boe.” [kilograms of carbon dioxide equivalent per boe] over the life of the field, below the global deepwater oil average of 15 kgCO2-e/boe and the global oil average of 27 kgCO2-e/boe averaged over 2022-2032.”
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