With Gulf of Mexico (GOM) activity accelerating throughout both U.S. and Mexico waters, Australia’s BHP has given its stamp of approval to spend $258 million to advance the front-end engineering design phase for the Trion project in Mexico’s deepwater.

Mexico production

Studies would be centered on completing engineering and commercial arrangements toward potentially sanctioning the project by mid-2022.

BHP operates and holds a 60% stake in Mexico blocks AE-0092 and AE-0093, which contain the Trion discovery. A subsidiary of Mexico’s state-owned Petroleos Mexicanos (Pemex) has a 40% interest in the GOM blocks.

BHP has also given the go-ahead to Shenzi North, a U.S. GOM deepwater project it shares with Repsol SA.

BHP earmarked $544 million in capital expenditures (capex) for the project. The operator took over as majority owner last year and holds a 72% stake. Repsol, with a 28% interest, is expected to make a final investment decision later this year.

“Both Shenzi North and Trion are strong growth assets for our business, providing attractive returns from relatively low carbon intensity resources,” said BHP’s Geraldine Slattery, president of the Petroleum operations.

“Shenzi North is aligned with the petroleum strategy to unlock and deliver further growth options in this key Gulf of Mexico heartland. This board decision also marks an important milestone in advancing the Trion development as we continue to work with our partner Pemex toward a final investment decision in calendar year 2022.”

BHP for years has been an active participant in the U.S. GOM lease sales. It also partners in some of the biggest deepwater projects, including with BP plc in Mad Dog 2. Mad Dog is set to ramp in 2022 with 140,000 b/d of capacity. 

Mexico’s Pemex has mainly shifted its focus to shallow water and onshore resources to boost output, but private sector firms have been active in GOM waters and are starting to show results.

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In July, Italy’s Eni SpA announced another deepwater find in the Sureste Basin in Mexico GOM, with preliminary estimates indicating 150-200 million boe in place. Also last month, Mexico exploration and production (E&P) company Hokchi Energy SA de CV announced it had ramped up a third well offshore the state of Tabasco. The well increased total Hokchi output to more than 14,000 b/d.

This week, upstream regulator Comisión Nacional de Hidrocarburos (CNH) approved exploration plans for PC Carigali, a subsidiary of Malaysia’s Petroliam Nasional Berhad, better known as Petronas, to drill the deepwater Bacalar-1EXP well. Investment is set to hit $60 million, with prospective reserves pegged at 759 million boe.

Meanwhile, later this month the Ichalkil and Pokoch fields operated by Fieldwood Energy E&P México are also set to begin operation, with production to hit 40,000 b/d. In July, Lukoil said it was buying Fieldwood’s operator stake in the project.

Private sector oil production hit 146,000 b/d in June compared with 128,000 b/d in the year-ago month. Mexico had a total of 21 offshore exploration projects involving private sector firms  active during the month of June.

Christopher Lenton contributed reporting