Woodside Wins Mexico Approval for Trion Field

Woodside Energy Group Ltd. has received the green light from Mexico's regulator to proceed with the development plan for the Trion oil field and has now also secured the approval of its state-owned partner for the project's capital.

"Woodside’s final investment decision (FID) to develop the Trion resource, announced 20 June 2023, was subject to Trion joint venture approval and regulatory approval of the FDP [field development plant]", the Australian company said in a bourse filing this week. "Both of these 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 stake. PEMEX Exploracion y Produccion, which discovered Trion in 2012, holds the remaining 40 percent.

Welcoming the National Hydrocarbons Commission's approval of the FDP, chief executive Meg O'Neill said, “This milestone allows us to fully progress into execution phase activities with our contractors".

"Following the approval of the FDP, Woodside has booked Proved (1P) Undeveloped Reserves of 324.7 MMboe gross (194.8 MMboe Woodside share) and Proved plus Probable (2P) Undeveloped Reserves of 478.7 MMboe gross (287.2 MMboe Woodside share)", 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 for the project's floating storage and offloading unit (FSO). "The investment is expected to deliver an internal rate of return (IRR) greater than 16 percent with a payback period of less than four years", Woodside's FID regulatory filing said. "The forecast IRR excluding the capital carry is greater than 19 percent."

Woodside expects Trion to start producing 2028, targeting overseas markets.

The reserves will be tapped through a floating production unit (FPU) with an output capacity of 100,000 barrels a day, to be connected to an FSO vessel with a capacity of 950,000 barrels, according to the FID announcement.

The initial phase of drilling involves 18 wells, consisting of nine production wells, seven water injectors and two gas injectors, according to Woodside. The company expects 24 wells to be drilled over the life of Trion, located 111.8 miles (180 kilometers) off the Mexican coastline and 18.6 miles (30 km) south of the Mexico-USA maritime border.

The independent energy company said in the FDP approval announcement 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 installation rights for the FPU and the FSO have gone to SBM Offshore NV. The rig contract has been awarded to Transocean Ltd., while OneSubea UK Ltd. has bagged the contract for underwater trees.

Woodside said in the FID announcement Trion is part of the company's emission reduction targets.

"Woodside believes that Trion is resilient in a decarbonizing world, because of several factors including its forecast short payback period of less than four years, the fact that two-thirds of the resource is expected to be produced within 10 years from startup, portfolio free cash flow resilience in the IEA NZE [International Energy Agency net zero emissions] scenario and it having an expected all-in breakeven less than US$50/bbl", the FID announcement stated. "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 global oil average of 27 kgCO2-e/boe averaged over the period 2022 to 2032."

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