BHP approves $544 million investment in Shenzi North project

By Dominic Ellis
Alongside $544 million investment in Shenzi North oil project, BHP becomes founding member of Komatsu GHG Alliance and announces two new solar projects

BHP has approved investing US$544 million in the Shenzi North oil project in the US Gulf of Mexico.

As the operator, BP holds a 72 per cent share, while Repsol holds the remaining 28 per cent and is expected to make a final investment decision later this 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 production facility. The project adds two wells and subsea equipment to establish a new drill centre north of Shenzi with the capacity to produce up to approximately 30 mboe per day. Production is expected to begin in the 2024 financial year.

The BHP Board has also approved US$258 million in capital expenditure 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 a Final Investment Decision from mid-calendar year 2022.

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

Geraldine Slattery, BHP President Operations Petroleum, said both Shenzi North and Trion are strong growth assets for its 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," she said. "This Board decision also marks an important milestone in advancing the Trion development as we continue to work with our partner PEMEX towards a Final Investment Decision in 2022.”

In its operational review for the year ending June 30, BHP's total petroleum production decreased by 6% to 103 MMboe, with volumes slightly above the top end of its guidance range. Production is expected to be between 99-106 MMboe in the 2022 financial year.

Crude oil, condensate and natural gas liquids production also fell 6% to 46 MMboe due to natural field decline across the portfolio, a highly active hurricane season in the Gulf of Mexico in the first half  and downtime at Atlantis, with tie-in activity in the first half of the year and unplanned downtime in the March 2021 quarter. No exploration and appraisal wells were drilled during the June 2021 quarter.

Founding member of Komatsu GHG Alliance, new solar projects in Australia

To accelerate its push to become a net-zero operator by 2050, BHP will become a founding member of Komatsu’s GHG Alliance, and plans to operate one of the first batches of zero-emission trucks upon commercial release.

BHP will provide engineering and technical resources to Komatsu to support the development phase as required. These activities will provide BHP with real-time access to technology in development, with Komatsu drawing upon BHP’s mining expertise to accelerate its path to market. Additionally, BHP and Komatsu will collaborate through the BHP FutureFit Academy to develop the future facing skills in our teams to operate and maintain this pioneering equipment.

BHP’s Chief Commercial Officer Vandita Pant said tackling climate change requires strong collaboration and collective effort across the supply chain.

"Reducing vehicle emissions is key to our climate strategy, and we are thrilled to join with Komatsu and our peers in the global mining sector on real, tangible action to help accelerate our transition to a low carbon future," she said. "Extending the FutureFit Academy partnership to equip our workforce to operate zero emissions technology is an exciting addition to our collaboration with Komatsu."

BHP and its power partner in the Goldfields TransAlta are to build two solar farms and a battery storage system to help power the Mt Keith and Leinster operations in western Australia. This will help BHP reduce emissions from electricity use at Mt Keith and Leinster by 12 per cent, based on FY2020 levels.

The Northern Goldfields Solar Project will include a 27.4MW solar farm at Mt Keith and a 10.7MW solar farm and 10.1 MW battery at Leinster, and will displace power currently supplied by diesel and gas turbine generation. Construction will start in Q2 next year and is expected to take 12-14 months.


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