PERTH (miningweekly.com) – Diversified major BHP on Friday approved a $544-million capital investment into its Shenzi North oil project in the US Gulf of Mexico.

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, with value further enhanced through the recent acquisition of an additional 28% working interest taking BHP’s interest in the Shenzi field from 44% to 72%.

The project adds two wells and subsea equipment to establish a new drill centre north of Shenzi with the capacity to produce up to about 30-million barrels a day of oil equivalent. Production is expected to begin in the 2024 financial year. 

BHP told shareholders that the project offers very attractive returns at a nominal internal rate of return of more than 35%, a breakeven of about $25/bl and a payback of less than two years.

BHP is operator and holds a 72% share in Shenzi North. Repsol holds the remaining 28% working interest and is expected to make a final investment decision later this calendar year. 

Meanwhile, BHP on Friday also approved $258-million in capital expenditure to move the Trion oil project in Mexico into the front-end engineering design 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% participating interest in and operatorship of the Trion discovery, also in the Gulf of Mexico.

PEMEX Exploration & Production Mexico holds a 40% interest in the blocks. 

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

“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 towards a final investment decision in calendar year 2022.”