BHP’s (ASX: BHP) board approved on Thursday $544 million in capital expenditure to execute the Shenzi North oil project in the US Gulf of Mexico with a 100% share interest.
The deepwater Shenzi oil and gas field lies in the Gulf of Mexico and holds estimated recoverable reserves of between 350 million and 400 million barrels of oil equivalent, although additional potential reserves will be targeted for follow-up development, Offshore Technology reported.
BHP is operator and holds a 72% share in Shenzi North and Repsol holds the remaining 28% working interest and is expected to make a final investment decision later this calendar year. Shenzi North represents the first development phase of Greater Wildling, following exploration success in 2017, with the resource and development plan refined through Ocean Bottom Node seismic data and analysis.
BHP’s acquisition of an additional 28% working interest last year upped the company’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 approximately 30 mboe per day.
Production is expected to begin in the 2024 financial year, BHP said in the statement.
The news comes after reports last month that BHP Group was considering getting out of oil and gas in a multibillion-dollar exit that would accelerate its retreat from fossil fuels.
BHP’s energy assets make it an outlier among the world’s biggest miners, but the company has long said the oil business was one of its strategic pillars and argued that it will make money for at least another decade.
The BHP board has also approved $258 million in capital expenditure to move the Trion oil project in Mexico into the Front End Engineering Design (FEED) phase.
The focus of the studies, BHP said, will be on completion of the engineering, commercial arrangements and execution planning required to progress to a final investment decision from mid- 2022.