June 20, 2023 [Oil Price]- Woodside Petroleum’s bosses have given the green light to the development of the Trion field in the Gulf of Mexico: an ultra-deepwater project estimated to cost some $7.2 billion.

According to Reuters, this is the first big investment Woodside Petroleum has committed to making since its merger with the oil and gas business of BHP.

Woodside owns 60% of the Trion field with the rest held by Mexico’s Pemex—the field is in Mexican waters. The field was discovered back in 2012 by the Mexican company. Pemex, however, did not have the resources to develop Trion on its own and it took on Woodside as a partner in 2017.

MarketWatch reports Woodside expects a return rate of more than 16% from that project and an impressively short payback period of just four years. The Sydney Morning Herald notes the payback period is based on the assumption that oil prices will average $70 per barrel in the coming years.

The company plans to install a 100,000-bpd floating production vessel and connect it to a storage and offloading vessel with a capacity for 950,000 barrels, the company said.

The reserves that the project will tap have been estimated at 479 million barrels of oil equivalent in oil and gas. Of these, Woodside’s share is seen at 287 million barrels of oil equivalent. According to Pemex estimates, the gross recoverable reserves of Trion are 485 million barrels of oil equivalent.

“The investment is aligned with Woodside’s strategy, exceeds Woodside’s capital allocation framework targets and will be a strong contributor to Woodside’s cash flows, shareholder returns and the funding of future developments in oil, gas and new energy,” Meg O’Neill, the chief executive of the Australian energy major, said.

She went on to note that the carbon intensity of the Trion project would be lower than the global average for deepwater field development and that it would be subject to Woodside’s emission reduction targets.

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