Woodside pledges US$7.2bn investment in Mexico's Trión field

Woodside has made a final investment decision (FID) on the Trión deepwater asset off the coast of Tamaulipas state in northeast Mexico.

The company stated that it is ready to put US$4.8bn into the field, pending the approval of its partner Pemex, which would have to spend US$2.4bn of a total investment of US$7.2bn, with peak spending expected in 2025.

The company's first FID in Mexico led it to "make an extensive risk assessment which supports this new country entry. We have a continued strong relationship with Pemex, our joint venture partner, and we are confident that the development aligns with Mexico's ambition to grow production," Woodside CEO Meg O'Neill told investors during a Tuesday call.

The partners expect to extract 479Mboe (million barrels of oil equivalent) of contingent resources after having conducted an exhaustive appraisal campaign involving spudding six wells. Production will be undertaken through a new floating production unit with 100,000b/d capacity.

The unit could manage 120,000b/d at peak production and will also process 145Mf3/d (million cubic feet per day) of gas, handle 140,000b/d of seawater treatment and injection, and produce power through a 60MW generation plant. It will be installed in 2027.

A second floating unit will handle offloading and storage, with capacity for 950,000b of oil, which would then be offloaded to conventional tankers. It will be installed in 2028. A gas pipeline will also be installed starting in 2026.

The production strategy involves 12 producer wells, 10 water injectors and two gas injectors, with the spudding campaign set to start in 2026.

The partners are expected to file the area's final development plan for review by upstream regulator CNH in the fourth quarter of this year. The plan is expected to outline production starting in 2028. Two thirds of the resources would be produced within 10 years of start-up.

According to Woodside, Trión has an internal rate of return for the company of over 16%, with a four-year payback period. "The investment aligns 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," O'Neill said.

Located in the Perdido Fold Belt and at a water depth of 2,500m, Trión is Mexico's most promising deepwater discovery. It was found by Pemex in 2012, and BHP Billiton (later a part of Woodside) won a tender to partner with Pemex in 2016, as the state-owned firm sought an associate through its farmout model due to its own lack of deepwater experience.

Pemex recently struck a similar partnership, albeit through a contract model instead of the farmout model, with New Fortress Energy to develop the Lakach deepwater gas field, an area where the State company made large investments but ultimately could not start production due to technical challenges.

Other important deepwater fields in Mexico include those operated by Repsol, Shell, CNOOC, and Chevron, which have conducted exploration activities over the past few years.

A lack of existing pipeline capacity has long been the Achilles' heel of projects in the Perdido area. While pipelines to the Great White hub in the US and Mexico's Tamaulipas state have been considered, both Trión and Lakach have so far opted for floating solutions.