BHP Billiton Impressed with Commitment to Energy ReformWed, 01/21/2015 - 22:43
Q: What experience positions BHP Billiton as a potential operator or PEMEX partner in Mexico’s deepwater areas?
A: BHP Billiton has expertise developing and operating its deepwater fields Shenzi and Neptune on the US side of the Gulf of Mexico. We also participate with BP and Chevron in consortiums in the same area, at the Atlantis and Mad Dog fields. Our deepwater track record can certainly assist PEMEX in its development. Additionally, we own the leases on approximately 200 blocks in the Gulf of Mexico. Recently, we were the highest bidder on 14 out of 16 blocks in a bidding round in the area. BHP Billiton is committed to helping Mexico develop its oil and gas resources in a safe and productive manner. We view ourselves as an ideal operator in terms of our drill times, which are second to none, our uptime in operating deepwater platforms, our capability to deliver deepwater projects on time and within budget, and in safety, which is paramount to BHP Billiton. This makes us an ideal partner for Mexico to develop its deepwater oil and gas resources. BHP Billiton has just celebrated its sixth year of operating the Shenzi deepwater field, which is located in waters that are 1,300m deep and has been producing close to 100,000b/d over the last six years. We believe the expertise, technology, and culture that we have built within our organization could be of considerable benefit to Mexico.
Q: What are the competitive advantages of BHP Billiton as a partner for PEMEX when compared to other major oil and gas companies?
A: Our track record in terms of project delivery is our calling card. We have Perdido acreage on the US side of the Gulf of Mexico, which is contiguous with what is being looked at for deepwater blocks in Round One. Our knowledge of what we have in the Perdido play will be beneficial for our collaborations with potential partners on the Mexican side. Another advantage that BHP Billiton presents is that it has the financial backing of a supermajor while maintaining the flexibility and speed of an independent company. While BHP Billiton is the largest mining company in the world, its petroleum business would be in the same class as the larger independent companies. Deepwater development is a priority for BHP Billiton Petroleum and we have built the organizational capability and capacity to execute and operate these type of projects. For example, we still retain the teams that built Shenzi, Neptune, Pyrenees, and Stybarrow, and they can be deployed quickly. We also have the world-class, state-of-the-art drillship, Deepwater Invictus, which we can mobilize with a drilling team.
Q: How has BHP Billiton found the process of collaborating with the regulators and PEMEX?
A: We have been extremely impressed with the transparency of the process with Round One, and the way in which SENER, CNH, the Treasury, the Ministry of Economy, and PEMEX have collaborated and are aligned with the objectives of the Energy Reform. The people we have been dealing with at all these entities have proven that they are committed and hardworking, and truly want to make the Energy Reform a success for the country.
Q: Is BHP Billiton looking to form a consortium to operate blocks in Mexico?
A: BHP Billiton generally prefers to be an individual bidder, as we usually only look to form a consortium once we are successful in winning a tender. We want to look at the prospects from our own perspective, decide on the right bids to make, and not have to address such areas with a partner upfront. Instead, we look for partners to complement the award based on an area’s particular development perspective or technical challenges.
Q: Have the current oil prices affected BHP Billiton’s interest in participating in the shallow waters bidding rounds in Mexico?
A: While it is true that shorter-term oil prices are more important for shallow waters than for deepwater, BHP Billiton always looks at the longer term and for a significantly large asset to develop. Whether in the shallow waters or deepwater bidding rounds, we would be looking for a prospect that is able to compete for our capital with the other projects that are put forward around the world. We will certainly look at the opportunities Mexico presents in shallow waters and see how their rate of return compares with our other prospects. However, while the financial aspect is key, we also have other factors that help determine whether each project would be a strategic fit within our portfolio.