Converting Mexico’s Deepwater Potential Into Reserves, Production

Mexico’s oil production has been on a steady decline for years. With the Energy Reform, Mexico sought to expand hydrocarbon exploration and production to increase the availability of these resources and drive the country's economic growth. One of the key opportunities is in Mexico’s deep waters, which PEMEX had left mostly untouched but that private players see as a greenfield venture. Trion, a Woodside-PEMEX venture, is the first major discovery in these areas and is now entering its development stage.

Woodside is one of Mexico’s most prominent oil industry players and is currently working in the ultra-deepwater Trion farmout project with PEMEX. The Trion field was discovered by PEMEX Exploration and Production (PEP) in 2012. However, development was put on hold due to the substantial investment required, along with technological capacity limitations. Now, in partnership with Australian Woodside, both entities anticipate oil production by 2028. Trion's prospects include substantial hydrocarbon production, with estimates projecting a peak output of 100-120Mb/d of oil and 145MMcf/d of gas.

Woodside shares that delivering a deepwater development is a complex undertaking and therefore takes more time to achieve first production when compared to onshore or shallow-water developments. According to Stephan Drouaud, Vice President Trion Mexico, Woodside Energy, the complexity of such investment has been compounded by pandemic-related supply chain issues and the current geopolitical challenges that drive a high level of volatility in commodity prices, as well as in the cost and delivery time of goods and services. While some of these elements are outside operators’ control, Woodside focuses on providing cost and schedule predictability through its contracting strategies and by engaging with the market to find beneficial solutions for all involved. 

According to Drouaud, the merger of Woodside with BHP’s oil and gas business has delivered a stronger balance sheet, increased cash flow and financial strength to fund planned short-term developments and new energy sources in the future. Following the merger, Woodside became the largest energy company listed on the Australian Stock Exchange (ASX). Woodside is now a global company with a truly international footprint and secondary listings on the London Stock Exchange (LSE) and New York Stock Exchange (NYSE). Woodside’s larger, more diversified portfolio is expected to deliver significant cash flow to help fund growth, Woodside’s participation in the energy transition and shareholder returns. "We believe in energy transition and in climate change. We are proud to be able to provide affordable energy to our clients while developing new energies," Drouaud added. 

Over a decade after its discovery, the Trion ultra-deepwater field in the Gulf of Mexico will be developed following CNH’s approval of Woodside and PEMEX´s plan proposal: a meticulous strategy tailored to the field's characteristics and sustained operability. This marks the first development plan for the extraction of an oil field in ultra-deep waters in Mexico. “This also marks the first time we work together with a national oil company,” Drouaud mentioned. 

This milestone will contribute to an increased understanding of the subsurface, facilitating additional development activities in the Perdido Basin, a region presently characterized by the presence of exploratory assignments or contracts, emphasizing the strategic importance of this forward-looking initiative. The project is also expected to establish infrastructure in the Perdido Basin, which currently has not any infrastructure development. 

In terms of numerical potential, the Trion deepwater field holds remarkable significance. Woodside reports gross proved undeveloped reserves totaling 324.7MMboe. Of these, the Australian IOC holds 194.8MMboe. When factoring in probable undeveloped reserves, the site's total reaches 478.7MMboe, with Woodside's share accounting for 287.2MMboe. To realize the field´s full potential, the project will employ a floating production unit (FPU) with an oil production capacity of 100M/d. This FPU will be connected to a floating storage and offloading (FSO) vessel capable of storing up to 950Mb. 

According to Drouaud, this kind of floating facility is a technology never before seen in Mexico, which makes it a bit more challenging to develop. “The complexity of this project made it difficult to comply with the local content requirements of Mexico, so we had to negotiate and make PEMEX understand that this technology could not be acquired or developed in Mexico. We would have loved to do it, but the complexity of the project requires us to look at it globally,” Drouaud added. 

According to CNH projections, the estimated volume of hydrocarbons to be recovered during the contract's validity period from 2023 to 2052 is approximately 434MMb of oil and 790Bcf of gas. Of this gas volume, 570Bcf will be reinjected into the reservoir, leaving 219Bcf planned for sale and self-consumption. Collectively, Trion is one of the most interesting projects presented to the commission, says CNH Commissioner Héctor Moreira. Its projected production will generate an income of MX$80 billion (US$47.7 billion) for the Mexican government.

For 2H23, Drouaud’s priorities for Trion consist of progress-detailed engineering and procurement across FPU, FSO, as well as Subsea, Umbilicals, Risers and flowlines (SURF) developments. Other priorities include initiating preparations for regulatory permits for execution activities and continuing to award key contracts, working toward the first oil in 2028.