The BHP board has announced that it has approved $544 million in capital expenditure to execute the Shenzi North oil project in the U.S. Gulf of Mexico.

The project offers “very attractive” returns at a nominal IRR of over 35 percent, a breakeven of approximately $25 per barrel and a payback of less than two years, BHP noted. Shenzi North represents the first development phase of Greater Wildling. The project, which will take advantage of existing infrastructure and production capacity in the nearby Shenzi production facility, adds two wells and subsea equipment to establish a new drill center north of Shenzi. Production is expected to begin in 2024.

In addition to the $544 million Shenzi North investment approval, the company’s board has also approved $258 million in capital expenditure to move the Trion oil project in Mexico into the front end engineering design phase. The focus of the Trion studies will be on completion of the engineering, commercial arrangements and execution planning required to progress to a final investment decision from mid-calendar year 2022, BHP said.

“Both Shenzi North and Trion are strong growth assets for our business, providing attractive returns from relatively low carbon intensity resources,” Geraldine Slattery, BHP’s president of petroleum operations, said in a company statement.

“Shenzi North is aligned with the petroleum strategy to unlock and deliver further growth options in this key Gulf of Mexico heartland. This board decision also marks an important milestone in advancing the Trion development as we continue to work with our partner PEMEX towards a final investment decision in calendar year 2022,” Slattery added in the statement.

BHP holds a 72 percent operated share in Shenzi North, with Repsol holding the remaining 28 percent working interest. BHP holds a 60 percent operating interest in blocks AE-0092 and AE-0093, which contain the Trion discovery. PEMEX Exploration & Production Mexico holds the remaining 40 percent interest in the blocks.

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