BHP Petroleum’s total petroleum production in second-half 2019 decreased year-over-year and volumes for the 2020 financial year are expected to come in at the lower end of the guidance range, the company said in a Jan. 21 update. Total petroleum production for the 2020 financial year remains unchanged at 110-116 MMboe.
For the half year ended Dec. 30, 2019, the company’s total petroleum production decreased by 9% from second-half 2018 to 57 MMboe. Crude oil, condensate, and natural gas liquids production declined by 9% to 26 MMboe due to the impact of Tropical Storm Barry in the Gulf of Mexico and natural field decline across the portfolio. This decline was partially offset by higher uptime at Pyrenees following the 70-day dry dock maintenance program during the September 2018 quarter. Natural gas production decreased by 8% to 189 bcf, reflecting a decrease in tax barrels at Trinidad and Tobago in accordance with the terms of its production sharing contract, maintenance at North West Shelf, reduced domestic gas sales in Western Australia, and natural field decline across the portfolio.
Production projects
In the Gulf of Mexico, the Atlantis Phase 3 project (non-operator, 44%) is 36% complete. Development includes a new subsea production system that will tie back to the existing Atlantis facility, with capacity to produce up to 38,000 gross b/d of oil. Initial production is targeted for this year.
The Mad Dog Phase 2 project (non-operator, 23.9%) is 65% complete. The project includes a new floating production facility with the capacity to produce up to 140,000 gross b/d of crude oil. Initial production is targeted for 2022.
In Trinidad and Tobago, the BHP-operated Ruby project (68.46%) is 13% complete. The project includes five production wells tied back into existing operated processing facilities, with capacity to produce up to 16,000 gross b/d of oil and 80 million gross standard cu ft of natural gas per day. Initial production is targeted for 2021.
The Bass Strait West Barracouta project is tracking to plan and is expected to achieve first production in the 2021 calendar year.
On Nov. 2019, BHP and Woodside signed a non-binding Heads of Agreement to progress the Scarborough gas development which includes agreement on a competitive tariff for gas processing through the Pluto LNG facility and BHP’s election not to exercise its option for an additional 10% of the WA-1-R lease. BHP and Woodside are targeting finalization of required conditional binding agreements by the end of March. A final investment decision by BHP is expected midyear.
Exploration and appraisal
In Trinidad and Tobago, the company completed the exploration program on its Northern licenses as part of Phase 4 of its deepwater drilling campaign. Carnival-1 well was spud on Sept. 30, 2019 and was a dry hole. The well was plugged. Development planning studies of the discoveries in the North are ongoing.
Following Carnival-1, the Deepwater Invictus rig returned to the US Gulf of Mexico where it is currently completing regulatory abandonment work on Shenzi appraisal and exploration boreholes. During the December 2019 quarter, BHP extended it contract for the Deepwater Invictus rig for an additional year through May 2021.
As reported in the company’s September 2019 operational review, BHP was the apparent highest bidder on blocks GC124 and GC168 in Green Canyon in the central Gulf of Mexico and on 18 additional blocks in the western Gulf of Mexico. All leases were awarded by the Regulator in the December 2019 quarter.
Petroleum exploration expenditure for the December 2019 half year was $306 million, of which $164 million was expensed. A $700 million exploration and appraisal program is being executed for the 2020 financial year.