BHP has reflected on a second half of 2019 where its petroleum output decreased by 9 per cent, while it also looks ahead to growth opportunities in this area of the company.
The company’s petroleum production decreased to 57 million barrels of oil per day. BHP’s 2020 financial year guidance remains unchanged at between 110 and 116 million barrels of oil per day, with volumes expected to be towards the lower end of the guidance range.
Crude oil, condensate and natural gas liquids production declined by 9 per cent to 26 million barrels of oil per day due to the impact of Tropical Storm Barry in the Gulf of Mexico and natural field decline across the portfolio.
BHP said the 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 per cent 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.
The company, with operator Woodside, signed a non-binding heads of agreement to progress the Scarborough gas development offshore Western Australia during November 2019.
The agreement also included a decision 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 per cent of the WA-1-R lease.
BHP and Woodside are targeting finalisation of the required conditional binding agreements by the end of March 2020.
A final investment decision by BHP is expected from the middle of 2020.
The Bass Strait West Barracouta project in the Gippsland Basin, offshore Victoria, is tracking to plan and is expected to achieve first production in 2021.
BHP completed its planned exploration program at Trinidad and Tobago at its Northern licences as part of phase four of its Deepwater drilling campaign.
The Carnival-1 well was spudded on September 30 and was a dry hole. The well was plugged and abandoned two weeks later and 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 its contract for the Deepwater Invictus rig for an additional year through to May 2021 to support its ongoing exploration activities.
As reported in the 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(4) 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 $US306 million, of which $US164 million was expensed. A $US700 million exploration and appraisal program is being executed for the 2020 financial year.