Page 104 - Annual Report 2020

1.11.1 Petroleum continued
Conventional petroleum Conventional petroleum exploration and appraisal
BHP’s net share of capital development expenditure in FY2020, The majority of the expenditure incurred in FY2020 was in our
which is presented on a cash basis within this section, was focus areas, including Gulf of Mexico (US and Mexico) and Trinidad
US$909 million (FY2019: US$645 million). While the majority and Tobago. We also incurred expenditure in Canada.
of the expenditure in FY2020 was incurred by operating partners Access
at our Australian and Gulf of Mexico non-operated assets,
we also incurred capital expenditure at our operated Australian, In the US Gulf of Mexico, we expanded our acreage positions
Gulf of Mexico, Algeria and Trinidad and Tobago assets. through lease sale participation. In FY2020, the regulator awarded (2)
two blocks in Green Canyon, central Gulf of Mexico and 19 blocks
(1)
Australia in the western Gulf of Mexico. In July 2020, the regulator awarded
BHP’s net share of capital development expenditure in FY2020 two blocks in Green Canyon, central Gulf of Mexico and three
(3)
was US$223 million. The expenditure was primarily related to: blocks in the western Gulf of Mexico.
(4)
• Scarborough gas field development In Barbados, the offshore exploration licences for the Carlisle Bay
• North West Shelf: Karratha Gas Plant refurbishment projects and Bimshire blocks were declared effective as of 27 January 2020.
and external corrosion compliance The first exploration phase is a three-year program with commitment
• Bass Strait: West Barracouta subsea tie back development of seismic data.
and Snapper A21a development project Exploration program expenditure details
Gulf of Mexico Our gross expenditure on exploration was US$564 million
BHP’s net share of capital development expenditure in FY2020 in FY2020, of which US$394 million was expensed.
was US$617 million. The expenditure was primarily related to:
• Atlantis: execution of approved development on Atlantis Phase 3
Project and Brownfield subsea tie back to existing Atlantis facility
in Gulf of Mexico
• Mad Dog: execution phase of Phase 2 development
Trinidad and Tobago
BHP’s net share of capital development expenditure in FY2020
was US$46 million. The expenditure was primarily related to:
• Ruby: execution of approved development of Block 3a resources
in the Ruby and Delaware reservoirs

Exploration and appraisal wells drilled, or in the process of drilling, during the year included:
Well Location Target BHP equity Spud date Water depth Total well depth Status
Trion-3DEL Mexico Oil 60% 9 July 2019 2,596 m 4,615 m Hydrocarbons encountered; plugged
Block (BHP operator) and abandoned
AE-0093
Boom-1 Trinidad & Tobago Gas 70% 28 August 2,207 m 5,035 m Hydrocarbons encountered; plugged
Block 14 (BHP operator) 2019 and abandoned
Carnival-1 Trinidad and Tobago Gas 70% 30 September 2,119 m 4,347 m Dry hole; plugged and abandoned
Block 14 (BHP operator) 2019

In Trinidad and Tobago, we drilled two exploration wells in our Unit costs are expected to be between US$11 and US$12 per barrel
northern licences and completed Phase 4 of our deepwater drilling (based on an average exchange rate of AUD/USD 0.70) in FY2021
campaign in the first half of FY2020. The campaign included two reflecting the impact of lower volumes and forecasted lower
wells; Boom-1 encountered hydrocarbons and Carnival-1 was a dry price-linked costs. In the medium-term, we expect an increase
hole. Technical work is ongoing to evaluate an appraisal program, in unit costs to less than US$13 per barrel (based on an average
development planning and commercial options for the discoveries exchange rate of AUD/USD 0.70) as a result of natural field decline.
in the Northern Gas play. Petroleum capital and exploration expenditure of approximately
In Mexico, we drilled the Trion 3DEL appraisal well in the first half US$1.6 billion is now planned in FY2021 as a result of a delay of
of FY2020 where we encountered oil in the reservoirs up dip from the Scarborough gas development and several small and medium
all previous well intersections. The results provided greater sized projects, and an approximately US$250 million reduction
confidence around the scale, and quality, of the resource and we in our exploration and appraisal program.
now have sufficient information to underpin development planning. Onshore US: Discontinued operations
In Eastern Canada, technical evaluation is ongoing on our two On 28 September 2018, BHP completed the sale of 100 per cent
licences in the Orphan Basin to support exploration well planning. of the issued share capital of BHP Billiton Petroleum (Arkansas) Inc.
For information on conventional petroleum and 100 per cent of the membership interests in BHP Billiton
exploration, refer to section 1.5.3. Petroleum (Fayetteville) LLC, which held the Fayetteville assets,
for a gross cash consideration of US$0.3 billion.
Outlook On 31 October 2018, BHP completed the sale of 100 per cent
In our conventional business, volumes are expected to be of the issued share capital of Petrohawk Energy Corporation,
between 95 and 102 MMboe in FY2021 as a result of expected the BHP subsidiary that held the Eagle Ford (being Black Hawk
lower gas demand in Eastern Australia and Trinidad and Tobago, and Hawkville), Haynesville and Permian assets, for a gross cash
the previously announced delay of several small and medium consideration of US$10.3 billion (net of preliminary customary
sized projects with short lifecycles and natural field decline across completion adjustments of US$0.2 billion). Results from the
the portfolio. Onshore US assets are disclosed as Discontinued operations.
For further information, refer to note 28
‘Discontinued operations’ in section 5.

(1) Leases were awarded in blocks: GC124 and GC168.
(2) Leases were awarded in blocks: GB721, GB630, GB574, GB575, GB619, GB676, GB677, EB655, EB656, EB701, GB762, GB805, GB806, GB851, GB852, GB895, GB672,
GB716 and GB760.
(3) Leases were awarded in blocks: GC80 and GC123.
(4) Leases were awarded in blocks: AC36, AC80 and AC81.

102 BHP Annual Report 2020